What about Buying a Used Car?
You dream of driving around in a sleek new car, but the price of the car you want is way out of your reach. Set your sights on a used car and you can get the embellished car you want without having to dig deep into your bank account. To buy a used car, understand the process first so you can get the best deal. While buying a used car may sound stressful, going to a dealership with knowledge can help eliminate a lot of risks. Here’s what you need to know. Click here to learn more about buying a used car.
Check your credit report and score
If you’re applying for a car loan to buy a used car, first check your credit history. Get your credit report from one of the big three credit agencies (Experian, TransUnion, or Equifax) to check and correct any errors you find. You can also check your Experian credit score and take steps to improve your score if necessary. The better your credit score, the better terms you can get on a car loan, and the more leverage you’ll have in negotiations with dealers.
Know what you can afford
You probably know how much you want to spend on the car in total and how much you want to pay each month. Research average car loan rates and terms online to find the right terms for your financial situation. If you want to buy a car for $10,000 and you can put down $2,000, you’ll need a car loan of about $8,000. If you want to make a monthly payment of $300 or less, type $8,000 into your auto loan calculator to see if that’s realistic.
Then do some online research to find out the price range of the car you want. You can check the inventory of your local dealership, the classified car ads, or Kelley Blue Book values to get an estimate and see if your budget covers the car you want.
Shop around for a car loan
Financing a car through a dealer is not always the best way; You can often get better loan terms and interest rates from third-party lenders. Buy auto loans from banks, credit unions, and online lenders before you actually start visiting dealerships. Also, spend some time learning how to get a car loan.
Getting early approval for a car loan can give you more bargaining power at the dealership. It will also give you a clear budget and let you know how much you can spend.
Get vehicle history reports
You have your budget, you’ve pre-approved your car loan, and you think you’ve found the used car of your dreams. Not so fast. Before you actually inspect the car, get a vehicle history report to detect any potentially expensive or dangerous vehicle problems. You need the vehicle identification number (VIN) of the car, which you can get from the seller.
Bargain and make a deal
Ready to start bargaining? A used car is easier to negotiate than a new one because there is no fixed suggested retail price. Use Kelley Blue Book or Edmunds’ auto evaluation tool to assess the value of a car. Just enter some basic information, such as make, model, mileage, and condition, to get an estimate. Subtract 10 to 20 percent from those prices and start giving sellers that price.
If you’re preapproved for a car loan or can pay cash, use it as a bargaining chip. Did your mechanic find anything repairable with the car? Estimate the cost of repairs and use it to lower the price of the car.
Things to look out for when buying a used car
The real cost of buying a used car goes beyond the monthly payment you have to make. Remember to factor in maintenance, gas, and insurance costs, and remember that old cars require more expensive repairs than new ones.
Be wary of dealers or sellers who are not completely honest with you. The seller should be willing and willing to show you the vehicle’s service report for you to take to your mechanic for inspection and to answer any questions. A seller who doesn’t want to do these things may have something to hide.
The impact on your credit
Like other types of loans, a car loan can have a positive or negative impact on your credit, depending on how you handle it. Your lender will alert the major credit bureau of your new loan and report your payment history. Paying on time will help improve your credit score; Missed payments can hurt it. If you miss too many payments, you’ll be back on the bus or carpooling from friends when your used car gets repossessed.
It is more affordable to buy a used car than a new one. The key is to take it slow. Before you make a bid, evaluate your budget, arrange your funds, and thoroughly inspect your car. By educating yourself and preparing, you can find the car of your dreams at a price that won’t put you in the red.