A Quick Guide to Buying a Used Car

Owning a new car gives most car buyers a shot of contentment and puts a bounce in their step.  Compared to buying a used car, new cars are absolutely the worst investment a person can make unfortunately.  Once they get off of the lot, they depreciate to the point that 10 to 25 percent of their original value is lost.  This percentage gets even higher the longer the car is on the road.  And after a few years or so, its original worth, which may have been in the tens of thousands, drops down to just a few thousand.  During this time, the car loan that may have been used to secure the purchase of the new car will most likely not dropped nearly as much in principal value.  This is primary reason why many consumers that purchase a new car and what to trade it in within the first couple of years are upside down or underwater with the car loan.  That is, the car loan will exceed the value of the car, an undesirable financial position to encounter.

Yet, this phenomenon is not all doom and gloom.  Individuals who are interested in buying used cars can use depreciation to their advantage as they are able to get a relatively decent vehicle thousands below its original sticker price.  In these situations, the car loan will also more closely drop in value along with the car value over time.  Interest rate can be slightly higher on used car loans, since the price of the car is generally much lower, even for slightly used cars, the loan amount is measurably lower.

So, why aren’t more car buyers jumping onto the used car bandwagon?  Some want the prestige associated with buying a new car, particularly those deemed to be popular by the public.  Others are afraid that if they get a used car they are more likely to get a vehicle that is not as efficient and possibly even a ‘lemon.’  Well, this doesn’t have to happen.  With just a little bit of foresight and negotiation skills, a person can get a used car that is both affordable and in good condition.  Add in good car loan shopping and the net result is a well priced car with a very manageable car loan and car loan payment.

First, a used car buyer must understand there are three venues for trying to buy a used car.  These include: buying a certified pre-owned car, buying a non-certified car from a dealership and buying a car from an individual.  Certified pre-owned cars offer the consumer the most protection, since they had to go through a vigorous inspection process to earn their certification status.  Certified pre-owned cars offer a lot of security, but they are also significantly more expensive.  On the other hand, the wear and tear on non-certified cars tends to get downplayed by car salesmen.  When buying certified pre-owned a thorough test drive is a must.  It is also advantageous to obtain the car loan financing in advance.  With a preapproved car loan, negotiating over the car price is a much easier task.  However, a used car buyer doesn’t necessarily have to go that route to get a good deal.

So, how does a person determine which venue they need to go through to buy their used car?  If they’re looking for the lowest price, buying from an individual is the way to go.  Since individual car owners are not covered under most lemon laws, a car owner needs to do some investigation to make sure the car they are getting works.  To do this they need to get the vehicle’s identification number, (known as VIN).  They then need to use this number to run a vehicle history report from sites like Carfax.com.  This will tell them any accidents the vehicle has been involved in.

Once they have obtained this information, they need to see the vehicle in person and inspect it for problems.  If they have a friend that has knowledge of cars, bringing them along would also be helpful.  Additionally, they should make sure the car owner would allow for a thorough test drive.  Hopefully, they should as long as they are in the car with the person, (to prevent the possibility that it gets stolen).

If a person does not want to get their used car from an individual or get a certified pre-owned car, the other options involve purchasing a used car from a dealership.  Lemon laws ensure that if a car is bought from a dealership, it must meet certain standards of working condition and protects against acts of fraud, if it isn’t a person can pursue legal action.  With that in mind, the test drive is again of significant value.  As well as, a comparison on prices of other comparable cars that has the same mileage and year of production.  The reliability and reputation of the car dealer should be evaluated before buying any car.  In shopping for any used car, shopping for similar cars and comparing price and condition to be sure of the best value is a key element.

In conclusion, a person should not fear the thought of buying a used car.  Getting the right vehicle will require a bit of legwork, but in the long run the savings one gets makes the extra work worthwhile.  Be sure to check the auto loan rates for used cars and the term of the loan needed to make the purchase the best value for your budget.

Tags: car loan rates, used car loans, used cars

This entry was posted on Wednesday, February 4th, 2009 at 6:13 am and is filed under Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.