Buying a new car is a big deal. There’s a lot to think about: financing, gas mileage, warranty, number of passengers it can fit, and so on. But things get even more complicated when, instead of a new car, it’s a used car you’re shopping for.
Going the used car route can be tricky, but far more cost effective than buying a new car. In fact, as soon as you’re the official owner of a brand new car, its value decreases! Used cars have been owned, tested, and hopefully maintained for multiple years. In other words, they have already experienced the value drop of being owned by someone–so you can benefit from that–and they have proven themselves road-worthy simply by still existing. So, what are some things to think about when you are buying a used car?
1. Your needs and what you can afford.
- How much money can you afford to pay per month on a car loan?
- Consider how much disposable income (spending money) you have each month. A good way to gauge this (and to save up for a down payment) is to put any excess money not needed for bills/food/necessities into your savings account and see how much you come up with in a month. If you’ve put away $300 over the course of the month without having to dip into that for things you need, then that MIGHT be what you can spend per month on your car. Keep in mind you’ll want some wiggle room (consider your car insurance payments) and don’t forget about any future expenses that may pop up later (will your child need daycare or school supplies? do you owe taxes? what if your house needs maintenance? how much will you spend in gas on the new car?)
- It’s a good idea to get pre-approved for your auto loan too, so you know what kind of rate and payment you’ll be looking at. Use our calculator here to help you figure out what your budget allows.
- What do you need in a car, and will it be in your budget?
- Do you need something that’s good on gas? Remember, your monthly budget may change depending on how much you have to spend on gas.
- How many people will you need to fit in your car? If you are planning to expand your family in the coming years, a compact car might not be a fitting investment. But if it’s just you and your pup, maybe it is!
2. Investigating your used car prospect.
- Ask about proper maintenance, especially Timing Component replacement. Was it completed? Different vehicles have different requirements for when the timing chain/belt and other components need to be replaced. Sometimes it’s as early as 70,000 miles and sometimes it’s more than 100k. This is often an expensive procedure, but it needs to be done or it puts the car at risk of breaking down and sometimes even permanent engine damage if the components fail.
- Look at the brakes. Usually you can see the rotors through the wheel, do they look chewed up or uneven? If so, those will likely need replaced along with the pads and possibly even the calipers. Replacement isn’t the most expensive procedure, but rotors, which have a minimum thickness should be replaced when they wear down and are too thin to take the pressure of the caliper and pad squeezing on it to stop the car. Rotors with natural looking holes drilled in them are fine, those are there to fight overheating.
- How do the tires look? Is there deep enough tread on them to know they will be safe for a while before needing to be replaced?
- Take a look at, or ask about, the exhaust. We live in Ohio. Let’s face it, our exhaust systems don’t last long. They take most of the damage from the salt and road grime and rarely get washed properly. If you’re able to, give a look at the mufflers and what’s called the flex-pipe (on some cars, not all). Look for holes in the mufflers and rust on the flex pipe. The flex pipe is typically the thinnest piece of metal on the system and is under the most stress. It’s designed to bend and allow the rest of the exhaust to swing or move when you turn corners or hit a bump. It tends to be the first to fall to the elements.
- Look at the title. Some cars have what’s called a salvage title and were declared a total loss by an insurance company due to anything from natural disaster (flood damage) to being in a wreck. Cars with titles like this can be risky and will require some serious scrutiny.
- Consider selling your current vehicle privately instead of trading in. Most of the time the market price for a vehicle sold privately is higher than what a dealer will offer. However, if your car needs a lot of work done or isn’t in the best shape, it may not be easy to sell privately or could require some work first.
- Ask if they can provide the Vehicle History Report, if they don’t have one available, have them provide you the car’s VIN so you can look into it yourself using Carfax or AutoCheck.
3. Make the deal and do the paperwork.
- Come to a final agreement on the price. If you are buying from a dealership, review the sales contract thoroughly. It should list the cost of the vehicle, a documentation fee, possibly a charge for the smog certificate, sales tax, and license fees.
- If you are buying from a private seller, make sure the title and registration are properly transferred. It might be prudent to do the deal at an FFCCU branch to have a notary on hand to make sure everything is taken care of.
- Have you thought about extra coverage just in case? With Guaranteed Asset Protection (GAP) coverage, in the event of a total loss, the difference between what your vehicle is worth and what is still owed on the loan is covered. PLUS our GAP coverage includes $1,000 towards a replacement vehicle when you finance your next car with us. Learn about the other advantages of using GAP here.
- Consider an extended warranty if the car isn’t a certified pre-owned vehicle or doesn’t come with it’s own warranty. It’s nice to have just in case your used car experiences a sudden breakdown.