What is a Bidding War and Why is it Free?

How to Buy a Used Car

How to Buy a Used CarUsed cars are each unique with different mileage and severity of wear and tear.  This is unlike new cars which are commodities (identical in every way except for price).  Because of this, you'll have a hard time making car dealers compete through a Bidding War like you should do when buying a new car.

But you can still save money buying used instead of new.  Aside from the car price, a used car will save you money on insurance, registration, taxes and depreciation (loss of the car's value over time).

The key to buying a quality used car at a good price is to take the right steps BEFORE you make an offer.  You want to find a good deal and feel comfortable that the car does not have any maintenance issues or a troubled past.

To buy a used car without having to worry if you're getting ripped off, follow the steps in this guide:


Step 1 - Search Used Car Listings

Where do you start when looking for a used car?  There's no real magic to this step, just figure out your budget, your preferred car type, and start combing through listings.

One way to narrow your search is to first look at new cars and even test drive a few to find the style you want.   Once you've settled on a model, search to see if you can find a similar car that's a few years old.

To find a large variety of competitively priced cars, you'll need to search a large number of listings.

I recommend searching for used cars on Edmunds and AutoTempest.

Once you've found a car you like, then it's time to make sure the car is in good condition.

 

Step 2 - Check the Car's History and Condition

To spare yourself a major headache, verify a used car's history and condition before making an offer. Take a lesson from car dealers who purchase used cars every day.  They always run a vehicle history report on your trade-in before they buy it, and you should do the same. A vehicle history report will let you know if the car has been in a major accident, salvaged or reconstructed, stolen or was a lemon.

If something turns up when you run the report, you can avoid a costly mistake and skip making an offer. But if you still want the car, before you make an offer show the seller a printed copy of the report, and point out any issues that will help you justify a lower price.

For more information, learn how a vehicle history report works.
It's also important to get the car inspected by a certified mechanic to catch any other issues that may not have been reported. Most auto repair shops will do a comprehensive inspection for $50-$150. Look for AAA or CAA discounts on inspections as well. Spending a little now to check up on a car has the potential to save you a lot in the long run. When buying off eBay or over long distances, the seller will often agree to arrange this for you if it means you're likely to purchase the vehicle. Just make sure the inspection is performed by a reputable shop.

Step 3 - Know the Car's Market Value

Before you make an offer on a used car, you need to know the car's value. The price the seller put in the window is not likely to be the market value. It's only a starting point for negotiations. There are two easy ways to get a realistic estimate of how much you should pay:

  1. Lookup the car using the Edmunds Car Appraiser
  2. Search similar listings in other cities on AutoTempest and try to find a comparable car that has a lower selling price.

Bring printouts of both of these items and use them as proof the seller is asking too much.  Forget about the seller's initial price, just give a realistic bid. If you have documentation that your bid is in line with market prices, it's very difficult for a seller to argue the facts.

And be sure to use pricing that reflects the current condition of a car by selecting: "Outstanding", "Clean", "Average", "Rough", or "Damaged". Many times a seller will price their car based on "Outstanding" condition, but there are almost always small dents, scratches, and wear and tear that make the car in less than perfect condition.  Be sure to detect and point out these flaws to the seller and explain that they should be reflected in the price.

Step 4 - Used Car Financing

Whether you're buying from a used car dealer or private party, finding competitive online financing is the key to saving money on your loan.

If you're buying from a used car dealership, use the same approach you would use to finance a new car:

  • Know your credit score
  • Get pre-approved from an online lender like myAutoloan.com
  • When you talk to the Finance Manager, give them a chance to beat the best interest rate you found. The Finance Manager works on commission and will usually try to beat or match your best rate if you give him a chance. Ask him what kind of rate he can give you and do not be embarrassed to show him your outside lending quote. If he cannot match it, then feel free to use your outside financing.

Step 4 - Making an Offer

If you follow the steps above you'll be better equipped to make an offer on a used car.  You'll know the true value of the car and be able to back it up with documentation.  Bring these items you to make your point.

  • A printout of a vehicle history report
  • A printout of the Edmund car appraisal
  • A printout of any comparable listings you've found at lower prices in other cities

Ask for a fair price based on these things and don't be afraid to walk away if you can't get the deal you want.  Different used cars come on the market everyday and there will be plenty of other choices if you take your time.