On average, the cost of a pre-owned car is about half that of a new one – but remember – used cars are only bargains if we don’t overextend ourselves paying for them. Try these tips for deciding just how much you can pay for a pre-owned car:

1. Calculate all monthly expenses to determine the remaining amount available from your monthly income.  Calculate and include everything you can think of that you pay for on a monthly basis, including realistic expenses for things like food and entertainment.  

2. Estimate and include fuel costs in your expense calculation, and whether the vehicle will be driven to work or school every day.  Learn what fuel costs are in your area and calculate how much it will cost you on average to fill up every week.   This is especially important if you commute over long distances daily.

3. Check insurance rates. They’re normally lower for used cars, but will vary based on the individual and specific vehicle.  Also, ask about discounts and find out if you qualify. 

4. Take into consideration any other associated costs, such as registration and license fees, or if the vehicle will need new tires.

5. Most financial experts say a monthly loan payment should be no more than 20 percent of your remaining monthly income.

6. Most lenders expect a minimum down payment of 10 percent, but it’s sometimes less – or none at all – depending on the lending institution.  If you are required to provide a down payment, it’s a great idea to put down more than 10 percent; the more down payment you can provide, the less your monthly payments will be.

7. Consider using numerous Internet sites to help find used cars in your price range. There are numerous sites that contain thousands of vehicles for sale from reputable dealers.

8. Take advantage of Carfax or AutoCheck to obtain a vehicle history report.  These reports can help you determine if the car you may be considering has ever been in an accident or flood, and will help to determine if the odometer is accurate.

9. it’s a good idea to have a used vehicle checked out thoroughly by a trusted mechanic before you buy.  Many people believe that after a test drive, this is something that’s simply unnecessary, or they feel uncomfortable asking if they can take the vehicle to a service garage, but it’s important to remember that it’s your money, therefore you have the right to know exactly what you’re paying for.  If the mechanic uncovers any problems, these problems can be used as a bargaining tool to help lower the cost of the vehicle, or can be a reason for you to decline the sale completely. 

10. As always, never be afraid to ask questions and if you believe you’re not being treated fairly, or with respect, take your business somewhere else.

Tags: Advice, Car Shopping, Cars Loans, General, Guides // Add Comment »