How to Buy a Used Car

How to Purchase a Used Car

Used-car prices have risen this year, and while the price increase has slowed, market analysts believe they are still higher than before the pandemic and will certainly remain so for some time. The reasons are numerous. In summary, a global microprocessor shortage has caused automakers to struggle to satisfy demand, and production costs have grown as a result of residual pandemic impacts and rising raw material costs.

With fewer new cars for sale, demand for used automobiles has climbed, and with the average new-car transaction exceeding $48,000, according to Kelley Blue Book, used-car prices have risen as well. As a result, according to the August Consumer Price Index survey, used-car prices are up about 8% over last year. And the value of old autos has increased by 50% since February 2020, the last month before pandemic shutdowns put the global economy into disarray. That implies you might be looking at older used cars to keep inside your budget.

Buying a used car instead of a new one is the simplest approach to save money when purchasing a car. When you buy a new car, it begins to rapidly depreciate the moment you drive it off the lot, losing a large chunk of its value in the first few years of ownership. When you acquire a secondhand car, the original owner bears the brunt of the depreciation over its first few years. You spend a lot less than you would if you bought the automobile new.

A used automobile that is out of warranty may require more maintenance, and financing may be more expensive. However, selecting a car with a high expected dependability rating and low ownership costs can help you save a significant amount of money. Purchasing a used car can be more difficult than purchasing a new car. It is more financially hazardous because there is no safety net of a new car manufacturing warranty.

How much money do you have?

As a general rule, if you’re financing your car, your car payment should not exceed 10% of your take-home salary. If you’re on a limited budget, you might want to cut back even further. Used cars will require some extra care from time to time, such as new tires and upkeep. Then there are the other expenditures of ownership that buyers frequently overlook, such as gas and insurance. If the automobile you want to buy is out of warranty, you should set aside a “just-in-case” money to cover any unforeseen repairs.

What characteristics are most important to you?

Choosing the correct car might be difficult with so many alternatives available. Take some time to consider how you intend to use this vehicle. If you have a family, for example, you’ll need enough space for everyone as well as plenty of cargo capacity. If safety is a primary consideration, look into crash tests at the Insurance Institute for Highway Safety. Some advanced safety measures that were once reserved for luxury automobiles have become standard on numerous models in recent years.

What to Look For

Make a list of must-have characteristics to help you narrow down your options. Then, using car finding tools on automotive websites like Edmunds, look for models with those amenities. As you progress, make a list of three car models to investigate further.

After that, you can begin looking for secondhand cars on the internet. There are numerous websites to choose from, with some of the most popular being AutoTrader, Facebook Marketplace, and Craigslist. Listings are available from both individual sellers and dealers on these websites.

Speaking of which, you should limit your search to franchised dealerships, used automobile superstores (such as CarMax), and private sellers.

In general, you should avoid “buy-here-pay-here (BHPH)” used automobile lots, which frequently use fraudulent financing techniques. BHPH lots also frequently stock vehicles that a professional dealer would reject due to mechanical or other faults.

Private seller or dealer

The decision to buy from a dealership or a private seller is entirely personal. When buying through a dealer, the price may be greater, but they may provide limited warranties or other incentives such as free floor mats or other incentives to entice you to buy. A private sale may be less expensive, but it is risky. If something goes wrong with the deal after you’ve given over your hard-earned cash for a lemon car, you may not have as much recourse.

Even with old autos, dealers are subject to tight restrictions, but private sellers are less accountable when selling personal belongings. These are factors to consider while deciding where to buy.

Find out how much your car is worth

If you intend to sell your existing vehicle and use the proceeds to purchase your new vehicle, you must first determine the value of your vehicle. We practically wrote the book on this, and when you use our tool to investigate the Kelley Blue Book automobile worth, you’ll obtain a reasonable estimate.

There, you can enter the brand, model, and condition of your vehicle, as well as its features. Be realistic about its condition, and keep in mind that if your automobile has scratches and dents, the buyer will want to negotiate. Once you know how much your automobile is worth at the dealership and privately, you may decide which approach is best for you.

If you simply want to be done with the vehicle and get it off your hands as soon as possible, you may want to explore an Instant Cash Offer. This procedure works exactly as described. Dealerships will make you an official offer based on the worth of your vehicle. It eliminates the need to negotiate a trade-in at a dealership or deal with low ball text offers from strangers if you try to sell on your own.

What is the vehicle’s quality

Larger dealerships frequently provide dealer-certified used cars, which can remove a lot of the guesswork from buying a used car. These vehicles are typically a few years old, have only had one owner, and have undergone a comprehensive inspection. Certified vehicles often come with a limited warranty that covers major repairs for two or three years. A certified car will almost certainly cost slightly more than an uncertified car of the same age. However, if you can fit it into your budget, the peace of mind may be worth a little extra spending.

Examine the interior and exterior for damage. On a sunny day, you should look in the car. Walk around the outside of the automobile, looking for body damage and tyre wear. Then inspect the interior for upholstery damage and wear on the armrests, gear changes, and steering wheel.

Now is the time to be picky. Any visible damage, no matter how little, can be used to negotiate a reduced price for the vehicle.

When assessing regular wear and tear, consider the car’s age and mileage. For example, if you’re looking at a car that’s 10 years old and has more than 100,000 miles (160,000 km) on it, you’d anticipate the gear change and steering wheel to be worn.

Body damage may also indicate that the vehicle was wrecked and not properly fixed afterwards.

Examine the Vehicle’s History

Carfax or another reliable agency’s reports can reveal an automobile’s accident history as well as if it has been serviced on a regular basis. (The majority of automobiles in CR’s Used Car Marketplace have a history record, and CR members can view reliability and owner satisfaction directly in the listings.)

Circulate around the Vehicle

Visually check the vehicle on a dry, sunny day to detect flaws and probable problems. Look for rust, fluid leaks, and traces of collision repair on the underbelly. Turn every knob and press every switch to ensure that everything works properly. If you smell mildew, the vehicle may have been in a flood or there may be a leak someplace, implying undiscovered water damage.

Attempt a Test Drive

Before you even start driving, make sure the automobile is the right size for you, that the seats are comfortable, and that the controls won’t drive you insane. Look for visible exhaust smoke, feel for unusual vibrations, and smell for burning fluids while driving. Check under the car for greasy leaks after driving, keeping in mind that if the air conditioning is turned on, there will be a puddle of clean water under the car.

Purchase a Mechanical Inspection

This piece of advice is so crucial that it bears repeating: If possible, get the car inspected by your technician or, in a pinch, a friend competent in auto maintenance. Unless the vehicle is covered by a warranty or service contract, any problems that arise after you drive it home are your responsibility.

Price negotiation

The price offered by a used automobile dealer or seller is almost always adjustable. Use the information you obtained while analysing the vehicle to negotiate a lower price. Even if you didn’t find any serious issues, you usually have some wiggle room. For example, the automobile could be a wonderful buy at a reasonable price, but it’s not the colour you want. You may say something like this: “I truly like this car; I just wish it wasn’t blue. This is the same colour as my ex-car. girlfriend’s Of course, if you were ready to cut the price a little, that might be something I could overlook.” You can use this to gain a large discount if your mechanic stated that extensive repairs will be required within the next month or so.

Examine the contract

When you buy a car from a dealer, you’ll be handed a mountain of paperwork to read and sign before you get the keys and drive away. Check that you understand everything in these documents and that they match what the dealer informed you.

Examine the contract for any blank spaces. Some dishonest merchants would ask you to sign a contract with blanks, claiming that they don’t want to waste your time and will fill them up later. Almost always, the information entered differs from what the dealer promised you. However, after you’ve signed the contract, there’s nothing you can do about it.

If the dealer offers financing, be sure you understand the interest rate and loan period. Determine whether there are any consequences for repaying the loan early.

If you buy a car from the owner, you will most likely not have a formal written contract or bill of sale. If the owner has committed to do something for you, get it in writing so you may enforce it in court if necessary.

Sign the agreement

Sign and date everything once you’re sure that everything in the contract is right and you’re ready to buy the car. You’ll very certainly be required to show your driver’s licence and proof of insurance as well. Don’t depart with the car until the transaction is completed. Untrustworthy dealers may allow you to leave with the car but subsequently change the conditions of the agreement.

Transfer the car’s title and register it

When the transaction is completed, the seller will fill out the information on the back of the title to transfer ownership of the vehicle to you. You will subsequently be in charge of paying any taxes and registering the vehicle in your name. When you acquire a car from a dealer, they will usually handle the title transfer and registration for you. The registration and title transfer taxes and fees will be added to the purchase price. If you buy from an individual owner, you will have to handle all of this yourself.

If you have financed your vehicle, your lender will be recorded as a lien holder on the title. Most lenders hold the title until the loan is paid off, at which point they provide you a title that does not mention any lien holders.