What to Ask When Buying a Used Car

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What to Ask When Buying a Used Car

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October 08, 2014

My engine blew on my fully paid off car in late 2013.  It was only the second car that I’ve owned, and it was great to me for nine years.  Not having a car payment for years, I was enjoying diverting that extra savings to other areas of my financial life.

You’ve probably heard that a new car’s value drops immediately when it’s driven off the lot. When the time came, I was set on buying a used car with low mileage to take advantage of the depreciation the first owner experienced. While I think I made the right decision, follow the five helpful tips below so you don’t get in a financial bind when you purchase your next used car.

  1. Was the car leased or owned?
    The previous owner of a car is a big sign of what’s to come for a used vehicle.  Cars that were leased often can be neglected since drivers know they’ll be returning it back to the dealer in a few years.  I’ve found that cars with a single owner maintain and service their vehicles more than leased car holders.
  2. Has any large maintenance been done recently (such as transmissions flushing, replacement of brakes, or fluid and engine coolant)?
    Cars with certain mileage rates (typically between 25,000-35,000 miles) might not have had these items serviced, but will add up as additional costs in a few short years.  Brakes on certain vehicle models can cost between $400-$600 and transmission fluid and servicing can add up to another $250-$600.
  3. What is the car’s accident report look like?
    Ask for this before you plan to buy the vehicle so you don’t make an impulse purchase. If there is Carfax® report, be sure to comb through it to inspect the accidents and ask questions to the sales people.  It’s their job to explain what you are purchasing.
  4. When were the tires replaced?
    Tires can be an expensive item to replace on vehicles.  Take a look at the tire tread and ask the sales person if and when they were ever replaced.  If the tires haven’t been replaced, then chances are you’re looking at another $700-$1,500 of additional costs for new ones.
  5. Is there a warranty?  What is included and not included?
    You may have heard that warranties make up a large portion of auto companies’ annual revenue.  If you feel a warranty is required, try and weigh the cost vs. benefit to see if it’s worth it.  Don’t let them talk you into a warranty that doesn’t cover the key components of the vehicle.

Buying a car is a big financial move. It’s imperative that you budget properly when signing that dotted line on the day you buy.  You might be saving money by buying used, but depending on the vehicle history you can get hit with an additional $2,000-$3,000 of expenses within the first year. Prepare to purchase a used car by remembering to ask the questions above, and drive away with confidence.

Brandon Hayes

Private CFO™ and Vice President oXYGen Financial, Inc.

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About the author

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Brandon Hayes

Vice President, Private CFO®

In 2011 Brandon opted to forego a long-term career in corporate America to join oXYGen Financial because he was impressed by the vision of creating a premier independent financial services firm, which strives to provide unbiased advice to the X & Y Generations.

A native of Westlake, Ohio, Brandon currently lives in Atlanta with his wife Aly, daughter Maryn, and their black lab Pepper. He's the youngest of three children and played soccer through college at Elon University. He's an avid runner and enjoys cheering for Cleveland sports teams despite some pretty rough years.

Credentials/Certifications:
CERTIFIED FINANCIAL PLANNER™ and MBA from Georgia State University in Entrepreneurship. Brandon holds his Series 7 (General Securities Representative), 63, Series 65 (Investment Advisors Law) and Georgia Life, Health and Variable Insurance licenses.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Background and qualification information is available at FINRA's BrokerCheck website.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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