Written by Sébastien Malo, CNN
The big question when it comes to car buying is “how much?” A used car typically costs anywhere from $10,000 (500 British pounds) to $100,000 (2 million British pounds). Of course, this assumes the car is healthy. That said, before you even buy, there are some important things to keep in mind.
1. Car price is not the whole story
Just because a car is listed on the open market for cheap doesn’t mean it’s cheap for everyone. There’s a difference between a car that’s on a used car site and is actually in private hands.
“Even a brand new car like a Lexus is typically only discounted by 15-20%,” says Kurt Schueller, vice president of National Accounts at InsureMyTrip.com . It’s usually due to advertising gimmicks and marketing.
Purchasing a used car from a reputable auto company is actually the best way to save money on your car purchase.
Before buying a used car, look for current market values. You can compare prices within your area, search for certified pre-owned cars on car sites, and even check the R.V.A. Certified Pre-Owned list for your state.
There are also a number of articles you can find on buying and selling cars online , outlining specific ways to save on used car prices
2. Compare the trade-in, depreciation, and credit
The value of your old car depends on what is currently in the market. If you’re buying a used car, you can expect it to depreciate within a few months, but this depreciation won’t necessarily increase after the sale.
“If you’re buying a new car, you’re going to get a great deal if you trade in an old car, but if you buy a used car and bring it in as a trade-in, it’s the exact same car, so you don’t get a great deal,” says automotive expert Sibongink He.
The depreciation factor comes from the fact that most used cars are brand new, so they depreciate faster.
It’s also important to look at how much trade-in value the seller is going to get.
“It’s fair to say the less you trade in your own car, the more it’ll cost you to purchase it,” says Buick Expert Mark Flasher .
Another important piece of information is the credit score. When a dealer takes possession of a car, the dealership will take a look at your credit and estimate your monthly car payment based on your score. According to the Federal Trade Commission (FTC), the creditworthiness of a person and his or her ability to repay a loan are factors when a bank decides to finance a vehicle. If your credit score is as low as 580, it’s going to cost you.
“We definitely advise people to check their credit. If your credit is low, you will have to deal with a higher interest rate on your car loan,” says Schueller.
3. Buy the right car
Part of the decision-making process lies in the engine size and color of the vehicle you’re looking to buy.
There are a number of general advice for choosing the right car. Smaller cars are considered lighter, which means you won’t need a lot of fuel. They’re also more fuel efficient, so they save you money on your daily commute.
“You can save a lot on fuel with a smaller car, and the load factor, which is the amount of weight you put on your car in a year, is reduced,” says Sibongink He.
When it comes to the color of your new car, check the common colors and go with something like silver. This is also a good color for your eyes.
Remember, the advertised “dollar-for-dollar” savings on cars isn’t necessarily true. Buying the car you’re looking for should be your first step to saving money. Buy a car that’s likely to be more reliable and stay within its annual wear and tear.
4. Never buy an older car
Even though a car is technically brand new, it might need more than just a paint job and some new hardware. This might include warranties for both the vehicle and the brand. If you live in a major city or a rural area, a car can also probably repair itself. Of course, if the car is a rental, always be careful to follow the maintenance instructions.