If you are in the market to buy a used car, the shock of car prices may not have fully come home to you. Gone are the days of a bargain find for under $1,000, unless that car is 20 years, has a rusted body and needs extensive repairs. Today's used car prices are high because people are keeping their cars longer. With fewer cars turning over to new owners, prices have risen accordingly. Figure that you'll pay $10,000 or more for a three-year-old compact car. Prices can vary depending on condition and mileage, but most late model used cars will do a good job of retaining value.
Please read on for some tips on how to save money on a used car.
1. Know what you want. Don't buy a used car based on price. Buy one based on your needs and your desires. Certainly, you can find a bargain on a five-year-old subcompact, but if you need a family sedan, then stick with a midsize or larger model. Narrow your search to the body style that suits your needs and begin your search there.
2. Set a budget. How much can you afford to pay for a used car? Will you be seeking financing? If making monthly payments, what can you afford to pay each month? Cash will, of course, make the process easier to handle, but with used car prices not far off the mark of new car prices, you'll find financing the way to go. Your savings here will depend on two things: your credit score and the amount of money you can put down. Shop for a loan through your credit union or bank; a shorter term will mean a lower interest rate.
3. Buy private, if possible. If you buy a used car from a dealer, you will pay more for that car then buying one from a private party. A dealer will mark up his price to make more money. A private party puts you in a better position to bargain. Know what the worth of a car is by securing its purchase value via Kelley Blue Book at kbb.com.
4. When buying through a dealer makes sense. Although a private party transaction can save you money, you may do better buying through a dealer if your car is one or two years old. Here's why: late model used cars sold through dealerships typically still have the original warranty on it. Moreover, it may be a "certified used car" which means it went through an extensive multipoint check to ensure that it is like-new. You'll pay more for this kind of vehicle, but you'll get more too.
5. Buy a fleet car. Cars that are used as fleet vehicles such as rental cars through companies like Hertz or Budget, can be had for a good price. Typically, such vehicles have 30,000 or fewer miles on the odometer, have been very well cared for and may come with a warranty. Moreover, such vehicles are usually high-end models, and come with all the bells and whistles you want like a navigation system, premium audio and in some cases a moonroof. Another option is a fleet vehicle that is sold by a government agency. Such vehicles usually are older, have many miles on the odometer, but can be had for a few thousand dollars. Consider these retired police and state cars if you are mechanically inclined and don't mind sinking some of your own sweat equity into the car.
Used Car Considerations
Always contact your insurance agent before buying any car, new or used. Find out what your insurance premium will be for that vehicle -- even among like cars, rates can vary as insurers consider crashworthiness and repair costs as they calculate your rate. Finally, take the car you are considering buying to a mechanic for an evaluation. You'll pay about $100 for a thorough check up, but you might avoid getting stuck with a lemon.