How to Buy A Used Car

How to avoid new-car devaluation blues without having used-car headaches

The average American owns about 12 cars over the course of their lifetime – and according to a recent report by Statista, there’s a good chance that one or more of these cars will be bought as a used car.

According to the report, about 42.7 million light vehicles were sold used in 2017.
That’s significantly more used sales than the 17.1 million new vehicles sold.

So why are people opting to buy used over new? There are a variety of reasons why used car buying beats new car buying, and a bevy of avenues to purchase a used vehicle.

Here’s a closer look:

Benefits to Buying Used

Arguably the biggest benefit of buying used is the price. In fact, a new car will depreciate about 60 percent over the first 5 years of its life, making a used car purchase a much more affordable one. In fact, buying used allows many consumers to purchase a nicer model than they’d be able to afford than if they bought new because of the depreciation.

[bctt tweet=”Buying used allows many consumers to purchase a nicer model than they’d be able to afford than if they bought new because of the depreciation.” via=”no”]

What’s more is that because vehicles lose most of their value early on in their lives, they’ll actually depreciate less over time the older they get.

Other benefits include cheaper vehicle registration fees, as many states base costs on the model year and value. And you might be surprised to learn that warranties aren’t exclusive to new models.

Most dealerships offer certified pre-owned (CPO) vehicles, which must pass a rigorous inspection in order to qualify. On top of this inspection, most also come with extended warranties. This all helps to offer peace of mind to consumers during the buying process that no matter which vehicle they choose, it won’t fall apart as soon as they drive it off the lot.

As you can see, there are benefits to buying used. And, while you may not get that fresh new car smell in a used vehicle, the good news is that they made air fresheners for that!

Where (and How) to Buy Used

Gone are the days of paging through your local newspaper classifieds section. Today, the Internet makes things more convenient than ever when shopping for a used car. Here’s a look at some of the avenues we suggest:

• The dealer: If you want peace of mind with your used car purchase, you can’t beat going the CPO route. It’s true that buying from a dealership may cost a bit more than doing so from the other avenues on this list, but having a warranty to fall back on and knowing that the vehicle passed a thorough inspection is worth it to many consumers.

As we said earlier, one of the risks with buying used is that you don’t know much about how well the car was cared for prior to your ownership – even if you pull a vehicle history report. Buying a CPO vehicle helps minimize some of the perceived risk. It’s also worth noting that you can buy non-CPO vehicles from dealerships and used car lots. They’re usually less expensive than a CPO vehicle, but come with a tad more of the aforementioned risk.

• Craigslist: Craigslist is an ideal resource if you’re looking for something rare or very specific and aren’t concerned as much about the vehicle condition as you are with just finding a specific type of vehicle.

The website allows you to set up alerts, communicate with the seller and even arrange a time to see the vehicle in person prior to any price negotiation.

• Private Party: Individuals post vehicle listings on other websites like eBay and AutoTrader. Generally, you can purchase vehicles at lower prices when buying from an owner, but you should be weary of vehicle condition.

Before buying from an individual, we recommend pulling a vehicle history report on it, seeing the car in person, taking it for a test drive and even seeing if you can have a mechanic take a look at it to assess its overall condition.

• Auction: Though this can be more of a crap shoot than the other used buying avenues listed here, buying a vehicle at an auto auction can be a great way to get a decent car for an ultra-low price.

Auctioned cars typically consist of a mix of old rental cars, salvaged cars, repossessed cars or public service vehicles that have been “retired” from use. Many vehicles up for auction have been heavily used and come with a risk, but it is possible to walk away with a decent vehicle for a great price.

Each auction typically has different rules and regulations, so be sure to do your homework beforehand.

Pre-Purchase Inspection is a MUST

Once you find a car that might suit your needs, it’s a really good idea to get it inspected. Call around, or simply search on Yelp for a mechanic that offers pre-purchase inspections. This service should not cost much more than $80, and will subject the car in question to a thorough gauntlet of tests.

NOTE: Even if the inspection reveals a number of issues, it does not mean that you should pass on the vehicle. Have a candid conversation with the mechanic about the car’s value and the cost of repairs – and the urgency of those repairs. If you find a car that’s valued at $3,000, is being sold for $2,000 and needs $650 worth of repairs, it’s probably still very much worth buying.

Now, go car shopping!

Don’t be weary of buying a used car. Just know what you want and do your homework on where to find it. If you do it right, the process can be just as satisfying as driving a brand new car off the lot, even if it doesn’t have that new car smell.

Before you go shopping, check out this information on car loans.