So you’re searching for used cars and you’re suddenly realizing there is a whole lot more that goes into a buying a used car than simply finding one online and sending a quick payment to the seller via Venmo or PayPal. It’s okay, we understand – buying a used car seems like one of those things that should be so simple – after all, how many things have you bought off eBay or Craigslist with pretty much no hassle?
But in reality, buying a used car is a lot more complicated than people make it out to be. There are a lot of steps you are going to want to follow to make sure that you are getting a good deal and that all of the paperwork is done correctly. Of course, some of this hassle can be mitigated if you buy a used car from a dealership rather than an individual seller, but it’s still good to know exactly what you’re getting into when you buy used.
Below, we’re going to break down some of the key components and steps you should take to protect yourself (and your money) when you’re buying a used car.
Start By Being Financially Prepared
First things first, you’re going to want to set a strict budget for yourself. It’s so simple to start car shopping with a tentative number in mind and suddenly decide that it’s okay to spend way over what you thought you would. So do yourself a favor: sit down and really look at your finances to figure out exactly what you can afford. Ask yourself if you can afford a sizable down payment. If so, that’s great! If not, that’s okay too, but then you need to be even more prepared to work with a bank or a lender to help you finance your new-to-you car purchase.
Before you start shopping for a loan, you should prepare yourself by finding out your credit score. Your credit score gives lenders a good indication of what type of borrower you are – namely, responsible or not. In an ideal world your credit history would be in the 700s and essentially flawless, but for many American’s that’s simply not the case. In fact, the average American’s credit score hovers somewhere around 673 – which is just that… average.
However, for many of us, even an average credit score would be something to celebrate. Instead, many American’s struggles with having poor or even no credit history. If you fall into this category, know upfront that it is going to be somewhat more difficult to secure a loan, although it certainly is feasible. Unfortunately, you may be hit with high-interest rates and unfavorable borrowing terms, which is not ideal. Keep in mind though that even if your borrowing terms aren’t fantastic, you can use your car loan to start to repair and rebuild your credit by making every payment in full each month.
If you’re having a tough time securing a car loan from your local bank or credit union, you may want to try shopping around online. There are several financial institutions that will finance risky lenders and it’s worth it to do your research and exhaust every option before working directly with a dealership – especially a Buy Here, Pay Here dealership. Those are to be avoided at all costs and used only as an extreme last resort.
Spend Time Doing Your Homework
While it’s tempting to hop straight online and put an offer in on the first sweet car you see, you really want to invest some time into researching some of the brands and models that interest you. Just because you love the look of the Honda Accord doesn’t mean it’s actually got the amenities or space that you may actually need. To make the most of your research, make a list of the top five most important things your car must have – and we aren’t just talking about sunroofs and Bluetooth (although by all means include those on the list). Aside from just fun and cool features, you want to consider things like safety rating and EPA fuel estimates. After all, you might find a car that has all the bells and whistles, but if you can’t afford to fill it up at the gas station, it’s not exactly serving its primary purpose.
Once you have your list, you are free to start browsing the classifieds, your local dealer and of course, online. There are plenty of great sites to shop for used cars, so take your time and don’t feel pressured into buying the first model that catches your eye – there are tons of cars out there and you want to be sure you’ve found one that really works for you.
When you’ve located the ideal car, you want to make sure that it has a clean CARFAX report. The CARFAX basically provides a comprehensive history of the car, including any big accidents or insurance claims. Keep in mind that even CARFAX only knows what gets reported, so there’s always a possibility the car may have sustained unreported damage. That’s why it’s absolutely vital that you take the car to a trusted mechanic before you sign for it. A mechanic will be able to spot damage that may not be immediately visible to you and can let you know the overall state of the vehicle. It might cost you a hundred bucks or so, but it’s absolutely worth every penny – especially since you’ll have very little recourse once you’ve officially bought the car.
Prep for Paperwork
When you’ve decided to move forward and purchase a car that you’ve thoroughly researched and had inspected by a mechanic, it’s time to seal the deal. If you go through a dealership, they’ll take care of the paperwork for you, but if you go through an independent seller you need to be prepared to take over the title (which proves that you’re now the rightful owner of the car) and you’ll want to complete a bill of sale (which records the details of the transaction). Of course, laws vary from state to state, so be sure to make sure you’ve double-checked and have all of the documents that are required from your state – you can do that by clicking here.
Enjoy the Ride
Sure, figuring out your budget, credit score and the difference between needs and wants when it comes to your new car can be boring. But if you follow the above guidelines, you’ll feel much more confident when you get behind the wheel of your new car because you’ll know you’ve made the perfect used car purchase. So take our advice and then feel free to go out and enjoy your ride.