If you’re in the market for a used car, here are 10 considerations before making your purchase:
1. What is my budget?
Before considering any purchase, always determine a budget for it. If you are paying cash for a used car, you won’t have to finance a monthly payment. So consider how much you’re willing to spend and if the car fits into that budget. If not, are you willing and/or able to finance the rest? If you’re planning to finance the purchase, consider what you want for a monthly payment rather than how much to spend overall because, when financing, you’re buying a monthly payment. Get pre-approved before starting your search, even for used cars. Contact your financial institution to apply or find a local credit union (credit unions tend to give lower rates than most banks). To learn about the benefits of a credit union, see our Credit Unions page. If searching and pricing vehicles through dealerships, don’t forget to consider tax and license into the final cost of the vehicle. A general rule is to add 10% for tax and license for the total, out-the-door cost. For example, a $10,000 vehicle will cost roughly $11,000. However, if you’re buying private party, you will have to pay tax and license at the time of registering the vehicle with DMV. In addition, if the registration fee is due within 60 days, this fee will be added to the total amount owed to the DMV. Lastly, find out if the vehicle you have in mind will increase your insurance rate. Insurance can increase significantly, depending on the type of vehicle and your driving record. To learn more about auto insurance, see our post about Understanding Auto Insurance.
2. What type of cars am I considering?
Once you determined a budget, now consider the type of vehicle that would fall under that budget. Remember to give yourself some wiggle room on price, so unless you’re willing to spend more than what you planned, don’t find something that will barely squeeze by your budget. Before searching, create a list of your needs (kid-friendly, roomy, towing capability, good gas mileage, reliable) and your wants (body-style, colors, fuel-efficient, luxury options), then cross-reference the two lists. Don’t buy a vehicle that meets all your wants, but none of your needs.
3. Am I being realistic?
After considering your needs versus wants list, are you being realistic with your expectations? For example, if you need a fuel-efficient vehicle, but you need it to fit 8 people with towing capability, you’ll probably have to choose one or the other. Also, research the prices on the type of cars you’re looking out and find out the average price of an 8-passenger vehicle with a towing package. If the average is around $25,000, don’t assume you can get one for $10,000. And, if you can, it probably is too good to be true. Sometimes an awesome deal in the initial purchase will cost you more money after the purchase with repairs.
4. Am I being too picky?
From experience, Auto Expert has had our fair share of picky consumers, which is an attribute that works well when searching for newer vehicles since there are more options to choose from. However it doesn’t work so well when searching for a used vehicle (especially with a lower budget), UNLESS you’re willing to wait months for us to find your SPECIFIC vehicle in mind. For example, if you’re looking for a 1998 Honda Prelude with silver exterior and black interior with no more than 15,000 miles, you’ll be waiting forever because it probably doesn’t exist. When considering to buy a used car, be flexible with your specifications.
5. Should I consider a certified used car?
Choosing a certified used car depends on how much you’re willing to spend. Typically, certified pre-owned (CPO) cost more than ones that aren’t, and they tend to be newer models. Manufactures’ certified programs have taken much risk out of the used car shopping experience because they offer excellent warranties on very clean, refurbished used vehicles. And, only certain vehicles qualify for certification. Usually, the vehicle must be under 5 years old and have less than 75,000 miles.
6. Should I purchase through private party or a dealer?
This depends on you. General rule, if you’re looking for something under $4,000, you’ll probably find what you’re looking for through private party or a smaller ma-pa type dealership. If purchasing private party, remember you’re buying “as-is”, unless stated otherwise. Most, if not all, private party purchases don’t include a warranty. If you finance the vehicle through your credit union, you can purchase a warranty through them, depending on if it meets the year and mileage requirements. Going back to Consideration #1, factor in repair costs after buying a used vehicle through private party or through a smaller dealership. Sometimes spending a little more up front, will save you money after the fact. If you’re purchasing through a dealership, most dealers offer extended or “aftermarket” warranties. And, like stated above, if you’re financing through a credit union, most credit unions offer extended warranties, depending on if it meets the year and mileage requirements.
7. If purchasing through a dealer, are they reputable?
If considering purchasing a used vehicle from a dealership, find out if the dealer is a reputable dealer. If the dealership is a franchised, 5-star dealership they will have better quality vehicles on their lot. Smaller, ma-pa type dealers have cheaper vehicles, however the quality of them is highly questionable. Auto Expert only partners with franchised, 5-star dealers, or at least, very close to that standard. Our dealer partner list is extensive in the fact that we only work with dealers who have quality vehicles on their lot. These vehicles are put through inspection and checked for frame damage and salvaged titles. Larger, franchised dealers sell their unwanted or vehicles that don’t meet their standards to smaller dealerships. We DO NOT work with these smaller dealers because of this fact. Granted, the vehicles are still used, however quality should still be factored into consideration when purchasing a used vehicle.
8. What kind of warranties am I able to get?
Extended warranty options, also known as MBI or Mechanical Breakdown Insurance, are insurance policies that insure your new or used vehicle against mechanical failure. With MBI policies, you can usually choose any mechanic in the U.S. to service your vehicle. MBI varies greatly depending on coverage desired, model, and age of the vehicle. On average, credit unions can offer policies as low as $800 compared to the average dealers cost, which can range between $1500 to $3500. Learn more about Credit Union Lending here.
9. Can I get a similar vehicle that’s a newer model that fits my budget?
Some cars, especially Hondas and Toyotas, hold a higher resale value because of the quality of the vehicles, (even through all the Toyota brake recall mess). In these instances, the difference between a new and used version of the same model isn’t too far off. Most of the time, any vehicle that is about 1 to 2 years old under 15,000 miles is very closely priced to a new one. For example, a Certified Pre-Owned (CPO) Honda civic is usually around $15,000 to $16,000 before tax and license. A new Honda civic is around $16,900 before tax and license. And, sometimes prices on used cars will even be more than what you can get the new car for, of course this depends on the vehicle. In addition, manufactures are always providing rebates, which can lower the price on a new car versus a used one.
10. How do I get the facts about the car I want?
Now that you’ve considered at least 9 questions before purchasing, make sure the vehicle you’re buying is clean of salvaged titles or frame damage. You can check this by ordering a carfax report at www.carfax.com. These reports can cost upwards of $34.99, depending if you’re pulling a report on one or more vehicles. Most dealerships will provide a carfax report, IF you ask.