Wednesday, November 30, 2022

How Much Should I Pay For A Used Car

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Be Extra Cautious If The Car Is At Least 10 Years Old

How Much Should I Spend on A Used Car?

Brand new cars can be money pits too. The odds are more likely if you have a used car thats at least 10 years old and has had multiple owners.

Like everything else, cars eventually break down and need repairs and routine maintenance. Certain parts have a limited lifetime and you usually have to start paying for larger, more expensive repairs when the car approaches its 10th birthday. You should always pay the least amount possible for any vehicle but pay as little as possible when the car is older to hedge against any potential, unforeseen repairs.

If the car has been well-maintained in previous years, the odds of making expensive repairs are less likely because of preventative maintenance and responsible driving habits. When a car has been taken care of: clean engine, smoke-free interior, and a polished exterior, you might consider paying more for the car.

There are still plenty of good, reliable 10-year vehicles that make an excellent addition to your garage, just perform your due diligence.

How Much Can You Talk A Dealer Down On A Used Car

This is the central question that you should be considering when youre planning to buy a used car, and there’s no one-size-fits-all answer. The amount you can knock off the price ultimately depends on what the car is worth, how strong your financing position is, and how long the car has been on the lot.

Here are some things that can help as you prepare to negotiate:

  • Check KBB or another online resource to get an idea of the vehicle’s value and what similar models are selling for locally.
  • Consider how much trade-in value you may be able to add to the pot if you’re trading in a car you already own.
  • Revisit your budget to determine how much you can realistically afford to spend, whether you’re paying in cash or financing a vehicle.
  • Get estimates or quotes for similar vehicles from other dealers so you have some numbers to use as leverage with the dealership you plan to buy from.
  • Determine where to start with your initial offer and the max you’re willing to pay.

Negotiating a used car price is something of an art, and it’s important to have confidence as you begin to bargain. Don’t allow a salesperson to intimidate you into making a deal that you’re not comfortable with.

Negotiate With A Private Seller

Once you find a vehicle you would like to buy from a private seller. The first thing you want to do is get the vehicle identification number so you can review the vehicles history. This will keep you from wasting your time trying to buy a car with a serious discrepancy.

I recommend reviewing the used car history report on the vehicle. This will keep you from wasting your time attempting to buy the car.

When making contact with a private seller be polite and ask a lot of questions. This will give you an advantage when you start the negotiation process later. If you dont feel good about an answer you can cross the vehicle off your list. Ask these types of questions:

  • Whos name is the car titled in?
  • Why are you selling the car?
  • How long has the vehicle been for sale?
  • How many miles on the car?
  • What was the vehicle used for?
  • Do you have the maintenance records?
  • Did you buy the car new?
  • How is the overall condition?
  • Does everything work?

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Get Freebies From The Dealer

In some cases, you can get more bang for your buck for asking the dealer to throw in additional items for free.

These extras can include window tinting, anti-theft devices, all-season floor mats, wheel locks, splash guards, or additional keys.

Some of these can be easily secured by simply asking during the negotiation process.

You can also get the dealer to throw in a few free oil changes, tire rotations, and car washes.

However, one add-on to be cautious of is extended warranties. In most cases, these will end up costing you a lot more than they will save you.

Dont make an impulsive decision or be pressured by the people at the dealership. Warrantees are a huge profit center for dealerships, so they are incentivized to sell you one.

S To Estimating A Dealers Used Car Cost

How Much Should I Pay For a Used Car?

The first thing you want to do is find the car you want. You can do this easily by using free online used car listing sites. These sites have millions of used and certified pre-owned vehicles to choose from. Their online tools allow you to fine-tune search criteria to find that perfect used car.

Once youve picked out the used car youd like to own, print or write down all the specifics of the vehicle such as the year, make, model, trim, miles, and options. Youll use this information to help estimate what a dealer should have paid for the vehicle.

Youre now going to appraise the car just as a dealer would do if you were trading it in. The appraisal tool I recommend is Edmunds Appraisal Tool. Their tool tends to be closer to the local used car market is in your area at any given time.

Enter the information about the car. Make sure you enter the correct year, make, model, trim, exact mileage, engine, transmission, options, etc. You will then choose the vehicles overall condition. Your choices will be outstanding, clean, average, and poor.

If youre looking at a used car from a reputable dealer you should choose the condition as excellent to get the most reliable number.

The last section will provide you with three amounts:

  • Trade-in What you can expect for your trade from a local dealership.
  • Private Party Sale What to expect if you sell or buy a car through a private party.
  • Dealer Retail The price others are paying for the same car in your local area.

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Make Sure You Dont Overpay

Once youve set your budget and identified the used car you need, the next step is to compare prices for similar vehicles so you dont wind up paying much more than the average price for the model you want. Youll also want to carefully evaluate the condition of the vehicle before you buy.

Compare Car Prices

Look at multiple car shopping sites and listings to compare the prices you see for the model of your choice. Make sure you take notes on the best prices you find to reference later. When you head to the dealership, you can negotiate on the cars price using the information you found in your research.

Used Car Pricing: How Do You Know If The Price Is Fair

A lot of thought goes into the process of buying a used car. Of course, theres reading reviews and taking a test drive. Theres securing financing, assessing the vehicles condition and finding a car with the lowest possible odometer reading. But the most important part of buying a pre-owned vehicle is, of course, making sure the price is fair. If youre not sure how to do that, weve provided a few tips to make sure you dont pay too much.

Kelley Blue Book

Kelley Blue Book isnt just a book its now an easy-to-use website that helps you determine exactly what to pay for the car youre interested in buying. Simply go to Kelley Blue Books website, KBB.com, click What should I pay for a used car? and follow the sites prompts. Youll discover a value based on real-life market data, auction data and similar cars for sale. You can even find out a detailed number based on options and extras, as Kelley Blue Book allows you to select what features are included on the car youre considering. Find a used car for sale near you

But Just to Be Sure

Consider Condition

One thing we highly recommend before trying to assess the value of a car is figuring out its condition. Thats because youll want to compare listings that are similar, and youll want to provide KBB.com with the best possible information.

Related Used Car Buying Articles:

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Car Finance: Should I Go For Pcp Finance Or Hire Purchase

Should you prefer the pay monthly option, consider whether its important to you to own the car or if you simply want the lowest monthly payments and are happy to put down another deposit after several years, followed by a series of payments to get into another car.

If ownership is important to you, then look into Hire Purchase you get relatively affordable monthly instalments and own the car outright once youve made all the payments. As youre paying off the debt faster than with PCP finance, youll pay less interest overall, too.

If you simply want the lowest monthly payments, however, choose PCP finance youll have smaller monthly bills and can hand the car back when the contract ends, put down another deposit and get a new one.

As you dont own the car with PCP – unless you make the large optional final payment – youll want to put some money aside during the contract for your next finance deposit, though. Otherwise, you may find your monthly payments ramping up when it comes time to trade up, as the less you put down on a deposit next time around, the higher the instalments will be.

Used Car Buying Tips: How Much Should I Pay For A Used Car

How Much Should We Pay For Our New Car?

Updated Oct 19, 2020 | Same topic: Best Advice for Car Buyers

Buying a car can put a dent on your budget. Regardless if it is brand new or a used car, it is still a significant amount that typical households dont splurge on a regular basis. Purchasing a car requires a lot of thought and bigger savings on the side, so the usual expenditures and responsibilities wont be sacrificed.

Buying a used car is smart because it entails saving some cash

Being practical and cost-efficient is the smart way to go nowadays. Sure, there are benefits of purchasing a brand new car but buying a used car is the route that most real-world folks go to. There is nothing wrong with buying and driving a used car in the first place.

So as a smart and practical prospective used-car buyer, how much should you be preparing and allotting for your future car?

Unfortunately, there is no magic number to provide you with a specific amount but how to make sure that you are getting a fair and smart deal is something better for you to dwell on and Philkotse.com will help you with that.

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Does The Used Car Check Out

Youve found the car you liked, it looks clean, smells normal and drives great. Youve checked the Carfax or Autocheck report and its free of accidents. If there is an accident reported, youll have to be the judge on if its worth buying. We decided we didnt want a car that had been in an accident. If there are lots of service records, awesome. If not, dont worry about it, well make sure we are getting a reliable car later in the process.

That brings us to the big question

Used Cars Do Not Have A Factory Invoice

Unlike new cars, used cars do not have an invoice. Each used car must be looked at on an individual basis. Dealers buy used cars from auctions, wholesalers, rental companies, or acquire them through the dealerships as trade-ins.

Figure a dealers true new car cost here.

Dealers make an internal cost sheet for each individual used car. The cost sheet acts as an invoice for the used vehicle and allows management to see exactly how much they have invested in a vehicle.

This type of system makes it difficult for you to determine what the true cost is on a used car. You can never tell if the car dealer bought the car cheap or overpaid for the vehicle.

Where are more tips for this topic?

  • Dealers keep their used car costs a closely guarded secret. Normally, only a select few within the dealership have access to this top-secret information.
  • No matter what anyone tells you, theres no way to tell exactly what a dealer paid for a used car. Each used car must be looked at individually. The condition of the vehicle, mileage, factory options, and even consumer popularity are just a few factors that determine the dealers overall cost.
  • Used car sales are a high-profit area for a dealership, one of the reasons for this is, a dealer does not have to disclose their cost for the world to see. Dealers have a greater opportunity to make more money selling a used car over the sale of a new one. This is where the old saying, Buy them cheap and stack them deep comes from.

More car buying tips

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Determining The Dealer’s True Cost

When you’ve found a car you like, the next thing you’ll want to know is the dealer’s new car cost. Use this formula to calculate the cost: Invoice price â dealer holdback â factory-to-dealer incentive = dealer cost.

While dealers are open about customer rebates and advertise them publicly, they are not open about factory-to-dealer incentives. This information is not advertised or shared with potential buyers. To obtain this information, search for your selected vehicle on sites such as Edmunds to find current incentives.

As an example of what you should pay for a car, say you’ve found a vehicle with a sticker price of $31,000. The invoice is $29,000, and the dealer holdback is 3 percent of the invoice, which comes to $870. There’s an additional $2500 in secret factory-to-dealer incentives.

Using the dealer’s true cost formula, here’s an example of what you might pay for this car:

  • $31,000: the new car sticker price
  • $29,000: the factory invoice price, which includes factory added options
  • Subtract $870 for dealer holdback
  • Subtract $2500 for the factory-to-dealer incentive
  • $25,630.00: the dealer’s true net cost

When calculating an offer, you want to get the best deal possible. This means you don’t want to pay more than 5 percent profit for the car. Therefore, it’s a good idea to also calculate your offer using 5 percent. By having both figures, you’ll know how much wiggle room you have to work with.

All The While Watch The Numbers Carefully

How Much Should You REALLY Spend on a Car in 2021

Be ready with a pad of paper, and the whole time youre in that cubicle working that deal, write down the numbers they tell you. You need to know the current figure of every number any time anything changes. Thats so they cannot inflate your trade allowance, and stuff it into the MSRP or the purchase price. Here are the typical numbers you need to be tracking:

  • MSRP
  • Discounts
  • Trade allowance
  • Dealer fee
  • Balance

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About Kelley Blue Book New Car Prices

When buying a new car, theres a lot of pricing information to consider. Most people look at the MSRP sometimes also known as new car sticker price. Some shoppers dig to find the invoice, thinking they can get an even better deal on a new car. But how do you really know how much you should pay for the new car youre interested in? Rely on Kelley Blue Book and KBB.com, with over 90 years of knowledge about car pricing. Check out the Kelley Blue Book® Fair Market Range and Fair Purchase Price for New Cars. Updated weekly, it takes data from thousands of deals, current supply and demand and regional and seasonal factors to show you what you can expect to pay for a new car. Sometimes the price might be close to MSRP, if the vehicle is new and in high demand. Other times, you might actually plan to pay thousands below MSRP if the car is widely available. Or, if youre not sure which car you want, KBB.com even helps you browse new cars by category and make, so you can find exactly the one you want.

What Should I Pay For A Car: Everything You Need To Know

Price is one of the biggest considerations when shopping for a new or used vehicle. Know what price range is within your budget before visiting a dealership.

Price is one of the biggest considerations when shopping for a new or used vehicle. Know what price range is within your budget before visiting a dealership. When asking yourself, ‘What should I pay for a car?’ don’t forget to factor in maintenance and upkeep, repairs, car insurance, and fuel, in addition to the down payment and monthly payments.

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The Used Car Age Sweet Spot

Taking these figures into account, buying a vehicle thats 2-3 years old means youre getting a nearly new vehicle while taking none of the depreciation hit yourself.

As an example, a car that would have cost you $30,000 new can be yours for around $16,000-$20,000 if you wait 2-3 years to buy it.

Even further savings can be made if you purchase an older vehicle. A five-year-old car will typically have lost around 60% of its value. So, our $30,000 example vehicle can be yours for around $12,000 five years down the line.

Why Buy A Used Car

How Much To Pay For Your New Car

The first question is, what kind of car do you want? Perhaps youve already made the smart decision to buy a used car . If not, buy a used car. Why? Because a new car depreciates roughly 11% after you sign on the dotted line and take your new vehicle on your first joy ride. It gets worse, after 5 years the new car you purchased is worth 37% of what you paid for it at the dealership. Unless you have money to blow, let the person who isnt reading this post take the financial hit of a new car so you can benefit later from their costly financial mistake.

Which make and model is a personal and budgetary decision. A lot of the financial gurus, like Dave Ramsey, say you cant afford a car unless you can pay cash for it. I wholeheartedly agree. Dont dump money into a car you cant afford because its a fancy brand or has a slick style. This vehicle only needs to get you from point A to point B safely, not show the world how much money you have .

Once youve decided on a used model you like and can afford, I recommend you check out Consumer Reports. They have a list of used cars with ratings on which cars have turned out to be the most reliable. Many public libraries subscribe to Consumer Reports so you dont have to pay the $6.00 monthly fee.

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