Save Money When You Buy A Used Car, The Right Way Part 1

Buy a Used Car The Right Way
save money when you buy a used car the right wayYou may not be on the market to buy a used car, but at some point, your child, niece, nephew, grandchild or other relative friend or neighbor may be. Buying a used car can come with many “gotcha’s” that can ruin your savings. So, here are a few helpful hints.


There are many ways to buy a used car. Some are efficient and some are not. You can buy from a family member or friend and know the history of the car. You can also buy from the used car lot side of a new car lot, which is a good option when you go to a car lot. You can purchase a certified used car, but it is a good idea to check out the VIN number any. The certified used cars are usually 3-4 years old and typically are in good shape. You can also purchase a used car at one year old, from a rental car agency. You can also buy directly from a used car dealer, this requires a lot of homework on your part to make sure you have a quality used car, and you don’t get an over-priced car or predatory loan.

A lady I spoke to at a seminar of mine told me she was concerned for her son. He went alone, to a used car lot and brought home a car. She was proud of him for taking the initiative to go alone, negotiate a car price and loan, and provide his transportation to and from work. He was told the length of his loan period, but it was not true. That time period has long past, and he still owed a lot of money on his car loan. She could not understand how this could happen. I told her to get the contract out, read the fine print, and get back to me. Before she contacted me, I told her what to look for. The following items are what she looked for, and sadly, many are what she found.


I informed her that she should talk to her son and tell him the importance of “doing his homework” before he makes a major purchase of any type. The next time he sees; “used cars for sale” – he should immediately start his research.

The first thing to do is to call the local banks and credit unions to find out what the going APR and interest rates are. Currently used car loans interest run from 2% to 5%. If you go to a used car dealer and he offers you 20%, you are better off riding the bus. Alternatively, if he offers you a 7-year loan on an inexpensive used car, that is also a red flag — that something is wrong.

If you can qualify for a used car loan from a bank or your local credit union, these loans are far superior to the used car dealer loans. You can get qualified from your bank or credit union first, then take your “evidence of loan qualification” papers with you to the dealer.


The women I spoke to about her son’s used car loan informed me that her son’s contract stated he was paying 21% interest, he was told the interest rate was 9% by the dealer. Understand more about debt and money when you get your free book excerpt on debt.

Used car dealers can charge something called a “dealer rate” over the “buy rate”. The dealer works with a lender who gives him the loan and allows him to “mark-up” the interest rate as he wishes, this is the “dealer rate”. The dealer is not really concerned about the markup because he will get the difference between his rate and the lender’s rate, or the lenders “buy rate”. He uses the excuse that his clients all have bad credit, and are high risk. That is not true, her son had good credit. His only problem was that he was a low-information buyer. The lenders “buy rate” is the lower rate the car buyer qualifies for — her son had a very low “buy rate”, but did not know it. Her son did not understand what the sign, “used cars for sale”, really meant, and neither did she.

A sad trick that some used car dealers’ play on low-information buyers is the conditional sale agreement. The buyer unknowingly signs a “conditional sale” agreement, after they have the car for a while, the dealer calls and tells them to bring back the car. He then, informs the buyer that he/she must now sign a permanent sells agreement, but the interest rate has been increased. Click “blog” at the top  of this page for part 2 and part 3.

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 Save Money When You Buy a Used Car The Right Way Part 1

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About MsLane

Lois Center-Shabazz, aka MsFinancialSavvy, is a Money Strategist specializing in helping others with Mega-Money Management through what she calls the Money Trio of Guerrilla Budgeting | Sane Savings | Investing Insights. Visit the top toolbar of and schedule a discovery session with Lois. She is also a nature photographer (, acrylic painter (, and has an online calculator website at Lois is the author of the Live Rich Save Money! series on Amazon Kindle.

16 comments on “Save Money When You Buy A Used Car, The Right Way Part 1

    • Some people don’t know that a car that is 3 or 4 years can be just like new if it is well kept. The plus side is you don’t have to pay for those expensive warranty service visits the first year or buy expensive insurance to cover you if you total the car while the cost is upside down.

  1. This is some great information we can all use. When I bought my car I research cars for about a month before going to look at them. Thus, I was prepared to purchase the car that I ended up buying.

  2. Yes! Being as informed as possible before going to look at cars is very good advice. Thank you for this useful information.

  3. This is some good advice. I remember when I financed my first used car. Luckily, my parents taught me well so I never got the used car salesman that offers us a car for 20% interest.

  4. Great info!! I only wish I had known this info last month when I bought my (new to me) Volkswagen CC!
    I’m definitely going to keep all of this in mind for next time since we only buy used cars. We feel buying new is a waste of money because they depreciate as soon as you drive them off the lot. ?

  5. I had 3 cars in my life and all of them were used. Really good tips and I need to remember some of them because my next car will be used as well:D

  6. Used car people are creepy for the most part although I do have to say I had a friend who used to be ones. I know how shady they can be.

  7. The point of snapping-up a second-hand coupe is to save the wallet. However, if the buyer does not do an extensive research before buying, then it can certainly finish up costing him more than a brand new car. It will be better if you make a vast research and compare the prices of the similar models in your proximity before making the final call. Second thing is, the price of a handed-down vehicle is quite high in the month of April and May. This is just because of the seasonal demand. Better you should wait for the offseason, by which you can own the same model with less ownership cost.

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