Buying a Used Car? What to Pay and How to Pay

The first rule of buying a used car is to…

Set a Budget

Before you even look at a motor, fix a budget! If your bank balance is more supermini than supercar, try and stay within your means – especially if faced with the type of silver-tongued car dealer who could have you upgrading before you can shout ‘Derren Brown in a sheepskin coat’.

If you have a car in mind, consult a used car guide or website (e.g. Parker’s) for a ballpark figure on what to pay. Also research running costs such as mpg, tax, parts and servicing, and car insurance

Haggling

This is probably a buyer’s least favorite part of the process as it involves conflict – you want the lowest price whilst the seller wants the highest price. The trick is to stay firm and not be intimidated, even if the seller is a seasoned pro.

Keep negotiations calm and friendly and know what you’re talking about (again, refer to a car guide or website to do your homework on pricing). If you uncovered any faults during the car check or if the tax or MOT’s about to expire, use this to leverage the asking price downwards.

Open with a lowish figure rather than one that’s so low it will send the seller into hysterics. You’ve already fixed a top budget, so if you can agree on a price somewhere in between then you should be happy. Simply walk away if you feel the seller is being stubborn… who knows, this could be the move that sees the price drop.

Payment Methods

·         Cash: Having the cash is one of your best bargaining chips when haggling. This is because the vendor gets paid straight away and can avoid any credit card transaction fees.

·         Credit Cards: Safe and convenient, but a dealer may not give you their best price because they’ll have to pay a card transaction fee.

·         Cheque: Paying by cheque usually requires funds to clear before you can take the car. If buying privately, see as much of the seller’s ID and proof of address as you can before leaving their home. Basically, don’t hand over the cheque until you’re satisfied that the seller will still be there when you return to collect the car.

·         Bankers Draft: A type of cheque issued by banks (for a fee) that is viewed as safer than money (in the sense that it’s less risky than carrying cash), more secure than a personal cheque (they are drawn directly on the account of a bank rather than your account), and should be readily accepted by a car dealer in lieu of cash.

Finally, don’t forget that no matter how you pay, always get a receipt.