How to Buy a Used Car Without Getting Ripped Off


Everyone knows you can save a ton of money buying a used vehicle instead of a new one. But how are you supposed to buy a used car without getting ripped off?

Used car sellers are notorious for skillfully covering up expensive mechanical problems when selling used cars, and to make matters worse, used cars are often sold without any warranty at all! Even though used cars cost thousands less than new ones, overpaying for a used car can still be a significant financial setback.

How can you get a great deal on a reliable vehicle that fits your budget and come out a winner in the used car game? Here is the method that I have followed to buy several great used cars without paying too much. (See also: 3 Reasons Why You Should Never Buy a New Car)

1. Set Your Car Budget Before You Start Shopping

As with buying most things, one of the big potential problems when buying a used car is simply spending more than you intended to spend. When car shopping, it is easy to be drawn to newer models with lower miles. You can always find a little bit nicer car if you are willing to pay a little bit more money.

The best way to avoid getting drawn into spending more than you can afford is to set a budget first, before you even start looking at cars. Decide how much you are willing and able to spend on a used car and have this number clear in your mind before you start looking. The budget for my last car was set at $5,000 before we started shopping.

2. Select Your Target Vehicle Model

Next, think about how you will use the car. Is there a chance you could need to haul kids or pets? Will you want to use the car to help move your stuff to your next house? Will you need to tow anything?

Even though gas prices are low, driving a car that gets 15 MPG still costs twice as much as driving one that gets 30 MPG! Pick the most fuel-efficient car that meets your needs and you will save money on gas every time you drive.

Based on your current and anticipated needs, start picking out makes and models that are of interest. Car lots can be a good place to get ideas for vehicles that would work for you, but don't let a salesperson pressure you into buying anything until you have finished your research.

Check book prices using a site such as Kelley Blue Book to see what model years and mileage would fit within your budget. Use Consumer Reports to see reliability ratings, and check the Insurance Institute for Highway Safety to review crash safety ratings for the make, model, and year of several vehicles. Look on Craigslist for local car lots to see what models are available in your area.

Based on the results of your research, narrow your field to the best make and model for you. Based on book price, select a range of a couple model years that are likely to fall within your budget.

After you have selected a make and model that meets your needs and a range of model years that will fit your budget, get familiar with the options that are available. One good thing about buying used cars is that options don't affect the price much; you just need to make sure to find a car that has the options that are important to you. If you really want leather seats or a towing package, it won't cost much more if you can find a car that has these options installed.

3. Test Drive Your Target Model

Next, it's time to set up some test drives. Your goal is to test drive several cars of your target make and model, in your budgeted price range, with your preferred options. The condition of used cars varies a lot. With some patience, you can find one in the best condition available.

Look for cars to test drive both from dealers and from private party sellers on Craigslist. You can often find better deals buying directly from sellers on Craigslist. Don't test drive cars that are outside of your budget — you could end up falling in love with an expensive car and paying too much.

Driving several cars of the same model will allow you to make a good comparison of condition and how well the car rides and handles. During my most recent test drives, I was surprised to find that the car that handled best and that was in the best condition was two years older and had more miles than the other cars I drove.

You can't tell much about the condition of a car by its age and how many miles are on it. The type of driving (city vs. highway) and how the car was maintained have a big impact on the condition of older used cars. You need to test drive a car and check it out in person to know whether it is in good condition or not.

You may be disappointed with all of the test drives. This can be a sign that the model you targeted is not right for you. Another problem can be that there are not very many of your target model for sale in your area. Go back to Step Two and choose something different if you don't find a car that you want after going on some test drives..

4. Used Vehicle Inspection From a Mechanic

You can learn a lot about a vehicle from a test drive, but there are lots of problems that could escape your notice. For about $50, you can have a mechanic at a car shop do a used vehicle inspection. This is useful to help you avoid buying a car with major problems. It is also useful to have the inspection results when negotiating the price.

Even if a used car is in great shape, the used vehicle inspection will usually turn up a list of routine maintenance items and concerns along with a price estimate for repairs. This is a powerful bargaining tool to be used along with book price in negotiating the best deal.

5. Negotiate the Best Price

Unlike most other items for sale, vehicle prices are typically negotiated.

The last used car that I bought was in great shape, yet it was offered right at the minimum of the book price range. It appeared there was not much room to negotiate on price. I decided to acknowledge that the asking price was reasonable, but pulled out my used vehicle inspection report and started going over all the work that this car needed and the price estimates for this work. I used the vehicle inspection report to move the price down $500 below book price. I ended up paying $4,300 for my car and came in $700 under budget.

When you find a car that you really want, it can be tempting to pay the full asking price. My advice is to resist this urge and make an offer below asking price. The seller probably wants to sell the car as badly — or even more — than you want to buy it. The worst that can happen if you make an offer is that the seller will say no, and then you can offer more, and still end up with the car. You are likely to save hundreds of dollars by negotiating the price.

I like to use evidence when bargaining on a price instead of simply asking for a lower price. I show the seller book prices or a list of repairs that are needed to substantiate my offer. Sellers are more likely to accept the lower price if they think it is rational and that other buyers would likely come to the same conclusion.

Sometimes you can end up bargaining with an unreasonable seller who wants too much for their vehicle. This can be a problem especially when someone first starts selling a car and thinks they can get a great price for it. You might have to find a different seller or come back in a few weeks after the unreasonable seller has experienced the reality of trying to sell a used car for more than market price.

Following these steps will help you find the best used car in your price range without getting ripped off. You might even be able to negotiate the price to less than your budget, leaving you with extra funds to handle any repairs or maintenance needs that pop up.

Have you bought a used car? How'd you keep from getting ripped off?

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Guest's picture

I bought a 2004 Chyrsler Sebring convertable and got it for 1900. Blue book was 3600. I just walked out of dealership told them to call me when they couldn't sell it they chased me to door.

Dr Penny Pincher's picture

Cindy, this is a great example of how you can save a ton of money if you are willing to negotiate on price!

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