Better Budgeting: Buying a Used Car

Buying a Used Car

Black Belt Shopper (featured column)
by Larry Wiener

If you've read a recent newspaper or caught TV and radio ads you've heard about the success of employee discount plans on new cars.  If you read a little further on, you’ll also find that the boom in the sale of new cars has caused dealers and others to have a glut of late model used cars.  That glut has resulted in a large number of used cars available for purchase, many at bargain basement prices.

A strong case can be made for buying a used car, especially if you can buy the used car for cash, but would need to finance a new car.  Most cars experience the largest percentage of their depreciation the first two years and the increased quality of today’s cars allow many drivers to keep a gently used car for a long time.  Some experts say that buying a three-year-old car and driving it until it is no longer efficient can save you 40% in overall costs over buying a new car and keeping it until it no longer is efficient.  That sounds reasonable when you consider the costs not only of buying the car, but insurance, registration, and other such expenses.

So, where do you find a good used car and how do you make sure the one you picked is good?  Here are a few tips.

First, new car dealers often keep the best trade in cars to sell themselves. Therefore, going to a new car dealer may be the best place to find a large number of clean used cars in one place.  Many savvy car buyers, however, prefer to sell the cars themselves because they know they can get more for them.  Therefore, the classified ads and car magazines (like the Auto Trader) may be a source of better bargains.

Used car lots tend to not have as good quality cars as the new car lots.  New car dealers often sell their lesser or less saleable cars to the used car lots.  Often, these lots make the cars visually attractive hoping that you won’t look too carefully at the mechanical condition.

Therefore, any time you buy a used car, it is a good idea to get it inspected by an independent mechanic.

Also, when buying a used car, it is a good idea to stick to cars that have been highly rated by professional raters.  It is often worth it to pay a few hundred dollars extra for a quality car and avoid expensive repairs down the line. Consumer Reports regularly rates cars.  Ratings and other useful information is available at Edmunds.   You can get an idea of the price cars are going for at the Kelly Blue Book site.  If you are cash strapped and in need of a car right now and don’t want to get into much debt, a very highly rated and well maintained older car can be a good purchase.

I have always preferred buying cars from private parties.  That way I can interview the person and assess how well (s)he has taken care of the car.  I also avoid the high-pressure car dealers.   My current car is a 1997 Honda that I bought from an engineer who needed a larger car for his growing family.  I found the car on the Recycler, a free ad paper popular in California.

If you are going to finance your used car, it is best to arrange for financing before you start car shopping.  That will give you a better gauge for what you can afford and will keep you from being taken in by high-pressure car dealers.  Used car financing is often more expensive than new car financing, so remember that when you are making your plans.  Try to put as much as you can down and finance for as short a term as possible to avoid excessive interest payments.

Another advantage of buying a used car is that you can afford more car than you can if you buy new.  You may really want a minivan for your family, for example, but may not be able to afford a new one.  If you shop used, you may find an affordable minivan instead of having a buy a smaller family sedan new.  This will pay off big on family outings.

Whether you buy new or used, money spent taking care of your car is money well spent.  Today’s cars will last a long time if well-maintained, but if you miss those oil changes, you may find yourself with big repair bills sooner rather than later.

The debate over new car vs. used car will go on forever.  If you drive long distances and can get a good deal both on the car and financing if necessary, maybe a new car would work for you.  For most of us who don’t want to spend a lot on a car and who don’t drive really long distances, however, a clean used car is worth considering seriously.

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Copyright © 2005 by Larry Wiener. All rights reserved.
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