Daily Note: How to Buy a Used Car

We may be experts at eliminating all the little money leaks but unless we spend time to learn how to save on big ticket items, we are handicapped from the beginning.

Lately, we were thinking of buying a used car but how do you actually buy one without regretting down the road? After tons of research and several less than stellar experiences, let me share how you should buy a used car.

In general, there are two main concerns of every used car buyer and the following steps are aimed at them specifically. They are: (a) price of the vehicle and (b) reliability after purchases.

Narrow Down the Selection

There are two phrases to buying a used car. There’s “I have $X budget to pick a model that I like” and then there’s the “once I know the model, I want to get the best price available”. Most people simply combine these two phrases to save time but this is recipe for paying too much, since sellers will try to give you so many options on the spot in order to confuse you and manipulate you into paying for a higher price than needed. That’s why you need to give yourself enough time. In other words, don’t buy a car, especially a used one, in a rush or on impulse. Once you pick a model and settled on it, move on to find a good deal. Never combine the two phrases.

So how do you narrow down the search? Dealerships!

The best place to find the model you are looking for, assuming you aren’t buying a beater, is to actually go to the dealerships and test drive the different models. In order to save time though, look through the dealership’s website to make sure they have the selection you are looking for. Your goal is to find out about the different options available as well as how cars actually drives, so don’t worry too much about whether the dealership you go to will give you the best bargains.

In case you are, there’s no need to feel bad about dealership hopping because you are legitimately thinking about buying their cars. When you get in, just be prepared to get phone calls when they try to follow up with you. You can always refuse to give them your number, which they are fine with as long as you aren’t being rude.

Finding a Good Price

Now comes the tricky part, finding a good price on the exact model that you like. As a used car buyer, it’s tough to get exactly all the options, color that you like at the lowest price available on the market. If it happens to turn out that way, great but don’t bet on it. That’s why you should figure out the “must-haves”, and then go on the hunt to find the best deal with the car that have those options. Here are several places to aid your search.

Edmunds.com – You can find not only the MSRP and invoice prices on new vehicles but old ones as well. For used cars, they also scan the system to see what other people are paying for and give you an estimated market value of the year, make and model of the car you have your eyes set on.
Specific Car Forums – A great place to find out about the car and what deals people are able to get is to read car specific forums. If you are looking for a honda accord, just search for “honda accord forum” and there will be tons of bulletin boards with people talking about their beloved car. As you read the forum posts, you can find out about reliability, problems, deals and prices that people are paying (yes, even prices for used cars).
Others – craigslist and ebay are great places to get a gauge on how much a car is worth on the open market. No one ever gets their asking price so take craigslist listings with a grain of salt. ebay is good because you can not only see which ones are for sale but also the closing price, giving you a good sense of market value.

The Importance of a Carfax History Report

With used cars, it is imperative to get a carfax history report that shows the complete history of the vehicle. Sometimes, you find that the last odometer reading on the report is actually higher than the actual reading, indicating something fishing going on. Other times, you see that there was flood or frame damage, a big nono when buying a used car.

Also note that it’s the responsibility of the buyer to order a report. Not the seller, not the mechanic that you ask to look at the vehicle. You. So spend a bit of money on the report and drastically reduce the chances that there will be a major repair soon after you buy the vehicle.

Dealer Experience

It is safer to buy a used car at a dealership (or big name used car retailers like Carmax), assuming that you aren’t paying much more for the experience. This is because most brands now have what’s known as “certified pre-owned” cars. With these, the dealership will inspect the cars, make sure there’s no major damages and will even offer out a multi-year warranty (for example, Lexus pre-own carry a 3-year, 100,000 miles limited warranty as opposed to 4-years for a new one). So if the price is right, buying a certified pre-own will give you the piece of mind that there are no major damages that aren’t detectable by the untrained eye (that means us).

In order to get a good price with dealerships, make sure you do your homework before you sit down and negotiate. Never let the salesperson offer you different cars because all they’re trying to do is lure you into thinking that you are getting a better deal while the point of their tactic is to offer you a lesser car for the same price, maintaining their profit. Have a car in mind, tell them a price that you are willing to pay for and let them do the work.

In your preparation, you need to:

Research ahead of time on the inventory that they have so you know exactly which car you’d like to own.
Have multiple quotes of similar models as well as the Edmunds estimated value printed out so you can show them when they ask why you are requesting such a low offer (trust me, they will use the word “low” when you know it’s really “fair”).
Act uninterested with their suggestions and just tell them what you need them to do.

Don’t Be Lazy

Car shopping can become frustrating as salespeople after salespeople “mug” you with sales pitches and phone calls, all the while you are spending tons of time researching and comparing different options and prices. However, I assure you that once you finish buying the car and start driving it home, all the hard work will be worth it.

Don’t be lazy. You can really save big by knowing how to buy a used car, which starts with research.

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