Buying used is a great way to get behind the wheel of a vehicle without the steep cost of the current year’s models. And as vehicle prices have reached new heights over the past few months due to the combination of the pandemic and semiconductor shortage, buying used can help you save money.
Buying used has not been immune to the price increase. The average cost for a used vehicle in November of 2021 was 28% higher than that of 2020, according to CNET, a Red Ventures property. But buying used is still less expensive than buying new. So, as we enter the spring car-buying season, keep these tips in mind to get the best deal.
8 tips to follow when buying a used car
When shopping for a used car, follow these tips to drive away with the best deal.
Tip 1: Have a realistic budget
The best way to save money when it comes to a large purchase is to be honest with how much you can afford. When it comes to buying a used car, it is no different.
You must not only be aware of the monthly finance cost but the additional vehicle costs that are bound to pop up. Take advantage of an auto loan calculator before starting your vehicle search so you have a firm understanding of your budget.
Tip 2: Explore financing options
Choosing the right financing option for your vehicle is not dissimilar to the experience of finding your perfect car. Lending options include banks, online lenders and dealerships, and it is vital to shop around to ensure you get the best terms and rates available. Check out current rates and Bankrate’s winner for best used car lender before accepting a loan.
Tip 3: Apply for loan preapproval
Auto loan preapproval is when a lender tentatively approves you for a certain amount while you shop for your car. It isn’t an ironclad agreement, but it does give you a better idea of what you will pay in interest, and what you can afford.
The main benefit of loan preapproval is that it can give you confidence that you’re getting the best deal. Walking onto the car lot or even entering the dealership online you will have the comfort of knowing exactly how much you can borrow for the vehicle, and can even use it to negotiate.
Tip 4: Trade in your old vehicle
Trading in your vehicle will save you money, and it can ease any stress of figuring out what to do with your previous vehicle. The trade-in process ranges depending on the dealership you use but the steps are simple. It primarily requires you to understand the worth of your current vehicle in comparison to the new one.
Shop around and get quotes from several dealerships. You can use the estimates as negotiating power with the dealership you end up buying from.
Tip 5: Make a large down payment
The larger your down payment, the less you will have to borrow and the lower your monthly payment will be. Saving up and thus placing a large down payment upfront will save you money as you drive. Because you’re borrowing less, you may have a better chance of being approved for a loan and can potentially get a lower rate.
Tip 6: Consider a certified pre-owned vehicle
One way to get around some of the risk that comes with buying used is to shop certified pre-owned. Typically found at dealerships and rental companies, these vehicles hold a special stamp of approval stating that they have been approved by the manufacturer and typically hold low mileage, were properly cared for and are accident free. These vehicles can also come with an additional vehicle warranty, ensuring long-term quality assurance.
Tip 7: Shop online
The marketplace for purchasing a vehicle has shifted dramatically over the past few years, and buying used is a great time to take advantage of the online buying options available. Try looking outside your ZIP code to see if there is a specific vehicle you have set your sights on or try your hand at more futuristic options like Carvana or Vroom. If you feel more comfortable taking the traditional route, still do research online before heading to the lot in person so you have an idea of costs and vehicle availability.
Tip 8: Conduct a detailed car inspection
Buying a used car comes with additional risks. You don’t know how the previous owner handled the vehicle and unforeseen issues could be looming.
To be sure you aren’t driving away with a stealth fixer-upper, inspect the vehicle and request a vehicle history report. Along with an initial test drive, it is wise to get an independent mechanical inspection to check for any issues under the hood.
With so many Americans looking to buy vehicles right now, it is a good idea to prepare ahead of time to save the most money possible. And when it does come time to get a new vehicle, consider used options to drive away with some extra money in your pocket.