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What to consider when buying a used car
Before you buy that used car, make sure you're prepared.
6 tips for buying a used car
- Start with a budget. Knowing how much you’re able to afford upfront or on monthly repayments can help you narrow down your search for a car.
- Research models and makes. Look online to compare models and makes and narrow it down to a few choices that suit your needs.
- Consider maintenance costs. Used cars might require more repairs than old cars — and typically aren’t covered by a warranty.
- Get a VIN check. Checking a vehicle identification number (VIN) can tell you if the car’s been stolen, in an accident, if someone still owes money on it and more.
- Have a mechanic look at the car. The only way to make sure that your car is in good shape is to have an expert check it out.
- Don’t be afraid to negotiate. The price of a used car typically has more wiggle room than a new car. Get an idea of the car’s resale value to make an informed argument for a lower price.
Where can I find a used car?
You have options when looking for a used car.
- Online dealerships. Sites that focus primarily on selling used cars often post photos and car history information for you to browse from home. You can find both licensed dealers and private sellers on these sites, meaning you have your pick of cars at prices you can afford.
- Trading forums. There are forums where people sell their cars and where you could find a bargain. However, a private sale can be risky because you don’t know the seller and the car’s history may not be fully reported.
- Classifieds. People still use the newspaper to sell or trade their cars. There are also dedicated websites like Craigslist and eBay where you can find a used car for sale in your area. But since you’re dealing with a private seller, you need to be careful and inspect a vehicle before purchase.
- Used car dealerships. If you want a large selection of used cars, there’s likely a used car dealership or two in your area. At a dealership, your seller will be licensed and the car is often sold with a warranty. This is a good option for people who don’t want to risk a private sale.
- Previous rentals. Many rental companies sell their cars once the new model year has been released. You could take advantage of a newer used car that has received regular maintenance — but it may have more mileage and general dings than other, similar used cars.
- Former leases. Also known as an off-lease car, these are typically the next best thing to a certified preowned car (CPO). This allows you to buy a newer car at a fraction of the new price, all while knowing that your car has received regular maintenance and only has a few thousand miles on it.
How can I finance a used car?
If you’re looking to finance your purchase, you have a few options available to you.
- Secured loan. A secured loan requires you to use your car as security, but in return they generally have lower interest rates. But beware — some lenders won’t offer secured loans for cars older than 10 years old or a car with more than 150,000 miles.
- Unsecured loan. An unsecured personal loan won’t require collateral, but you may find that the interest rates are higher because it’s more of a risk for the lender.
- Dealer financing. If you’re buying a car from a dealership, then they may be able to offer you a financing option.
Compare your used car loans
What to know about buying a used car
Since used cars have been owned by at least one person, the condition of the car should be a top concern. Some cars can look almost new, while others can look like they’re on their last wheel.
For many, a used car is the best option for their budget. The previous owner has taken the hit of depreciation, so the money you pay for the used car will be closer to the car’s actual value.
Of course, there are risks that come with buying a used car. A problem may not be immediately obvious. And since used cars typically don’t come with a warranty, the manufacturer likely won’t cover the cost of the repair.
Before you buy a used car, research the make, model and year of the vehicles you’re interest in and know what types of questions to ask.
How to start a search for a used car
- Don’t go for your first pick. It can be tempting to buy the first car you like. But be cautious — a car is a large ongoing expense, and it’s important to consider every option before you make your final purchase.
- Research online and in person. As you start browsing your car options, do your research. Look online, in newspapers and visit a few used car dealerships. Test driving can make a huge difference in your decision.
- Understand the market. Knowing the current prices makes it easier to know if you’re getting a good deal.
The used car buying checklist
You don’t want to drive off the lot with a used car that’s going to cost you money to repair. Always have a professional mechanic do a full inspection of your car before you sign any loan or purchase agreements, and when you’re looking for problems, keep these points in mind:
- Everything sounds right on your test drive.
- The brakes and car controls function well.
- There’s no sign of damage.
- The upholstery is in good condition.
You’ll also want to make sure the seller has these documents handy:
- Transfer of ownership paperwork
- Registration papers
- VIN numbers and car history report
The factors that come into play when you buy a used car can seem overwhelming, but you want to make sure that you’re buying a quality vehicle. Be prepared to do plenty of research on the specific make and model you’re interested in and educate yourself on how to negotiate so you can make an informed decision.
Frequently asked questions
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