Famed financial guru, Dave Ramsey, says you shouldn’t buy a new car “unless you’re a millionaire.” According to a study of 10,000 millionaires, he said, the people questioned in the study said they did not buy a new car in the years leading up to their financial success.
“They just said, ‘We’re not putting our money in crap that goes down in value and then scratch our heads and wonder why we’re not millionaires,’” Ramsey said.
Ramsey’s advice is helpful for people looking for long-term, reliable transportation without the value depreciation that comes with buying brand new. This infographic by Edmunds illustrates a new car’s value depreciation over five years.
If you decide to go the used route, following the tips below can help your wallet, your sanity, and provide you satisfaction years down the road.
Look at your budget
Used vehicles can still be quite expensive and you don’t want to get sunk into a loan that has you wringing your hands when the payment is due each month. Take a realistic look at your income and expenses to see what you can afford before you sign away several years and thousands of dollars of income on a vehicle you can’t afford.
If you’re looking to avoid a loan and have cash saved for your new ride, make sure your purchase allows you to keep some money set aside for repair emergencies that could otherwise leave you stranded.
Establish your needs
Before you start poking through used car lots, think about what your used vehicle will be doing for you. Are you looking for a daily commuter? A first car for your teenager? Maybe a weekend toy for camping, off-roading, or finding a hidden fishing hole?
Working with thousands of folks over the years, the fine employees at Maverick have seen what makes people happy in the long run. Thinking about how your new vehicle will be used most helps you narrow your search list and is far more likely to provide you with more long-term satisfaction.
Check the ratings
Now that you’ve decided what type of vehicle you’re looking to purchase, have a look at the ratings of the models offered in that style using review sites like Edmunds. Even if you’re looking at something as obscure and old as a 1990 Geo Metro, you can rely on Edmunds’ user reviews to give you first-hand information about reliability and performance.
Worried about the availability of parts for a model you’re looking at? The internet can be a wonderful tool. Sites like Parts Market have a vast inventory of body, mechanical, interior, electrical, and suspension parts so your used purchase can stay on the road until flying cars finally make their debut.
Scope out used cars
The debate rages on whether you should buy from a used dealership or from a private seller. A private seller may have a documented maintenance history and be willing to part with their vehicle for a lower price. A dealership does offer financing options if you don’t have ready cash and dealerships also have a reputation to uphold, so it’s unlikely that they’d sell you a lemon for fear of losing potential future business.
In the age of the internet, you can also check dealership reviews to see how customers rated their experiences. Either way, there are several private sellers online and used dealerships in the Boise area, so you should have plenty of choices.
Get the Vehicle History Report
Every vehicle on our lot has an available history report and we can’t emphasize enough the importance of this step. History reports contain information like odometer rollbacks or a salvage title, meaning the car was previously wrecked and declared a total loss by an insurance company.
You’ll need the vehicle’s VIN number for these reports. Try popular sites like AutoCheck and CarFax to access these reports or you could end up paying for a junker that gives you more grief than relief.
Compare prices
Afraid of being swindled and overpaying for a used car? Use that fear as motivation to do your homework and use tools like Kelly Blue Book, which allows you to look at the price range the model you’re looking at sells for.
For instance, my 2014 Subaru Outback sells for around $12,000, but that’s assuming the car’s mileage is around 96,000 and the interior and exterior are in excellent condition (I have 160,000 miles on mine with plenty of dents and scratches)
Complete a Test-Drive
You’re the one who’ll be driving the vehicle each day. Just because it looks cool and will make you the envy of your cohorts, doesn’t mean you’ll enjoy spending hours behind the wheel. A lengthy test drive assures you’re comfortable in the vehicle and like how it handles.
This goes without saying, but you’ll need a valid driver’s license and insurance, unless the dealership or seller you’re working with doesn’t mind being complicit in a misdemeanor.
Have a Mechanic Take a Look
As Schoolhouse Rock taught me years ago: “Knowledge is power!” Though you may not want to fork out extra dough for services, a professional mechanic can make sure your potential vehicle is mechanically sound and provide you with much needed buying confidence. Also, don’t put too much faith in your overly confident uncle. Make sure you consult a professional, experienced mechanic.
If you can’t afford a mechanic or are more confident than the average Jane or Joe, here’s a short list of things to watch out for when inspecting a used car:
-Check the window sticker for warranty or “as is” information
-Check the body for rust, which can spread quickly
-Examine glass for fractured or pocked areas
-Test wipers and windshield fluid
-Push down on each corner to check suspension
-Test lights and examine lens condition
-Check tire tread and alignment
-Test brakes during drive (they should be responsive, not spongy)
-Make sure interior instruments work
-Check the interior roof for water stains
-Examine hoses and belts for cracks and wear
-Listen to the engine carefully
-Make sure the battery is free of residue
-Check oil, radiator, and transmission fluid for cleanliness
-Look for oil or other fluid leaks under the vehicle
-Feel the tailpipe for residue (black and greasy means burnt oil)
-Get under the vehicle to check for damage and/or repair work
Prepare to negotiate
If you’re not shopping at Maverick Car Company, where we have set prices based on Kelly Blue Book and comparison to hundreds of like models for sale, be prepared to haggle for the price you’re willing to pay. Set a spending limit and make an opening offer less than this price. You should already know the average price for the vehicle you’re looking at buying if you’ve followed this guide.
Iron Out the Details
When buying privately, make sure the vehicle’s owner signs over the title for a valid sale. To be extra cautious, check with the Department of Motor Vehicles to make sure there aren’t any past-due registration fees you’d be stuck paying for if you bought the car to register in your name.
In Idaho, however, registration is tied directly to the plates when you register a car you’ve purchased, so you don’t need to worry about that in the Gem State.
If going the dealership route, you’ll probably get offered extended warranties, service agreements, and be charged various fees, whether legitimate or not. Read your contract carefully. Don’t be pressured to hurry through this process and don’t be afraid to ask plenty of questions.
When going the loan route, you’ll need to maintain full coverage insurance until the loan is paid in full and the title is in your possession. At that point, you can opt for liability insurance. Regardless of your purchasing choice, you must register the vehicle, insure it, and have full driving privileges before you hit the road unless you like spending time and money at the courthouse.