Buying a Used Car: Budgets, Down Payments, and Maintenance
A used car may be more affordable than a new car, but it is still a major purchase. You have to consider a lot of different moving parts before you visit a used car dealership. Are your finances in order? What are you expecting as a monthly payment? What is your maintenance budget? Will you be putting a down payment on the used car? Will you be trading in your current vehicle in place of a down payment? All of these questions can make the experience of budgeting for a used car a challenging and sometimes headache-inducing process.
However, it doesn't have to be that way. Here at Paradise Motors, we do our best to make buying your next car easy. This article will help answer your most pressing questions and cover some important details when it comes to budgeting to buy a used vehicle. Not only that, this article will outline what you need to know about down payments and trading your current car for your next used vehicle. Let's get started with the obvious: down payments and what you need to put down.
What to Put Down for a Down Payment
Buying a used vehicle is different from buying a new vehicle for a number of reasons. New vehicles come with a few more guarantees and warranties that you don't get when buying a used car. However, because new models cost more, it means you have to put down more as a down payment. Usually, new car down payments are around 10% of the vehicle's total value, but this may vary depending on where you get the vehicle from and your financing. Since the average new car costs nearly $50,000, a 10% down payment is beyond the means of many shoppers.
Buying used instantly cuts down on the price of the vehicle, and that gives you a lot more leeway with your budgetary concerns. You're paying less overall for the vehicle, whether you pay for it all in cash or get financing to pay for it through a loan. Although used cars, trucks, and SUVs typically require the same 10% down payment as a new vehicle, their much lower price means the down payment is much more affordable.
This greatly reduces what you will need to spend on a used vehicle compared to if you buy a brand-new vehicle. Because the average used car in Michigan costs around $30,000, you only need a fraction of the down payment for a used vehicle compared to buying a new car. Just be sure that when you opt to buy used, you're not just budgeting for the total cost of the vehicle but also thinking about if you have the cash for a down payment. It's important that you budget for both the monthly payments and the initial down payment––and remember that a higher down payment will reduce your monthly payments.
Trading in Your Vehicle as a Down Payment
Here at Paradise Motors, we will help you get an appraisal for your current vehicle so you can trade it in when purchasing a vehicle on our lot. You can actually use your current vehicle as a form of down payment by trading it in. This greatly reduces some of the costs and concerns many shoppers have with trying to buy their next vehicle.
One thing to keep in mind is that trading in your current vehicle may not be enough to cover the entire down payment for the used vehicle you want to buy. Depending on the cost of the vehicle you are purchasing and the value of your trade, you may still have to cover some of the down payment out of pocket. However, the opposite can be true as well, and what you trade in may cover not only the down payment but also some of the additional costs of the vehicle, bringing the total costs down significantly. This is why it is important to appraise your current vehicle and understand what it is worth before you start budgeting for your next car.
If you have not yet paid off the vehicle you are trading in, we can still accept it as a trade-in. In this case, you will need to contact the lien holder to determine how much you still owe on the vehicle. That amount will be deducted from the trade-in value of your current vehicle, and any remaining value can be put towards the down payment on your next car. If you have a loan on the vehicle you're trying to trade in, it's best to talk to all parties involved before you finalize your budget.
What Extra Maintenance Costs to Expect
Budgeting for a used vehicle doesn't end with the down payment and monthly payments––it also includes another important facet: maintenance. Buying a used vehicle is only part of the total cost of ownership, and you also have to consider budgeting for the service and maintenance of your used car, truck, or SUV. Different vehicles, body styles, and model years will determine what maintenance costs you can expect in the long run for your used car.
One of the most important maintenance aspects of a used vehicle is its powertrain. This maintenance centers around its engine, transmission, and other mechanical components. Inspecting the vehicle and ensuring that everything powertrain-related works as intended can save you a lot of time and money. This means ensuring that the battery holds a charge, the spark plugs are still good, and the belts don't need to be replaced. Otherwise, you will have to budget to have these parts fixed.
Another important maintenance consideration is the suspension. It may be difficult to gauge the health of a vehicle's suspension before purchasing it, but once you test drive a used car for yourself, you can determine how well it rides. If it's too bouncy and bumpy, then it may need new shocks or struts. However, if you feel it pulls to the left or right, then the alignment may be off. If you find that the vehicle has trouble stopping or slowing down, it may need brake fluid or new brake pads.
Budgeting for the expenses of maintaining a used car can get pricey if you're not sure what you're looking for or how to properly manage what service it does require. However, going in beforehand with a checklist of what to inspect, what you might have to replace, and what you're willing to pay for replacement will certainly help with budgeting for a used car. Here at Paradise Motors, we inspect every used car before we put it up for sale and repair anything that could cause problems in the future. This reduces how much you need to budget for maintenance.
Plan Ahead Before Buying
We all know that we should always buy vehicles that fit our budget, but it can be easy to focus on the advertised price and forget about smaller details like maintenance and service. Down payments, trade-in value, and other aspects of financing can also slip under the radar when budgeting for a used car. Hopefully, these tips will help you out as you set up your budget for a used vehicle. If you want more advice on finding a used car, truck, or SUV that fits your budget, simply reach out to the team here at Paradise Motors. We are here to help!