Tips for Buying and Financing a Used Car

Many people prefer buying used cars instead of new ones because this way, they get to save a lot of money.

While buying pre-owned cars certainly has many benefits, it comes with its own set of risks. Before you buy a second-hand car, you must research the market carefully to make sure that you get the best value for each dollar you spend.

After all, you don’t want to be stuck with a car that looks good on the outside but starts rattling as soon as you bring it home.

When it comes to buying and financing used cars, make sure you follow our simple guidelines to ensure you get an awesome deal.

Before we get started with the tips, keep these two things in mind:

Higher interest rates

When you start looking for financing options for pre-owned cars, you’ll find that their interest rates are higher than new cars. This is because the prediction of depreciation of a new car is easier to calculate. But with a used car, it’s difficult to find the depreciation rate. And since the car is old, it might give problems, making the buyer to bail out. To counter for such losses, banks charge higher on used cars.

Higher insurance rates

Insurance is something you’ll have to purchase whether you finance your car you buy it in full.

Old cars have higher mileage and are easier to break down. Besides, used cars have older models that might not have enough safety features. This is why insurance companies aren’t especially happy with them, thus making them charge more.

Now let’s see some tips for buying and financing used cars.

Get a car that’s about a year old

By the time a car completes one year, it has generally traveled about 10,000 miles. This results in its prices being lowered by about 25%. Selecting a year-old model will help you get reduced car costs and getting an almost new car.

Problem is, it’s difficult to find a year-old car on sale. But if you do find it, consider it a good deal.

Get an affordable car

If you’re going for a used car, chances are that you’re looking for some tips to save money. Here are some money saving ideas for pre-owned cars:

  • Get a smaller engine: A bigger engine will burn more fuel. So make sure you consider the engine size when selecting a car. But if you need a car to make long journeys, a small engine wouldn’t be much good for you. In that case, it’s best to get a bigger engine.
  • Petrol cars are cheaper than diesel: Diesel engines often give better gas economy. This is why petrol cars come cheaper. If you’re planning to use the car for commute, it’s best to get a car with a better economy. But if you don’t plan to drive it around a lot, getting a cheaper car is a better option.
  • Get manual if you can drive it: Manual transmission is often cheaper than automatic. So if you’re comfortable with manual transmission, it’s best to get that model instead of settling for an automatic one.

Check the papers

Whether you buy the car with financing or on your own, it’s best to get it inspected. Get a trusted mechanic and find out the possible problems in the car before buying. If you find problems, you can either break the deal or negotiate the price. Check for things such as air and oil filters.

Make sure you check the present insurance papers. This will help you discover any accidents that the car has been in. Check the No Claim Bonus on insurance. If it has a high NCB, it means it hasn’t been in any accidents.

Also, make sure you check the chassis and engine number and see the number on registration papers.

Get the registration transferred

Once you pay, it’s important that the car should be legally owned by you. Get the registration of the car transferred in your name. Apart from the registration, you also need to transfer the insurance in your name. You can also get new insurance for the car. But as discussed earlier, it will cost you extra. If the existing insurance has a high no claim bonus, it’s best to stick with the current insurance.

If the first owner of the car got it financed, make sure you get the no objection certificate from the finance company.

Buy it at the right time

If you’re not in a hurry, select the right season to buy the car. Car dealers have targets and this is why they often offer deals at special times. They are generally towards the end of quarterly sales. It is that time when car dealers need to fulfill their targeted numbers and are desperately looking for more customers. Ask for some bonuses and you just might get them.

However, if you’re buying the car from the previous user, there will be no special seasonal discount on it. Since private sellers have their own reasons for selling the car and there are no targets to meet, any time is a good time to buy from them.

Buy it from the right person

If you’re buying the car from a trader, make sure you know about him. Word of mouth works as a great reference. Ask your friends and family if they know a good car trader. If they don’t, you can check online reviews. Try to find reviews on open forums like Reddit instead of review sites. Many car dealers post fake reviews on review websites. Peer-reviewed platforms are the best place to find honest reviews.

Final words

With these tips, you can save a lot of money buying a used car. Since purchasing a pre-owned car can be tricky, you need to contact the people you trust. If you buy it directly from a friend or family, you can be sure you’re getting what’s promised to you. However, if you’re buying from a dealer, always check their references before placing your trust in them.

About the Author Roger

Roger is a mechanical engineer by day and grease monkey by night, who spends all his free time tweaking things in his car. His love for car audio equipment is only matched by his desire to help others find the best products suited to their needs.

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Adrian Crisostomo says November 19, 2018

When you mentioned to buy from the right person, I was reminded the time I bought my first car which was a used one. I was so excited to buy one that what I did was just look for a nearby used car store and picked the car my cash can handle. It was really stupid. I ended up buying a car that needed a lot of repairs and I can’t return it. Its really important to buy from a shop from a person that you know. Or you can bring a long someone who is experienced to help you check the car before you buy them.
Adrian Crisostomo recently posted…Car Auction Philippines: When to Know You Are Ready for OneMy Profile

Penelope Smith says March 7, 2019

This is some really good information about buying a used car. I liked that you pointed out that you should check the paperwork. It might also be smart to check that the car is roadworthy.

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