There are many reasons to purchase a pre-owned vehicle rather than a new one — chief among them is the fact vehicles start depreciating the second they leave the lot, meaning buyers of new cars will shoulder the burden of a significant financial hit right away.
Finding the right used car, truck or SUV can help you get a reliable vehicle within your budget also capable of meeting your transportation needs. According to CNBC, in 2021 the average used car price in America fell just shy of $25,500. This is somewhat higher than in years past due to how the COVID-19 pandemic has affected supply and demand, but still much lower than the average price tag on a new car: nearly $41,000.
Looking at the average price is a good start, but it doesn’t really answer the question of how much you should pay for a used car. Why? Because the price will depend on many factors, including the vehicle’s seller and its specifications.
Here are some important considerations when shopping for a used car at the right price point.
Find the True Market Value
Figuring out a vehicle’s market value is key to understanding how much you should reasonably pay for it based on data like:
The good news is that there are many free vehicle value estimators available online from a variety of sources, like Consumer Reports, Kelley Blue Book, Edmunds and more. Inputting all the information you have about various vehicles into these online calculators can help you come up with a fair range for which that vehicle should sell in your area based on its features and characteristics.
The best used car websites will provide all this information in each vehicle listing. However, if you’re considering buying a vehicle from a private seller, be sure to ask for all pertinent information up-front as well as inspecting the vehicle with your own eyes before committing.
Questions to Ask Before Buying a Used Car
The price you should pay for a used car ultimately depends on many factors. Knowing what to ask before you walk into a dealership or contact a private seller can help you accurately understand the value of the vehicle so you can make a fair offer.
What is the most you can afford to pay?
Only you know the realities of your budget. Walk into negotiations, whether you’re working with a dealership or an individual, with a firm number in mind as the upper limit of what you can afford. Only give serious consideration to vehicles falling below this number, and make your first offer lower if possible so you can compromise while falling below this limit.
What are comparable vehicles selling for in my area?
Buying a car in a rural state with a low cost of living is sure to look different from purchasing a vehicle in a big city with a higher-than-average cost of living. When doing your research on the fair market value of different vehicles, make sure each has been updated to reflect your location.
How well has the vehicle been maintained?
Two used cars of the same age can run very differently depending on how well they’ve been maintained over the years. This is where it pays to ask about maintenance history and service records — as well as accident reports and ownership. Asking for documentation demonstrating routine maintenance and a lack of “red flags” will help you know exactly what you’re paying for.
How much you should pay for a used car ultimately depends on its fair market value, a figure influenced by your location, the vehicle’s features and its history.