In good years, manufacturers sell at least 16 million new vehicles. But for used cars, those numbers routinely top 40 million vehicles per year according to CNW Market Research. That means that for every two consumers shopping for a new vehicle, there are five more that are looking for a used car. Just as new car shoppers carefully research new cars, you should do the same when buying used. Some of the steps in buying used cars are the same as when buying new, but there are some important differences we will examine in a bid to help you find the best used car deals.
Understand Your Needs and Wants
First things first: what kind of vehicle do you want? What is your budget? Do you have a list of must-have items? What other features are important to you? Answer these questions first and you will make the car shopping process much easier for yourself.
You can save yourself a lot of time by choosing a vehicle that aligns with your needs. You may want a sports car, but you may need an SUV to carry your family and haul your stuff. For most consumers, those needs trump their wants. At the same time, blending those desires can yield a more satisfying purchase decision. For instance, a used Porsche Cayenne will deliver the utility, while providing a level of performance few SUVs can match.
You should also know how much money you can afford to spend on a used vehicle. Most consumers will finance their purchase, therefore you should estimate your monthly payments for a three-, four- or five-year loan. Add in your down payment, a trade-in or both, and your monthly payments may be manageable.
Make a list of all the non-negotiable items for your used car purchase. These may include: an automatic transmission, climate control, an audio system, navigation, power accessories and Bluetooth connectivity. Other features may be important, although not essential to your purchase decision, such as leather seats, automatic headlights, a top safety rating or a towing package upgrade. Allow your must-have items to drive your purchase decision with any “extras” serving as a bonus.
Know the Market
The automotive market is in constant flux. Consumer demand has shifted in recent years away from minivans and large cars to utility vehicles. Vehicles that are in high demand will fetch a premium price. On the other hand, if you live in Florida and are searching for an SUV such as a Ford Explorer, or call Minnesota your home and want a convertible such as a Mazda MX-5 Miata, those vehicles should be more difficult to sell in their respective markets.
When buying used you can purchase a vehicle from a private party or from a dealer. Typically, you will pay less for a car when buying directly from a private seller. At the same time you may only be eligible to receive the balance of the manufacturer’s warranty. A used car, particularly a certified pre-owned vehicle (CPO) will have gone through an extensive checklist and carry a warranty, usually from the manufacturer. Dealer overhead will cost you more, but you will also receive the peace of mind that comes with a CPO purchase.
Online research can easily reveal the available vehicles in your area. Craigslist will feature your local cars from private owners and some dealers. Check local dealership inventories and spread out your search by visiting sites such as CARFAX Used Car Listings to maximize your effectiveness.
When you do find a vehicle you like, you should familiarize yourself with its pricing. Sites such as KBB.com, NADAGuides.com, and Edmunds.com can give you the market value of these vehicles. Acquire that information and use it as a negotiating point. You should know that very few sellers set their prices in stone, therefore be prepared to haggle for a better deal as you negotiate. However, if you explain to the seller that you “must have” that car, then he has no reason to negotiate — you simply tipped your hand and will miss getting the best used car deal.
Perform Due Diligence
Before you agree on any used car, you should verify its condition. Take it for a drive, keeping the audio system off to listen for noises. The car should ride smoothly, be free of rattles and provide very good handling and strong braking. Some of the pricier repairs you will encounter have to do with the suspension system. Specifically, a front-wheel drive model with constant velocity (CV) joints are expensive to repair, but problems are fairly easy to detect — simply take that front-wheel drive vehicle to an empty lot, turn the wheels sharply to the left and again to the right — whining, clunking and clacking noises are an indication that the CV joints are shot.
Other areas to inspect include the interior — odd smells can point to flood damage — under the hood, where you can look for leaks; as well as the transmission, tires, lights and electronically operating parts. Certainly, it is worth the investment to have a competent third party, such as your mechanic, inspect the vehicle. That $100 investment can save you thousands of dollars in repair bills.
If you are comfortable with the car, do another check — obtain a CARFAX Vehicle History Report. That report will reveal a lot of information about the car, including change of ownership, accidents, thefts, repairs, possible flood damage and mileage. But that report may not list everything, including the personal repairs an owner made. Still, with your mechanic’s sign off and a CARFAX report, you are in a much better position than the consumer who does not perform due diligence.
You should also contact your insurance agent to find out what your insurance costs will be. For some consumers, the elevated insurance rates associated with a purchase can bust their budgets. Get a quote on the vehicle you have in mind.
Arrange for Financing
Cash is king, and if you have the means to do so, it may make sense to buy your used car outright with an all-cash transaction. Certainly, paying with cash can help you leverage the price too, but not always.
For the rest of us, financing our purchases is necessary. Here, you can arrange for financing on your own through your bank or credit union. Some financial institutions offer low-rate financing on late-model used cars. Those low rates are based on your credit score and are reserved only for people with excellent credit.
Your dealer may arrange financing too. And in some cases, those deals come with incentives. For instance, if you purchase a CPO vehicle, manufacturers will often provide financing incentives that include low interest rates.
Check out our list of monthly used car deals for current specials. That list outlines other incentives that may be offered, including free maintenance and payment assistance. Compare these offers with the financing you obtain on your own to secure the best used car deal.
Finalize the Deal
With your used vehicle identified, your due diligence performed, the best price negotiated and your financing in order, you are ready to finalize your deal. Be careful here — you must ensure that all costs related to your vehicle are known, including the transaction price, what the dealer is paying for your trade and your financing. Verify that your financing deal is locked in — a one or two percent increase in your interest rate could scuttle your deal. Be cautious about dealer add-ons, such as an extended warranty, but if you decide to get one be sure to negotiate what you will pay.
Finally, sign the contract, obtain the keys and perform one last walk around. If you’re satisfied, drive away and enjoy your “new” used car purchase.