Just because you're buying a used car, doesn't mean you should pay the sticker price.
Many used car lots expect shoppers to haggle for a lower price and accordingly price cars higher than what they're worth.
Of course, that's not the only tactic you can use to save money. Whether you go in knowing the value of a car or are willing to walk away, you can save money when buying a used vehicle.
Make Sure You Can Afford the Car
Before you even think about what type of car to purchase, you need to know how much money you have to spend and what your price range will be.
Hopefully, you have saved cash for your purchase, but if you have to finance, make sure the monthly payments (and all related costs) will work with your monthly budget.
Typically, you don't want to spend more than 20% total on car expenses (including insurance, fuel, maintenance and repairs). Your car payment should be no more than 10% of your pay.
Of course, the less you spend on your car, the more money you have to save for your future in the long run!
Choose a Good Car
Once you know your budget, do your research on the best car for you and your family. Do you have kids that need to be in car seats? Do you need a lot of space to transport materials? Choose a car model that is the best option for your lifestyle.
Research the cars (through sites like Consumer Reports) that you're considering and make sure that they're known for being reliable and don't have a lot of known issues for the model and year you want to buy.
You don't want to make a purchase and find out that model is known for having the engine or transmission blow out!
Consider Additional Costs
Instead of just considering the purchase price of the car, make sure you research all costs.
Before you make a purchase, call your insurance agent and get a quote for the insurance costs to make sure it's not overly expensive. You could also ask your mechanic about the average costs of repairs to make sure maintenance costs are not super expensive compared to other vehicles.
You also want to consider the fuel efficiency of a vehicle and what your monthly fuel expenses will be. An SUV with a low MPG efficiency will of course be more expensive than a subcompact car.
Know the Value of the Car
It takes literally seconds to look up the value of a used car. You can visit the Kelley Blue Book website and enter the specifics of the car to get the actual value.
You'll need information on the mileage, year, condition, and any extras the car might have. Just plug in the information on the website and you'll be told what you can expect to pay for the car on a used car lot or from a private party seller.
Check the CarFax Record
You also want to check the CarFax record for the specific car to check the vehicle history report.
You want to make sure it had regular maintenance and oil changes, wasn't in an accident with damage, and also to check the former owners (like part of a rental fleet, personal vehicle, etc.) and where the car was owned.
Remember some northern climates use a lot of salt on the road, which can cause the undercarriage to rust.
Don't Buy in a Hurry
When you buy a car in a hurry because you're desperate to have another vehicle, you don't get the best deal since you won't be able to take the time needed to comparison shop and make the best decision.
Pay In Cash, If Possible
One of the easiest things you can do to save money on a used car is to pay with cash. If the dealer knows that you're paying with cash, he knows you're serious about the purchase. It's also much harder for a dealer to turn down cold hard cash.
Save up the money, if possible, before you go car shopping so you can save more money on the purchase price.
Get Preapproved for a Car Loan
If you don't have the cash to pay for the entire cost of your car upfront, make sure that you research your own financing options and get preapproved by your local bank, credit union, or an online lender to get the best rates.
Dealerships often make a lot of money off the financing and will often be more expensive than a third party lender (unless they offer to match your preapproved interest rate).
Avoid Long Term Loans
Think in terms of the total purchase price rather than a monthly payment. You don't want to tell the car dealership you can afford a certain monthly payment and then find out you've taken out a 6 or 7-year loan!
If you must finance, choose the shortest loan term possible and pay the loan off as quickly as possible.
Shop Multiple Dealerships
Rather than just shopping at your closest dealership, shop online at dealerships all across your city (and even those out of town). Compare prices to see if you can get a better deal at different dealerships.
Wouldn't it be worth driving a little bit, if you can get an amazing deal at an out-of-town dealership?
Bring Someone That Knows About Cars
If you don't know much about cars, you want to bring someone who does. He or she can look the car over and tell you if there are any problems you need to be aware of. If the car isn't coming with any type of warranty, this can save you a lot of money down the road.
If you don't have someone that you can bring, ask if you can have your trusted mechanic look it over before purchase.
Test Drive the Car
Even if you negotiate everything online, make sure you take the time to test drive the car and make sure that everything seems in order.
Even better, if you have your mechanic test drive the car and take a look at it for you.
Use the Internet
Use the internet to your advantage. You can save time by contacting various dealerships online, rather than visiting them to try to get a great deal.
You can also avoid the salespeople who work on commission, whereas many internet managers are on salary.
Plus, you take the emotion out of the deal when you can decide at home on your time what you want to do. Dealerships love to pressure you to make a decision on the spot!
Haggle All Details
You want to get the total purchase price as low as you can get it. Again, knowing the value and being willing to pay cash can make a huge difference.
Once you get the price as low as you think you can get it, then discuss your trade-in. You never want to bring up your trade-in until the very end. This can save you thousands.
Even better, try to sell your car yourself rather than trade it in for the best price.
Be Prepared to Walk
Can't get the deal you want? Don't worry. There will always be other used cars to choose from. Also, many dealers won't let you walk. If your offer is reasonable, many dealers are going to change their minds if you're willing to walk away from the purchase.
My dad and I saved several thousand dollars off the price of a used car when we got up to walk away several times. He knew what he wanted to pay and was willing to walk away if it wasn't a good deal.
Skip Buying Add Ons
Once you've negotiated everything related to the transaction, make sure you avoid buying any expensive add ons. Do you really need rust, stain, or dent protection? Not likely!
As long as you have the money for any potential repairs, you can also skip buying an extended warranty. They're usually set up to make profit for the dealership.
Buying a used car is a great way to save money. New cars lose their value as soon as you drive them off the lot.
However, that doesn't mean you can't save money off the sticker price of a used car. Know the true value of the car you want and its condition, pay with cash, haggle, and be willing to walk. That's all it takes to save money when buying a used car.
Additional articles you might like;
- How to Pay Cash for Your Next Car
