How to Save Money | Buying Used Cars

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Internet access for research
Time to do it right!

Step 1

DETERMINE WHAT YOU CAN AFFORD

Before you do anything, check your budget. Here are important questions to ask yourself before buying your "new" used car:

* If you have currently have a used car to sell or trade in, what is it worth? A good place for this information is Edmunds.com. In the 'Used Cars' section on their homepage, you can select 'Appraise Your Car' and will give you $ values for 'Trade-In' and 'Private Party Sale'. You will typically get more for your old used car if you sell it to a private party. However, some people don't like to hassle with this and prefer the trade-in approach. And yes, you can trade a used car in for another used car!

* Will I finance this car or pay cash? Now that you know what you can expect to get for your old car, you can calculate your budget. What monthly payment can I afford? How much money can I put down on the car up front?

If you're going to finance the car, you should shop around for lending institutions with the best interest rates first.

Then, ask the lenders to tell you how much your monthly payment would be if you financed a used car for $10,000, $15,000, $20,000, etc. This will give you a sense of how much car you can afford within your budget. (And don't forget about the 'other costs' associated with cars like: taxes, insurance, maintenance, registration fees, and gas consumption.)
Step 2

DETERMINE THE TYPE OF CAR YOU WANT

Now that you know what you can afford, you can start deciding on what type of used car you want.

When you start this process, you may already have a specific vehicle in mind. I caution you on this point, because you may not be able to afford exactly what you want. So, if possible, avoid getting you heart set on a particular car from the very start. Keep an open mind.

For example: if you really like the Honda Accord, you might also consider the other brands in it's class (Toyota Camry, Nissan Altima, etc.) and research each of these online.

On Edmunds.com you can research any particular model of car and it will provide detailed specifications, reviews, ratings and price ranges.
Step 3

FIND YOUR CAR

Edmunds.com allows you to search for used cars that are for sale near you: by model, year, price range, even distance from your home! And, it will provide a list of these used cars complete with pictures, descriptions, mileage, prices, where the cars are located, contact information for the owner, VIN # (very important), etc.

Once you have found a list of cars that you are interested in, I recommend calling the contact # provided by Edmunds. Ask if the car is still available; why they are selling (if private party); ask if they can tell you anything important you should know about the car; do they have all the maintenance records; and I will usually ask them if they have a little room to work on the price - I'll explain that the car is a little out of my price range, but if they can work with me a little I might be interested still. (I call this 'planting seeds'.)

Remember, don't get your heart set on any particular car just yet. Make a short list of 'possibles' and proceed to step 4.
Step 4

RUN VEHICLE HISTORY REPORTS

In step 3, you narrowed your choices to a short list of possibilities. Remember that I mentioned how Edmunds.com can provide the VIN# (Vehicle Identification Number) for cars in your area? Now, here's why that is important:

I highly recommend that you now visit CARFAX.com and sign up for their service. CARFAX provides a collection of records specific to each automobile by referencing their VIN #. This includes information such as:

* Has the car been in a reported accident?
* Has the mileage been tampered with?
* How many owners have driven the car?
* Has the car been inspected lately?
* Was the car labeled a 'lemon'?
* etc.

The cost: 1 VIN search = $29.99; 10 searches = $34.99; 30 day Unlimited = $39.99

Buying a car is a major investment. In my opinion, $30-$40 is a small price to pay for peace of mind.

So, sign up and run reports for each of the cars on your 'short list'. The CARFAX information may make the list even shorter.
Step 5

EXAMINE THE CARS IN PERSON

Alright, now you're ready to go look at the cars and thoroughly check them out. It is very important that you take your time here. Start by opening everything that opens: doors, hood, trunk, glove compartment, etc. Examine closely. Is the engine clean? Do the lights all work? Any dents or scratches? Is the spare tire in good shape? Will you have to replace the tires? Verify the mileage on the odometer.

You are looking for anything that might appear to be problematic. Look under the car for any leaks. Do a 'sniff' test: Did someone smoke in the car? Check out the radio. Bring along a CD and test that out as well.

Now comes the Test Drive. You should plan on driving the car in both city driving conditions and on the highway/freeway. You want to check for handling, rattles, vibrations, etc. Is the car comfortable to drive? Are there any blind spots that could be a problem for you? Does the Heater & AC unit work properly? Does it brake smoothly? Shift abruptly? Do the brakes squeak or grind?

When you are done with your test drive, you should give the car another sniff test. Open the hood again and see if there are any odors of things burning like oil or other fluids.

When I buy cars, throughout this process, I am very clearly pointing out to the seller things that not perfect or that bug me. The reason is: I want them thinking that I'm not in love with this car and I'm trying to 'plant seeds' of doubt - hopefully resulting in their willingness to lower the asking price.

OK, you've examined and test-driven each of the cars on your list. This should have narrowed your list considerably.
Step 6

MECHANICAL CHECKUP

Another thing you should consider is taking your final car choices individually to a trusted mechanic for a checkup. Now this might cost you $50-$100 per car. I choose to do this.

Remember how much money you are saving by buying used cars in the first place. Just think of this as investing some of that money in insurance.

I go through the AutoClub for recommendations of local auto shops that they have certified. And, if you are an AutoClub member, they usually have coupons for $ Off this service.
Step 7

PURCHASING YOUR CAR

After the examination process, you have hopefully narrowed your selection to maybe 2 or 3 choices. Now, it's decision time. You have to pick one. Considerations may hinge on variables like: how many miles are on the odometer, price, gas mileage, color, etc.

For some, this is the hardest step in the process of buying user cars: making a decision! But at least you have done your homework and at this stage, you have a couple of excellent choices.

For the purposes of this article, I'll leave the price haggling and financing advice up to you.
Step 8

One last thing: you may want to purchase an extended warranty on the vehicle. I suggest that you go online and shop around for auto warranty brokers. They are usually less expensive than what you might get from an auto dealer.

The one I use is called AutoWarrantyBroker.com. The ad presently on their website reads as follows: "$950 for five years or 100,000 miles. Any model year, Any starting miles!"

Comments

roadlemons said

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on 10/5/2009 Great article! But there is so much more to saving money. For instance you mentioned "price haggling and financing" Did you know that is where most of your savings can be made? There are so many things people are unaware of that can save them hundreds even thousands more!