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Money Expert - Diana Clement - Financial Planning, Career, Investing, Economy, Property - MSN NZ

Buying second-hand cars

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Getting a good deal on a second-hand car requires some legwork. Although it's easy to go to a car yard to buy a car, they're usually cheaper from private sellers on auction websites, via small ads in the newspaper or at local car fairs.

It certainly makes sense to buy second-hand. New cars can lose one-third or more of their value in the first five years.

Having said that, there's no such thing as a good price on a bad car.

Rule number one when buying a used car is never be lazy. If you do the legwork, shop around, and haggle, you could save hundreds or in some cases thousands of dollars.

Try not to limit yourself to dealerships or car auctions. You could find just the deal you're looking for by spotting a car for sale in the street or by asking around.

Also question the model you plan to buy. It's a really good idea to consider the cost of repairs on your vehicle — they'll be more expensive for a rare car than a common one — and just how much gas your car will guzzle over the years. The cost of these two factors could wipe out any savings you make on purchase. It's all about the "true cost to own".

If you need to sell your car first you might want to consider trading it in. This saves a lot of time and hassle, but it's not the best way to get top dollar. The chances are that the trade-in price will be less than you could get on the open market because car yard prices tend to be higher.

The downside of buying privately is that you have no warranty and if you buy a lemon you're stuck with it.

You'll also need to take more care. If there is finance owing on the car then it could be repossessed even though you've bought it. It's a really good idea to get a vehicle history report such as the AA LemonCheck. That is designed to identify:

  • stolen cars;
  • finance owing;
  • ownership details; and
  • odometer history.

The Internet makes shopping around almost infinitely easier. When I was shopping for a particular car I found 73 of them listed on one auction website and many more showing the sold price in the expired listings.

Another way to get a feel for the correct price of a car, then visit the Turners Car Price Check Service.

Car fairs are another good place to compare prices. The advantage with these is you can usually get a mechanical report on the spot — which saves a lot of to-ing and fro-ing.

Borrowing money adds hugely to the cost of the vehicle. You can bargain better with cash. If you must borrow, try to get a car loan from your bank rather than use the finance on offer at the dealership. You'll have more choice of where you can buy. And car yard loans are almost always laden with additional charges and torturous interest rates.

There are many ways to save money on used cars. They include:

  • Set a budget and don't be led by your emotions.
  • Buy a car with a few small dings or other cosmetic imperfections.
  • Haggle hard.
  • Learn about Bangernomics.

Have your say: Do you prefer to buy a new or used car? How do you get a good deal on a car?

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User comments
Hi, The above thought is smart and doesn’t require any further addition. It’s perfect thought from my side. -------- Jon. <a href="http://www.nissannewcars.com" rel="dofollow">New Nissan Cars</a>
Funding a vehicle utilising Dealership finance is often less expensive than the Banks. Also, the Franchise Dealership Business Managers are experts in automotive finance and will show you the best option to fund the purchase, whether via traditional finance, lease or revolving funding options. At some Toyota Dealerships interest rates are as low as 8.75% whereas if you do not have a mortgage with a bank you will find that they are still around 15.75% or higher. If you are in business do not discount new vehicles as you can depreciate quicker that late model second hand vehicles, plus your cost of motoring can be less with repairs & maintenance, plus you have full warranty for upto 5 yrs with some manufacturers.

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