My personal journey from debt-burdened to financially free has allowed me a unique view on cutting costs and saving money. Compared to the old me, the new and financially wise version of myself has found ways to get the best value for my money. It was no different when I went shopping for a used car last year.
At first, it was all a little overwhelming. There were so many great options to choose from out there and when I finally found a car that fit my needs, I wasn’t sure if I truly was getting the best deal. Luckily, my super saving skills kicked in during my search. I ended up paying 25 percent less than the asking price by implementing these 10 money saving tips. I only felt it was appropriate to give back to this great community and share the tips with you all.
10 Money Saving Tips for Buying a Used Car …
1. Research Used Cars That Require Minimal Maintenance
When I was looking at purchasing a used car, I found the choice was cars that historically cost less to maintain over their lifetime. On average, Americans spend as much of their income on maintenance and insurance costs as they do the actual car. The difference in maintaining a Toyota Camry instead of a BMW 328i would save me, on average, $12,300 over a 10-year span. Now that’s a lot of money!
It’s pretty safe to say that looking into the maintenance costs will help you get the most value out of a used car purchase.
2. Look at Resale Values to Reduce Depreciation
Along those same lines, researching cars’ resale values in comparison to purchase price ensured I was getting the best bang for my buck.
For example, if I had bought a new Toyota Tacoma in 2012, it would be worth about 61 percent of what I could sell it for today as a used vehicle, according to Cars.com. Compare that to the purchase of a 2012 Nissan Titan. I would be able to resell the vehicle for only 31 percent of what I bought it for. An extra 30 percent on an original MSRP of $20,000 would mean another $6,000 in my pocket when it comes time to sell the car four years later. That’s all because I did my research and bought based on depreciation. Resale values of used cars can be found here.
3. Choose a Vehicle That is at Least One Year Old
Did you know that when you buy a new car it depreciates in value by 11 percent just by driving it off the lot? I sure didn’t. And after one year, that same car is worth 25 percent less!
For those trying to save money on a used car purchase, it would be wise to shop for cars that are at least one year old. I shopped for the previous year’s model of the Toyota Camry. I found I was able to buy a nearly brand new car at a 25 percent discount off the sticker price.
4. Create a Bidding War Among Sellers
Haggling never really has been my strong suit. Having read blog posts, Reddit posts and just talking to friends, I realized I needed to up my negotiation skills. I remembered what I learned about supply and demand in my high school economics class. I’m sure Mr. Smith would be pretty darn proud of me if he knew I used what I learned in his class to get the best possible price on a used car.
As I shopped around for the best value, I threw out hints that I was looking at nearby competitors. By doing this, I created a surplus in supply in the mind of the sellers, allowing me to pit them against each other to beg for my business. In the end, this resulted in me getting the best car for the best price.
5. Negotiate the List Price
After lots of research and visits to used car lots (big and small) I learned that, whatever the sticker price may be, there is always room for negotiation. Moreover, pricing is subjective. One ALWAYS should have the courage to try getting the best deal possible by making an offer you feel comfortable paying.
As a rule of thumb, I started by offering 10-15 percent off the list price. I used any flaws or areas of weakness in the car to reduce the value in the seller’s mind. Then I gauged the seller’s reaction to see where I stood. So if the car cost $10,000, I offer them $8,500-$9,000 and said, “the tires are worn out and need to be replaced soon and the front hood has a large scratch.”
If the offer was too low or insulting to the seller, I always had the chance to offer a little more and they would listen because money talks.
6. Cut Out the Middleman by Buying from a Private Seller
Used car dealers are good in the sense they usually provide extra security on your purchase, but I learned this extra protection is built into the final sales price. This is an added expenditure that I noted when dealing directly with a private seller. I took a look at Craigslist and AutoTrader and found some great deals from regular people just like me.
Ultimately, I did not end up buying directly from the owner, although it would have saved me a good chunk of change. The optimal scenario for me was finding the perfect option for my wants and needs AND getting the security of buying from a reputable and reliable used car dealer.
7. Don’t Splurge on Unnecessary Add-ons
Each and every extra feature that has been built into the car comes with a price tag. Yeah, it would be nice to have satellite radio, heated leather seats and a touchscreen navigation system, but the budget I had did not allow for luxury features.
I focused on the basics and going with the car that covered all of my needs. I did not give in to the part of my brain that was saying “it would be cool to have…” That alone saved me hundreds, if not thousands, of dollars.
8. Cars That Use Gasoline May Be Cheaper than Diesel to Operate and Maintain
Diesel versus gasoline was something I had no idea about. However, I knew I had to learn because gas prices in California are so high. I found the majority of diesel vehicles are more fuel efficient than ones that use gasoline. However, it’s highly debatable that going with a diesel vehicle will save you money in the long run.
Cars that run on diesel are known to be more expensive to purchase and maintain when compared to their gasoline counterparts, offsetting the average 30 percent in fuel economy savings that diesel can provide. Factoring in the higher purchase price, fuel prices and maintenance costs, it can be said that going with a gasoline car saved me money over the vehicle’s lifetime.
9. Buy at the Perfect Time
When it came to getting the best deal, I learned that the season can be a huge factor in whether the seller is willing to negotiate.
I called up a used car dealership in San Diego and spoke to the general manager. When I asked if, and when, there are advantageous times to buy a used car he said, “Many dealers are more willing to negotiate the price down at the end of particular months to meet designated sales quotas. Buyers should be on the hunt for a deal at the end of March, June, September and December, when salesmen need to hit certain numbers to get their bonuses and dealers want to clean up their inventory.”
At the end of the day, it’s a win-win for both parties. I adhered to this advice and set out to buy my used car at the end of March. I got a great deal because I was a savvy negotiator and the seller got to clear up space for a new vehicle while hitting their sales quota.
10. Complete a Full Inspection and Test-Drive Before Signing
After shopping around and finding exactly what I had been looking for in a used car, I didn’t jump the gun and sign on the dotted line. First I test drove the car and had a full inspection performed by my personal mechanic (my uncle, ha-ha). I found out that missing this step is one of the costliest mistakes a used car buyer can make.
Imagine if I had paid for a used car from a seller without having my uncle do a full inspection? Everything seemed to be in good working order when I took a look under the hood. Then a few weeks into driving my new purchase, something didn’t sound right. So I take the car into my local mechanic and he comes back with bad news. The car has been leaking transmission fluid and now it needs to be replaced.
All of a sudden that great deal I thought I got has turned into an expensive $3,000 headache. If I would have properly inspected the car and known what to look for, like a mechanic would have, this problem could have been avoided in the first place. There is no such thing as being too careful.
I hope my experience helps you the next time you are in the market for a used car. I hope you are able to implement these tips to receive the ultimate deal on the perfect car.
Do you have a unique or memorable experience buying a used car? If so, what is YOUR top money saving tip for getting the best deal?