How To Buy A Great Used Car
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Written by Steve R. Lowry
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Monday, 09 February 2009 |
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I have never bought a brand-new car. But I've bought plenty of used ones--from national chains, independent auto dealers, and from the woman at the bakery down the street. By my reckoning, I've saved upward of $30,000 this way. Here's how you can do the same.
ST UP FINANCING FIRST
The terms of your loan don't affect the price you'll pay for the car, so there's no reason to make the deal first and borrow later. Plus, having a loan in your pocket puts you at an advantage in negotiations. So, before you talk to any dealers or sellers, consider arranging your financing. Shop for the best loan at banks, online, or at a credit union. Apply at Capital One Auto Finance (capitaloneautofinance.com) or E-Loan (eloan.com), and within 15 minutes you'll get a call saying whether you've been approved. If you take either site's financing, you can use the check at any dealership within 30 days.
KNOW WHERE THE DEALS ARE
Some of the best bargains are at new-car dealerships; they have trade-ins taking up space and salespeople want to unload them. But think twice about dealerships' "certified" used cars. Although they have been reconditioned and come with manufacturers' warranties, they're generally no bargain, typically costing at least $500 to $1,000 more than comparable models elsewhere.
DO YOUR HISTORY HOMEWORK
Once you've zeroed in on specific possibilities, eliminate clunkers by asking the dealer or seller for the car's vehicle identification number. This unique number allows you to get a complete ownership history from Carfax (carfax.com). For $25, you will receive a comprehensive report detailing whether the car has ever been totaled or if the model has ever been recalled. And for $30--the price of a 30-day subscription to Carfax--you can get this kind of useful lowdown on as many cars as you like.
SNAG A GOOD PRICE ON THE CAR WITHOUT NEGOTIATING
If you hate haggling, try shopping at CarMax, the nation's largest used-car chain (with locations in 22 states). CarMax's salespeople earn a flat fee for each model sold, so they have no incentive to tempt you with a more expensive vehicle. And the stores have a five-day money-back guarantee as well as a 30-day limited warranty. I've bought two used Toyotas from CarMax, and my only regret is that I traded in my old cars there instead of selling them myself for a little more money.
You can also buy without negotiating at hertzcarsales.com, enterprise carsales.com, and Enterprise sales locations, where manufacturers' warranties are often still in effect. And some independent used-car dealerships will give you a fair, no-bargaining-allowed price. I bought my used 2002 Subaru Forester that way. The price was a little higher than a private seller's would have been, but I liked the 30-day money-back guarantee. Plus, the 6 percent financing rate was quite a bit lower than what I could find on my own (8.25 percent) and it saved me about $425 over the life of the automobile's loan.
GET A BETTER PRICE BY HAGGLING
The key to negotiating successfully with a dealer is doing your research before making an offer. Choose two or three models and bone up on their values at the three big online used-car pricing sites: kbb.com (Kelley Blue Book), edmunds.com, and nada guides.com (NADA Guides). When you're ready to talk, bring along your printouts from the sites. "The dealer may tell you the asking price has already been discounted $500, then offer to knock another hundred off, just because 'he likes you,'" says Philip Reed of edmunds.com. "But if you've done your research, you'll know whether that's a good price. If it isn't, increase your offer in small increments, until you're not willing to go any higher."
Once you've agreed on the price, insist on an independent vehicle inspection. "Any reputable dealer will allow a prepurchase inspection by the mechanic of your choice," says Sheri Edgecomb, general manager of Edgecomb's Imported Auto Sales & Service in Charlottesville, VA, where I bought my last used car. Be sure the mechanic specializes in the make and model you plan to buy. When the dealer asks about financing, show him the loan you have and ask whether he will match it. If your credit is good, try asking for a lower rate. You just might drive home with a bargain on the car and the loan.
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Last Updated ( Monday, 09 February 2009 )
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