How to Warn Yourself From the Fiasco When Buying a Car
For those who cannot afford to purchase a new vehicle, buying a used car can be a viable option. There are pros and cons, and additional steps you can take to help protect yourself and your new investment.
Not everybody can buy a new car straight out of the dealership.
People looking to buy a new vehicle need to either secure a loan beforehand, have enough cash to pay for the car upfront, or have good credit to get approved for financing at the dealership. If you want to buy brand-new but don't have any of these, you won't be driving home that fresh ride anytime soon.
There is a way to satisfy your need, whether you're a first-time car buyer or if you're looking to replace your old clunker: buy a used car.
The Benefits of Buying a Used Car
There are plenty of benefits when you choose to buy a used car instead of a new one.
You Can Avoid Depreciation
Brand-new cars lose 20% of their value the minute they roll out of the dealership and around 30% at the end of the first year, depending on the mileage and model. That's a colossal number. If you spend $30,000 on a new car today, it'll be $6,000 less the following day, regardless of how far you've driven it. Towards the end of the year, your car's value will dip even further to around $21,000. That's the cold, hard economics of depreciation at work. However, buying a 2 - 3-year-old car allows you to get a relatively new vehicle without the high sticker price.
You Can Finally Buy The Car You've Always Wanted
Since you're buying a used car, you can go all-out and get the make and model you want. With the same budget of $30,000, you can go for the range-topping models with all the tech and features, or you can spring for a little luxury. Even if you decide to pocket the first-year depreciation money, you'd still have $21,000 to spend on a used car, which can get you something pretty decent.
Pay Less on Registration and Insurance
Registration and renewal fees decrease over time, and used cars are cheaper to insure.
The only downside to buying a used car is uncertainty. You expect a brand new vehicle to be perfect because you're buying it straight from the dealership. A new car has no dings, dents, engine problems, electrical issues, weird noises, and other annoyances. A used car, on the other hand, is like a box of chocolates: you never know what you're going to get. This Forrest Gump analogy especially holds if you barge in a used car lot and make a purchase without a well-thought-out game plan
You need to do extensive research, put in the leg work, schedule as many test drives as possible, and hire a trusted mechanic to inspect the car from top to bottom, especially if you borrowed money to buy it.
How a VIN Check Can Help You Avoid a Bad Car Purchase
You can avoid a used car buying fiasco and unwanted surprises by running a VIN lookup to get more details on the vehicle's history report. VIN stands for "vehicle identification number" and running a check can tell you whether a car has been stolen, has ever been in a significant accident, or has any encumbrances.
A VIN check covers the following:
- Information and history of the vehicle
- Ownership history
- Repair and maintenance records
- Past odometer readings
- Sales history
- Insurance claims
- Police reports
- Structural damage
- Flood and accident damage
- Salvage check
Running a VIN check on a used car can also help you avoid scams and ensure that the vehicle is in good shape, especially when you're buying from a private seller who you don't know. Purchasing a car without knowing its history can leave you with a lemon full of problems due to poor maintenance or past accidents. You'll most likely end up paying more for the car than what it's worth.
Red Flags to Watch Out For When Buying a Used Car
When you're in the market for a used car, look out for deal-breakers or things that would warrant a massive price cut. If the issue is a major one or if the seller refuses to budge with the price, walk away.
The odometer has been tampered with
A rolled back odometer is an ominous sign that the seller is trying to take you for a ride. Don't let scammers rip you off and walk away immediately.
The car is still under finance
The seller should let you know if the car is still under finance or else you'll get stuck with paying it off. If the seller doesn't disclose this fact and you learn about it via a car history report, you should look elsewhere.
The car has been written off or issued a salvage title
"Written off" means that repairing the car would cost more than what it's worth. If you encounter a vehicle that has been issued a salvage title or has been written off, walk away. The car most likely has invisible or irreparable damage brought about by shoddy repairs.
Obvious Maintenance issues
Buying a used car isn't as good as buying brand-new, but if you put in the work and research the vehicle's history, you can find a reliable diamond in the rough that will serve you for years to come.