Simply put, car buying is a frustrating experience. You begin by wringing your hands over the necessity. Do we really need a car? Buying new is so expensive. Should we consider used? Buying a used car is always a great alternative to buying new. So let’s go over a few tips to help you in your used car shopping and make your next purchase the easiest yet.
The advantage to buying used is choice. Unless the world is suddenly inverted, used car prices are always lower than new. This is a no brainer. Because of the lower price, your buying opportunities are multiplied. You’ve obviously done the research and know how much you can borrow from a lender. You also know what kind of car you want.
Suddenly, there are makes and models you would never consider when new, but used prices on these cars puts them well within reach. That’s great, right? Well, yes and no. We always like choices. Restaurant menus are full of choices. The cold cases at the Quicky Mart has choices. But the increase in choice equals the potential for confusion. So let’s begin with some simple tactics to help relieve the stress.
A simple trick is to watch used car values. Kelley Blue Book is a great place to start. But as you might guess, car prices will fluctuate depending on market demand. Here’s one quick tip. Keep an eye on lease returns. Many market experts are forecasting an increase in lease returns, thus a larger number of used cars on dealer lots.
With maintenance plans now included in lease agreements, lease returns are typically well maintained cars. In addition, mileage tends to be low due to restrictions built into those same agreements. To dealers, cars coming off lease represent unsold inventory that’s taking up space. Use this to your advantage when negotiating price.
Next, be wary of brands that hold their value. These might be cars from premium manufacturers, such as Mercedes-Benz or BMW. But what harm is there in considering a manufacturer that doesn’t?
Yes, I may sound crazy but bear with me. If you choose a model or brand that’s known to come up short on value, then you may be able to use the brand’s “flawed” reputation to your advantage during negotiations. Since you’re open to buying used, a car’s value is of less importance. Much less so than new. This isn’t a criticism of you as a buyer. It actually makes sense.
Value over time is how you calculate depreciation, the scourge of all new car loans. According to Investopedia, depreciation is a basic formula used by automotive experts to determine a car’s value over an average period of fives years of ownership.
“The automotive industry is so competitive these days that you’re seeing vehicles being redesigned every four or five years,” said Eric Ibara of Kelley Blue Book. “If you see a vehicle that is in its fourth or fifth year and not doing well selling [new] retail, it would tend not to hold its value as well as its competitors.”
The advantage to buying used is the original owner paid most of the depreciation. You’re not on the hook for it. Unfortunately, a model or manufacturer known to lose value will depreciate more. But for the sake of this conversation, that doesn’t matter. Again, depreciation can be your friend when looking for a used car. It helps reduce the price and gives you a leg up during negotiations.
One reason why a car has poor value is its reputation for reliability. Do the research and know what cars suffer and can’t be trusted to be dependable. Then immediately discount those models.
Find a car that meets some basics, such as likeability, how it fills your needs and, of course, your budget. All of these requirements are easily met with a used car. Take the time to do it right and it will be the easiest purchase you’ll ever make.