Want to buy a used car for a lot less money? There are two good ways to do so, and one good reason to buy used - to save money. Okay, that seems obvious, but this isn't just about spending less initially. The research shows that a four-year-old car can cost 40% less over its lifetime versus a new car, when you include the costs of gas, oil, repairs, insurance, and everything else. In fact, almost half of the millionaires in the United States buy used cars, according to the book "The Millionaire Next Door," by Thomas Stanley and William Danko.
First Way: Buy The Right Used Car
The idea here is to look for the cheapest "type" of car that will provide you with everything you need. The bottom line is that some cars just cost more than others. You pay more to buy and to operate them, so look for the lowest-cost one that will suit your needs. Whatever your negotiating skill, a four-year-old Jeep Wrangler is still going to cost more to buy and run than a four-year-old Dodge Caliber. So unless you need the four-wheel drive or space of the former, why not buy something smaller and cheaper.
Some of the factors to consider when looking at the overall cost of a used automobile:
- The initial price. The popular auto "blue-books" or price guides will give you an idea of what used cars are selling for in your area. Some of us think the accuracy of these may be suspect, but they are better than nothing for comparing the relative values of various models of car.
- Ongoing repair costs. Find a copy of the Consumer Reports auto edition at your local library. It has ratings for all major systems and parts of different models. Usually there is also an average annual repair cost for each car too.
- Gas mileage. Ask an owner about the mileage he or she gets - if you think he or she is honest. There are also websites like fueleconomy.gov where you can find fuel economy figures for used cars. With 15,000 miles per year, the difference between 20 miles-per-gallon versus 34 MPG is an extra 309 gallons per year, or $1,000 at $3.25 per gallon.
- Auto insurance. Different cars have different insurance rates. Ask an agent about the cars you're considering, and take notes.
- Future resale value. Plan to drive the car for just a few years? Then you have to consider what it will lose in value during that time. Different used cars may cost $8,000 each, but one may be worth $6,000 a couple years later while others are only worth $4,000 or even less. Research resale value online, or look over a used-car price guide to see which models tend to retain the most value.
Second Way : Negotiate the Right Price
The next step in buying a used car for less is to negotiate a lower price. There are a few tricks you should know, but start with a good idea of what the car is worth according to whatever guide you have available. Look for the wholesale cost, and make your first offer lower than that. Here are some other pointers:
- Invest time. When you think you want a car, spend some time with the owner or sales person, and looking at the vehicle. Expert negotiators call this "time investment," and use the technique often, because the more time the seller has invested with you, the more they want to sell to you. They don't want to "waste" that time. In other words, you can get a lower offer accepted if you first take more of the sellers time up front.
- Subtly point out any issues. Examine the engine and the underside of the car, even if you aren't sure what you are looking at. Hint at any problems you see politely, but never contradict or insult the seller. The idea is for the seller to like you but to also start to doubt the value of his vehicle.
- Be prepared to walk away. Always be ready to say, "I'll think about it," and leave (unless you really need a car today). It's one of the oldest and surest ways to get price concessions when negotiating. Car salesmen in particular know that when people "think about it" they rarely return, so this is a strong tactic on your part, and they'll usually make their best offer at this point.
- Get a mechanic look at it. Bring the car to your mechanic, or have a friend with some mechanical knowledge come with you to look at it. A car isn't necessarily cheap if it breaks down a week after you buy it, and in any case everything that your friend or mechanic finds wrong is a negotiating point that may result in a lower price.
To summarize: Use both ways to buy a used car for less.
1. Look at the right cars - the cheapest for your needs.
2. Negotiate the lowest price you can get.