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A 5 Step Plan For Buying A Used Car

By Erik Folgate

Right now is a great time to buy a used car, because new car sales are lagging from the current state of the economy. Car dealerships know this, so they are focusing their attention on offering great deals on used cars with various promotions. I recently saw a TV commercial for a Toyota dealership boasting a Corolla for under $11,000, and I thought, “wow, that’s a good deal”. Then, I realized that it was for a 2007 Corolla, not a 2009. It was one of those types of car commercials that you would normally see for a new car where the car is driving down a highway somewhere in the hills of California. It tricked me into thinking that they were advertising a new car. Buying used cars a little different than buy a new car, so here is a step-by-step guide to help you on your search for a “new” used car.

  1. Do Your Research. You need to narrow down your used car search to three car models, then learn everything you can about that particular model. Do not step into a car dealership or talk with a seller on Craigslist or Autotrader until you know what car you are looking for and everything about that car. You must be an informed buyer when it comes to buying a car.
  2. Know your target price. Look at your finances and look at KBB.com or NadaGuide.com to figure out the most you are willing to pay for the car and the least amount a dealer or seller would be willing to sell the car you are considering to buy. Somewhere in the middle of these two prices is your target price.
  3. Figure out financing. Are you going to pay cash? If so, negotiate the heck out of the deal, because cash is king when it comes to making a large purchase. If you need to finance a portion of the car, go to your local credit union. They typically have the best loan products for used cars at very competitive rates. My best friend recently bought a used Toyota Yaris from a private owner and got a 4.75% interest rate!
  4. Make a list of dealers and private sellers to visit. Make a short list of dealers and private sellers with the best deals of the cars you are interested in. Check out websites like Angie’s List and Yelp.com for reviews of car dealerships.
  5. Know when to walk away. This is the most important part about looking for a used car. If the deal doesn’t seem right or you don’t trust the salesman/seller, walk away from the deal. The moment the dealer has you emotionally involved in a deal or a particular car is the minute they win the negotiation battle.

Buying a used car is like chess. Make sure you are always in a position of strength. Do any of you have any more tips for buying a car or a story to tell about a recent purchase? Share it with us in a comment below.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

Related Articles

  • http://www.ifacarfinance.co.uk IFA Car Finance

    Particular like tip 3 – it can pay to shop around and go independent.

  • http://www.buildmybudget.com Chris @ BuildMyBudget

    Be prepared to negotiate and take into account any warranties or service plans in your overall price. A BMW may be cheaper at the used dealership but servicing it may be more expensive than buying a slightly higher priced alternative.

  • http://www.rayskillmanchevrolet.com/ Tyra Shortino

    Exactly! Look for the best deals that would meet your standards for a car. Bring a mechanic to make sure that the car is in good condition. Ask the dealer for a test drive, if possible. You can tell a lot about the condition of a car from using it. Or look for a private owner, as it would be easier to negotiate with such. Lastly, keep your eyes out for the best price!

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