what is the best way to buy a used car?

fifteen Min Read | Feb 1, 2022

Buying a used auto tin be a huge headache. Start, in that location are all the hours of research you lot take to practice ahead of time. Then, in one case you practise find a car, you lot've got to make sure it'southward not a full piece of junk. Fun times. Only remember, investing time and endeavor here will pay off. If you're going to crush out thousands of dollars for a vehicle, be smart and have the time to find a reliable used motorcar.

Believe it or not, undecayed used cars are out there. They oasis't gone extinct! You lot just need to larn how to buy a used car the right mode so y'all can walk in with confidence. Don't worry—you came to the right place. We've got all the info you lot need (and then some). Starting time your engines!

Why Buy a Used Car?

There are a ton of reasons why ownership a used machine is actually better than buying a new motorcar. Don't believe usa? Let's count the ways:

Used vehicles don't go down in value as much over fourth dimension.
Most used cars are but as dependable as new cars just are way cheaper.
Buying used will save you money on car insurance.
Used cars tin have cheaper registration fees.
Ownership used means you're less likely to take manufacturer recalls or new model problems.

How Much Does a Used Motorcar Cost Now?

Okay, before you gear up out to buy a used car, there'southward something you've got to know almost the prices these days: They're college than ever. At the end of 2021, the average cost paid for preowned vehicles hit an all-fourth dimension high of most $29,000.¹ That's the first fourth dimension the price for used cars has cracked the $29K marker. And prices aren't expected to dull downwards in 2022 either. In fact, the experts think we'll see the average price of a used car hitting $30,000 for the first time ever. ⁱⁱ

What's Impacting the Price of Used Cars?

Inflation

Oh, hi again, aggrandizement—you really get around these days, don't you? With inflation (you guessed information technology) inflating prices on everything, it's no surprise that information technology's hit the auto manufacture too. The Consumer Price Index, which measures the price of goods and services over time, showed that inflation striking 7% in 2021.³That aggrandizement rate raises the toll of everyday items and those higher ticket items as well—you know, like cars.

The Microchip Shortage

What the heck is a microchip shortage, and what does that take to do with cars? Smashing question! Nowadays, nigh everything runs on those little computerized chips. Even cars. All those fancy buttons, doohickies and bright lights on the dash in a new vehicle need a flake to ability them up.

Dave'south easiest money-saving tip: See if you're over paying for car insurance.

It's truthful, the microchip shortage straight impacts new cars, but because of the shortage, at that place are fewer new cars available to be purchased. That means all those people in the market for a new machine are switching gears and ownership used cars instead. And that's making the price of used cars spike. Since May 2020, the toll of a used automobile has climbed 50%.⁴It's great news if you lot're ready to sell off your used car (put it toward your debt snowball!) just not so great news if you're in the market to purchase a used car.

Supply and Demand

With beefed up savings and stimulus checks to fire, a lot of people have been itching to buy cars since mid-2020. But with not enough cars to go around thank you to factories shutting down during the pandemic, supply and demand just hasn't been able to catch up. The good news? Car inventory is starting to inch back up once again (hooray!), but it'south still beneath normal inventory levels. When looking at their stock, dealerships see how many days it would take them to sell all their cars if they didn't bring in any new inventory. In November, that number was 44 days—15% beneath last year's number.⁵

Okay, now that we've covered all that, hither's a slice of practiced news for yous: Non every used car out there costs an arm and a leg. Have used car prices gone heaven high? Yup, for certain. But there are plenty of used cars much cheaper than that—you just accept to exercise some digging and make sure you know where to look.

How to Purchase a Used Machine

Of class, buying a used motorcar comes with a few risks. That'southward why you need to do your homework earlier committing to a vehicle. If you don't practise your enquiry, you could pay more than than you should for your motorcar or, even worse, end upwards with a used car that's a total piece of junk. These eight tips volition help to steer you in the right management.

Set Your Budget
Detect Your Platonic Car
Store for a Used Car
Figure Out the Used Motorcar'south Value
Inspect the Used Car Yourself
Go for a Examination Drive
Take the Used Car to a Reliable Mechanic
Utilize Negotiation Skills

Step ane: Set Your Budget

How much machine tin can y'all afford? And we're not talking almost car payments here. You should pay for a machine—in total—with greenbacks. Manifestly and simple. Yes, that means you'll have a serious dent in your savings, simply you'll skip the stress of spending hundreds of dollars on car loan payments each month. Isn't that awesome?

Let's say you lot borrow $10,000 for a car with a v% interest rate and a term of five years. You'll end upward spending an additional $one,322.74 in interest. Not and then affordable anymore!

The truth is, you don't need car loans. Y'all tin can observe reliable used cars in whatsoever price range. If you're struggling financially, you can find a vehicle to get you from point A to point B for as low as $ane,000 to $2,000. It may not be pretty, merely you'll get by.

If y'all aren't happy with the cars y'all can beget, recall that you can accept all that money you save on car payments each month and stash it abroad for an upgrade. Just make it a priority in your budget!

P.Due south. If y'all need a budgeting tool, give ours a test-drive in a Ramsey+ costless trial. Information technology'll help yous get moving on becoming debt-complimentary and working your way to the automobile you really want.

Step 2: Find Your Ideal Machine

One time you've set your budget, you can find your ideal car. Not your dream car. Your ideal motorcar. Information technology's the one that all-time fits your lifestyle and your budget.

Before you lot declare your loyalty to your favorite automobile make, step dorsum and have a wait at the kinds of vehicles and what each was designed to do.

Trucks, for example, were designed to carry goods and heavy materials. So unless you're hauling heavy cargo on a regular footing (yous know—gravel, timber, bricks), don't buy a truck. For a good commuter vehicle, stick with options that are compact and free energy efficient, similar sedans, hatchbacks or hybrids.

Narrow down your choices with this quick checklist. Read through these statements and option three that apply to your situation the most.

____ I want a vehicle with plenty of cargo space.
____ I want a vehicle that can fit more people.
____ I want a vehicle with better fuel economic system.
____ I desire a vehicle that's easy to make it and out of.
____ I want a vehicle that's safe.
____ I desire a vehicle that'south better for the environment.
____ I want my vehicle to comport heavy cargo.
____ I want to go off-road or on crude terrain.
____ I want my vehicle to be compact and light for city parking.
____ I want my vehicle to have towing capacities.

Find some insights there? Remember, you'll have to make some sacrifices too. Y'all won't find a vehicle that does everything. So prepare your eye for that. Be honest with yourself about your wants and your needs, and think long term most how you lot'll exist using your car.

Want to Salvage a Piddling Extra Money?

Of course you do. So remember nearly features you lot don't need your car to have. Not simply technology like GPS, Bluetooth connectivity and backup cameras—only the basics too.

Take cylinders, for example. Today, a 2011 Kia Sorento with six cylinders costs around $9,000 to $11,000.^{half dozen} The aforementioned Kia with a four-cylinder engine? $8,000 to $10,000 (and these numbers change nigh daily).^vii Merely it doesn't stop there: Stick shift transmissions are usually cheaper than automatics, and forepart- or rear-wheel drive (2WD) are cheaper than all-wheel drive (AWD).

Bonus Tip: When you're comparison different vehicles, don't forget to think near insurance costs too. Work with an independent insurance agent who can help you save.

Step 3: Store for a Used Car

Now that yous know how much you can spend and what kind of automobile you need, it'southward time to starting time shopping. Only first, permit'due south talk about ii places you lot should steer clear of:

New automobile dealerships. Even though most new car dealerships sell used cars, they're always more expensive.

Buy-here, pay-here lots. These are dealerships not merely sell cars (buy here) but besides offer car loans (pay here). Yep, you know the kind. They have pushy salesmen, multicolor pennant streamers, and a 20-foot blow-upwardly gorilla shaking a "sale" sign. Plus a ton of hidden fees, and unremarkably less than a 48-hour return policy.

With a lilliputian more searching, you tin can find improve used cars somewhere else. Here are six places to showtime your search.

CarMax
Carvana
Craigslist
eBay Motors
Showroom lawns
Independent used machine dealerships

Stride 4: Figure Out the Used Motorcar'due south Value

At present it's fourth dimension to figure out if the used car y'all've called is worth the cost. Dig up all the information yous can on the car so yous tin talk the seller down to a ameliorate deal.

1. Start with Kelley Blue Book (KBB).

KBB uses data from actual sales and sale prices to requite you the right cost range.

two. Buy a vehicle history written report (VHR).

A good VHR costs about $50 and gives you accident history, ownership history and a ton of other records. It'due south helpful and takes out a lot of the guesswork when buying a used car. All you need is the vehicle identification number (VIN) for a detailed report.

iii. Effigy out the buying cost.

That's what y'all'll spend to maintain the auto (oil changes, new tires, fluid flushes) and what long-term repairs yous should expect for the brand and model you're looking at. Y'all'll also need to know the cost of replacement parts and repairs. You can use the Edmunds True Toll to Ain tool to go a good gauge.

4. Find online forums focused on the used car.

Nearly every model has a forum with threads stretching back a proficient while. Look for common issues that owners have had with the blazon of auto you desire to buy.

5. Cheque the vehicle's recall history.

Don't presume the seller has taken intendance of a used auto'due south prophylactic recalls. In fact, over 83.2 million cars are on the road with open recalls on them—that'south 1 in iv cars.^eight And yep, you guessed it—people still endeavor to sell those cars without getting the recall stock-still. So what can you do? Check the National Highway Traffic Administration for your vehicle'southward recall history (if it has one).

6. Inquire for an insurance quote.

Used cars are usually cheaper to insure than new ones. In fact, a 5-year-old car is nigh 27% less expensive to insure than its brand-new counterpart.⁹ If you already have insurance, ask how much your premium will change if you buy a sure brand and model. Allow an contained insurance agent exercise the comparing for you.

Footstep 5: Inspect the Used Car Yourself

Even if yous're non a mechanic, y'all can use this listing of advice from the Department of Motor Vehicles to check for signs of harm and corruption. While none of these things alone should stop you from buying the car (except for major damage, like a blown head gasket), a bunch of these could save you lot from buying somebody else's auto trouble.

Under the Hood

Bank check the oil level and color.

Check the color of the oil under the oil cap.

Cheque the belts.

Bank check the transmission fluid dipstick.

Check the level of the coolant.

Check the brake fluid.

Outside

Look at the car'south paint task.

Check the tires.

Check the tail pipage.

Open up and close the doors, trunk, fuel door and fuel cap.

Check the lights.

Inside

Cheque the wear on the steering cycle, seats and pedals.

Lock and unlock all doors.

Check A/C and heating.

Idle the motorcar and lookout the temperature judge.

For fifty-fifty more tips and tricks you need to know when ownership a used machine, download our free Machine Guide!

Step 6: Go for a Exam Drive

When you lot're taking the car for your starting time examination-drive, turn off the stereo so you can hear noises in the auto. Selection a route with hills, bumps and, yep, even potholes. Even if you plan to use the car on highways and flat roads, test the car on rough roads to get a sense of how information technology handles.

Use your exam-drive to answer these questions:

Feel

How does information technology feel on flat roads?
How does it experience when it hits a crash-land or pothole?
Does the car struggle to pick up speed?
Do the gears modify smoothly?
Is the brake squishy or also sensitive?
How does your torso feel subsequently the exam bulldoze?

Noise

Does the engine audio polish when you accelerate?
Does the engine rattle, knock or grind when you lot idle?
Are there vibrations or odd sounds under the hood when you advance above 60 MPH?
Exercise the brakes squeak?

Sight

Tin you meet out of the car easily?
Does black fume come up out of the exhaust when you start the automobile or advance?
Is the RPM gauge consistent when you idle?

Odour

Dial down the air conditioning—do you odour burning oil?

Step 7: Take the Used Car to a Reliable Mechanic

If the car has passed your personal inspection, good. At present let's meet if it passes the mechanic's inspection. If the seller doesn't desire a mechanic to inspect the car, that's a bad sign. E'er take a mechanic inspect a used car, no thing the status. A proficient mechanic will tell if you're about to purchase a reliable used car or if it's a lemon.

When it comes to inspections, you have two options:

Take the motorcar to a trustworthy garage. Most car garages charge a apartment fee for inspecting used cars. They'll bank check the car out and tell you what'due south going on.
Set up a mobile inspection. A mechanic volition come to the car, practise the inspection, and print out the results.

If a mechanic tells you lot the car has damages that outweigh its value, let the seller know yous're no longer interested, or use that knowledge to lower the asking cost.

Step eight: Use Negotiation Skills

If you accept good reasons to believe the seller should lower the asking cost, you can utilise everything you lot've just learned about used cars as ammo to negotiate a better deal. Negotiations tin be tough for people who don't like to rock the boat, so haggle similar a pro with these 3 tips.

ane. Bring your enquiry to the table.

Let's say the seller wants $3,000 for his used Volkswagen Jetta. Kelley Blue Book says the average price range for that Jetta is $2,800 to $iii,000. But y'all noticed that the tires are bald and a headlight doesn't work. And you read online that this model has problems with radiator fans. Your VHR shows no owner has ever replaced the radiator fans. Ah-ha! Now you lot've got something. Bring all this info to the seller—cistron in the cost of tires, a headlight and a radiator fan—and offering less.

2. Pay in cash.

Tell the seller you'll be paying for your used car in cash—just don't reveal how much cash you have. When sellers sniff green, they're more probable to agree on your terms.

three. Be patient.

If the seller doesn't budge, you can walk away. You have all the buying power. Most of the time, they need your money more than than y'all need their machine.

One More than Thing: Get the Right Automobile Insurance

Hey! Congrats on the new-to-you auto yous just bought.

URRRRRRRT! Nail!

Nobody expects an blow—which is why yous need to be insured the moment you first driving that new ride. With then many factors affecting the types of machine insurance bachelor, information technology'south piece of cake to spend more money than your coverage is worth. To make the right choice, choice an expert who can answer your questions, run the numbers, and help you compare rates.

Connect with an insurance Endorsed Local Provider (ELP). ELPs are top-notch RamseyTrusted agents who work with insurance companies to assist yous find the correct coverage at the right toll. We've vetted them, and you tin can trust that they'll walk you through the whole process hurting-free. Make sure yous and your family have the coverage yous need to protect yourself and your (crawly) used motorcar. Notice your ELP today!

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