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Buying a used car: lessons and lessons learned

Both my wife and I have been driving 13- and 14-year-old used cars, almost as long as we’ve been together. But my wife’s relationship with her vehicle hit a bumpy road last month when her 2000 Honda Civic and muffler parted ways. We took it to a few places that found cracks in the whole exhaust system and the best quote we got was about $650. Ouch! On a car worth maybe $1000, it made our decision pretty easy.

We knew our vehicles were getting old, so we’ve been looking at newer, more ‘family-friendly’ models for a while, and luckily we put a savings plan in place about a year-and-a-half ago. We researched many vehicles in our price range and in the end, we bought a 2012 Mazda5. My first thought was ‘Oh, no, I’m a van owner.’ Not that there’s anything wrong with that. There are lots of perfectly older dads riding in vans. Ha! I’m kidding!

It’s actually a great vehicle, and I would love to say that we paid it fully in cash, but we fell just a few months shy of our savings goal, so we took out a small loan and we’ll have that fully paid off in a couple of months. We could have gone with a more inexpensive car, but an extra 2 months of payments didn’t seem like a lot to get a one year newer vehicle.

This week, after reading ‘Don’t wait for life’s big moments to save for them‘ from Kayla’s  I’ve Worked Too Hard To Be Poor blog, in retrospect, the smarter thing would have been to start saving before our vehicles got too old. And I could have got away with making smaller payments for a longer period of time, instead of forcing ourselves to put so many other things on hold for that year-and-a-half we were saving up for the car. But we don’t always think about what could happen until it does, or it’s too late. Which reminds me, I should probably start saving up to replace my own 13-year-old car.

But here are some of the things we did right and some simple things to keep in mind, when buying your next vehicle:

Have a max budget in mind

I can’t stress this point enough. Before you even set foot into a dealership. Before you even start searching. You should always have a number — the maximum amount you can afford and are willing to spend on a vehicle. The dealer will always try to upsell you, so it might be a good idea to tell him that you’re looking for a car $1000 below your ‘real’ max budget.

Remember your max budget should include all taxes and fees. This includes all federal and provincial or state taxes, any freight/delivery fees, auction fees (if bought at an auction), licensing fees, leasing/financing fees (easily avoided if paid in cash), and environmental fees for things like A/C, tires and emissions testing. There may be others and the costs will vary depending on your location. But it never hurts to ask a friend, neighbour or family member that’s recently purchased a vehicle, what to expect or at least get an idea of taxes and fees for a vehicle in your price range.

As soon as you have a max budget in mind, start saving! You never know when your car could end up at the scrapyard, so start as early as you can.

Do your own research

When I started looking for my first vehicle, I remember coming up with an exhaustive list of potential cars that fit within my budget. Now, I’m not saying you go to the crazy extent that I did, but I think it’s important to not be tied to one make and model year because although you may want that vehicle, it might not be one you can afford.

  • List it. I liked to draw up a dream list with about 5 makes and models with the preferred year. By this time, you should have already thought of which vehicles are the best fit for your lifestyle or family. For example, a 2-door sports car might not make much sense with two kids. Searching through car forums will also give you a good idea as to the type of issues if any, that customers of that vehicle have had.
  • Price it. Once you have your list in mind, there are many sites like autotrader.ca and autotrader.com, cars.com, etc., that can give you a pretty good estimate on what you’re expected to pay before taxes and fees. If some of the models go over your max budget by a lot, you know these aren’t contenders. If it’s by a little, would you be happy going to a model one-year older to make up the difference?
  • Ensure it insures well. Once you have your list narrowed down to the best of the best, call up your insurance broker or agent. Most people neglect this step, but insurance can add big monthly costs to your car, and depending on the type of car you drive, you could be in for a rude awakening. When I bought my first car, a 2001 Nissan Altima, I had to neglect my previous choice, because the insurance costs were too high.

And once you’ve met your savings goal, you’re ready to shop.

Never take the car dealer’s word for it

A friend of ours is a dealer and helped purchase our car through a private auction, so we really lucked out. Whether you know someone or not, here are a few things to do to ensure you’re not leaving your money behind in the dust:

  • Get the report. Not 100% foolproof, but you’d kick yourself if you could have caught a red flag and you weren’t bothered to. Reporting services like CarProof and CarFax are only as accurate as the information provided to them. So, If no one reports an accident to an insurance company, there’s a good chance it might not show up on there. Nonetheless, it’s a good place to ‘start’.
  • Get an inspection. If you’re not able to take the car somewhere for an independent inspection or have a mechanic tag along with you, at the very least ask someone who knows about cars to assess the vehicle. And especially if you’re buying privately. It’ll be worth your while. Also just because it says it’s certified (from the dealer) or certified pre-owned (manufacturer) doesn’t mean it will be problem-free. Inspections and warranty coverage vary greatly from brand-to-brand.
  • Test-drive it. Take a friend along for a second opinion and test the vehicle on the open road. Aside from how well it drives, is it comfortable? Does it fit your baby seats? Does it meet your needs?
  • Negotiate it. A dealer’s price is always flexible. Be prepared to walk away if you’re not getting what you want. If you’re paying in full, you’ll always have more leeway.

Buying used vehicles is not without risk, but my family has bought many used vehicles, without any major issues, aside from the same issues that plague any car. Buying a used car can save you thousands over a new car and can last you for years as well, but it’s important to take your time and do your own due diligence – never buy a used car on impulse and let your emotions drive your decisions for you.

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