Tips to save money when buying a used car

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Tips to save money when buying a used car

With inflation going sky high, wages not increasing in line with inflation, and complete uncertainty in what is happening in the United States and worldwide, it might not be the right time to buy a “new” used car.  But … unfortunately, your old car did not agree.  However much you loved and coached it along, your old 10-year-old car finally called it caput.  It is time to buy a “new” used car.

In an ideal world, you would just visit the website Sloto Cash, play a few games, and win more than enough money to buy the car of your dreams. but the world of reality just does not always jive with your dreamworld fantasies. even though Sloto Cash games are really fun to play.

So it is time to put shut down the games and start planning your “new” used car search.  And do not, for one second, start to think that your first step is to visit the local car dealerships.  That is the last thing you want to do right now.

Never go to a car dealership unprepared

Going to a car dealership unprepared is like going to the grocery store right after work, after skipping lunch … you are going to spend way more than you were planning to spend, and come home with a lot of things that you really do not need (or maybe even wanted).

Step 1: Create your budget

The first thing that you need to do is to figure out your budget.  How much money can you realistically spend per month on automobile expenses?  This includes the car payment, the insurance payment, gas money, standard repairs (for a relatively new car), and unexpected repairs if you buy a used car more than 5 years old.

If you do not know how to create a general budget, here is a quick review.

  • Take home pay — Estimate gross pay before taxes minus 25%.  That will give you an estimate of your take-home pay.
  • Rent/Mortgage payments — This should be between 25% – 35% of your take-home pay.  If your current housing payments are more than that, you should probably fix that problem before perching even a used car.  There is always public transportation for your immediate needs.
  • Utilities  — electricity, gas, water, sewer, garbage collection.  If you do not like how these bills fluctuate during the year, all utility companies offer a 12-month budget plan.
  • Food, toiletries, and basic medicine
  • Telephone, cell phone, or landline — You do not need both of them.  Are you paying too much for your cell phone?  Does it really fit your needs?
  • Internet, cable television — what is required and what is optional?  With internet only work?  With basic cable only work?  Would just buying DVDs work?
  • Health insurance, unexpected medical expenses

Then you have to add in some money for entertainment, clothing, and hopefully savings.

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That end number will give you an idea of what you can budget for transportation.  Now you can start to do some research to find out if a decent car can be purchased within that budget.

Step 2: What are your needs and what are your wants

What you want in a car and what you need in a car are two different things.  You may want a nice sports car, but if you planning to ask your girlfriend to marry you (aka, family is in the future), a sports car is probably not a good investment.

But if it is just the two of you now, and potentially plus one within the next couple of years, you also do not need a full-blow gas-hogging minivan either.

As for electric vs. gasoline vs one that can handle both … Do you live in a city?  Do you live in the country?  Is most of your driving close to your house, only every once in a while taking longer trips?

So let’s say that after doing research, you decide to go with a hybrid that provides the option to either use gas or electricity.  You get the best of both worlds.

Step 3: Bluebook and Edmund lookup

Whenever I want to buy a “new” used car, I always look for a car that is 1 year old.  So I go to the Edmunds website.  First, I looked up new prices.

  • 2021 Ford Escape Plugin Hybrid SE, new, $33,895
  • 2021 Ford Escape Plugin Hybrid SEL, new, $36,755
  • 2021 Ford Escape Plugin Hybrid Titanium, new, $39,251
  • 2022 Ford Escape Plugin Hybrid SE, new, $36,940
  • 2022 Ford Escape Plugin Hybrid SEL, new, $39,685
  • 2022 Ford Escape Plugin Hybrid Titanium, New, $42,195

Now I look up the used price for a car that is 1 year old with less than 10,000 miles on it.  You can also select how many miles from your house you want the car.  The default was 25 miles and it showed nothing.  So I changed it to 50 miles and saw 2 cars.  100 miles, 4 cars.  500 miles, 15 cars.  750 miles, 22 cars.

In the price section, you can see “price” or “loan” (monthly estimate).  Although, if you get your loan before you visit the dealer, you will get a better loan deal, the “monthly cost” button will give you a general idea of if even a relatively new used car is still too much.

For myself, I clicked on the “loan” button, and I saw all of the prices between $600 – $800/month however the thought of getting a hybrid car would be nice, it is not within my own personal budget.

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From what I can see, with the Ford Hybrid cars, the 1-year-old car has almost zero savings over a brand-new version.  Some of these used listings are even more money than a new version.  That is something that I have never seen when I had previously searched for a “new” used car.

Just curious, I checked out a Ford Explorer, base model, $38,255.  Since most of the used cars that are around 1 year old and have less than 12,000 miles are “showroom” cars (cars the salespeople used), you get a lot of bells and whistles on your car, but the price is still around the base model car.

Step 4: Apply for a used car loan online

Before you step into a car dealership, apply for a car loan online.  Once your loan is approved, they will mail you a “check” that has the maximum amount that you have been approved for.  Car dealers are used to these, so there should not be issues (assuming you are using a reputable online loan company). 

If the car dealer gives you a hassle and tries to tell you that only the car dealer can provide you the loan, walk away and do not look back.  If they are lying about that, what else are they lying about?

Step 5: Look at the history of the specific car you are interested in

When you look online, there will be a link on the car’s page for the history report of that car.  You definitely want to know if the car had been in an accident or if the car had been in a flood.  Both of those things can cause huge headaches later on.  Not to mention, looking up if there have been any recalls on that car.

Step 6: Go test drive the car

Once you have all of the paperwork (car info, loan papers), go test drive the car that you are interested in.  If everything looks good, you are all ready to make the purchase.

Step 7: Buy your car and take it home

The final step is to buy your car and take it home. If you cross state lines, you might not be able to take the car home that day.  First, the dealer might want to do one final maintenance check on the car.  Two, they have to do the paperwork to register the title. Some states even require that you have to show that the is insured before you are even allowed to drive it home.

But hopefully, beyond the standard dotting the i’s and crossing the t’s, you are going to have a nice (and hopefully uneventful) life with your “new” used car.

Dylan Miller

I am a Chicago native and regular contributor to "Locar Deals" and "Cars Cache". I have a master's degree in English, am an automobile content creation specialist, and have written professionally for a variety of automotive companies over the past few years. I write on a variety of vehicles, from high-end luxury cars to ten-year-old gas guzzlers and everything in between. And I love sharing valuable car buying tips with consumers from all walks of life.

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