If you’re considering buying a used car, you might wonder what you need to do to protect yourself and get the best price (and interest rate) possible.
We understand. At Addition Financial, we spend a lot of time walking our members through the process of buying used cars. We do it because we want them to feel empowered and prepared.
With that in mind, we’ve put together this brief used car buying guide to help you get the right car at the right price.
Before You Shop
The used car buying process begins before you ever set foot on a dealership lot. Here are some guidelines to help you prepare to buy a used car.
Check Your Credit
The first thing to do is to check your credit report and correct any errors or discrepancies. You want to go into the process knowing what your credit score is because it will play a significant role in getting you the auto loan you need.
Get Pre-Approved for a Loan
The next step is to get pre-approved for an auto loan. A loan pre-approval will help you:
- Set a budget for your used car purchase
- Lock in a favorable interest rate
- Negotiate as a cash buyer
- Avoid paying a high rate for a dealership loan
During the pre-approval process, you’ll need to provide the usual loan paperwork, including proof of your income and employment. Once you’re approved, you’ll be locked in at your interest rate. Most pre-approvals are good for a limited time of 30 days or so, so you’ll need to buy your car before the pre-approval expires.
Research Cars
Once you’re pre-approved for a car loan, you’ll know what your budget is, and you can start doing some preliminary research on cars. At this stage, it’s a good idea to decide what makes and models you like. You might want to start by listing features that are important to you and finding out which cars have them.
Your car research should include:
- Safety and consumer ratings
- Kelley Blue Book value
- Known maintenance and performance issues
Deciding on makes and models will help you narrow down your choice of dealerships.
Research Dealerships
You probably have several car dealerships in your area. Before you choose one, do some basic research so you know what you’re walking into. Here are some things to check out:
- The dealership’s reputation and online reviews
- Whether there have been any complaints filed about them with the Better Business Bureau or your state
- Whether they have a franchise to sell Certified, Pre-Owned vehicles
- If they are an indirect dealer for Addition Financial (find out here)
Used car dealerships can be scrupulous and safe to deal with, but they can also be shady. Doing a bit of research ahead of time can help you avoid the dealers who are most likely to try to scam or pressure you into buying a car you don’t want.
It’s a good idea to have at least two dealerships that you are willing to buy from. That way, if one tries to pressure you or feels wrong, you can try the other.
Dig Deeper with Vehicle Research
After you’ve narrowed down your dealership choices, you should check out the cars they have available. Most used car dealers today have websites where you can view cars and read about their history. You may even be able to watch a video tour of the car or see it being driven.
If you see a car you like, and its VIN number is listed, run a CarFax report on it before you go to see it in person. That way, you’ll know the car’s history and you’ll be in a position of power when it comes to negotiating.
At the Dealership
When you arrive at a dealership, you’re likely to be approached immediately by one or more salespeople. Here are the things you should do to ensure you’re negotiating from a position of power.
Let Them Know You’re Pre-Approved for a Loan
As soon as you speak to a salesperson, let them know you’re pre-approved for a loan. It sends an immediate signal that you are a cash buyer and can walk away if you need to.
Ask Questions about the Car You Want
If you have a car in mind based on your research, ask to see it. As you look at it, ask plenty of questions. For example:
- Ask to see the car’s service history
- Check the interior and exterior for damage
- Ask who owned the car before and why they wanted to sell it
- Ask to see the title (and be wary of salvage titles which indicate the car has sustained serious damage)
Asking questions is important because it keeps the salesperson on their toes and lets them know that you’re not someone they can take advantage of.
Take a Test Drive
The next step is to take a test drive. The key here is not to let the salesperson talk you out of a test drive or rush you. Take your time. Test everything. Drive the car on local roads and the highway.
This may be your only chance to see how the car feels and spot potential problems, so be thorough.
Negotiate and Be Ready to Walk Away
Assuming that everything goes well with the test drive, it may be time to make an offer. You should lead things off with an offer that’s low but reasonable. Use the car’s Kelley Blue Book value as a guide.
If the salesperson tries to play games such as saying they need to check with their manager, tell them they should feel free to do so and you’ll check back tomorrow. One of the most common sales tactics is to leave you waiting until you’re tired, hungry and ready to finish things up. It’s much better to walk away.
You should also ask if you can have your mechanic check the car out. Anything other than an immediate “Yes” in response is a major red flag. Leave the dealership and don’t look back.
Buying a used car doesn’t need to be stressful if you use this guide to help you. You’ll be able to research cars and negotiate from a position of power – and avoid the most common problems people encounter when buying used cars.
To learn about Addition Financial’s car loan options, please click here.
Posted on Aug 19, 2018
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