Here’s the painful truth about brand new cars. They depreciate their value as soon as you drive them off the lot. They shed about 10-15% of their value, then another 20% on their first year. By the time they are three years old, they are already 50% off their original value. To many, this may sound like a sweet deal. After all, 3-year old cars are not yet clunkers anyway. They are still in good condition and you could save a lot of cash buying them compared to getting a brand new one.
However, there are also things that you should consider before deciding which pre-owned car to buy, or whether you should consider buying a used car in the first place.
Don’t just go for the cheapest one
Don’t just base your decision on the price because it might just end up costing you more. Each second hand car has a story and there is a reason why it is cheap or still on the expensive side. Generally, those that have been driven more or has more mileage are cheaper. However, mileage doesn’t tell the whole story. The car might have been flooded, or it may have had a history of frequent repairs, which tells you something about the way the first owner handled it. So instead of simply looking at the price, do comparison shopping of the models you’d like to buy; then have a checklist of the things that you need to check before driving it off. Others would even recommend taking someone who knows more about cars than you when checking out the actual unit.
Test the car
Checking out the car or its parts visually is the first step. Taking it for a test-drive is the next. There’s nothing like getting a general feel of a used car than really taking it on a test run. Especially if you have driven a car before, you would know if something doesn’t feel right — steering, transmission, brakes, even the sound of the engine. If you really don’t know what you are trying to look for, again, take a mechanic with you when you do a test run.
Beware of sales pitches
There will be people who will try their best to get you to buy the used car. Don’t be swayed right away. Keep your emotions in check because buying a car, even if it’s a pre-owned, is a serious thing. It should not be an emotionally driven purchase. In other words, don’t decide right away even if at the first moment you feel that the car is the one for you.
Look at everything you need to look at. Check the car’s service records and other registration documents. Also, you’d want to make sure that the car is not stolen!
Negotiate on the final rate
When you have done your car-buying homework and everything seems fine, then it’s time to take it home. Now, here’s where your leverage comes in when you are taking on a car loan. Remember how we keep reminding you to take care of your credit or build good credit? Now is the time to use that to your advantage and negotiate on an interest rate. Never close a deal without trying to negotiate on a rate because it might just be worth it.