A Guide To Buying A Use Car From A Dealer
Buying a used car or a car that is almost new from a dealer can save you thousands of dollars. Buying a used from a dealer is almost the same as buying a new car from a dealer.
This guide will educate you so that you can get the best on your new purchase and also not get taken advantage of.
- The Benefits Of Buying A Used Car
- The Advantages Of Buying A Used Car At A Dealership
- Set A Budget
- Get A Loan
The Benefits Of Buying A Used Car
Some of the benefits of buying a used car from a dealer are listed below:
Avoiding Depreciation - Once a new car is driven off the lot, it depreciates in value that exact moment. On average, a new car loses as much as 11 percent of its value the moment that it leaves the lot and during the first five years it will lose an average of 15% to 25% of its value.
Price - A car that has depreciated in value presents you with an opportunity to buy a newer model year car at a lower price.
Lower Insurance Rates - You can save a lot of money on your car insurance because your car will be valued at a lesser price and also, you can get the state mandated minimum coverage, instead of being required to get full coverage for a new car.
The Advantages Of Buying A Used Car At A Dealership
Some of the advantages of buying a used car at a dealership are listed below:
Certified Pre-Owned Program - Dealerships offer certified pre-owned cars, which undergo rigorous mechanical and cosmetic inspection before they are offered for sale. Also, certified pre-owned cars are often covered by a warranty that goes beyond the original factory warranty. Many times, services like roadside assistance are also provided.
Buying a certified pre-owned car can not only give a peace of mind that the used car that you will be buying will be in great working condition, it can also save you time since you won't have to concern yourself with getting it inspected by your mechanic.
Extra Services - Dealerships will often offer extra perks, such as free oil changes.
Trade-Ins - Offering your current car as a trade-in can lower the amount that you have to pay for the car that you are planning to purchase.
Financing - If you do not have the money to buy a car, you may qualify for financing from the dealership. Preferably though, you should at least get a loan from either a credit union or a bank first before applying for financing from a dealership.
Set A Budget
Before you actually go to a dealer to buy a used car at a dealer, you should set a budget to determine what you can afford to spend and how much you're willing to spend.
You should determine what amount you can and would like to spend per month. You should also determine how much you can and are willing to give as a down payment if you can not get a loan. When setting a budget, you should take into account all of your expenses, such as your mortgage, rent, utilities, food costs, etc.
Since you will be buying a used car, you should also consider setting aside some money in case any repairs that aren't covered by the dealer warranty need to be made.
Get A Loan
Whether you decide to buy a used car or a new car from a dealer, it's best that you either have all of the money to buy the car upfront or to get a loan from either a credit union or a bank so that you can go to a dealer as a cash buyer.
In general, credit unions offer lower auto loan rates compared to banks. That is why I recommend that you first try to get a loan from a credit union, followed by a bank. When you go to buy a car from a dealer with a loan from a credit union or a bank, this makes you a cash buyer, and this can give you a better position to negotiate a better deal.
Research
The choices of cars that you can afford to buy depend on what you can afford, which is why it's important that you set a budget and try to get a loan before going to a dealership to buy a used car. Once you have set a budget and gotten a loan, if possible, then you should research what car you would like to buy.
You can use websites such as edmunds.com and carsdirect.com which let's you select car reviews based on make, model and year.
edmunds.com is also a great gauge the value of a car.
Reading reviews and ratings from various locations will help you get a good feel for what cars are reliable and offer what you're looking for.
Federal Trade Commission's Buyers Guide
The Federal Trade Commission’s (FTC) Used Car Rule requires that dealers post a Buyers Guide in every used that is offered for sale. The vehicles that have to have a Buyers Guide also include light-duty trucks, light-duty vans, demonstrators and program cars. Demonstrators are new cars that haven’t been owned, leased, or used as rentals, but have been driven by dealer staff. Program cars are low-mileage, current-model-year vehicles that were returned from short-term leases or rentals.
The Buyers Guide in the vehicle must tell you:
- whether the vehicle is being sold "as is" or with a warranty
- what percentage of the repair costs a dealer will pay under the warranty
- that spoken promises are difficult to enforce
- to get all promises in writing
- to keep the Buyers Guide for reference after the sale
- the major mechanical and electrical systems on the car, including some of the major problems you should look out for
- to ask to have the car inspected by an independent mechanic before you buy
The FTC requires Maine and Wisconsin to display a different version of the Buyers Guide.
Negotiating A Deal
Negotiating a deal for a used car is different than negotiating a deal for a new car since each car is different in mileage, condition, options, etc. You need to take everything into consideration when trying to determine what would be a good deal for you.
Before you begin negotiating with a dealer, you need to be familiar with the current market, especially for the car that you have decided to buy. It's also best to negotiate with dealers via phone or email. Dealerships will always try to get you to come to the dealership, don't do it, at least no yet.
The first price that they will offer will always be on the high side, you should counter with a low offer. If you are patient and time your purchase, you can get a good deal on your purchase.