|By Stewart Pelto on June 9, 2010
Buying used cars can save you thousands of dollars off the sticker price of a new car. But used car lots can also harbor greasy salesmen that aren’t afraid to saddle you with a cheap car and a bum loan. Take a few tips from the Federal Trade Commission:
First things first: taking out a loan to finance your purchase is going to make the car cost more. Unless you are willing to pay in full via cash or check (which can mean setting your sights lower than that 3-year-old luxury brand), you are going to pay the sticker price plus interest. This is fact.
So budget accordingly: if you start with your $20K sticker price limit, you’ve blown your budget already. Buy a car for $15 to $17K and let interest fill up the rest. Remember: affordability is what’s truly luxurious in life.
Now find a loan: I like credit unions and reputable car dealerships that make straight A’s on the BBB rating system. I do not like disreputable car dealerships offering loans for first-time buyers or any pitch that begins, “Bad Credit? No Credit? No Problem!” That used luxury car isn’t worth the giant down payment and the higher interest rates that come along with one of these loans.
Be smart and nobody will be able to take you for a ride. Before you put your John Hancock on ANYTHING, make sure you know exactly how much you will pay for the vehicle, exactly how many payments you are expected to make, and exactly when those payments are expected. Don’t just scribble your name over some documents because you and your lead foot are getting impatient.
And if the car ends up being a dud, make sure you can get your money back. Forgiving return policies and money-back guarantees are just names for a three-day period known as your “right to cancel.” Dealers are not legally bound to give you this right. Honest dealers will. Dishonest dealers should be asked to provide it in writing. Now drive off the lot with the wind in your hair instead of grease.