FINANCING Archives — Auto Trends Magazine

How to drive a deal on your next used car.

Buying a used car has its advantages as the steepest depreciation costs for new cars come during the first few years of ownership. Used cars come priced to reflect steep depreciation, are generally cheaper to insure then new cars, and often come with the original warranties.

Take the following eight steps to help you find a used car that you want and can afford.

Step No. 1 — Identify Your Style

Nissan Versa Note used car — Nissan Versa Note

Choose a used vehicle based on your needs. Quite easily you can find a “great deal” on a model that you may not want, including a gas-guzzling SUV such as a Ford Expedition. Then again, that low-cost subcompact Nissan Versa Note may be too small of a car to suit your needs. Understand your reason for wanting a certain type of vehicle.

If you have a family, a sedan or a crossover might be the logical place to begin your search. Narrow your list to a certain vehicle size, such as a midsize sedan, and attempt to restrict your search further to a specific make/model vehicle. Visit sites such as Consumer Reports, Motor Trend, and Edmunds to read product reviews and to obtain pricing information.

Step No. 2 — Establish a Budget

Your desire may be for a luxury sedan, but your wallet may tell you that you can afford a mainstream family sedan, such as the Ford Fusion, Kia Optima or Toyota Camry only. Determine what you can afford and make your plans accordingly.

Learn what the prevailing prices are for a particular vehicle by visiting Kelley Blue Book (KBB). Compare KBB’s dealer and private party sale prices with Internet car ads found on Craigslist and eBay. Know that used car pricing will vary depending on several factors, including mileage, trim level, vehicle condition, and location.

Ford Fusion Hybrid used car — Ford Fusion Hybrid

Step No. 3 — Arrange Your Cash or Apply for Credit

Unless you have enough cash on hand to purchase a used car, you will rely on credit to finance your transaction. A used car dealer may offer to finance your loan, but you can typically find better rates by shopping around.

The logical first place to look is where you currently do your banking. Banks and credit unions provide financing, with some financial institutions offering loans on vehicles up to 10 years old. Get quotes from at least three lenders and know that both your credit score and repayment ability will be big factors in determining your creditworthiness.

See: Federal Trade Commission: Understanding Vehicle Financing

Step No. 4 — Know Your Market

Porsche Cayman S used car — Porsche Cayman S

Choose an uncommon model such as a hard to find coupe or gas-sipping compact and you will find the pickings slim and your cost may come in higher than anticipated. Select a popular model such as the Hyundai Sonata and your choices may prove greater and the prices fairer.

Some vehicles do not fare well outside of certain markets. Convertibles such as the Chrysler 200 are popular in Sunbelt states while four-wheel-drive SUVs are most desired in areas where winter weather and tough terrain prevail. Then again if you want a pickup truck and live in New York City you may find a seller eager to unload a vehicle with few takers.

Step No. 5 —Search For a Car

Consider both private party sellers and used car dealers when shopping for a car. Generally, you will pay less when buying privately, but with a used car dealer you may get a warranty on top of the balance of the manufacturer’s warranty.

Buying from a dealer may be the best option for you if you want a certified used car. Such models must meet rigorous guidelines instituted and backed by the manufacturer. Typically, cars no older than two or three years old qualify, but some manufacturers back cars up to five or six years old.

You can also check the fleet inventories of major car rental companies such as Hertz, Budget, and Enterprise. Although such vehicles are often driven hard, they’re also usually very well maintained. You may find a bargain and still get a warranty with it.

See: MSN Autos: Survival Guide to Buying a Used Car

Dodge Charger SE used car — Dodge Charger SE

Step No. 6 — Test and Inspect

Once you find a car that is of interest to you, take it for a test drive. Keep the audio system off and listen for how the engine turns over, the transmission engages and how the brakes react when you come to a hard stop. Have the owner show you how various technological features work, including the audio and navigation systems, climate control, sunroof and other electronic amenities.

Inspect the car carefully, looking for signs of wear and tear or concealed damage. New carpeting may hide rust while hazed over headlamps in a newer model could signal water damage. Ask the owner for repair records and invest in a CARFAX vehicle history report. If possible, take the car to your mechanic to have it evaluated. He will tell you what problems are present, if any.

See: Accuweather: Thousands of Water-Damaged Cars May Hit the Market in Wake of Texas Flooding

Step No. 7 — Make An Offer

Your earlier research can pay off when it comes to making an offer for a vehicle. KBB research may give you a price very close to what any vehicle is worth, enabling you to negotiate from a position of strength.

Know that if the owner has priced the car according to the information she uncovered herself, you may have little room to negotiate. Still, offer a reasonable price and wait for a counter offer. Find a common ground where you both can declare victory and you’ll have a deal.

See: ABC News: Haggling 101: How to Set the Opening Offer for a Used Car

Step No. 8 — Complete the Deal

The last step for sealing your used car deal is to make your payment. If you have a pre-arranged loan, your dealer will handle the paperwork including the contract. For a private party deal, your lender may issue you a check for the amount due. Cash deals are best handled by signing a contract and obtaining a receipt.

Have the title signed over to you by the owner. Take your car to the department of motor vehicles to have it registered and a new title issued. If there is a lien on your car — that is, you took out a loan — the lienholder’s name will appear on the title retained by the lender. Register your car, pay the required fees and taxes, and obtain new tags. Contact your insurance company to insure your vehicle.

Accomplish Each Step Carefully

Never rush into a car purchase, whether buying used or new. Likely, you will keep your car for a long time, therefore complete each step carefully to get the model that is right for you.

Jeep, Ram Propel FCA

Fiat Chrysler is riding a 73-month streak of year-over-year sales increases, the longest in the industry. After sales bottomed out during the last recession and just as Fiat gained control of Chrysler, the automaker has been nearly unstoppable. Credit the Jeep brand and Ram trucks with much of that continued good fortune, but when sales are tallied this month, a trio of oft-dismissed minivans may hold the key to FCA’s continued expansion.

The Chrysler Corporation launched the modern minivan movement in 1983 with the introduction of the Dodge Caravan and Plymouth Voyager. From the onset, Chrysler has dominated the segment, typically accounting for at least 50 percent of the industry’s sales. But minivans have long since peaked as customers flocked to more versatile crossover utility vehicles.

Since last fall, FCA has been in transition concerning its minivan products. The automaker invested upwards of $2.6 billion to develop a new model, the Chrysler Pacifica, while also continuing production of the Dodge Grand Caravan. The Chrysler Town & Country is officially canceled, but before shutting down production FCA pushed out thousands of models, flooding dealer inventories with the same.

Chrysler Pacifica Production Begins

Chrysler Pacifica production began on Feb. 29 and just 487 copies were sold in April. May will be this model’s first full month and sales should prove robust.

At the same time, Chrysler Town & Country and Dodge Grand Caravan sales continue with year-to-date sales up 64 and 104 percent respectively through April 2016.

2017 Chrysler Pacifica Hybrid.

Strong Incentive on Three Minivan Models

Propelling sales for both models are strong incentives. As of publication, Town & Country incentives include a $3,500 cash allowance or 1.9 percent financing for up to 84 months plus an additional $500 back. Grand Caravan incentives also come in at $3,500 along with 0 percent financing for 60 months plus a $1,500 cash allowance. Additional incentives should bring in deeper cuts, especially for remaining 2015 inventory.

Lease deals are also available, depending on the trim level selected. Typically, you’ll pay $289 to $299 per month for 36 months, with $2,999 down. However, CarsDirect.com explains that the Dodge lease on Grand Caravan SE isn’t especially attractive, considering its low MSRP.

Despite being a new model, financing and lease deals on the Chrysler Pacifica are in place. Right now, Chrysler is offering a $2,000 cash credit on the Pacifica. Or, buyers can choose 0 percent financing for 36 months and receive $1,500 cash back. If leasing is your preference, a Pacifica LX can be had for $269 per month with $1,999 due at signing.

Well-Stocked Inventory and May 2016 Sales

Last week, Automotive News noted that as of the beginning of May, 22,170 Town & Countrys and 29,247 Grand Caravans were unsold, representing a two-month inventory. Add in thousands of Pacificas and FCA’s dominance in the minivan segment will continue.

The timing of the Pacifica’s release coincides with curtailing Chrysler 200 and Dodge Dart sedan sales. Jeep and Ram sales should continue to bolster the automaker for May; together FCA is looking at a 74th consecutive month of year-over-year sales increases and should do so despite two fewer selling days this year.

FINANCING

8 Steps to Buying a Used Car