This is the second part in the series of “Save Money When You Buy a Used Car”. Many people ruin their credit early because they buy a used car from the wrong source, and don’t understand the process. You have many options when it comes to buying a used car. Buying a used car the right way can save years of financial pain off your life.
Her son thought he had a good deal because his monthly payments were low enough for him to pay. The problem was, his payments extended over a period that made him pay three times what his car was worth.
The monthly payments are important, but not the main item you should focus on. The main items to focus on are 1. Interest Rates, and 2. APR (Annual Percentage Rate). Each of these items is determined by credit score and whether you are buying a new or used car.
You can decrease your interest rate and APR by putting down a larger down payment if you don’t have a good credit history. But, make sure you get the lowest interest rate possible, check your contract. Before you go car shopping, ask around for a reputable dealer.
EVERYTHING IS NEGOTIABLE
Since everything is negotiable, the first thing you need to do is to research the dealers you will visit. Their information is all over the internet, both local and national websites have information on used car dealers. If you are interested in used cars, look up several makes and models with the year, and research the prices.
Before going to the car lot, you should know the current interest rates and APR on used cars. You should also know your credit report and credit score. Ask the dealer to quote his interest rate and APR. Then ask him to show you a copy of his contract, tell him you must take it home to read it. Of course, he will emphatically say, “no”, if he has given you a bad contract. At least, take out your magnifying glass and read it. If this angers him, that may be a sign for you to leave immediately.
INFLATED USED CAR LOANS AND PRICES
Her son paid for several “add-ons” he was not aware of. The add-ons can include items that are already on the car or totally unnecessary, but with his purchase, were all “re-charged” to him. The items car dealers usually add on are 1. Service Contracts, 2. Rust Proofing, 3. Gap Insurance 4. Window Etching, 5. Credit Life Insurance, and anything else that is not necessary, but drives up the price of the car.
The only thing a used car buyer needs is car insurance, contact an insurance broker before you go car shopping, let him know you are buying a used car. He will work out coverage before you buy the car. Contact him from the lot to cover your car purchase. Refuse all the add-ons; all of them will inflate the price of the car well past its value. Download a copy of the “Easy Budget Planner” before you research car buying.
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