Shopping for a used car can be tricky. You’re trying to find an affordable car, but also one that will last you for a while. You don’t want to drive the car off the lot, only for it to have a serious mechanical breakdown a few weeks later. This is why it’s essential that you get the best value you can on your used car purchase. Here are some things to consider during the purchasing phase that will help to ensure you’re spending the right amount of money on a used car.
What Did the Dealer Pay for It?
A common question a lot of buyers have when searching for a used car is how much the dealer paid for it. The logic behind the question is if you can figure out how much the dealer paid for it, you can figure out a reasonable price you should pay to buy it. Unfortunately, it’s not always easy to figure out what a dealer paid for a car.
There are a lot of factors that go into the sale, such as whether the car was a trade-in, bought from a private seller, or bought at an auction. There are also taxes and dealership fees that they need to account for. When shopping for a used car you shouldn’t focus on what the dealer paid for it, but solely on what you will pay for it.
What are Similar Cars Selling For?
A good place to start your research is seeing what similar cars in your area are selling for. For example, let’s say you want to buy a 2010 Honda Civic. After searching your area for similar vehicles, you find 5 others for sale that all within $500 of one another. You then look at the Honda Civic you were considering and see that it costs $1,000 more than the average of the others. This would be a clear sign that the model you’re considering is overpriced.
Of course, there are other factors at play. You need to look at the mileage on each of the cars, along with its exterior condition and its accident history. It’s possible those other models were all cheaper because they had 50,000 more miles on them. Using other cars as a gauge for what that model should cost is a good starting point, but don’t forget to consider other factors.
Red Flags to Look For
When looking for a used car there are a few red flags you should avoid. The first to look for is an accident history. If that used car has a history of major accidents, this could mean there are some serious underlying issues.
Another red flag is when the car was previously owned by a rental agency. These cars are often cheaper, but they were not treated well. Most car renters don’t treat the rental car well, and proper car maintenance is not always performed, so you may have damage inside the car or under the hood.
Finally, be wary of cars that have been for sale for a long time. A good car will sell quickly, so if the one you’ve been considering has been for sale for months, this is a sign that there is either something wrong or it’s priced too high.
Learn to Negotiate
After doing all your research you should have a good idea as to what a used car should cost you. However, this doesn’t mean you’ll get that price. This is where some negotiating skills can come in handy.
While there’s a lot you can do to improve your leverage during a negotiation, here are a few simple starting tips:
- Don’t let the seller know you desperately need a new car.
- Come armed with facts about what the car should cost and why.
- Visit dealerships towards the end of the month, or end of the quarter, when salespeople are more desperate to meet sales quotas.
- Have a backup option. If you don’t get a good price on the car, be prepared to walk away and get something else.
Get the Right Insurance and Warranty
Finally, getting good value for your used car goes beyond the final sale price. You should also think about the insurance coverage you have and any warranties. For example, paying for more insurance than the car is worth doesn’t make much financial sense. Talk to your insurance provider about getting the proper level of coverage for your car’s value.
Getting an extended warranty is also a good idea. Used cars are more prone to breaking down and a warranty can protect you in this instance. Look for an extended warranty that specifically matches the model of the car you bought. For example, if you bought a Kia Forte, look for an extended warranty for a used Kia.
Buying a used car is a major purchase, so you don’t want to rush through it. By taking your time and doing all your research you can make it more likely that you get a good value on your next used car purchase. Good luck!