The coronavirus pandemic has caused an increase in Americans buying used cars to save more money. The average cost of a brand-new car is $40,000. In this pandemic-wrecked economic climate, more Americans are choosing to buy used cars like never before. The average used car costs about $20,000. And the typical monthly car note costs $400. However, since used car sales are booming, the average price of a used car spiked to $23,000. And the price of a used car will incrementally increase for years to come. So, you should learn how to buy a used car without getting ripped off now more than ever.
Car dealerships and their salespeople have daily, weekly, and monthly sales quotas. A used car dealer is not interested in helping you find the car you need. Used car dealers sell cars all day every day. And you will be on their lot for an hour or longer.
Used car dealers are experienced in getting you to buy the car they want you to buy on their terms.
So, here are some tips on how to buy a used car without getting ripped off.
Compare All Local Auto Dealerships in Your Area
Look up all of the used car dealerships in your area. Methodically compare inventory vehicles, models, and prices.
The golden rule of knowing how to buy a used car is to know what you want to walk onto the lot. Used car dealers have an instinct for identifying confused, unsure, and ignorant car buyers and exploiting them for financial gain.
You don’t deserve to get scammed, but don’t make it easy to happen either.
Differentiate Cost-to-Buy and Cost-to-Own Budgets
Develop a budget for the car you want to buy based on the sticker price. You should also develop a cost to own budget too.
Know the price you want to pay and stay firm on it. Many used car dealerships will try the bait and switch to get you to buy a more expensive model. Don’t be dazzled by salespeople trying to pressure you into buying a car you don’t want or know about.
Also, you should consider a cost to own budget. It may cost you thousands of dollars every year to financially maintain a car. The more you drive a car, the more money you must put into it.
Also keep in mind that the older the car, the more expensive it will be to source parts for it. Try not to buy a used car more than a decade out of date or be prepared to pay more for its upkeep.
There are used car value appreciation sites you can reference such as Kelly Blue Book and Edmunds. Use them to research and determine the relative value of the model you want so you can budget better.
Doublecheck Your Used Car’s Real Value Against Your Budget
Check out some used car value aggregation directory sites to find the approximate value of the car you want. Get the information yourself instead of trusting the used car dealer. If you know the true sales value, then you know how to buy a used car.
Know the Difference Between Sticker Price and Invoice Price
A sticker price may be an inflated price that the used car dealer is passing on to you to increase their own profit margin. Understand this trick if you want to know how to buy a used car without getting ripped off.
The used car dealer paid an invoice price to buy the cars on their lot. The sticker price could be inflated to represent the profit they want to make on the sale. Or the dealer may have added the delivery cost of receiving his inventory onto you to recoup some money.
Ask the dealer if the sticker price is the same as the invoice price. And check the VIN to back up your stance (more on that later).
Inspect the vehicle
$20,000 to $23,000 is a lot of money to pay for a used car. Make sure that you inspect the vehicle on the lot. Download a buyer inspection guide online.
Or bring a car expert friend with you to help you inspect a vehicle. Additionally, you can hire a local mechanic to come to inspect the car with you.
Bringing an expert with you may sound like too much, but if you buy a lemon you may spend a fortune fixing it. Or spend thousands on lawsuits. You could end up throwing away $23,000+ on a used car that is a complete loss.
Go On a Test Drive
Insist on a test drive for any vehicle you consider buying. The car dealer may come along, so make sure you bring a car expert friend or hired mechanic, to come along with you.
A car expert knows how to listen to a car maneuvering in different driving conditions and assess its condition. That is why you should bring along a car expert to help you – a car expert will know the sound of a struggling vehicle or rebuilt engine.
Negotiation on Your Terms
Don’t let a used car dealer pressure you into a deal. Tell them you need more time to consider the purchase. And copy the VIN of the used car for your research and protection. Leave and come back later after conducting your research. You will have more leverage.
You can input the VIN on websites such as SaferCar.gov and other car value approximation websites to find out if the vehicle has been in a wreck, salvaged, or recalled.
How to Buy a Used Car
The best way to learn how to buy a used car is to do as much research as possible before you walk on the lot.
That way, you will buy the car you want, at the price you want, and on your terms.
Walking onto a used car lot ignorantly and trusting every dealer you encounter is the equivalent of lighting money on fire.
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.