Don’t Get Ripped Off!
Before you buy insurance you need a car! So if you are thinking of a Used Car – here are some tips to make sure you get the best price you can. If you follow these steps you will not get ripped off.
If you have any questions about this process or if you need advice on how to do it – simply give me a call at (413) 543-3800 and I will be glad to help you.
Step 1. Determine Your Budget
- Budget your income and expenses to determine how much you can afford.
- Know what other expenses to expect – You will need to count on Title, Registration, gas, oil, maintenance, Excise taxes once a year and insurance. Be sure to factor all of these costs into your budget.
- Taxes on Your Vehicle – Massachusetts state sales tax is 6.25% – consider this in your budget.
- Down Payments – If not paying in full, always give down payments with credit card – not cash and not more than 20%. Do not give a down payment unless you know for sure you are buying the car.
- What the Car Dealer is Thinking – They are think that they want to make as much money off of you as they can – and they are very good at it. Always remember this. Let’s begin.
Step 2. Choose the Car You Want
- What type of Car Fits into your Price Range? You can search for your vehicle by price. The price that fits into your budget. This will determine the approximate year of the vehicle that you will be able to afford.
- Interested in Good Gas Mileage? Get a four cylinder, gas is expensive.
- What size Car do you Want and/or Need? Think of your situation, kids? Just you? Lots of traveling? Let your situation guide the type of car you want/need.
- Transmission – What type do you want? Automatic? Or Manual?
- Certified Used Cars – This can be a good option. Dealers spend time and money going through these cars point by point to ensure they are running and looking good. Good enough so they give you a decent warranty with them. They will cost a bit more but may be worth it in the long run.
- What Mileage Should Your Used Car Have? You want a car with less than 15,000 per year. More than that usually means the car can have some maintenance problems shortly.
- Get Car Insurance Quotes – Once you know the type of car you want, call around and get a few car insurance quotes – be sure you buy car insurance the smart way – just like you are doing with your used car purchase.
Step 3. Search for Your Used Car
- Check the newspaper. Check online. Check the free local auto magazines.
- Auto Trader will show you where your car is available locally.
- Check Car Max
- Yahoo Used Cars
Step 4. How Will You Pay? Financing or Pay Cash
- Pay Cash – If the car you are buying is under $5000 then you should really pay cash. If you cannot afford this, then save up. I wouldn’t recommend financing an older vehicle that doesn’t cost much – it just increases the cost of the vehicle that much more.
- If you Need Financing – Apply for Financing Before you go to the dealership
- Bad Credit No Credit Financing Refinancing – If you have poor credit or no credit – then get the car loan and pay it on time for the first 8 months – never late – then you can attempt to refinance with a different lender for a much better rate.
Step 4. Go Test Drive the Car
- Unless you are talking about a $1000 – $2000 car – you are not going to buy the car on the first visit. Only go test drive the vehicle – no negotiating at the dealer or the person’s house – not yet.
- The Car Sales Person and/or Sales Manager – They will try to sell you the car on the spot – but you must resist this. Simply test drive the car and politely leave – then you go do your research.
- Do not answer their question “How much were you looking to spend each month?” – Do not give them this ammo to rip you off. Just tell them you would rather just talk about the price of the vehicle.
- Used Car Checklist – These are the items you need to check on a car you want to buy.
- Vehicle History Reports – Very important. If it’s a dealer ask if they already have this – if not, and you are serious about buying the vehicle, buy your own report on the car – especially if it is a car over $2500. This will protect your money. This report can prevent you from ever buying a lemon. Just get the VIN of the car you are looking at and purchase a Vehicle History Report. IF there is a problem with the car this will tell you.
- Be sure the dealer is not selling it “As Is”? – Do not buy it! Most person to person sales occur this way – but if the dealer won’t give you a 30 day warranty – then find another dealer and another car.
- After the test drive ask for the dealer’s business card with fax number and leave. Or if person to person sale get their phone number and tell them you will call them later.
Step 5. Research Time
- Get Online Car Values – Go home and check the value of the car you just looked at. Use this value to make your first offer. Print it out. Correctly input the vehicle’s details – year, make and model, options and mileage. Choose Fair, Good or Excellent for the condition of the vehicle.
- Remember, a dealer buys the car at auction for much less than the car is worth – they then put it on their lot and can sometimes make double their money – IF you don’t know what you are doing – you are only going to offer the actual value of the car with a fair profit – you will not get ripped off..
- If you are serious about buying the car I highly recommend you have a mechanic look at the car. Yes, it may cost $75 or so but, it can save you thousands in future payments and lots of headaches. So, between your Vehicle History Report and your mechanic you are assured to get a decent vehicle – not a lemon!
- The Right Price to Pay for Your Used Car – If the dealer is asking $9,995 for the car and after your research you find the car is worth only $5000 – you know you are not going to want to pay much more than $5000, right? The dealer bought the car at auction for less than $5000 guaranteed. Offer $5400 and see what the dealer comes back at you with. If they are unwilling to be reasonable and negotiate – then find a different dealer and a different car – there are hundreds out there – and there are many reputable and fair dealers – you just have to find them.
Step 6. Your First Offer
- Used Car First Offer – Your offer amount will be the value of the car you determined through your research plus a fair profit of $400. See where this gets you. In most cases the dealer will come down from his asking price. But do NOT pay thousands more than the value you have researched – it just doesn’t make sense. Find a different car and a different dealer.
- The Secret to Saving Thousands? Knowing the Actual Value of the Used Car you want to buy is the entire Used Car Negotiating system. You must determine this figure before you make an offer or even consider buying the car.
- Your Secret Weapon – you are the boss – you have the ability to simply walk away. Do not fall in love with one car – choose several cars to look at. You want to find a good car at a good price from a dealer who will negotiate with you.
Step 7. Contact the Seller and Make Your First Offer
- Make Your Offer from the Comfort of Your Home or Office – Simply fax the dealer your offer or in a person to person deal call the person and tell them your cash offer. Be sure to present your offer with confidence and provide them with printed proof of the cars actual value.
Step 8. Negotiation
- Negotiation with a Dealer – They will probably not accept your first offer so you must be prepared to negotiate. Do this with confidence and with the feeling that this is not the only car for sale on the planet. If the dealer isn’t willing to work with you then find a different car and a different dealer. Let them rip someone else off – not you!
- How to Respond When you Get a Counter Offer – No matter what the dealer comes back with – you calmly raise your offer by just 4% – and throughout the negotiations you never raise it more than a total of 12% of your original offer. For example, your first offer is $3000, they say that is ridiculous and want $5000 – you come back with $3120 ($3000 plus 4%) and in total you will not pay more than $3360 for the car – know the figure you will not go above. Be prepared to walk if necessary.
- Once you settle on a price – get it in writing and tell them you will be over to pay for the car.
Step 9. Present or Sell Your Trade In
- To get the Most Money Possible for Your Trade In – Sell it on your own with Auto Trader or use CarMax or Craigs List. A dealer will only give you the “wholesale value” of the car – which is less than what you would get if you had sold it on your own.
- Used Car Trade In Value – KBB or NADA – Know your approximate Trade In value before you present your Trade In.
- Tell the dealer you Have a Trade In – AFTER you have negotiated the price for the car you want.
Step 10. Pick Up Your Car
- From a Dealer or a Person – Give it a once over – look at everything again to be sure the car is in the same condition as when you took it for your first test drive.
- Second Test Drive for your Used Car – Always take it for a second test drive – just to be sure.
- For a person to person sale print out and Prepare Your Bill of Sale before you go pick up the car.
- Paperwork for your Used Car – With a dealer make sure all the figures are correct and that it matches the price you negotiated – no surprise fees added.
- Title – Be sure the title is present – do not pay for the car if the dealer or Person does not have the title – no exceptions. If it is a person to person sale ask for the persons ID and match that up to the name on the front of the title.
- With a dealer – get the warranty in writing.
That’s it! If you have any problems with the dealer transaction:
- Car Dealer Problem Resolution – Call your local Attorney General – They over see all Car Dealerships and their licenses to sell cars in Massachusetts.If you have a problem with a dealer, the car or your down payment – tell the dealer you are going to the Attorney General – that usually gets their attention.
If you Follow These Guidelines You Will Definitely Save Money on Your Used Car Purchase – Good luck!