It’s time to buy a car. You’ve weighed the pros and cons, considered the marketplace, and are on the hunt for that perfect used car. The world is a scary place, however, and the world of used cars can be particularly daunting.
To help put your mind at ease, I compiled a list of 5 crucial steps everyone should take when preparing to buy a used car.
Before you even begin reading reviews, searching through listings, and scheduling test drives, you’ll need to find out exactly how much car you can afford.
There are three critical elements to a good car budget: down payment, financing rate, and monthly payment.
It’s very easy to fall into a habit of budgeting for a car based on monthly financing payments, and a monthly payment is likely the number that will be most often thrown around once you do sit down to negotiate.
But at this stage in the game, you want to budget for the maximum purchase price of your car.
Typically, you’ll need to put down at least 10% of the car’s purchase price as a down payment. This means if you’re looking at a $20,000 truck, you should expect to put down at least $2,000 up front.
Every dollar you put down is a dollar you don’t have to pay interest on when it comes time to finance, however, so if it’s within your means, you should feel encouraged to put down more than 10%—just don’t get too carried away.
If you’re buying an especially used car, you’ll also want to keep an “emergency fund” on hand, to handle unexpected (but generally inevitable) repairs.
Don’t spend your entire budget on your initial purchase, and realize higher-end vehicles will almost always cost more to repair than more value-oriented cars.
A good rule of thumb is that you shouldn’t spend more than 20% of your monthly take-home pay on a car payment, so once you’ve determined the amount you can comfortably use as a down payment, we’d recommend working backward from a potential monthly payment to find your budget.
Every one of my listings includes an Auto Loan Calculator, which you can use for some quick answers—but don’t forget to add your state’s sales tax.
Factor in an expected financing rate, too, but try to overestimate this for now, as it will provide you with a welcome buffer down the road.
Now that you have a solid budget, it’s time to do some automotive soul searching.
What do you need your car to do for you? What are your priorities? Do you need lots of cargo space, all-wheel drive, great fuel economy?
Very rarely will a car be able to provide absolutely everything you want, so prioritizing your needs will help you narrow your search.
Don’t be afraid to ask your family and friends for their thoughts, but be sure to research some expert reviews, as well. Visit pages like Kelly Blue Book or Consumer Reports to find out if any major mechanical problems are plaguing a model you want.
Doing this homework now will save you valuable time (and money) in the long run.
Buying a used vehicle will undoubtedly save you possibly thousands of dollars, provided it’s mechanical condition is 100% and you won’t be shelling out hundreds or even thousands of dollars on maintenance shortly after your purchase.
This is why it is extremely important to look at cars that have been pre-certified and rigorously inspected for mechanical shortcomings.
Just ask the dealer or person you’re shopping, to provide you the service work record from the inspection of the car. This should tell you a lot about who and what you’re considering buying.
Find Your Car
With a budget in mind and your recently acquired wealth of knowledge, it’s time to find your car.
There are many 3rd party sites like cargurus, edmonds and cars.com to name a few that feature most of the dealership inventory in your local area. Instead of going to 100 websites it is all compiled in one area. Pretty innovative stuff.
This means no more sifting through pages and pages of listings, trying to make sense of trim levels, options, and asking prices.
To narrow your search, use the filters found on the results pages. You’ll be able to select specific trims, colors, and even transmissions and drivetrains. Want a green crossover with all-wheel drive and an automatic?
I’ll find it in my enormous inventory. Once you’ve found your perfect car, take a look at the description & read other shoppers’ reviews regarding the car.
Most dealers will be willing to provide a vehicle history report—CarFax and AutoCheck are the two most common—and there’s no point in test-driving a car without one. This is why every single one of my units listed online has a carfax link for you to review the history.
Vehicle history reports are only as good as their data, so while a spotless one might not put you 100% in the clear, a bad one can steer you away from purchasing a lemon.
Also, ask the prospect seller if they have any reservations about your taking the car to an independent mechanic for an inspection. Anyone selling a well-sorted vehicle shouldn’t take issue with this request, although it’s not uncommon for the dealer to request a deposit before allowing you to take the car for an inspection.
You will absolutely be leaving me a nice deposit to take one of my cars to another shop-as I already know exactly the mechanical condition of the unit. I’ve actually never had anybody request this of me though.
Finally, finally, it’s time to take cars for some test drives. By this point, you’ve probably identified which car is your first choice, but it’s always a good idea to drive more than one vehicle when you’re making a final decision.
This will give you an opportunity to weigh one car’s strengths and weaknesses against another’s.
Find some time to practice using the controls. Test the air conditioning. Does the steering-wheel telescope? Is it hard to adjust the radio’s volume? Get perfectly situated in the car before you even think about hitting the accelerator.
When you and I hit the road, take care to treat the car like you would if you owned it. This means drive it on the highway as well as some back roads, try to find some traffic to sit in, and definitely experience some stop-and-go situations.
If the dealership is near roads you know well and travel frequently, all the better. The salesperson will probably have a predetermined route for you to drive, but if that doesn’t cover all those elements, take a different one.
While you’re at it, definitely practice parking the car. A big SUV will probably have a lot of enticing features, but it’s also going to be a source of endless frustration if you struggle to parallel park.
Likewise, get in and out of the car a few times; sports cars look great, but their low ride height can wreak havoc on a bad back. And bring along some items you may carry with you regularly, whether that’s a suitcase, a folding stroller, a child’s car seat, or even just a purse. Finding a place to put that last one is a frequent annoyance.
After you’ve covered some miles on your test drive, hop out and take a good look at the tires. Inspect the paint for chips or scratches, and give your nose a workout—inside the car, outside the car, and under the hood. If anything looks or smells wrong, don’t be afraid to ask about it.
Close The Deal
Finally, once you’ve done your due diligence, it’s time to talk turkey. You’ll be in a more comfortable negotiating position if you enter negotiations having already secured financing from an outside bank or credit union.
While it’s fine to pitch a figure a little lower than the respective fair market value of the vehicle, keep in mind starting significantly below market price may lead to a dead end.
Pitch a respectful offer and make sure the dealership understands you’ve done your research.
Car dealers stand to make money on more than just the purchase price of a vehicle, so a willingness to buy some of the add-ons like floor mats or rustproofing may entice them to go lower than they typically would.
All dealers will add taxes and fees to the final sales price. It can be frustrating, but these fees generally aren’t worked into the advertised price. However, this is rarely an attempt by the dealership to pad its bottom line and shouldn’t be considered out of line.