January 27

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Things to Avoid When Buying a Used Car

Buying a used car can be a smart investment when you need a replacement vehicle. While new car purchases tend to increase with a rising economy, used cars can provide a great alternative as long as you know how to shop for one. You can get the most bang for your buck with a used car. While this provides an opportunity to live more economically, a used car, by definition, has issues from regular wear and tear. Therefore, it’s important to avoid making these costly mistakes when you’re in the market for a second-hand car. In case you are searching for used cars near you, you can explore this website. Acura of Overland Park is a family-owned and operated Acura dealership in the Jay Wolfe Automotive Group.

Before you purchase your used car, whether that’s through a dealer or from a private owner on a website such as Craigslist, you’ll have to figure out how you’re going to pay for it. Not everyone is able to lay down the cash for a car in full—even for a used one. Those who can’t have to consider financing.

Financing allows you to understand the upper limit of your price range. Knowing your budget makes negotiating prices easier. If you’re buying a car from a dealership, you can certainly take their offer. But remember, dealer financing is built like a wholesale insurance offer, often adding in additional interest rates.

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Can you avoid this? Sure you can. The way you can do this is to shop around because different lenders offer different rates. Make sure you have your approval in hand even before you shop for your car—it’ll help keep you in line and within your budget. An auto loan calculator can also help you determine what kind of loan term and interest rate will fit your budget.

One thing to remember is that used car financing rates are generally higher than those for new cars. That’s because lenders want borrowers to buy new vehicles. The reason? It’s simple. If you default on your loan and the lender has to repossess the car, it can get a better resale value on a new car than it ever could on a used one.

You can save a lot over the long term if you have enough money to buy your used car outright. If you don’t fall into this category, you’ll have to make up a budget and determine how much you can afford.

When people look for a new car, they often think about the monthly payments they’ll have to make. While a lower monthly payment is good for your monthly budget, a longer payment period means you end up paying back more money in the long run. Due to compounding interest, it could make more sense for you to take on a higher monthly payment since it’s possible to pay back the principle in a shorter period.

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A cheaper way to get yourself into a used car is to lease one. And yes, you can lease a used car. But not all dealerships offer used car leases and there are certain conditions. According to Edmunds, it must be certified pre-owned. The mileage must be under 48,000 miles and the vehicle must be less than four years old.1

But remember, while your monthly lease payments can be lower than your monthly loan payments, you may have to return a leased car at the end of your lease. If you bought your used car, you can sell it or trade it in at your discretion. One bonus is that the residual value at the end of the lease for your used car will be much more affordable than a new car, making it more attractive to purchase at the end.

 


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