Step 7: Buying a used car
“This is one of the best used Toyota in town.” Sounds familiar? Ever heard something like this before from a used car dealer? Buying a used car is more complicated and challenging compared to buying a new one. This is because used car market is a business twisted with scams. Shoppers who love to buy a used car online have to take extra care. If you have gone through Step 1 to Step 6, you may continue your journey to choose the best ride with some of the used car buying tips.
Hard-earn money could be gone with just one small mistake. Here are some good ways to avoid scams:
- Do not believe offers that sound too good to be true either from dealers or private sellers. Refer to Edmunds or Kelly Blue Book to at least have a price range in mind for the car you are looking for. For example, if Edmunds’ TMV used price for a 2011 Toyota Camry is from $16,000, does it sound too good to get one offer at $12,000?
- Do not make any payments to the seller until you see the car, touch it, and test drive it. It does not mean you will not be cheated even if sellers disclose their bank account, eBay information, or personal information.
- Be extra careful when the seller finds thousands of reasons saying he cannot use a phone to communicate with you and keeps pushing you to complete the deal.
- Please understand that eBay Motors Vehicle Purchase Protection is not an insurance!
Which model year should I choose?
Pre-owned or Pre-registered car. If you prefer nearly new cars, it might worth considering pre-registered car. Dealers, big companies or third party with buying power purchase hundreds of vehicles from manufacturers every year and they will receive a discount up to 30%. These vehicles are registered under them before being resold to buyers. Some pre-registered vehicles will be used by the company’s staff for a few months or as show car before being resold. This is the reason why some pre-registered vehicles are extremely low in mileage. These cars appear new although the buyer is the second owner in the log book.
Recondition car. In some Asian countries, there are grey importers who import hundreds of close-to-new used car from Japan or Europe. The import tax for new and used vehicles could have a difference of up to 150% and that is a huge savings for the buyer. Dealers could have restored the car by replacing worn parts and make it close-to-new before selling to general buyers.
So now you have decided to buy a used vehicle, but what model year is the best? The table below is the market value for a used Ford F-150 SuperCab and the monthly payment for a four-year loan term with 4% APR (Note that the amount here is just an example):
|Model year||Used price from||Monthly car payment||Depreciation after a year|
What is the model year that fits you?
If cash is important to you, choose what you can afford based on the monthly payment. Compare 2011 and 2010 model year, the difference is $74 a month; does this $74 affect your monthly income? If it does not, 2011 may be your choice. Otherwise, 2010 model is for you. If your monthly budget is between $300 and $400, why not consider a three-year-old Ford F-150? It is newer and still within the affordable range.
If depreciation is your main concern, look carefully the chart above. It shows that the depreciations for Ford F-150 SuperCab rise again in the fourth year. Find out the depreciation rates for the model you wish to buy and analyze it. Depreciation for 2010 and 2009 model year are from $2200 to $2300 respectively, if you are planning to use the car for just a year, why not just pick the newer model since the loss is almost the same?
Other than monthly payment and depreciation, do consider about maintenance. A five-year-old Ford F-150 has the least depreciation and monthly payment but the maintenance may cost more. Parts replacement without warranty is expensive. Mileage is the main thing that determines the reliability of a used car. A 2007 Ford F-150 with 60,000 miles is still better than a 2009 Ford F-150 with 120,000 miles. You may read more about “used car buying checklist” and “questions to ask when buying a used car” at Step 3.3.1 and 3.3.2.
Used cars to avoid
We will tell you what kind of used cars to avoid here but not particularly on which model. People who know nothing about cars should avoid:
- Vehicle with no service record. If the previous owner is taking good care of the car, there must be service records or history from either manufacturers or private service centers. Certified receipts are a good proof of a car that is well maintained.
- Salvage or junk title cars
- Illegal cars. Vehicles imported to the country without paying taxes or impounded vehicles involved in serious criminal case before.
- Heavy modified. Any vehicle that has been heavily modified is not recommended for daily use especially pimped out cars.
- Unbelievable mileage. Avoid cars with doubtful mileage. A ten-year-oldToyota sounds too good with only 5,000 miles running. In fact, the odometer may have just started the second round!
Best time to buy a used car
It is rumored that the best time to buy a used car is during raining day or early morning. You will still be unable to get it cheaper if the dealer just sold 5 cars the day before and made a good profit. According to Suming, the best time to buy a used car is during year end when dealers try to clear their stock on hand. This is because a car depreciates each year. If dealers have to keep their stock over the year, they will need to bear the loss. Two Honda City, one registered in January 2011 and another registered in December 2011. Both of them will sell at the same price as used car in 2013.
Suming also mentioned that every salesperson needs to achieve certain monthly quota to maintain their commission. End of month will be a good time to shop for used cars from dealers. If the quota for a salesperson is 20 cars, and they have sold 19 cars, chances for you to get the best used car deal are higher.
Tips for used car buying
- Get a vehicle history report from Carfax or AutoCheck. It cost less than $50 dollars. These reports are helpful and it tells you if the car is stolen, recalled, totaled, flooded, or involved in any criminal cases before. It also tells you the vehicle title (either is normal, salvage, junk) and number of owners.
- Stick with your price. You have done the entire research since Step 1. You should already have a price in mind. Negotiate as tough as you can with the seller. A good way is to start the bargain with the lowest offer possible. If the seller offers $11,000 and you expect $10,000, start to make your offer at $9,000. Stay firm with what you expected and prepare to walk away anytime from the seller if the price is not right. Do not forget there are more cars sitting in the dealer’s lot than buyers.
- Negotiate with nice person. Consumers are always right, give up the deal if you meet a dealer that keeps pushing you to buy the car.
- Do not get trapped. A common technique sellers or dealers always use is “Someone else is interested with this car and he may make payment this evening.” Let it go if someone else is interested.
- Do not feel shy to ask. Ask for service record, ask for discount, and ask for a test drive.
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