Buying a Used Car
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Buying a used car instead of a new car is one of the best ways to save a significant amount of money while still getting a great quality vehicle. If you’re looking to buy a car, no matter where you buy or which car you choose, it’s a big investment. If you follow this article, we’ll show you how you can save the most money when buying a used car.
Depreciation in New Vehicles
One of the biggest reasons to buy a used car is to avoid paying for the depreciation on brand new cars. It’s estimated that cars depreciate by 9% to 11% the moment that vehicle is sold off the dealer lot. After the two to three year mark, most new vehicles have depreciated by a staggering 22% to 30%! So while these statistics are a new car buyer’s nightmare, they’re a used car buyer’s dream if they know how to play the game. The best time to buy a used car is once the car has gone through its most significant depreciation period. So if you’re on the market for a car right now, you should be keeping an eye out for 2018 and 2019 car models.
Doing The Research
Before you make any major investment, you need to research the market thoroughly. Decide on what type of used car makes the most sense for you, whether it’s a truck, sedan or SUV. Once you’ve chosen the type of vehicle, you need to close your scope on 5-6 vehicles across all manufactures to narrow down your picks. Be sure to check out reviews online, special features of the vehicle and of course, the price differences between all the vehicles. You can use valuable tools like a car loan calculator to see how much the monthly payments would be if you chose a particular vehicle. Having the knowledge of the costs is something you need to go into the dealership with so you can negotiate accordingly.
Visit Multiple Dealerships
One of the biggest rules about buying a car is to NEVER buy on your first visit to the dealership. Your first dealership visit should be to see the vehicles in person, maybe do a test drive and to decide on whether or not you like the way the salesperson dealt with you. If you felt like on your first visit that despite telling the salesperson you weren’t looking to buy today and they still seemed to be pressuring you, that’s probably a good indicator that you should buy elsewhere. When you’re buying a car from a dealership, you should have the confidence that you’re not going to be upselled or charged extra non mandatory fees.
Fuel and Maintenance Costs
While this point goes along with doing your research, you need to make sure that you know the limitations of certain vehicles. All vehicles consume fuel at different rates and while one cars price tag may be cheaper at the dealership, it may cost you more in the long run in fuel than the more expensive car next to it. Obviously, a truck will cost you more in gas than any sedan but a truck has an entirely different use than a sedan. The second part of this point is the price of maintenance on particular vehicles. While you can never be sure how often you’re going to be in the mechanic shop because anything can happen, you need to look at the long term reliability of the vehicle. This is as easy as checking out online reviews to see if you can notice any trends in a particular vehicles maintenance requirements. If you’re noticing that one of the sedans you’re interested seems to have a lot of transmission issues, it may be in your best interest to avoid that vehicle.
Buy At The Right Time
Depending on what time of the year or month you decide to buy a car, you could save thousands. Typically, May is the beginning of the busy season for car salespersons. So if you’re able to wait towards the end of the busy season to buy a car, you could see yourself getting a discount as dealers and salespeople are trying to rid their car lots of last years vehicles. Typically the best months to take advantage of this is from November to February. If you’re unable to wait this long to buy, perhaps consider waiting until the end of the month. Many car salespeople have monthly quotas, so towards the end of the month there is often a big push to meet or exceed their quotas. This may get you a discount on the price of the vehicle or include some extra features at no extra cost.
Learn To Negotiate
Negotiating is an integral part of the car buying process. Every dealership has a manufacturers suggested retail price also known as MSRP, dealers then have the discretion to increase that price. You being aware of that should give you the confidence to know their is in fact room for negotiation. On top of MSRP, many dealers have non-mandatory fees like extended warranties, administrative fees and block heater installation. You may see them try and add these in acting as if they’re mandatory fees, but you need to be aware these aren’t mandatory and you can use them to negotiate a better price.
Figure Out A Down Payment
Once you’ve negotiated on a price, you need to decide how much of a down payment you want to make. Typically, a good rule of thumb is to put down 10% of the cars total value. A down payment is great for two reasons. First, it means you’re asking the lender for less money, which will both increase your likelihood of being approved and most likely decrease the interest rate. Secondly, putting a down payment will lower the costs of your monthly payments. Ideally, you put as much down as you can afford without putting yourself at risk of financial strain.
Use A Car Loan Calculator
Using a car loan calculator is a great way to get an estimate of what your monthly payments will look like. All you have to do is plug in basic information like the price of the vehicle, the length of the financing term, your estimated interest rate, which province you’re in and the down payment or trade in value if you intend to use these two. This should help you better understand what you can afford.
Are you ready to buy a car?
If you’re ready to shop for the car of your dreams, let Car Loans Canada help makes the process easy. We have plenty of resources on our site like the rates page where you have access to see the lender’s rates. Once you’ve seen the rates page, you can check out our car loan calculator and plug in numbers to give yourself a rough estimate of the costs per month of owning a vehicle.