Choosing to buy used cars over new models can be advantageous in a number of ways. As the online financial guru Wall St. Cheat Sheet details, pre owned cars are almost always cheaper than comparable new models, their value doesn’t depreciate anywhere near as quickly as new cars, and the insurance premiums for used cars tend to be significantly lower than for whatever the hottest new ride is at your local car dealership.
That said, the one thing that doesn’t change between buying new or used vehicles is the danger of getting a raw deal when financing your car. If you’re wondering how to finance used cars without breaking the bank, while ensuring you get exactly you want, here are three simple tips you can follow to lower costs.
Three Cost-Saving Tips for Anyone Trying to Finance Used Cars
- Options Strengthen Your Negotiating Position
- Go into Your Meetings Armed with Quotes
- Knowledge of Your Credit History is Power and Money
For the American Association of Retired People (AARP), one of the best things you can do when trying to finance used cars at a low rate is to keep your options open. If you lock in on on car, then a dealer can negotiate the price of that car how they see fit. It’s a matter of demand. On the other hand, if you give yourself a list of three or four acceptable options within your price range, the demand is spread out, giving you the ability to negotiate lower prices.
The best way to enter any negotiation is from a position of strength. That’s why Money Under 30, a guide to making better financial decisions from a younger age, puts so much emphasis on getting quotes from outside lending institutions before trying to finance used cars through your dealer. These quotes put your dealer in the position of having to negotiate, instead of the less comfortable other way around.
If you really want to get a great deal when trying to finance used cars, the best thing you can do is research your credit history before ever stepping foot on your local car lots. The reason is simple: a small minority of unsavory car dealers like to use their customers’ ignorance of their credit against them. The most classic case is a dealer telling their customers that their scores are a lot lower than they actually are, using that as rationale for why their financing ends up being so high. Make sure you know your own credit score to keep this trick from working on you.
Do you make a living running a used car dealership? What is some of the advice you’d give to shoppers looking to finance used cars without getting screwed? Let us know in the comments section below. Find out more about this topic here.