14 Smart Ways to Save Money on a Used Car
If you are looking to buy a used car, find out how you can save thousands by following these simple car buying tips.
Buying a car is a huge life decision that affects you for years to come. After housing and food cost, owning a car is usually the next highest expense in the budget. To put it into context, the average monthly payment for a car is over $500!
Recently I saved thousands by using these smart tips for buying a car. These ideas are simple but will save you from making costly mistakes when buying your next car.
1) Buy from a Private Party Instead of a Dealership
This first tip so save money while buying a used car may seem like a no-brainer, but consider buying from a private party instead of a dealership. This can save you thousands of dollars! Dealerships charge an extra commission, documentation fees, and they also have to pay for overhead. They pass this lovely cost onto you.
You can almost always pay less money to a private seller versus a dealership. On the flip side, you can usually get more for your car selling it to a 3rd party too instead of a dealership. You’re essentially cutting out the middle man which saves you more.
2) Look for an Economy Car
Consider a small car if you’re looking to save money on your used purchase. Honda, Toyota, Chevy, and Ford all make very economical cars that will save you thousands of dollars in cost, gas, and insurance over time.
Get a car that can meet the necessities of life. You probably don’t need a luxury car with If you will be using the car 99% of the time to go to work and commute a long distance, then definitely consider an economy car. It might not be as “sexy” as a big truck that big truck likely means big debt.
3) Consider Buying a Car from Several Years Back
According to CarFax, a new vehicle loses 20% of its value in the first year, and then 10% annually thereafter for the next 4 years. That means that the car has lost 60% of its original value in the first 5 years! A brand new $30,000 car will only be worth $24,000 after the first year, and worse yet, worth only $12,000 after 5 years! It’s because of the quick depreciation that a lot of people are upside-down on their cars when trying to sell them.
Buy a car that is at least a few years old so you can avoid the massive depreciation which occurs in the first several years. Go five years back or more and you can be certain that you’re saving some serious money by avoiding this depreciation cost.
4) Consider Purchasing the Base Model Package
Almost every car made these days has a bunch of fancy extras that are cool but not exactly needed. Companies make the base model and in addition to that they have a bunch of extra “trim packages”.
These packages usually have additional features inside or a slightly larger engine. Typically the features aren’t worth the cost, but that’s for you to decide. Consider the base model package to save hundreds or even thousands when buying a car.
5) Research a Fair Price for the Car
The ultimate car pricing source is hands down Kelley Blue Book. It’s the best online source for getting accurate pricing on cars makes and models. Research the car you want on Kelley Blue Book to know the fair price you should pay to a private party or used car dealer.
6) Look for Deals in Different Cities
You may need to look further than the city you live in to find a good deal on a car. The best deal may be several hours away. We had to drive four hours round trip to buy our car - but it was definitely worth it.
Try looking for cars in a large city relatively close to you. Cars will typically be cheaper in larger cities because there is a larger supply of vehicles there.
7) Order a CarFax Report
One of the best things you can do when you’re buying a used car is to order a CarFax report. I am so very glad I ordered this vehicle history report before buying our used Subaru.
I was able to see the maintenance report for the vehicle’s history as well as if it had been in any accidents. I saw that it had been well taken care of and had been in no major accidents. It gave me so much more peace of mind when buying the car.
8) Get a Full Vehicle Inspection from a Mechanic
Once you are satisfied with the CarFax report you’ve ordered and have taken the car for a test drive, ask the seller if you can take it to a mechanic to get a full inspection. This should cost anywhere from $100-$200 and you can negotiate it into the price of the car.
You should be very wary to buy a used car from a stranger or dealer without having a full inspection completed by a 3rd party mechanic. This inspection can save you thousands of dollars down the road. Treat your next car like an investment by paying for the inspection before you buy the vehicle.
9) Negotiate with the Seller
Another reason you should get an inspection for a mechanic is now you have the power to negotiate the price down with the seller. You know the condition of the vehicle and what needs to be fixed if anything.
When we bought our last car, the seller initially wanted $3,000 for it. It turned out the timing belt and ball joints had to be replaced, which we paid $1,200 for. Because of the work which had to be done, we were able to negotiate the price down to $1,600 which was much better than the initial asking price.
10) Ask for Maintenance Records from the Seller
If the seller has taken good care of their car, then they should have at least some proof of maintenance records. These aren’t essential if you’ve ordered the CarFax report already, but any extra maintenance records will add to your peace of mind. Plus, you will have a good idea of your maintenance costs moving forward.
11) Fix the Essentials to Start
You don’t have to fix every minor thing on the car you’re buying. Just start by fixing the essentials needed to safely drive the vehicle. Focus on the engine, belts, tires, sway bars, ball joints, etc.
A broken piece of trim or a new paint job isn’t needed right away and can be saved up for later down the road. This way, you can get the car on the road faster while paying less money up front.
Also, consider cheaper alternatives while upgrading your car. For example, if you want to connect your smartphone to your car radio via Bluetooth, you can either upgrade the entire radio or get an FM Bluetooth transmitter like the one we bought for our Subaru.
The radio would cost $200 or more while the FM Bluetooth transmitter is less than $20 and is much easier to install. A little research can go a long way. :)
12) Follow a Smart Maintenance Schedule for Your Car
If you want to keep your newly bought used car to last as long as possible, then follow a normal maintenance schedule. The most common thing you’ll need to do is an oil change every 5,000 miles or so. Oil changes are the easiest and cheapest way to keep your car running smoothly over the long run.
Over time you will also need to do things like rotate the tires, flush certain fluids, and replace parts as they wear out over time. Try to stay as proactive as possible in order to avoid breakdowns.
13) Remember that Car Insurance is Cheaper for Older Vehicles
Another perk to buying older vehicles is that you’ll be able to pay less for car insurance - usually 20% less or more. Newer cars are simply worth more, and so they are more expensive to insure. We have 2 used cars and pay $80 for insurance for the two of us every month. That’s a lot less than I had to pay as a single guy right out of high school with only a beater to insure :)
14) Consider Buying the Car Between November and January if Possible
You can find better deals on used cars around the holidays for a couple of reasons. First, with a new year coming up, people will assume their car will be a year older and thus worth less than before.
In addition to that, people don’t buy as many used cars during the holidays so demand goes down and makes prices lower. Consider buying a used car between November and January if you can time it right. It may save you a few hundred dollars.
Most of these car buying tips are simple but will help you save thousands over time. The process for buying a car can be scary but following these tips will help you tremendously in the buying process.
What ways have you saved money buying your cars? Share in the comments below :)