Should I Buy A Used Car?
So you need another car? Do you buy a new one or a used one? Here are some good reasons to consider buying a used car:
- If you buy a used car with low mileage you can probably drive a car that's in great shape, which you would probably not be able to afford if you tried to buy the same type of car new
- You'll save money on your insurance premium for a used car over a new one
- New cars depreciate very rapidly, especially during the first couple of years. As soon as you drive a new car off a dealer lot it will instantly depreciate between $1,000-$2,000! After the first three years most cars are worth only about 60-70 percent of their original value. Generally, large luxury cars and subcompacts tend to depreciate fastest. Used cars with the slowest depreciation rate are popular selling models and/or vehicles with options that are popular. The bottom line is that you can save A LOT of money!
- It is possible to find excellent deals on used cars in excellent conditions from a car that has been released from a rental company or a lease
- Unlike new cars that are more perfectly priced, with a used car there is more room to negotiate a better price
However, the tradeoff is that with a used car you cannot be guaranteed that it has been accident-free, that its odometer reading is accurate, but most importantly, that there are no hidden problems that will surface after you buy it. While there are no absolute guarantees, you can take as much risk and uncertainty out of the equation as possible.
Eliminating Risk and Uncertainty When Buying A Used Car
First-off, when considering the risk of buying a used car, you should consider that:
- Modern technology has made used cars more reliable and durable than ever
- Many used cars are still under factory warranty
- Many dealers sell certified used cars that include extended warranties
- Buying from a private owner can be a lot less stressful and certainly more informal than buying from a dealer
- With the Internet, it is very easy to trace a car's history by using its VIN number
- You can invest the money you save from buying a used car toward something that appreciates such as real estate or a low risk, interest bearing CD
You may have heard the quote, "Prior planning prevents poor performance." This definitely applies to shopping for a good used car. The first rule of eliminating your risk is to do your homework! Start by reading as many car reviews, consumer reports, Internet web sites, and speak with truly knowledgeable people, friends and colleagues while recording your findings from all of the data you have gathered. Your goal is to narrow your search to one to three models (see Deciding On The Right Car).
Second, always check a car you are seriously interested in by reviewing its history. You can look up a car's history by its VIN number here. If you get to the test drive phase make sure you thoroughly test drive the car under similar conditions as you plan to drive your car (see the checklist and article on, Test Driving A Potential Used Car). Then pay the money to have a mechanic that you trust inspect the vehicle. It's a good investment. On this note, NEVER make a deposit on a car before its history has been checked, and it has been thoroughly test driven and then inspected by a qualified mechanic).
Be very careful when examining and filling out the paperwork. If buying a car from a private owner you must ensure that there are no outstanding liens against the vehicle and that the person signing the Bill of Sale is the actual and legal owner of the car. Also, make sure the car has not been stolen. Ensure that you take the time to thoroughly read the warranty and fine print very carefully. If buying through a dealer and the car is certified, make sure you know exactly what has been certified. Again, read the fine print. Finally, remember that buying a used car is a business transaction. Therefore, accept no verbal agreements or promises unless they are in writing and signed by both you and the seller.
Deciding On The Right Car
First, write down your needs versus your wants in a car. You will soon see which makes and models fit your lifestyle and needs. Then ask yourself a series of questions:
What type of car can you realistically afford? What will you use your car for? How long to do plan to own it? How many people will you usually transport? What kind of driving do you do? What is your driving style? How long is your commute? How important is safety, reliability, and gas mileage to you? Do you want manual or automatic transmission? Do you need four-wheel or all-wheel drive? How much cargo space do you need? Will you be doing any towing? What are parking conditions at your home? What safety features do you want? What are the insurance premiums? Do you want Automatic or manual transmission? Do you need a two-door, four-door, SUV, pick up truck, mini-van, sports car, luxury car, or station wagon?
Once you have narrowed down your choice in makes and models, and begin your search, you want to always check the car's history records. Also, focus on a car with low mileage. While this is good, realize that it does not guarantee that you will have a problem-free used car. Additionally, a car that is too old should almost always be avoided, unless you like a particular car and are buying it to recondition it and are prepared to pay money to do this. Generally, you wish to focus on cars that are 2-5 years old to take advantage of the depreciation value while still being able to buy a car that will probably be trouble-free.