As we all know, cars are mostly known to be a poor investment. But, for many people, they are an essential form of travel. As we are now in an age where depreciation can be as much as 20% of the vehicle value once you drive off from the dealership. So, the important question you may be asking yourself is: How can I avoid losing a lot of money when buying a used car?
The first thing to note when buying a used car is that it is dependent on your situation to which method will save you money. It may be best for you to purchase privately or through a dealership. But, how do you know what method is the best for you?
Research: When you are looking to purchase another vehicle, you should never impulse buy. It is important that you weigh up all your options before signing any papers.
It can sometimes feel overwhelming when going to purchase a car, especially when you are trying to make the best financial decision. So, with that in mind, here are 5 ways to prevent losing money when buying a used car:
Minimise the net price, (What you’re going to pay minus what you’ll be able to resell for)
When going to buy a used car, many people forget about the future and therefore don’t take it into consideration for their purchase. It is always a smart decision to keep in mind the car’s expected resale price for when you come to sell it at a later date.
By minimising the initial purchase price and aiming to get it as close to the future sell price will help prevent a larger loss when you come to sell the vehicle in future. While it isn’t always possible to know how long you will keep the car or the number of miles you will complete in it, you can get a general idea from doing some simple research.
Choose A Make & Model Which Is Popular
Buying a used car is not the most ideal way to express your individuality, instead it’s more about the function of the vehicle. If you’re often the designated driver when you go out, then you’ll want to purchase a vehicle suitable to do so. No matter what, it is important that you look at vehicles that are popular as they are more likely to be in demand even in the future.
Focus On Mileage Over Age
If you can find a used car which is around 3-5 year old without high mileage, then you’ve definitely found a winner. These kinds of vehicles are usually from older people who haven’t driven long distances, not to mention they won’t have thrashed the vehicle. By acquiring a vehicle like this, you will pay a lesser price and reap the benefits of having less wear and tear overall.
Never buy a brand new car – Friendly Advice
While it may seem amazing to drive away in a brand new vehicle, with a few miles on the odometer and that new car smell. However, you can save a look a lot of money if you look past those things. This is not down to used cars being less expensive, it just means overall they have depreciated less. Most vehicles once they have hit the 75,000 mile mark will start to depreciate at a much slower rate.
Usually these miles are done within the first 5 years of the vehicle being purchased, so anyone who has purchased the car from new will most likely have suffered the largest portion of the depreciation, which means if you purchase the vehicle after the 75,000 miles has been reached, you are moving out of the depreciation red zone.
Only Buy Vehicles With A Clear History
If you have found the right car, then it is time to do some in-depth research. You need to be 100% sure that this vehicle doesn’t have anything hiding in the cracks. Having a good overall inspection of the bodywork, common rust spots and taking a good look at the chassis is always recommended.
However, there are some things that a visual inspection won’t tell you. Things like has the car been written off, scrapped, stolen or even have outstanding finance. That is why I would recommend performing a car reg check to ensure that you have all the vital information you need to purchase with confidence.
It is also worth knowing what to look for when buying a used car in addition to this.
There you have it, have you got any lessons from when you bought a used car? Why not drop a comment below, I’d love to hear your stories!
Please note that this post was contributed by Harry Baker.