Buying a car, even a used car, is exciting. And while you want to get the car that you like most, you also want to ensure that you get all the savings that you can make on the original price as well as the financing.
Doing some upfront research and shopping around can help avoid scammers and bad deals. So if you’re buying on your own from an individual, verify all the details of the car and ensure that you know the steps required to transfer the title and register the car because you hand over money to anyone.
To ensure that you are getting the best bang for your dirham and you’re not buying a lemon, make sure that you keep the following tips in mind when shopping and financing a used car.
Age of the car and warranty
If you’ve the budget to buy a car that is relatively new, try to get a car that is still under warranty. This car is likely to be more attractive to lenders and get a more competitive rate. In addition, you will be able to predict your own costs for the length of the warranty.
Buying a car under warranty also means that you will be able to see the record of its repairs, which should be more transparent. This car can be significantly less expensive than a new one, but you will still get to enjoy many of those perks, which makes it a pretty good deal.
If you’re buying a much older car with no or incomplete records, verify its condition independently. Take it to a shop where you get it inspected — not only to know if it is worth the asked price, but also to know how much more money it may require in the near future. Only inspect a car that you’re certain that you like, otherwise your car-shopping exercise can become costly.
Check financing options
Because used cars’ values are not as straightforward as values of new ones, your options of financing could vary — and shopping around could help you get the best rate and terms for your car. If you’re buying from dealership, you probably will get a quote on financing. Make sure that you check with your bank for other options.
In addition, make sure that you ask for what could reduce your interest rate. With a used car, a lender must account for quick depreciation, so financing on a shorter period could make give you a better rate, even if your payment is slightly higher. Consider making a bigger down payment to shorten the term and keep the monthly payment affordable.
A shorter term is also beneficial for you because you don’t want to be upside down on your car, meaning owing the bank more than the car value at a certain point. Your goals should be to be able to sell the car and pay it off at any point, while at least breaking even.
Service packages
Many carmakers and dealership over service packages. Check these out while you’re buying because your used car is likely to begin to have issues at some points and regular maintenance is the way to delay these issues and save you money on the long run.
Make sure that you know what these packages include. A service package that is a bait to get you in the door without sufficient coverage could cost you more as you pay a higher rate to your service provider. Typically these packages would be available even after the purchase. So if you’re overwhelmed with paperwork for the car and the loan, don’t rush into committing to any more services.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Buying a used car
Do your own due diligence
Consider a newer old car under warranty
Check financing options
Verify the car condition independently
— R.O.
