FAQ

Before buying a used car, always check the vehicle’s current value to avoid paying too much.The other big influencer on today’s used car market is inflated interest rates.

There are a lot of moving parts to consider when calculating how much you can afford for a used car. Prepare yourself for some disappointment during this process because what you can comfortably spend afford is probably less than you estimate. That’s because there is so much more than the purchase price or, if you finance, the monthly car payment that enters the equation.

Many of us believe we are on top of our personal finances as long as we don’t have any past-due payments.

If you are sitting on a mountain of debt, making only the minimum monthly payments on your credit cards or charging necessities at the grocery store indicates you are living above your means. Each of these examples is a clanging alarm bell. It’s time to get serious about your financial future, tighten your belt, and rein in your spending. It also means setting your sights low when shopping for a used car.

Creating a realistic monthly budget is Step 1 in your quest to buy a used car. Within a few dollars, you must know how much unused monthly income you can direct to car expenses. Never outspend your budget for a vehicle.

If you have a car to trade in, you need a solid idea of how much the vehicle is worth. If you are still making payments on it, you must also determine the payoff amount. The difference between its value and the payoff is the equity you have in your current car. That equity can go toward the down payment on your next car purchase. You may need to contact your lender for the loan payoff amount. Check your car’s fair market value, and you can also consider an instant cash offer. You may also need to sweeten the pot by adding some cash to the transaction. We recommend that your down payment, including your trade-in and upfront cash, be 20% of the purchase price.

Auto insurance is another critical piece of information you must have before pulling the trigger on a used car purchase. Unless you pay cash, you must show proof of insurance before a lender will allow you to drive off in your new ride anyway. Consequently, you might as well determine the cost of insurance before getting too far along in the buying process. Choose auto insurance carefully because your insurance premium will be a significant part of your transportation costs. When it comes to monthly car expenses, your insurance premium will be a significant slice of that pie.

You can use our “Get an Insurance Quote” link to easily get your vehicle insurance estimate from all the companies :Get an Insurance Quote – Paradise Motors Ltd. (bdscars.com)

If you have the funds to pay cash for your used car purchase, pat yourself on the back and feel free to skip this section. However, for most of us, getting prequalified for a car loan supplies a big piece of the budgeting puzzle if you borrow money to buy a used car. Prequalification may require a little work, but the effort is essential to determine the lowest interest rate you qualify for. Car buyers with weak credit may receive higher interest rates. Shop around for the best financing interest rates, even if your credit is excellent. Our Vehicle Loan link allows you directly see the loan providers and determine the best loan terms: Vehicle For A Loan – Paradise Motors Ltd. (bdscars.com)

“Prequalified” is different from “preapproval.” Prequalified means a lender has looked at your creditworthiness and estimated the terms you qualify for based on your information. In other words, it didn’t verify your information. Preapproval means the lender investigated your credit and personal history. Based on that investigation, the lender will lend a specified amount for a predetermined interest rate. A prequalification won’t affect your credit score or credit report; a preapproval may temporarily affect your credit score. You also aren’t locked into a preapproval. You can still shop around for a better financing deal.

Pro Tip:If you find a car you like and start doing mental gymnastics, trying to fit the expense into your budget, it’s too much car. Step back, get a grip, and find a more affordable vehicle. Remember, your monthly payment depends on the amount borrowed, the number of payments (term), and the interest rate. You can reduce the monthly payment amount by tinkering with any of those.

There are many factors to consider when buying a used car; some are more important than others. Each used car has different trade-offs. Buyers must decide for themselves where to compromise and where to draw the line. For example, we are convinced that one-owner used cars have a better chance of being well cared for. However, the older the model, the more likely it has had multiple owners but may still stand the test of time.

A used car with fewer miles is almost always preferable to a used car with notably more miles. In general, fewer miles mean less wear and tear. However, highway cruising miles cause less wear and tear than stop-and-go city miles. Consequently, a car with a lot of highway miles might be in better shape than one with significantly fewer city miles. Regardless, as a rule of thumb, we still lean toward fewer miles than more miles.

“When buying a used car, miles are typically more important than the age of the vehicle. This is assuming you’re considering vehicles that are similar in age, to begin with, say within five or six years. Once the age gap becomes more like eight to 10 years, there could be important safety features that the newer car will have because those innovations or options simply were not available when the older car was new.”

Tip: Barbadians average about 20,000kms of driving per year. Dividing the total miles on the odometer by the car’s age gives you its average annual mileage. If its annual mileage is significantly more than 20,000kms, take a closer look at its condition and maintenance records before purchasing it.

There is no easy answer to the question, how old should a used car be? How old is too old for a car? The primary advantages of a more recent model-year used car are less wear and tear (fewer maintenance and repair costs) and more advanced technology (safety and connectivity). The best advantages of an older model-year used car are a lower purchase price and decelerating depreciation. What we mean by decelerating depreciation is that the greatest amount of depreciation is in the first three years, or as much as 30% to 40% in those first 36 months. Usually, the loss of value begins to taper off in the fourth year, with the percentage of value loss decreasing year by year after that.

Most of us don’t seriously consider depreciation. It doesn’t contribute to our monthly car expenses, and we don’t feel the pain of depreciation until we sell a car or trade it in. Still, that loss can be 50% to 60% of the car’s original value in five years. However, as a used-car shopper, the good news is that you will pay much less for a 5-year-old version of that car than if you buy it new. Older cars tend to cost less to insure, as well.

Then again, older cars cost more to maintain and keep in good repair. It’s a trade-off.

Shoppers looking for a reliable used car should be looking for something newer than 15 years old. “Going back further than that will likely mean a car that’s nearing the end of its service life,” he said.

“Also, a 20-year-old car simply won’t have the same number of safety features as a more modern vehicle. “Things like head curtain airbags, rear parking cameras, rear cross-traffic alert, and others will be more common and easier to find on a modern vehicle.”

A car’s age and condition are less critical when it serves as a second or a third family vehicle used for around-town errands. The more a car contributes to a family’s daily transportation requirements, the greater the need for it to be fully operational and in good condition.

Consequently, how old is too old depends more on the car’s role and how much car you can afford than on some statistical average point on a graph where repair expenses and depreciation costs meet.

Check out a list of the most reliable cars from nearly any year, and you will find it packed with Toyota and Honda models. Sure, there will be vehicles from other brands but more Toyota and Honda models than any other carmakers. Even so, judging the reliability of any specific used car, regardless of the manufacturer, is virtually impossible. Not every used Toyota and used Honda out there is a good buy.

Your best bet is to find a used car that fits your needs and budget, then researc its reliability.

Some carmakers make more reliable cars than others: Toyota and Hondaspring to mind. The odds are you can hold down repair costs, minimize depreciation, and have a vehicle that will last for years with a reliable brand. The key is finding an older model in good condition that you can afford from a carmaker with a reputation for reliability.

If you are itching to dip your toe in the electric vehicle (EV) waters, you can probably find a real bargain among used EVs. EVs often depreciate at nearly twice the rate of an internal combustion engine (ICE) car. That’s bad news for someone buying a new electric car but spectacular news for the used EV shopper. For the EV-curious, a used EV is a smart way to see if an all-electric car is for you. A big reservation when buying a new or a used EV is battery life because replacing an EV battery will set you back several thousand dollars.

Consequently, the question of how long will an EV battery last is a good one. Although an EV battery’s capacity degrades as it ages, it can last 15 to 20 years. Moreover, as battery technology moves ahead, replacement costs will likely go down over the next decade.

For used car intenders who are a little skittish about buying a used car, Certified Pre-Owned (CPO) bridges the gap between new and used. Although every carmaker has its own unique CPO program, they usually require vehicles to be less than five years old with fewer than 60,000 miles on the odometer. They must pass a multipoint inspection by a factory-trained technician. Any issues discovered during the inspection are fixed or replaced with factory parts. The original carmaker issues a CPO warranty honored by any franchised dealer. Often the carmaker offers other value-added benefits like 24/7 roadside assistance and loaner cars during covered repairs.

Spending extra money on a certified pre-owned car really gets you one thing: peace of mind. Suppose you’re looking for a typically reliable brand of car like an Acura, Chevrolet, Honda, or Toyota. In that case, a certified vehicle might not be worth the extra money, especially if that used car still has some time left on its new car warranty.”

Consider buying your leased car if you are searching for a used car because your current lease is about to expire. If you like the vehicle and know it’s in good condition, why not finance it and stick with it? With the inflated prices of used cars today, the chances are that you can come out on top by purchasing the vehicle you’ve been leasing. Somewhere in the lease contract, the leasing company or dealer had to include a sale price at which you can buy the car at the end of the lease. That sale price is probably less than the vehicle’s value in today’s used-car market. In other words, you’ll be getting a deal.

Although some dealers may offer leasing for used cars, we don’t recommend it.

Once you’ve found the used car of your liking and checked out the history report, it’s time for that test drive. If you need guidance on how to test drive a car, we have it. The seller will probably insist on accompanying. Unless the owner is a friend or family member, there will likely be a bit of a trust issue. So, make the most of that passenger and use the test drive as an opportunity to ask any questions that have been nagging at you. Make sure you cover all the bases possible during the drive, leaving no stone unturned.

Securing a pre-purchase inspection is a sound idea, even if you test-drive the used vehicle. It’s not guaranteed to catch everything, but when performed by a professional technician, a pre-purchase inspection provides some peace of mind.

An extended warranty offers some degree of coverage for a car after the new car factory warranties expire. Offering at least a little peace of mind, extended warranties are typically offered by third-party companies. They are expensive and may not cover many of the parts and systems most likely to fail.

If you choose an extended warranty, your best choice is an exclusion warranty. It lists specifically the parts and systems it doesn’t cover. Prices will vary, as well. Most extended warranties are structured so the vehicle owner pays for the repairs, files a claim against the warranty, and then waits for the warranty company to reimburse the claim. This leaves room for all sorts of mischief on the warranty company’s part. There are legitimate extended-warranty companies, but you’ll need to do some serious research to find them.

When you’ve picked the car you want, it’s time to get down to the numbers. Consider the car’s valuation and weigh that against what you discover during the test drive and inspection. Often, your initial offer will have nothing to do with the seller’s asking price, but you’ll have plenty of concrete information and research to back it up. You want to avoid insulting the seller but don’t be afraid to make a lower offer. If you have to move up, do so in small increments. You should have a price ceiling and don’t go over it. However, you also should be willing to make some sacrifices for quality. The car with the lowest sticker price can often cost you much more in the long run, not to mention the headaches of having to make time for numerous trips to the mechanic.

If at any point you don’t have a good feeling about your negotiation, don’t be afraid to walk away. Remember, by this point, the seller has a lot of time tied up in you. It’s better for the seller to drop a few bucks than to go through the entire sales process with someone new. Everybody negotiates in their way, and bringing along your ample internet research is a huge first step to getting a great deal. Knowledge is power!

Before you sign anything, get everything you’ve been promised in writing — especially anything related to a money-back guarantee or any other kind of warranty. Even then, sign an “As Is” paper only if you know you’re getting a pristine vehicle because “as is” overrides any verbal promises the seller has made. By this point, you should know just as much about the vehicle as the seller, but you should still leave nothing to chance. And with all the paperwork in order, you can drive away in your new-used car smiling, knowing you’ve maximized your value.