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How to Buy a Used Car

Last year, my wife and I were eating dinner when we suddenly heard a crash outside. We ran out the door and saw that someone had smashed into our car, which had been parked on the street. The lady driving the other car was drunk and driving on the wrong side of the road. The lush and her car were completely unscathed, but our car was totaled. Doesn’t it always seem to work out that way?

Kate and I had to buy a new car.

Well, new to us. We ended up buying a used car. Now, this was the first time I had ever had to buy a used car without help from my parents, so I was sort of clueless about the process. This was my first big, adult purchase. From doing some research on the web and talking to friends and family, here’s a list of tips and advice on how to buy a used car.

Benefits of Buying a Used Car

Avoiding depreciation. It’s common knowledge that once a new car drives off the lot, its value depreciates immediately. In the first two years of ownership, a new car can lose about 30% of its original value. And if you decide to sell your new car a few years after you buy it, you’re going to lose a lot more money in the re-sale than if you had bought it used.

Price. If depreciation is your enemy when buying new, it’s definitely your best bud when you buy a used car. There isn’t much difference between a brand new car and a two-year-old car. By buying a car brand new, you’re basically paying 30% more than you need to. That’s a big mark-up for that new car smell.

You can save even more money if you decide to buy older cars that have more miles on them. A buddy of mine back in college bought an ’86 Honda Accord hatchback for a couple hundred dollars. It was super ugly, but it drove just fine and lasted him a few years.

Bigger selection. Because used cars are cheaper than brand new cars, you effectively widen the selection of cars you can purchase. Instead of being merely a dream, luxury and sports cars enter the realm of possibility. I remember back in high school when my dad and I were shopping around for a used car, I found a late model (this was back in the 90s) Mercedes Benz for about $5,000. I couldn’t believe it! Something had to be wrong with it. So, we took it for a test drive and to a mechanic. It was in tip-top shape and drove like a dream. I ended up not buying the Benz. I was too punk rock for that. Instead I went with a 1992 Smurf Blue Chevy Cavalier. Now that’s punk rock. However, the experience did open my eyes to the fact that if you look hard enough, you can find some awesome cars for super cheap when you buy used.

Save money on insurance. If you buy a considerably older used car, you can save money on car insurance by only getting the state mandated minimum coverage. If your car is worth less than 10 times the premium on your insurance, it’s probably not worth getting comprehensive coverage.

Buy a Used Car from a Private Owner or a Dealership?

When you buy a used car, you have two possible sellers: a private owner or a dealership. Each has its advantages and disadvantages.

Owner Advantages

Owner Disadvantages

Dealership Advantages

Dealership Disadvantages

Blue Book It!

When you’ve decided on the type of car you want, start researching its value using the available tools online. It’s essential that you know how much a used car is worth when you start negotiating.

Kelley Blue Book. [2] Since 1926, Kelley Blue Book has been providing used car prices in their trademarked blue book.

Edmunds.com. [3] Edmunds.com will not only give you the manufacturer’s suggested retail price (MSRP) for a vehicle, they’ll also check what others have paid for that particular car and give you an almost real-time market price for it.

How to Inspect a Used Car

Alright. So you’ve picked out a used car you like that’s in your price range. Before you make an offer, you need to inspect it to ensure you’re not buying a lemon. This is especially important if you’re buying directly from the owner. Your best bet is to take the car to a mechanic you trust and let him look it over for any defects. If you don’t have a mechanic handy, here’s how you can inspect a used car.

CarFax. Get one. CarFax is a comprehensive report of a vehicle’s history. The report costs money to buy, but it’s definitely worth it. The report can tell you if the car has sustained flood or frame damage, two things you want to steer clear of when purchasing a used car. All you need to run a CarFax report is the car’s vehicle identification number (VIN) which can be found on the dashboard, just below the windshield on the driver’s side or on the driver’s side door, just below the locking mechanism.

Initial Inspection

Before you start the car, give it this initial inspection:

Test Drive

Negotiating [4]

We could devote an entire post to this, so that’s what we did [4].

Alright, I know I missed some advice here. That’s where you guys come in. What other used car buying tips do you have? What should guys know when buying a used car? Share your advice in the comments.