Buying from Private Sellers

I have a weakness. I admit it. I like to change the car I own way too often. I am not even sure if I can count how many I have bought over the years. In that time, I have learned a few hard lessons that I thought I would share, in hopes that maybe they can save you all some money, time, and energy.

When I was 16, I bought my first car with my own money by asking the seller to let me make payments. Surprisingly, he did. The whole car cost $600, and I was paying him $100 per month. On my way home with it on the first day, it died. I had to have it towed to a shop and repaired. I can’t even remember what the problem was, but I think it was something to do with a pump. Water? Oil? I don’t know. It has been a while. OK, a long time. Anyway, I called the owner up and told him what happened and pleaded for his help. Once again, he surprised me. He paid the bill and added only some of it to my bill with him. I don’t know how I got so lucky, because I can’t imagine that happening today. Once you drive away with a car, it’s problems are usually yours. Especially a cheap old car from a private seller. This man just acted out of the kindness of his heart to help a young, inexperienced girl with her first car. I will never forget it. The thing to realize here is, it doesn’t hurt to ask. Ask for a better price, or terms of payment. You have nothing to lose, and they just might surprise you.

The next cars I bought were also from private sellers. They all came with their share of problems and quirks. Most were huge gas guzzlers. None had under 100,000 miles. But, each one was a little better than the last. The best thing was, I had also learned a very important lesson. Car prices are negotiable. I got very good at asking them to lower their prices. I usually found some measure of success. Over the years, I have saved myself thousands of dollars this way.

Buying from Car Dealers

I learned a lot from my first car dealership experience. All were lessons that ended up costing me a lot of money. I learned about sticker prices, financing, 3rd party warranties, Carfax, and the importance of reliability.

Sticker prices and Financing

Even when buying from a dealer, there is always room for some price dropping. Don’t think you have to pay the price on the window. I made that mistake the first time I bought a newer car from a dealer. I thought the price was set in stone, and ended up paying a couple thousand dollars more than I should have. I didn’t even ask if they could give me a better price. Then, I financed the car with the bank that the dealer provided. I potentially could have saved even more money if I had shopped around for lower interest rates. If you want to be the most prepared, shop around for a car loan before you even go car shopping. You are much more likely to get a lower financing rate, lower payments, and even a lower down payment from a credit union before you buy than you would at the dealer. If you do find yourself at the dealer without pre-approved financing, make sure you tell them how much you are willing to pay each month and ask for their lowest price. Even a 0% interest financing could mean you will be paying a huge payment every month, because the time limit might be very limited. Look carefully at the documents before you sign them.


3rd Party Warranties

Sometimes dealers will sneak in extra costs, like warranties. A 3rd party warranty is something that a car dealership will often try to add on when they sell you a car. Sometimes they even include it in their sticker price, without telling you it is an optional coverage you are paying for. It is a warranty that you pay for, good for a certain time period, that covers very specific problems that may come up. The thing to know is that the dealerships make quite a profit off of these warranties. My mom said when she was a car dealer, that was where she made most of her money, because she always lowered the price of the car itself. Another thing about them is that they rarely cover the things that will actually go wrong. They are geared toward covering the things that may cost a lot if they do go out, but are not likely to have problems. I figured this out by reading the fine print, and working out what I was paying extra for that insurance. Luckily, even though I bought it when I bought my first dealer car, I was able to cancel it after a few months and saved myself a lot of money. The warranties themselves often cost several thousand dollars, so they are a very expensive “peace of mind.” A better idea, I have found, has been to a lot whatever extra amount that would have added to your monthly payment and put it into a savings account instead. That way, you will earn interest, and most likely have a good chunk of what you need if the unexpected happens, without giving that money to someone else and not being able to get it back if you don’t need if for repairs.

Carfax

Another thing I learned from that car is that the Carfax report may not be completely accurate. Even though I got one when I bought the car, I got another one many years later when I tried to trade it in. Much to my surprise, an accident had been reported on the second report that was not on the first. The dealer I got the car from had only recently acquired the car when I bought it. Sometime between when he bought it and sold it to me, someone reported that the car had been in an accident. That lag time made it so that neither I, nor the dealer knew it had been in a wreck. Low and Behold, the car I had paid thousands too much for by paying sticker price and getting an after market warranty was now worth even less because it had an accident on its record that I didn’t know about.

Reliability

The last lesson I learned with that car-buy a reliable brand, as new as you can afford, without actually being brand new. New cars lose thousands of dollars in value as soon as you drive them off the lot, where a gently used car with a high reliability rating holds its value both in the amount you could get when you sell it, and in the years of life you can use it. A new car doesn’t feel new for long, anyway, and if you are like me, you will just want a different one anyway.

Despite the fact that I ended up paying way more than I should have for that car, It wasn’t a total loss. I happen to have that car to this day, 16 years later. My son was an infant when we bought it because we wanted to have a reliable car to carry the baby around in, and in that respect it has been perfect. As a matter of fact, the car is now his to drive, since he just turned 16 and got his license. I have never (knock on wood) had to make a major repair on it, and it has cost me much less over the years than any other car I have owned. With regular maintenance, I have no doubt it will carry my son faithfully at least a few more years.

Take Aways

When buying a car, always negotiate for the best price, and come prepared with financing you can afford or set terms in your mind as to what you want.

Shop around, for both the car and the financing.

Do your research, so you know if the car is a good one. Buy the most reliable, gently used car you can and save the money you would have spent on 3rd party warranties to put into your savings account instead.

Don’t buy new unless you just can’t help yourself, and then keep the car as long as possible to avoid wasting money. Try not to be like me and buy cars too often. Buying a good one you can keep for many years will save you thousands of dollars.

Always, always read all the fine print before you sign any paperwork to look for hidden add-ons or fees.

What has been your experience with car buying? Do you find any of these hints helpful, or have some of your own to share? I would love to hear from you.

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