In the first quarter of 2014, the Wall Street Journal reports that more than 2.6 percent of automobile loan borrowers missed at least one monthly payment. Trading in older used cars for newer models can saddle borrowers with a much higher interest rate and may run the risk of defaulting on their monthly payments, resulting in repossession.
When considering buying used cars, here are some issues you should consider before adding to your monthly living expenses.
Review Your Needs
Do you really need a new car? What can you realistically afford? Does buying used cars make sense for your lifestyle, or are there alternatives that would make more sense financially?
Set Your Budget
How much of your monthly income can you put into car payments, maintenance, repairs, fuel and insurance?
Finding The Right Vehicle
You probably already have a few models in mind. That’s a good starting point, but be open and flexible for buying used cars you haven’t considered. Browse local car listings in your newspaper or dealer’s online sites to get an idea of the price range for the used cars you’re considering.
Check For A Model’s Safety And Reliability
Use Consumer Reports for general reviews on the reliability of a specific make and model. Make use of Transport Canada’s Defect Investigation and Recalls website for checking known problems and the National Highway Traffic Safety Administration site for crash test results.
Pre-Screen A Private Purchase
If you’re considering buying used cars from a private dealer, you can use your phone for much more than setting a viewing and test drive time.
Ask lots of questions to save yourself from an irritating situation or a waste of your time.
• Do you have the title?
• What’s the current mileage?
• Are maintenance records available and have normal services been performed?
• Are you the original owner? When did you purchase the car?
• Has the car been in an accident, what was the extent of damage and who did the repair?
• Are there any current mechanical issues?
• Why are you selling your car?
• If the owner isn’t forthcoming, move on to the next listing. You may pay a private owner less than a car dealership, but you have little recourse if problems arise.
A test drive is so important and still, some folks are hesitant to get behind the wheel. Get behind the wheel and see how it runs.
You should check all tires for the tread thickness; look for fluid leaks, body ripples that may indicate bodywork. Make sure doors, locks and windows work smoothly and listen to the engine with the hood open to check for knocks, hisses or ticks.
Check under the carpet in the trunk for rust and examine door hinges for signs of rust. Make sure all the controls work; ask the salesperson to sit in the driver’s seat so you can see that lights and signals work properly.
Ask to see a Carfax or AutoCheck report on the vehicle. Do not buy a car if the dealer does not have one of these reports.
Negotiate For A Better Price
Never accept the asking price, but don’t get crazy with a low-ball offer. A 10 to 15 percent reduction is a figure that’s reasonable, and with your trade-in, you could save a lot.
Be sure to negotiate your trade-in price after you’ve agreed on the selling price. Make sure to ask for a free extended warranty or other services – the worst the salesperson can do is say no.
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