4 Tips When Buying a Used Car or Truck
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By Mary Pollard, Ascend Vice President of Consumer Lending
There finally may be light at the end of the tunnel for Middle Tennesseans who are in the market to purchase a used car or truck.
Prices for pre-owned vehicles, which skyrocketed during the pandemic, have fallen for four consecutive months, according to the Bureau of Labor Statistics April Consumer Price Index. After peaking in January, used car and truck prices declined 0.2% in February, 3.8% in March and 0.4% in April. Prices in May flattened, but buyers still paid $60 less than the previous month.
While that is indeed good news, pre-owned vehicle prices are still more than 11% higher than a year ago, according to Manheim’s Used Vehicle Value Index. Kelley Blue Book puts the average price of a used car at around $28,312.
But with the prices steadily trending down, more consumers are shopping for used cars and trucks. Dealertrack, a leading automotive software and data analysis firm, says loans for used cars and trucks increased 10% year-over year. Demand for used vehicle loans by our credit union members is even higher.
All too often, buying a pre-owned car or truck can often be a case of “buyer beware.” Here are four tips to help Middle Tennesseans make a smart purchase:
Know what you can afford
Before deciding which type of used vehicle to buy, first figure out how much you can afford. Review your income, expenses and any debt obligations to make sure the price range for your desired make and model (see below) fits in your budget. Also factor in other expenses – gas mileage, maintenance and repairs, insurance, and, if you are taking out a loan, the interest you will pay every month. This will give you get a complete picture of the estimated costs of owning and operating your vehicle.
Research used car and truck prices
Knowledge is power, so before you step onto an auto dealer’s lot, it will help to be familiar with the cost of the make and model vehicle you want to purchase. There are plenty of excellent online resources (Edmunds.com and kbb.com, for example) to get you started. (Those websites also provide articles on how to negotiate with dealers.) Also visit online sellers – such as Autotrader.com, Cars.com, CarMax or Carvana – when comparison shopping.
Get preapproved for a loan
Because of the heightened demand for used cars, you may be competing with several other buyers for popular vehicles. To give yourself an edge, get pre-approved for an auto loan if you are borrowing to make the purchase. A preapproval will improve your negotiating power and help you close on the purchase faster, especially if other buyers have not been pre-approved. Most credit unions and banks, including Ascend, offer online tools that make it easy to submit the necessary information to obtain a used car or truck loan.
Know what you are buying
One final tip: Before driving a newly purchased used vehicle off the lot, make sure you are confident it is in good condition and meets your needs. You can:
- Take it for a test drive so you are comfortable with the seats and dashboard and how the car or truck handles on the road
- Review the vehicle’s accident and service history (if you didn’t already during the research phase) by looking at reports from a company such as Carfax or other service providers
- And if you can, have the car or truck inspected by a mechanic or, perhaps, a friend who knows a thing or two about automobiles.
Car shopping for your next used vehicle can be fun, not stressful. By following these tips, you will be in the driver’s seat to make sure your pre-owned car or truck meets your transportation needs and fits your budget. Happy driving!