How to Buy a Used Car Guide

When to Buy a Car

This how to buy a used car guide is meant to help people who are struggling with the decision for when to buy a used car versus keeping their existing car, understand the true cost of car ownership and why it make sense to buy used as well as other tips to buy a used car.  I’ll keep the guide updated as I learn more from my own experience and research.

Personally, we’re driving older models and have avoided new (used) car fever for a while.  We have a 2003 Tahoe with 140,000 miles on it and a 2005 Civic with nearly 100,000 at the time of writing this guide.   Our cars are obviously aging and I know they aren’t going to last forever.

Is it time for us to get a new (used) car?  I’m not sure. I’m wrestling with the decision, but as I consider the following reasons to buy, I’m not sure we qualify yet.

Reasons to Buy a New (Used) Car

1.Your Car is no Longer Safe

Seriously, if you’re driving a car that is unsafe for any reason, you either need to get it fixed or look into a replacement ASAP. If you drive used, it’s a good idea to find a local mechanic that can change the oil (if you’re not up to it yourself) and can look the car over from time to time. Why would you risk your family members in an unsafe vehicle? Don’t do it!

2. Maintenance Costs are Eating You Alive

Some cars require more maintenance care and the prices can get extremely expensive for luxury cars, such as Mercedes, BMW’s, etc. We used to drive a Volkswagen Passat that just about sent me to the crazy house. Every 3 or 4 months something went wrong with it and it was never less than $300 to repair. I about lost it when the final repair was going to cost well over $1000. I couldn’t take it anymore and finally sold it.

I have a lengthy commute so I opted for what I call a commuter car – my Honda Civic. Again, i has nearly $100,000 miles on it and I’ve never paid for anything other than an oil change and some brake maintenance. Would I prefer to drive the Passat or Civic? Honestly, I would prefer the Passat, but I’m a lot less financially stressed driving the Civic. Did I mention my Passat finally broke down on the side of a highway?

3. Your Car is Destroying Your Gas Budget

Could you save a lot of money on gas if you were to drive a more fuel efficient car?  I already mentioned we drive a 2003 Chevy Tahoe.  It guzzles a lot of gas each month! I don’t know for certain but I think we could save over $100 per month if we were to drive a newer used car with better fuel efficiency. Is this reason alone worth a car payment since we won’t be paying for a replacement car with cash? No, but might be if we get to the point where our maintenance costs increase significantly.

4. You’re Not Concerned about Losing Money :)

Seriously, the more cars you buy, the more money you’re going to spend. I love nice cars, but cars are definitely the biggest money wasters. The depreciation is ridiculous when you drive a new car off the lot. Edmunds states in this infographic that a new car depreciates 11% just when you drive it off the lot! So, that’s throwing out $2,200 out the window when you drive off the lot. When you look at the numbers closely, it’s crazy and you can see why it makes absolutely no sense to buy new.  Used cars depreciate too, so if you’re constantly switching cars, you’re throwing away money.

What is the True Cost of Buying a Car?

Okay, so let’s say it’s time to be buy a replacement car (hopefully, used). It’s important to consider the true costs. It’s not just the price you see on the car lot.

Edmunds true cost to own calculator is one place that will give you all these numbers for all cars both new and used. Here are some of the costs you need to consider:

Insurance – Some cars have a higher insurance cost than others. Don’t forget to estimate this cost with your insurance company before making a final decision.

Depreciation – Again, don’t forget about depreciation when buying new. What your car costs new is nothing near what it will be worth when you drive it off the lot. Buying a car is an expense. The only way to truly minimize the cost is to drive it for the long-run when depreciation is low depreciation and the car is hopefully a reliable enough choice that the maintenance costs are low too.

Interest for the loan – Unless you’re getting a 0% loan on a new car you’re going to be paying interest payments. In other words, you’re in debt to a lender and car payments will hang over your head for on average 5 years. This thought alone makes me want to hold off on getting a replacement used car.

Title and tax fees – You will pay title and taxes up front so it don’t forget to calculate this extra expenses that will increase your payment if you don’t pay for them with cash.

Such costs can sneak up on you when you have to make your first payment, so make sure you plan for them in advance.

The Ideal Car Situation

I realized the other day my wife and I are in a pretty good car situation, even though we want to make a change.  To recap, the 2003 Chevy Tahoe has 140,000 miles and the 2005 Honda Civic has about 100,000 miles.

That may seem like a lot of miles and it is. However, both cars are known for their reliability. They both have low depreciation because of their age and haven’t cost us much in maintenance so far.

Now I do recognize the maintenance costs are about to increase. Both need some brake work. I also need to get the Tahoe to the mechanic to look it over.  Based on the car buying criteria I previously mentioned, I want to make sure it’s safe for our family and also determine if there are any hidden maintenance costs around the corner.

All this being said, the Tahoe needs a few repairs, including a driver’s side seat that has a mind of it’s own and a rear hatch that will knock you in the head if you don’t watch out.  But,  low depreciation, no payments and low maintenance is the ideal car situation in my opinion.

How to Buy a Used Car

What to Look for in Your Next Car

Alright, time to buy a car. You get it. You understand the costs. You NEED a car! Here are some things you might consider looking for in your next car that will help minimize cost and provide the car you need:

Used – I know there is nothing that beats the new car smell. Again, it’s great, isn’t it? However, given the cost of depreciation I keep mentioning, buying used is always the best deal from a financial standpoint and will save you money in the long-run.

Price - Use sites like Kelly Blue Book and Edmunds to research cars of interest and get an idea of price.   These sites also offer the ability to look at the price difference across models and features.  Never go into a dealership or work with an owner without knowing what the car is worth.

Low maintenance and reliability - Try to shop around for a car that is going to have lower maintenance costs in the long run and that has a track record for being reliable. You definitely don’t want to end up in the same situation as I did with the Passat!

Avoid Options – Options are great but they cost a lot of money. Arguably, they aren’t necessary. I get the fact that you may have some non-negotiables such as leather interior, especially with kids. That’s probably a non-negotiable for us. However, we don’t need all the other bells and whistles.

Buy a car that meets your needs – I love Jeep Wranglers. I had one before I got married and had a lot of fun cruising around town with the top down. Man, that jeep was fun! I really want another one, but I have to question whether or not a Jeep is ideal for my commute and kids. Tough decision.

Don’t hesitate to shop around and take your time until you find a car that absolutely meets your family’s needs with no regrets. Hopefully, it’s a car you’ll be driving for a long time.

Fuel efficiency – Gas mileage used to not be as important, but I imagine gas prices will do nothing but continue to rise in the future. Find something that doesn’t eat up your gas money and that you can feel okay about cruising around town on a Saturday with the family without worrying about gas. Finding a low gas mileage vehicle also helps the environment. :)

When to Buy a Used Car

Okay, you know what you’re shopping for, but when should you buy a used car?

After you’ve done your homework - The best time to buy a used car is after you’ve done your homework.  The need may be urgent given a mechanical or safety issue, but don’t ignore the above steps.  Take your time as much as possible and don’t let new car fever get the best of you.

End of the month - Another good time to buy is towards the end of the month when car dealers are looking to get their cars off the lots to meet quota.  You can also check out the beginning of the year when dealers are trying to get new inventory on car lots.

When it’s cold outside - Most people aren’t shopping as much during the winter season and car salesman have to eat too.  It’s a good time to shop if you don’t mind shopping in the cold.

What to Do Before You Buy a Used Car

Finally, before you buy, consider these tips to make sure you’re not walking away with the Volkswagen Passat I used to own:

Visit a mechanic – I think it’s a good idea to find a mechanic that can be trusted to perform regular car maintenance and provide an honest opinion about car repairs and maintenance. Last time I bought a cart I took it to a local mechanic and paid a couple hundred dollars for a review. This was well worth the money and I was able to use some of the things he found to negotiate the price of the car.

Test drive with and without kids – Obviously you’ll want to test drive the car a few times. Try it with the kids, but also make sure you drive it by yourself without any distractions. You’ll probably notices some things you didn’t when the kids were making noise in the backseat.

Get a CarFax- I also signed up for a CarFax report so that I could learn about the history of the VIN. Doing this saved me a big headache in buying one car that had several owners and had been reported in an accident a few times. Again, this was well worth the money.

Final Thoughts

Buying a new car is no small decision. After houses, this is typically the largest expense for families and spending too much money can cause a lot of financial stress. Know when it make sense to buy a car, consider the true costs of ownership, find the right car for your situation and do you due dilligence before buying and you’ll make the best decision for your family.

What are your tips for buying a used car?

About Jason Price

Jason Price is a family man saved by grace. Passionate about faithful financial stewardship (1 Cor 4:2 NIV), soccer and the Pacific sun.

  • Martin Worthy

    Look for any hidden fees involved if you’re going to have the car shipped.