A car is one of those things we usually get in high school and hope we can keep throughout college. However, sometimes that old Lumina will decide to break down for the last time (or this happens), and you find yourself in need of a new set of wheels before you get that degree. When that happens, follow these tips to get yourself the best deal.
The other day, one of my friends gleefully informed me that she had bought a brand new Subaru for about 12 grand. Good for her – she’s also a 20 year-old software engineering major who is getting paid to go to college and will be interning at Microsoft this summer at over $32 an hour. As for the rest of us, we probably have more than a few bills piling up and are making less than $10 an hour, if anything at all. If you fall into the latter category, you should buy a used car (however, if you are one of those people who can afford to buy new, make sure you check out the average cost of a new car in your area).
Specifically, aim for a car that’s more than two or three years old. After that period of time, a car’s value significantly depreciates. If you do enough research (and have a little luck) you can find a car with a reasonable amount of miles that will run almost as well as a new car – at a much lower price. Also, the cost of car insurance for a used vehicle will be much less expensive, bringing the overall cost of owning a used vehicle down. Honestly, this is a practice I’ll probably stick to after graduation; personally, I don’t care that much about having the newest thing as much as I do about having reliable transportation.
I have friends who have bought cars straight from the owner and had great experiences. I’ve also had friends who bought straight from the owner, only to have to put thousands of dollars of work into the car later. While you can sometimes get a great deal from an owner, I don’t think it’s something you want to risk in college. The higher sticker prices of a dealer can be mitigated by a lot of factors:
- Dealers are subject to “implied warranty” laws
- You can buy a “Certified Pre-Owned” car, which is less likely to have problems
- Dealers let you trade in your old car (make sure you look up your car’s value in the Kelley Blue Book)
- You have financing options if you need them – which brings us to the next tip:
If you can, pay cash for any car you buy. Ultimately, financing a car means paying more money for it. If you can afford to pay cash for a car, you’re getting a better deal. Even if you can’t afford to pay cash at the present time, you may be able to hold off on buying a car until you have enough money (Dave Ramsey has even outlined a plan for essentially financing a car yourself – it’s a pretty cool concept).
If you must finance, make sure you know what your options are. The dealer will be more than happy to finance for you – but you will usually end up paying more if you finance through it. That’s because dealers don’t finance cars; instead, they find a bank to finance the car. Finding you a bank nets them a “finder’s commission”, but it usually means you get a high interest rate. You don’t have to finance through the dealer at all, in fact; you can go to banks directly to get your own rate. I’d suggest getting a few quotes from different banks – these can help during negotiations and possibly get you a lower rate from the dealer. If you’d like to find out a little bit about how dealer financing works, I’d recommend this article.
However, there’s an even better way to finance a car than through a bank – and it’s a lot more likely to work if you’re a college student. Family and relatives can sometimes provide low-interest or even interest-free loans, especially if they know you’re too swamped with studies to come up with the cash on your own. Plus, Mom and Pop are probably going to be more keen on giving you a loan if you set up a systematic way to pay them back. Just be smooth when you make the call. I recommend an opener like this:
“Hey Mom! How’s it going? What? You think I’m calling about money? Can’t I call just to talk?”
There are all sorts of articles and lists on what to look for – and look out for – when buying a used car. Here’s a couple that I think sum up the process pretty well:
- Samarins.com Illustrated Used Car Inspection Guide
- WikiHow – How To Check Out A Used Car Before Buying It
These guides can give you a pretty good idea of the things you need to check when browsing cars. However, I’d still suggest that you bring along an experienced pair of eyes before signing on the dotted line. Older folks have usually bought a few cars and know exactly what to look for – they’ve probably learned the hard way a few times. So grab your dad, uncle, or grandpa (heck, maybe even a friendly professor if you’re far from home) and make sure you get a second opinion.
If you follow these tips, you should be able to get the best deal possible if you have to buy a car in college. It may not be an Audi, but remember – some girls are into brown sedans.