how much money do you need to buy a used car

With 1.9% financing on both vehicles, you’d think we would be older, but we are still in our late twenties! We have many friends who have large aspirations with their vehicles, but all I’m looking for is something that is a little sporty so it accelerates well, something that I can fit other people and things, and something that is reliable.
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Great post! I think that spending 10-15% of your annual income can get you a nice car, so if you have a very low annual income, then it’s time to increase it for you to get a more reliable car.
If you finance a new car, you live the dream for a few months before realizing that you’ll be making this crazy car payment for the next three and a half years and that you can’t afford anything else.
I’m an absolute car guy and I can still manage to spend no more than 20-30% of my income on cars.
How much car can you afford? Find out how much you should spend on a car in your twenties and why — unless cars are your absolute passion — it’s probably way less than you think.

Currently, new cars have an average depreciation of 20.5 percent after the first year of use, says Joe Spina, senior manager of remarketing for This falls into the general range of new-car depreciation of 20 to 25 percent, depending on brand cachet and the state of the used-car market.
Another explanation for the prevalence of minimal down payments is that interest rates on new cars are incredibly low, meaning there’s little incentive for people to make larger down payments, says Jessica Caldwell, Edmunds senior director of industry analysis.
By contrast, someone who makes a sizable down payment will have lower monthly payments, pay less in finance charges and immediately offset a new car’s initial depreciation.
Buyers with FICO scores of about 670 and below will have a hard time getting an auto loan from a bank or credit union unless they make at least a 15 percent down payment.
If your budget can accommodate it, making a bigger down payment will allow you to choose a shorter finance term, which will save you money in interest charges.
Take that depreciation, along with sales tax, finance costs and registration and pair them with a low down payment — or no down payment — and you get a buyer who is immediately "upside down" in the car purchase.
(This is not the case if you qualify for zero percent APR.) Plus, you will likely be upside down on the car loan — owing more money than the car is worth.
"You’re starting to see more people get into seven-year car loans, which reduce their monthly payment," says Kukla.
An Edmunds analysis of new and used car purchases showed that the average car down payment in 2013 was about 12 percent.
 After you have decided the type of make, model and features you want, some of the sites mentioned above can be searched for your ideal car.  If you agree on a price with the online dealer, you leave a deposit on your credit card.  Once your vehicle is selected, you arrange for pickup, test drive and pay the balance.
 Get the dealer to provide you with the VIN (Vehicle Identification Number) for the car at the other dealer so they don’t switch it when your car is delivered.  If you don’t see it first, make sure you can get out of the deal 100% with no penalty if when the car comes in you don’t like it or it is not what you ordered.
 Better yet, buy it direct from the other dealer.  However, if your dealer needs to order the car from the manufacturer directly that is O.K.  It should not cost more than the exact same model on their lot.  Make sure you put down no more than $500, and use a credit card to secure the payment.
 If you are in a rural area, you might need a vehicle just to get food.  Those living in a city with good public transportation might not need a car immediately.  And they are really expensive! Decide what you really need.  Those extras like navigation, leather seats really add up.  Look at the basics:  You need to purchase the car, get insurance, pay for gas and then maintain it.
  Financing A Car If you can buy the car with cash, great!  If, as a teen, you need to finance your car you will need a co-signor with a person who has a credit history and an employment and salary history, i.e. an adult.
 Get your/co-signatory’s credit report before you shop for financing see Credit History & Credit Score (FICO).
 Most leases require you to be 18 or older and have a credit history see Credit History & Credit Score (FICO), which is often difficult for a teen to establish.
 Bring along all your pricing information so you can make sure your local dealer is offering "a good deal".
 A responsible adult might have to take out the lease and the insurance, and list you as a regular driver.  However, you need to reside in the same house or neighborhood as that lessee.
 If you’re buying a car privately make sure to take it to a trusted mechanic to thoroughly check out the vehicle before closing the deal.
Every state’s insurance regulations are different, so find out what your state mandates.  Realize that what the state mandates is a minimum most experts recommend more.  There are many parts to car insurances (liability, collision coverage, comprehensive coverage, gap insurance etc.), so speak to an expert.
 Once you come up with a figure, save an additional 10-15% for inflation, increases in gas or car insurance and unexpected events.  Worse comes to worst, you will have extra money available to spend, or pay off the car early.
It’s preferable not to have your dealer get a car from another dealer.  But if you do have to do this, make sure you see the car first.
 Don’t buy a car if you don’t have this report, or if a dealer won’t give it to you.
 Do not rely solely on the auto company for financing.  Shop around to get the best rate you can.  Remember, most of the time it is the automobile manufacturer’s financing division that makes the real money.
 It doesn’t matter whether you are buying from a dealer, the Internet or an individual.
 If you can’t afford to put down 20%, DON’T BUY IT!  If you can’t pay off the car in 48 months, DON’T BUY IT!  Instead, buy a less expensive vehicle that you CAN afford.
 Check the web.  You might find a better deal online or a few hundred miles away.
 You also need to check out the safety ratings , and information on gas economy  .
    Basic Car Buying Rule If you can’t afford to put down at least 20% on the car, you’ll probably end up owing more on it than it’s worth.
With reports in hand, Google some common problems that make and model encounters, then head to Kelley Blue Book—the Mecca of used car resources—to see if comparable cars of the same general age, style and condition are selling for around the price you’ve been quoted.
The only thing standing between you and sweet, sweet victory is a little bit of paperwork including transferring the title into your name (or your parents’ names), registering the vehicle and maybe even some state licensing work.
Having a clear idea of what kind of car you’re looking for and the features you need in a vehicle before you head to a lot can save you thousands and prevent you from winding up with a bigger, gas-guzzling luxury ride when you really just need something to get to class and back.
If a car passes the test drive, we highly recommend ponying up for a history report that will give you a boatload of information including if the vehicle has been in any major collisions, has liens against it and whether the odometer has been rolled back.
Retrieved October 18, 2014 from In-line reference: (Shmoop Editorial Team, 2008) Chicago Style Bibliography (at end of paper): Shmoop Editorial Team.
If the car you’re eyeing passes your background check, head back to the lot, this time with your parents, siblings and anyone else who may be driving your sweet ride.
The price of gas is high, but that car…you just…can’t…get it…out of…your head! THE MADNESS! If visions of your own ride are just too overpowering, take a peek at your bank account before looking at available cars.
While you’re there, ask the seller about the car’s history, gas mileage, anti-theft features, whether it comes with a warranty, what type of oil it takes, whether they have the vehicle’s service records and the car’s Vehicle Identification Number (VIN).
You can get a Certified Pre Owned 2007 or 2008 Honda Civic with low miles for around $16K – $17K while a new Civic is going to be almost $20K.
My first car sucked and didn't last long before the maintenance required wasn't worth it anymore.
If you can get one that still has factory warranty remaining or has been Certified Pre-Owned with an extended warranty offered by the manufacturer then you are looking at a very nice gently used, well maintained used car.
As far as millage I would not recommend anything above 100K if possible, this is a reasonable amount especially for the type of engines listed above and should generally allow the car to run for a somewhat long time without any major problems (60K – 100K).
My first car sucked and didn't last long before the maintenance required wasn't worth it anymore.
If you can I would recommended a vehicle with a slant engine (various makes) or if that is not an option or is too expensive a flat engine (Subaru) as these tend to be much more reliable and run a lot longer then others.
For some people who cannot afford to buy brand new cars, second hand cars offer valuable alternatives to saving money for other important matters.
Aside from this, another myth that people scouting for a used vehicle believe in is that once the previous owner of the used car has provided them with the vehicle’s maintenance records, they would be safe from any kind of future problems regarding the vehicle’s performance.
Knowing what you can and cannot afford is the first step when buying used cars.
Never pay any money until you have seen the results of the RAC Vehicle Status Check or CARFAX Vehicle History Report.
You can work out a loan with the dealership or manufacturer, but it is also possible to walk into a dealership with financing already secured through a third-party source, such as our official, preferred lender LightStream, an online lending division of SunTrust Bank, and the preferred lender of Kelley Blue Book.
Here are some suggestions: First, make a list of all the things you need your vehicle to do (haul kids, go off-road, get good gas mileage, be absolutely reliable, maintain good re-sale value, be easy to park) and then make a second list of all the things you admire in a vehicle (body style, colors, luxury options).
It always pays to shop around, so check rates with your insurance company before you buy your new vehicle, and then quote & name your price on Progressive online to compare.
You should end up with a list of required and desired characteristics, which you can use to eliminate models that won’t work for you (you can’t haul kids in a two-seat sports car or operate a full-size sport utility vehicle on an economy-car fuel budget).
Typically, sport cars, anything with "turbo" or "supercharged" in the name, higher performance vehicles with larger or more powerful engines and vehicles with four-wheel drive will give you higher insurance rates.
"Someone with great credit, the bank may buy a loan contract for 130 to 140 percent of the book value of the car." For instance, if the book value of the car is $20,000, with an extremely good credit score you may be able to borrow $24,000, and use the extra amount to pay taxes, extended warranties or other fees.
"The loan-to-value ratio that a lender will allow is not affected as much by a year or mileage as it is by the credit score of the borrower." So will a buyer be able to finance a 10-year-old vehicle at 100 percent? "Yes," Roderick says.
Still, negative equity in your trade-in vehicle may require you to inject more capital into your purchase, particularly if you have some credit challenges, causing lenders to want to fund your loan at less than the retail value of the vehicle.
"Positive equity in the trade is exactly the same as money put down." You are more likely to have trade equity if you made a substantial down payment on your present vehicle.
Roderick explains, "Negative equity is when somebody’s trade-in value of their vehicle is below their payoff." While negative equity had been a problem with financing a vehicle, the situation has improved dramatically.
However, you still may want to budget a higher down payment in order to have a smaller loan, to avoid being upside-down on the vehicle, and to keep your payments lower, as well.
(This should also serve to draw out any potential sentient-car crime-fighting partners, as they cannot resist wisecracking and will likely say something cute like, "Geez, buy me dinner first." If so, then you’re done: It’s all cowhide coverings and curly hair for the rest of your days.) If there’s little to no rapport between you and the vehicle at this point, just sight down the trim lines to make sure they’re straight with no fluctuations — offset doors, fenders, and uneven lines could indicate frame damage.
So why do dealerships always want to know your price, payment and trades first? Because it gives them leverage against you: "Oh, well, if we’re going to do you a favor and take this trade-in off your hands, you have to buy one of these pre-selected vehicles." Or, "Oh, you’re financing? Those aren’t our finance cars.
Check those out in advance and start looking up the models you’re interested in, then read up on each one: Comb through car sites like Edmunds, click on forum posts by owners, get the specs and find out about users’ experience with reliability — hell, go to Wikipedia and bone up on the entire history of the model and the powertrain you’re considering.
Back in school, you’d do the same amount of research for a book report on Huck Finn just because an older lady in a paneled skirt threatened you with the alphabet — you can do the same legwork for a multi-thousand-dollar purchase you’re going to entrust your life to every time you leave the house to get a burrito.
i have a black xk8 convertible and people assume I’m spoiled and rich and i do feel special in it, little do they know i got it for 9g’s! but i would stay away because that car WILL break down on you, they were built incorrectly and every one will face the timing chain break, bearings, and transmission, 9 thousand in repairs and still needs stuff.
Mazda CX-7 (I like them, I’ve considered buying one) but, where they say in one paragraph, “with poor fuel economy” to the last sentence, “gets decent gas mileage”, make up your mind.
I think the author person just picked 12 random cheap cars he saw online, copied and pasted some facts from the manufacture’s brochure, and called it good.
Was this article supposed to be humorous? NONE of these cars with the exception of maybe the Cadillac will make you look rich.
I don’t believe any of the interesting engine options (or good looks, arguably) were introduced until the 2013 model year.
A new ’14 Chevy Spark LS for $11, 000 w/ manual trans, A/C, power windows/locks, am/fm stereo, alloys, rear spoiler and more is a good deal but it won’t make me look rich.
No doubt that new cars, even the “cheap” ones, have a lot more features than they used to and buying a more expensive car used is an old trick to get a good car for less.
This free online Car Down Payment Calculator will calculate the down payment dollar amount from a percentage of a vehicle’s purchase price, and it will compute the resulting loan amount, monthly installment, and interest costs.
In case you are new to the concept of using a loan to purchase large ticket items, a down payment is an amount of cash you would give to a lender in order to reduce the amount of money you need to borrow to make the purchase.
With that, let’s use the Car Down Payment Calculator to calculate the dollar amount you will pay down on a vehicle purchase based on a percentage of the purchase price.
Dealers that sell and service the brand of vehicle you’re considering can use the vehicle identification number (VIN) to determine whether your car or truck has ever been recalled for a safety defect and whether the repairs were made.
Buying used also means you avoid the depreciation hit new-car owners get in the first year, so a used car can hold onto its value longer, says Ronald Montoya, consumer advice editor for auto research company Edmunds.
Two good sources of information are Consumer Reports magazine’s April auto issue, available in the library or through the Consumer Reports website and JD Power and Associates, a research company that polls buyers about their cars and trucks.
The Federal Trade Commission requires dealers to place a "Buyer’s Guide" on the vehicle that tells whether the vehicle has a warranty and what that warranty covers.
Maintain Pricing Confidentiality – One thing that I don’t recommend is telling one dealer what another dealer’s quote was.  It is ok to acknowledge that you are looking at several quotes.  However, when they ask "Can you tell me who quoted you what price?" your response should be "I treat everyone’s quote as confidential and proprietary.  I won’t share your quote with others, and by the same token I won’t share quotes from other dealerships with you."  That will end the discussion and you will also actually gain respect in their eyes.
As a general rule, you can expect that the minimum profit that the dealer will accept for a car is 3% .  Where the Holdback is 3% (as it is for all American cars except Lincoln and many foreign cars) the dealer’s LAS will be the Invoice price of the car, plus Delivery, plus the Advertising charge, less any advertised or hidden Rebates (I+D+A-R).
In all likelihood their first response, in order to test you, will be, "Okay, if that’s what you want to do fine, but we can’t guarantee that the price we have agreed on for the new car will be good when you come back later." This is when you’ll have to start your soft walkout.  Then leave slowly, keeping the conversation going, and expect that there is a high likelihood that they will make concessions to keep you from leaving.
Calculate the Invoice Price for That Car – Make sure that you printed out the invoice prices for the car and the options for all of the trim lines for the model that you are considering before you left home.  On the sheet where you wrote down the pricing information from the sticker for the car you want, write down the invoice prices for the car and the options, add the delivery charge, and now you have the invoice price except for the advertising charge.
Occasionally dealers will actually install some of these items when the car arrives on the lot.  They then put a "supplemental sticker" ("rip-off sticker") on the car and insist that you have to pay for the extra items.  I would stay away from any car that has a "supplemental sticker," and I would not do business with any dealer that puts them on all their cars.  If you absolutely have to have a car with a "supplemental sticker", maybe because it is a color you have not been able find anywhere else, try to find out what the items would cost in the after market and then pay the dealer no more than 50% of that.  That way the dealer will probably just get their costs back.  And no, they do not deserve any profit an these items since you do not want them and dealer is forcing them on you.
Or the quote will include rebates that you are not eligible for (active duty military or recent college graduate) or it will leave out "mandatory" paperwork, ScotchGuarding, vehicle prep or other fees (which you should never pay for anyway).  If you know your pricing from the section above, you should be able to spot the lowball the moment the salesperson pulls it.
Sales people get paid from $50-100, depending on the dealership, for a deal with no money.  If the sales person you're dealing with gets paid a $150 bonus for selling two cars on a weekday, or $300 for selling four cars on a weekend, make him work for you.  If he's already sold a car that day, you're more inclined to have him try to earn his bonus, because his commission isn't going to do anything on just one loser deal.
You want to strongly insinuate (seeding information in a negotiation is always done best indirectly, meaning that if you want to communicate you have money you don't say you have money, you show you have money: you drive a nice car to the dealership, you don't act like a derelict when you're there, etc) that you have the ability to buy a vehicle, you're going to do it immediately, and that you're a savvy buyer who has all the information they need but will be motivated by price.
Then, you can leave the dealership with a brand new vehicle at the lowest price possible.  Instead of having to negotiate, you have someone who knows the ins and outs of the business, your sales person, working for you for an extra $100.  And last but not least, you will be able to get the deal of a lifetime.
We paid cash for our last two cars – both were 2-3 year old cars when we bought them with less than 30,000 miles on them.
If you’re looking at buying a solid car with cash, here’s a step by step plan on getting it done.
I think you need to look at other factors as well like – What else can we be doing with the money? For us, paying cash for a car meant having less cash flow to buy a house.
Now that you’re armed with information and you have cash in your car replacement, you can get the car that you want and spare yourself huge car payments.
Your family’s monthly cash flow will have some more breathing room since you’re only putting in some of your old payments.
We still pay car payments now, but instead of to the bank – we pay them to ourselves as kind of mentioned here – and when the time comes to buy another car, we’ll have enough cash saved to pay for that one as well.
If you’re buying new or used from a dealership, do NOT mention you’re buying with cash until after the price has been settled.
Is there a way you can realistically buy a new or slightly used vehicle with cash? Can you avoid a car loan for your next car? I decided to evaluate my viewpoints and analyzed how others have been able to do it.
You’re under no obligation to discuss method of payment yet and mentioning cash may hurt your negotiating stance.
Still, when we have bought our cars we had the cash to buy them outright but chose not to due to the low interest we were getting.
There are some great resources on the topic if you’re serious about paying for your next car in cash.
Since our credit is good we were able to get extremely low interest rates on our car through financing which allowed us to have more cash for our home.
I feel exactly the same way – paying in cash makes you consider if it’s really worth it.
You can obtain a CARFAX Vehicle History Report to find out the number of owners of the car you are looking at has had any problems in its past, such as flood damage, odometer problems, or a salvage titles.
If the seller cannot provide a detailed vehicle history report, you can use the 17-digit vehicle identification number (VIN) to secure a car’s history from CARFAX.
If someone buys a new car with major problems, and the manufacturer fails to repair the defects in a specified amount of time, the manufacturer may be required to refund the consumer’s money by buying the vehicle back.
Residual values (the projected worth of new cars at the end of leases) dropped significantly on a wide range of vehicles now perceived as gas guzzlers, increasing the amounts leasing companies must charge for depreciation and making lease payments more expensive.
In states requiring all the sales tax money up front, some customers add that amount to the drive-off check, while others roll it into the capitalized cost and pay it over the lease term.
So in total, you are paying interest on (a) the depreciation balance of $10,000, which declines each year as you pay down the principal, and on (b) the residual value of $12,000, which remains steady over the lease term.
"D and D includes full shipping and destination costs," says Michael Caudill, an auto expert who owns Driven Public Relations, a Temecula, Calif.-based public relations firm.
If the dealer can beat that, great, but at least you’ve done your homework first," says Langley Steinert, founder of, a search engine that alerts users if the car they’re considering is a great deal, a good one or not at all.
"These are all upsells, and if the finance manager makes the sales, the dealership gets a cut," Caudill says.
But nobody wants to buy a car with hidden costs and spend hundreds or thousands more than intended in finance charges, fees and mechanical problems.
"We estimate more than 1 million cars are on the road right now with an odometer rollback," Carfax spokesman Chris Basso says.
In addition, because there’s such an abundance of cars on eBay you’re pretty much guaranteed to find a bargain nobody else sees once in a while.
It might sound like we’re stating, but if you want to maximize your profits, you’ve got to buy a car as cheaply as possible and sell it for the highest amount of money.
Usually, both used and new cars are tricky to shift in the January to March period, which means it might be a good time to pick up a bargain.
Cars are connected to everything else that is bought using large amounts of money, so if a housing or banking crisis is on the way, expect people’s desire to buy automobiles to suddenly drop.
Most of the time, this means you’re going to make more money.
Some online auctions provide statistics about the average prices some cars sold for during a year, which can prove very helpful.
The buying and selling of cars for profit falls under individual states licensing laws for car dealers.
So the next time, you’re going to spend far less time because you know what you’re doing.
Obviously, all business involves rick, so if you’re not willing to lose your money, then you’re better off leaving it in the bank.
If you’ve learned everything there is about say the VW Golf V from a previous successful sale, than you need to capitalize and increase your success by doing that once again.
For starters, since more cars are advertised online than anywhere else, the market is fairer and less prone to wild fluctuations.
You can often find a better interest rate through your local bank or credit union than you would find with dealer financing.
Additionally if your car was totaled or stolen, the check from the insurance would not pay off the amount of the loan.
Additionally if you are not financing through the dealer, you may have more negotiating power to lower the amount that your car costs.
Generally they will need the title or vehicle identification number to process the loan.
Many lenders will not guarantee a rate until you sign the papers, but they will give you preapproval for a loan amount and the current rate.
Additionally, you will need to give them the title once you obtain it from the car’s previous owner.

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