Reasons and Suggestions for Buying a Used Car
Once you've decided how much you want to spend, the next big decision is new or used. The advantage to getting a new car is obvious: you're the first owner, so you know that nothing bad has happened to the car yet. In addition, you gain the full benefit of the manufacturer's warranty.
However, you pay for this piece of mind. Most new cars depreciate a few thousand dollars as soon as you drive them off the lot, and the rapid depreciation continues for the next couple years. In addition, insurance is more expensive for newer cars.
As an alternative, you might want to consider letting someone else foot the bill for most of the depreciation, by buying a car that's one or a few years old.
Since used cars have more idiosyncrasies than new cars, there are a few additional steps in the process. For starters, you'll need to determine the value of any car you're considering, to make sure you don't pay too much. The values can be found easily on the internet. Keep in mind that if you buy from a dealer, you should expect to pay more than if you buy an identical car from an individual.
You should also use the Carfax service to determine the history of the specific vehicle you're interested in. For a small fee, they'll tell you if the odometer has been tampered with, if the car has ever been sent to a junkyard, or if it has records of any other serious problems. This is more important for older cars than newer ones.
Next, have a mechanic conduct a thorough inspection of it. The $100-150 cost will be well worth it if it turns up any serious problems. You might want to agree to a price in advance of the inspection, based on the problems the seller reveals; and if any additional problems are discovered, the price will be adjusted downward appropriately. If the seller won't let you have a mechanic inspect the car, don't buy it; an inspection is a reasonable request, and their refusal might be an indication that they're hiding something. Some dealers don't allow mechanics to inspect their cars, but it's easy to find another dealer who does.
Some dealers offer "certified" used-car programs, backed by the manufacturers, in which they guarantee that the car has passed a series of inspections. These tend to be recent used cars, and they often come with warranties, although they're significantly shorter than new-car warranties.
Posted in ...Personal Finance