I received a great question from Dan today.  Dan asked whether GAP insurance is a good idea.  Before we get into the question at hand I will take this opportunity to explain what GAP insurance is. I have seen several acronyms for what GAP stands for, but it really is just that, insurance that bridges a gap. When you buy a new car the value of that vehicle is negatively impacted the moment the registration application is processed. It is often said that the vehicle loses value as soon as you drive it off the lot. While the sentiment is true, the reality is that the car becomes a used car the moment the car is titled. So technically that drop in value doesn’t occur instantly. But I digress. (more…)

This is part three of how to buy a used car. The first post covered how to buy a used car from a private party, the second was how to buy a used car from an auction. Definitely give each of those a quick read if you have not already since they do tie together.

Buying a used car from a dealer can cause even more stress and anxiety than buying a new car. Why? Because there are no two identical used cars, so apples-to-apples comparisons are almost impossible. Research and preparation are crucial if you want the best deal. In most cases you will pay more to buy a used car from a dealer, but this is not always without benefit.

The Auto Buying Guide covers the details and steps of how to buying a used car from a dealer. This post will discuss the advantages and disadvantages. The advantages of buying a used car from a dealer are considerable. The biggest advantage is the dealer is required by the local and Federal Government to stand behind the car they sell. The guaranty is limited, but it does cover you for enough time to identify any serious underlying problems. Another advantage is that you can drive your old car in and drive a new car out the same day. Financing is also much simpler when buying a used car from a dealer. You can still finance on your own, but just about any lender or auto finance company will grant a loan on a used car that is at a dealership.

The disadvantage of buying a used car from a dealer is that there is likely going to be some haggling, so you need to know what you are willing to pay. Do some research on Auto Trader to see what your chosen model is selling for on the open market. When you are at the dealership ask for the “Book Sheet”. This is the list of equipment, number of miles and approximate wholesale value. They don’t have to show it to you. But the better deal you are getting the more likely you are to see the Book Sheet, since they will use it to show you what a “great deal” you have. The important thing to know is what is available on the market at other dealers. All of them think they have the best selection at the best price. It is up to you to determine if that is true. You will also be paying sales tax and fees when buying a used car from a dealer, so include that in your budget.

If you want to learn everything you need to know about how to buy a used car at a dealer, check out the Auto Buying Guide.