Ongoing chip shortages, global supply chain issues, and inflationary pressures continue to strain used auto markets across the U.S. According to the U.S. Bureau of Labor Statistics, the consumer price index for used cars and trucks jumped an astonishing 40.5% from January 2021 to January 2022.
Used car prices peaked in August, but it’s still a tough time to be shopping for a used vehicle, especially if you don’t have the time or luxury to wait for a sunnier market. Fortunately, it’s not impossible to get a fair deal.
Follow these simple tips to get a quality used vehicle for a fair price:
Prearrange Your Financing
If you need to finance a used car, be careful of rising interest rates, which are going to make the vehicle more expensive than it already is. Check the financing options at your bank or credit union before going to a dealership so you can compare the terms of dealer financing, which may or may not be a good deal. If you plan to get financing for a private-party sale, have the funds secured and ready to go so that you’re able to act quickly if you find something you like—good deals rarely last long.
Crunch the Numbers Carefully
Put as much money into a down payment as you can afford. In addition to saving money on interest, a sizable down payment can reduce the chance that you’ll be left upside down as the vehicle sinks in value over the years. For example, if you have to borrow $15,000 for a used car that will be worth less than $10,000 in a year or two, you may end up owing more than the car is worth. If you crash the car or it’s stolen, you’ll still have payments but no car. Cars are depreciating assets, and when car markets return to “normal” levels, some used vehicles may depreciate faster than expected.
Be Flexible About Your Preferences
Try searching for used vehicles outside your immediate area. But be cautious about going too far. You want to be able to go see the car and test-drive it before making any deals or signing any contracts, especially for used cars. Other strategies might include settling for a less-well-equipped model to keep the price down, or choosing a different color, model, or year. While some compromise is encouraged, you should never compromise on safety and reliability. Consumer Reports recommends taking any used car to a reputable mechanic to have it inspected. If the owner or dealer doesn’t agree, you may be better off looking elsewhere.
Check the Vehicle History Report
This early step is essential to buying a safe and reliable used vehicle. If a car has a bad car history report, the sooner you know the better. Online tools like Carfax and AutoCheck are well-known sources that provide valuable insight by looking up the car’s vehicle identification number (VIN). For a small fee, you’ll learn more about the vehicle’s accident history and whether or not the vehicle has a salvage title, which means it has been declared a total loss by an insurance company.
Check for Safety Recalls
Using the same vehicle identification number (VIN) that you used to get the vehicle’s history report, you can quickly find out if there are any major safety concerns specific to that make, model, and year. CLICK HERE to use the National Highway Traffic Safety Administration’s free recall safety tool for information about vehicle safety recalls in the past 15 years.
Even in an unusual buying market, it’s possible to get a used car that will meet your needs and budget. Follow these simple tips to get a quality used vehicle for a fair price.