When looking for a good used vehicle on a budget, there are many factors to consider. Many people start out with a limited list of vehicles that they want to consider. This is one of the most common mistakes. Good economy or bad there are always great deals out there, but not always on a specific make and model. Modern cars are all built to a very high standard, and it is hard to find a truly bad one. Of course some are much better than others but on the used market you never know what you might find.
The best used car to find is one that is still under the factory warranty but has low mileage (less that 50,000 miles or 80,000kms). Another major factor in your decision should be the history of the vehicle, does it have any accidents? Where is the vehicle from? If it has been involved in an accident how much was the cost of repair? Any insurance claim on the vehicle that exceeds about $4,000 warrants caution. Ask for a CarFax or CarProof report on the vehicle.
When selecting a vehicle on a budget it is always best to define a broad category of vehicles you are looking for. To illustrate the why this helps you find a great deal on a used vehicle see the two scenarios below.
Scenario #1 (what most shoppers will do)
Jennifer decides she needs a new SUV, because she recently graduated from nursing school and only works part time she can only afford a used one. After much reading on the internet and absorbing many articles on the subject (the writers of which have varying degrees of knowledge on the subject) she decides she wants a Toyota RAV4. Because the Toyota RAV4 is very popular she sees that prices on the vehicles are quite high and selection is not great. Not to be discouraged she test drives a well equipped 2010 RAV4 with 36,000 miles. The asking price is $24,998 (note the mileage is above average but the asking price is quite high relative to a new 2012 vehicle which can be had under $30,000). After test driving the vehicle she goes into the dealership and starts to negotiate on the price. After a few rounds of back and forth she is able to get the 2010 RAV4 for $23,900. It is worth noting that at 36,000 miles the 2010 RAV4 is with in a few thousand miles of being out of the main warranty that covers most of the components on the vehicle. Jennifer is happy with her new purchase but the payments turn out to be higher than she wants, because she paid some extra money to extend the warranty because she was close to the end of the factory warranty. Overall this scenario is quite common. By narrowing her options to one model she has limited her choices in the marketplace and thus been forced to pay a higher price for a vehicle with above average mileage.
Scenario #2 (how to make your dollars stretch further)
Anita has a 1999 Honda CR-V. A few months ago she and her husband brought the vehicle in for regular maintenance and were told that it would need about $2500 worth of work over the next few months. Because their trusty CR-V has almost 170,000 miles on it they decide to start looking for a new vehicle. They are thrifty so they decide to buy a good used model. Anita starts to shop around for small SUVs but notices that prices are often quite high especially on Honda CR-Vs and Toyota RAV4s. Anita decides to broaden her search to include the Chevrolet Equinox, Nissan Rouge and the Ford Escape. After visiting many dealers Anita happens to stop at a small Chevrolet dealer. She tells the salesman what she is after and he takes her to the back of the dealership and shows her a 2011 Chevrolet Equinox that they just took in on trade. It only has 9,000 miles and was traded in by an older man after about 10 months of ownership. Best of all she is able to get the vehicle for $21,000. It is worth noting that she is getting a very low mileage vehicle that she does not need to purchase extra warranty for and does not need to worry about repairs. By keeping her options open and shopping around, Anita and her husband have found an incredible deal.
Considering that both the parties in the two different scenarios were on a tight budget it is easy to see who will make the most of their available funds. There are great deals hiding all over the place on used cars and SUVs, you just have to be patient and flexible in your choice of make and model.
When looking at a used vehicle there are other things to consider apart from model year and mileage. As mentioned previously the vehicle history is important but there are also more subtle indicators of what kind of life the vehicle may have had. Looking at the front bumper for scrapes will tell you how the person treated their vehicle. The stereo and steering wheel controls should not have excessive wear on them, also look for wear marks in other common places such as the inside door panels. All of these indicators will show how the vehicle was treated.
When test driving your new potential vehicle there are several important bases to cover. First, drive it in similar conditions to the ones you would drive in every day. This will let you see how it will fit your lifestyle. Next, get the vehicle on the freeway and get it up to the maximum legal speed. This serves to reveal any unbalanced wheels, unusual wind noise or any other indicators of issues with the vehicle. After test driving the vehicle it is a good idea to see a copy of the mechanical inspection. This document will tell you how much work was required to bring the vehicle up to a retail standard. On any newer mow mileage vehicle the bill should rarely exceed $500. Most modern vehicles don’t need any major work for at least the first 60,000 miles.
When looking at financing options for your used vehicle you need to be careful. Most dealers will advertise very attractive payments online or on the vehicle its self. More often than not these payments are by way of 72 up to 96 month terms. The problem with terms of that length are two-fold: First the amount of interest you pay over 6-8 years is large. Second by taking a long term with no money down you lose any hope of liquidity in the vehicle (i.e. being able to sell it if you choose to). The reason the vehicle will be difficult or impossible to sell will be because the finance contract is so long the vehicle is depreciating faster than you are paying it off. Many people 1 or 2 years into an 84 month finance contract find that they owe thousands more than the vehicle is worth if they want to sell. A healthy compromise is a 60 month finance contract. At a good interest rate the vehicle will be paid off in a reasonable period of time, also leaving your options open to liquidate if you need to. Make use of the many payment calculators online to give you an idea of the price range of vehicle you need to look at.
Getting the best price on a vehicle can be a daunting process for many people. Most of us do not like haggling. Don’t worry, if you are well informed getting a fair price on a vehicle is not too difficult. Once you have selected a vehicle that is within your budget visit a website like Kelley Blue book in the USA or Canadian Black book in Canada. These will give you an idea of the average prices that vehicles sell for in your province or state. Based on the information you get from these guides make a reasonable offer on the vehicle you have chosen. Don’t make an offer on a vehicle that you are not sure you want, its a waste of your time and the dealership’s. Try to buy the vehicle for a little less than the listed prices in the guides. Don’t bother making an offer that is thousands less than to listed prices. Remember that the dealer will make money from your purchase that it how they stay in business. Before making an offer on a vehicle be sure you are aware of the dealer’s administration or “documentation” fees. Typically they run from $200-$500, sometimes however they can be as high as $900. These days you are better off going to a dealer vs a private sale mostly because the product tends to be of a higher quality and you have guarantees about the vehicle you are buying.
Relax, take your time shopping for a vehicle. Avoid shopping when you are tired or stressed. The right vehicle is out there for you just make sure your eyes are open so you can see it.