Ooh, look at all those shiny cars out there on the lot! Your fingers are probably itching to wrap themselves around the steering wheel of your favorite. Right now may be the moment to rein in your enthusiasm, though: even if you know how to save money when buying a car, this is a big decision and worth taking your time over.
When buying a cheap car, there’s always a tradeoff between the price you pay and the car’s appearance, safety, performance, and ongoing costs – specifically, maintenance and insurance. The first step, therefore, is not learning how to find a cheap car per se but defining your goals as clearly as possible. Do you need something that just basically runs well enough to get you from A to B? Are you planning on driving your new car for a couple of years or only until you can afford something better? Can you stand to be seen in a vehicle that’s literally been around the block a few times, or do you need to project an image of success for professional or other reasons? How long a distance do you cover each month and how much will choosing a fuel-efficient car save you?
Once the answers to questions like these are firmly fixed in your mind, you’ll be much less likely to get distracted by enticing but unsuitable vehicles or fall for an upselling salesman’s tricks. Knowing what you want is at least half of how to save money when buying a car. Once you’ve gotten to this point, a moment’s research will show you what kinds of vehicles you should be looking at and how much you should expect to pay.
Averages prices for your chosen style of car are only a guideline, though. If you’re smart, you can probably end up paying several hundred dollars less – here’s how to go about it.
Table of Contents
- 1 Brush up on Your Negotiation Skills
- 2 Postpone Your Purchase If You Can
- 3 Make Sure to Look for the Most Economical Auto Loan
- 4 Avoid Gewgaws, Doohickeys, and Gimcracks
- 5 Try Private Sellers First
- 6 Insist on a Pre-Sale Mechanical Inspection
- 7 Check How Much Insurance Will Set You Back
- 8 Should I Get an Extended Warranty When Buying a Cheap Car?
- 9 Consider Leasing Instead
- 10 Adjust Your Expectations and Focus on How to Find a Cheap Car
- 11 The Long and Short of How to Get a Car for Cheap
Brush up on Your Negotiation Skills
Whether you’re buying a cheap car or the ride of your dreams, the price you see on the ad or sticker is rarely what you’re expected to pay. Instead, it provides a starting point for figuring out a number both the buyer and seller can live with, allowing the dealership to pretend that it’s doing you a favor by giving you a discount they were prepared for all along. In general, you can certainly pay less if you’re willing to spend half an hour or so flapping your jaw; due to things like optional extras, maintenance plans, and finance charges, you may also end up spending more.
The art of haggling is key to getting the final figure to move down instead of up. Professional salespeople understand how this game is played; you probably don’t. You’re in a better position when buying a cheap car directly from the former owner, but don’t count on having the advantage unless you know quite a bit about both cars and negotiation.
Fortunately, there are plenty of simple guidelines you can follow to improve your chances without resorting to dishonesty or cheap mind games:
- Always be ready to walk away. Any experienced negotiator is able to sense when a potential buyer has made an emotional commitment to purchasing something. Conversely, they’re much more willing to accommodate someone who clearly has other options to choose from.
- The person who sits down at the negotiating table with the most knowledge will usually come out ahead. You should make a serious effort to find out things like the average sale price of your preferred model of car, what its approximate resale value will be in a few years, how MSRP (Manufacturer Suggested Retail Price) is calculated, and what additional dealership fees they may try to sneak in at the last minute.
- Unless you know how these kinds of transactions work, keep things as simple as possible so you and the salesperson remain on the same page. As one example, let’s say you’re trading in your old car: the dealership may offer you an (apparently) great deal on a new vehicle but really be low-balling you on the trade-in. Alternatively, they can jack up the amount they’re willing to pay for your current car but be less flexible on the price of the one you have your eye on. Keep the different components of the deal separate as far as possible and focus only on the out-the-door price you’ll pay once all the paperwork is done.
- As with the police, half of dealing with salespeople is knowing when to shut up. Letting people stew in an uncomfortable silence is a time-honored negotiation and interrogation tactic, but you don’t have to fall for it. Unless you were asked a question, you can simply keep your peace and wait for them to talk about what concessions they’re willing to make.
Postpone Your Purchase If You Can
Again, it’s a timeless fact of negotiation that the party who can walk away more easily tends to have the upper hand. If all you’re interested in is how to get a car for cheap as quickly as possible, you may have to accept an inferior deal just so you can keep getting to work on time.
If you can make alternative arrangements for day-to-day transport, however, the balance of power swings in your favor. Not only won’t you be under pressure to take the first car you can afford, but you’ll also have more time to hunt for a bargain. One secret on the topic of how to buy a cheap used car is that some vehicles, for no clear reason, just don’t attract many buyers. Eventually, the dealership is likely to lower the price almost to cost just to free up some space on the lot.
Much the same thing applies to new cars that don’t sell as well as expected, for example when next year’s model is about to come out and there’s still plenty of excess inventory to get rid of. Keep an eye out for discounts and cashback offers, especially between October and December and around certain holidays. Another remarkably effective tactic you can use if you don’t need a car this very instant is to leave your phone number with a salesperson and ask them to call you if they find a way to deliver a deal that’s to your liking. Often enough, you’ll hear from them once the end of the month, quarter, or other quota period draws near.
Make Sure to Look for the Most Economical Auto Loan
One of the most common mistakes made by car buyers is focusing on the size of the monthly payments rather than how to get a car for cheap. Salespeople, at dealerships that also offer financing, encourage this: it’s much easier to convince somebody to sign up for five hundred bucks a month than a total of $35,000. What they don’t necessarily point out to you is that interest payments will amount to thousands of dollars, nor that they may be offering you the loan that’s most profitable to them instead of most affordable to you.
Especially if you’re already struggling with debt, you’ll want to keep an eagle eye on the total amount of money you owe and how much you’ll end up repaying. Make a point to shop around at different loan providers in order to get the lowest possible interest rate; getting pre-approval is generally simple and will give you greater leverage if you decide to finance your car through the dealership anyway. Also, consider making a larger down payment or accepting a shorter loan term; once you do the math, you’ll see that this really is the cheapest way to buy a car.
Don’t despair if you can’t get a competitive auto loan right now. It’s also possible to refinance these at a later stage. If your credit score has improved since buying a cheap car or you need to reduce your monthly expenses when times are tough, this option is definitely worth looking into.
Avoid Gewgaws, Doohickeys, and Gimcracks
Add-on options don’t affect the price of used cars all that much; instead, these nice-to-haves make a vehicle easier and quicker to sell. This means that someone upgrading from a tricked-out car isn’t forced to accept a low-ball offer just to get rid of it.
On a new vehicle, however, these options definitely cost you. It’s not all that unusual for a salesperson to make almost no profit on selling a new car but win back this money by talking you into getting stuff that looks nice, even though you don’t really need it. Leather seats are luxurious, certainly, but are they really $2,000 nicer than ordinary fabric? Having a sunroof is cool, but you’ll get more use out of it in California than Minnesota. If your previous car’s bodywork has survived a couple of years of you parking it, you can probably live without a backup camera.
Fancy rims don’t really make a car go faster, heated seats are only more comfortable for the first few minutes after getting in, and a roof rack you never use only serves to decrease your fuel efficiency. One large part of knowing how to get a car for cheap is to understand that optional extras are exactly that and the deal is only closed once you agree to a final price. You can even ask that options you don’t need be removed, or at least deducted from the sale price. They may or may not accommodate you on this, though, especially if these were installed by the factory instead of the dealership.
Try Private Sellers First
The cheapest way to buy a car is to cut out the middleman. Some car dealerships do indeed provide a valuable service and make the process of selling or buying a cheap car as painless as possible. They still need to pay rent and salaries, though, and the only way for them to do so is to make a profit on the cars they trade.
Assuming that you’ve been through the process once or twice, you probably understand the basics of how to buy a cheap used car. Transferring the title and registration isn’t too complicated in most states, anyone can apply for financing and insurance without professional help (thus avoiding the dealership’s commission), and figuring out the approximate value of a second-hand car is easy enough if you use the right resources. If you’re feeling adventurous, you can even try to snag a bargain at auction, including those of vehicles confiscated by the police, abandoned at airports, or left in impound lots. This represents a major risk, though: unless you can tell a diamond in the rough from a mechanical disaster, the high-pressure auction environment may not be for you.
Going the private route is a lot easier if you can spend plenty of time on the project of buying a cheap car. The kind of vehicle you need may not be available right now or in your area, and you’ll have to take a look at any serious prospect in person. On the plus side, negotiating the final price is typically a lot easier, there won’t be any attempt to upsell you on items like financing and extra warranties, and you’ll typically save between $500 and $1,000 on vaguely defined “dealer fees” alone.
Insist on a Pre-Sale Mechanical Inspection
The main drawback of buying from a private seller is that they typically don’t put a used car through the detailed inspection (and sometimes reconditioning) that results in a vehicle being called “certified pre-owned”. In addition, most states have “lemon laws” meant to protect unwitting buyers of vehicles that end up leaving a sour taste in the mouth, but these are generally aimed at dealerships and don’t apply to used cars, especially from private sellers.
In other words, you may have little recourse if the car you thought was a peach turns out to have a citrusy flavor. Simply checking the VIN (Vehicle Identification Number) online will already give you a ton of information, including any major accidents in the vehicle’s past and liens on the title. However, there’s no substitute for a physical examination of the engine, suspension, and other major components by an experienced professional. These typically cost under $200, making this a great deal: you may well be able to ask for a better price if your mechanic finds any issues or be able to walk away from a car that’s basically unfit for sale. Neither private sellers nor dealerships usually have any objection to a pre-purchase inspection from a third party; if they squawk at the idea, it’s probably best to look at another vehicle.
It’s also worth paying attention and taking your time during a test drive of any vehicle you’re not familiar with. Perhaps the seats aren’t really designed for someone with your body type, maybe the trunk is just a little smaller than you’re used to, there’s a weird smell inside, or you tend to bang your head on the doorframe when getting in. Even if these flaws are totally subjective, you can still use them to negotiate a discount on the price you, personally, are willing to pay.
Check How Much Insurance Will Set You Back
There’s no real mystery to how to buy a cheap used car; many can be had for under two thousand dollars. These apparent bargains come at a price, though: if you want to be a thrifty motorist, you have to take the total cost of owning a vehicle into account. In particular, you should get an idea of how much you’ll be spending on insurance and maintenance.
There are a number of ways to pay less for car insurance, but you’ll often find that cheaper, older cars carry higher-than-normal premiums compared to their value. Regardless, this is a big part of how to get a car for cheap, safely: you really don’t want to be out a large amount of money if you’re unlucky enough to get into an accident. Some dealerships will even refuse to let you leave their lot with a new car unless you can provide proof of insurance (though sometimes this is just a ruse to make you buy it through them!).
At a minimum, you’ll need to get the liability insurance mandated by your state. Assuming that you’re replacing a car that is insured, your insurance company may allow you a grace period during which both cars are covered; call them or read through your contract to make sure. It’s up to you whether you want to transfer your new car to your existing policy or not, but it’s certainly a good idea to get a couple of quotes to make sure you’re paying as little as possible for the coverage you need.
Should I Get an Extended Warranty When Buying a Cheap Car?
One of the annoying aspects of negotiating the cheapest way to buy a car at a dealership is that it’s often not clear when the deal really is done. After you’ve spent a significant amount of time talking with the salesperson, and through them with their manager, you’re likely to be ushered into an office where they’ll try to sell you even more extras: insurance, financing, and extended warranties being the most common. It’s almost impossible to research these in detail and compare other options while you’re just about to sign on the dotted line.
To add to the confusion, the latter item can also be called an extended service contract, vehicle protection plan, mechanical breakdown insurance, or something else along those lines. Whatever the term used, most of them will cover major, unexpected repairs but not routine maintenance. In other words, they give you roughly the same peace of mind as keeping a few thousand dollars tucked away in an emergency fund.
With new cars, which generally come with a factory warranty in any case, getting an extended warranty is probably a waste of money. When buying used, which is without a doubt the cheapest way to buy a car if you want to get good value for money, this decision becomes more complex. Did a mechanical inspection turn up a potential problem? Does the vehicle come with a full service history? Does your chosen make and model have a reputation for reliability?
Some extended warranties are also unreasonably restrictive: if your contract obligates you to use only specific shops for repairs and tune-ups, you may have to spend more on every oil change and still be out of luck if you suffer a breakdown while traveling out of state. On a final note, even if you decide to go with extended coverage, you’re under no obligation to buy this from the dealership: auto loan providers, insurance companies, and even banks all offer similar products.
Consider Leasing Instead
There may be a couple of reasons why you’re wondering how to get a car for cheap: maybe you work from home and commute only to the coffee machine and back, perhaps it’s for a family member who just needs something to get around, or it could be that you’ll only need to drive it for a couple of months or years before moving on to something better. In the latter case, a long-term rental car may be the more economical option.
Leasing a car generally means lower monthly payments, though you won’t get any money back when you trade it in. Both luxury and economical models are available on this basis, so you can choose to either save some money or drive something a little more flashy than you can afford to buy. The question of whether it’s cheaper to lease or buy can be argued either way depending on your circumstances, but it may be worth your while to at least check how much a leased car will cost you.
Adjust Your Expectations and Focus on How to Find a Cheap Car
Do you want to learn how to buy a cheap used car as quickly as possible? If you’re short of time, don’t even look at those advertised as “pristine” or “as new”. Ugly, scratched and dented cars offer great value for money as long as safety and reliability are all you’re interested in.
Likewise, a high odometer reading is a dealbreaker for most car buyers…but it doesn’t necessarily mean that the transmission is about to fall out. Several types of cars can keep ticking well after their 100,000-mile birthday, yet sell at a discount price due to the preconceptions many people have. This is especially true if a car was mostly driven on highways instead of in the city: stop-and-go driving puts a lot of strain on the suspension.
You can also save a lot of money by ignoring nice-to-haves like powered windows, entertainment systems, and even air conditioning. Once you start thinking of a car as no more than a chassis and engine, you can pick up some real bargains overlooked by style-conscious buyers.
The Long and Short of How to Get a Car for Cheap
In a perfect world, the vehicle you drive would be a reflection of your personality and the price wouldn’t even matter. Real life doesn’t work that way, though: whatever money you spend on a car is no longer available for any other purpose. In addition, cars are almost always depreciating assets: they lose their value over time to the tune of about 15% per year. If you factor in the interest you have to pay on an auto loan, you’re really losing money coming as well as going.
Most of us do, however, want to drive a car that’s pleasant to look at and comfortable to drive. This is why it’s important to make motoring one of your medium-term financial goals: figure out how much you can afford to spend at the moment and have a plan to upgrade in three to five years. Buying a cheap car now can be a good strategy for saving up for a down payment on something nicer down the line, reducing your financing costs and making it easier to get approved for a loan even if you have poor credit. Maybe you have to settle for a clunker right now, but a little advance planning will make it possible to improve your financial situation as well as what kind of car you drive over time.