Should I finance that used car?

I have been around enough used car salespeople to have heard numerous jokes about what people are willing to pay, and how they determine as much. Most people are only interested in the monthly payment and secondarily how many years they can finance it for. If they could get a 15 year loan for $100 per month they would jump on it regardless of the interest costs and danger of wearing out the car before the payments are done. I overheard one lady asking what her payment would be with the late payment added on! Many people really get themselves into a never ending problem by continuously rolling over bad debt into their newest vehicle loan.

My suggestion to everyone is this... Work towards a day when you can afford to pay cash for your vehicle. Even if it is only $2-$3 thousand dollars you can immediately begin putting your monthly payments in the bank drawing interest for your next purchase. Watch this video from Dave Ramsey that does a great job of defining how this process works.

What is that car worth?

In one way or another I have spent most of my life working in the auto repair industry. Along the way there are a few things that I have picked up that seem second nature to me but I have come to recognize that not everyone is aware of. One of these is how to determine what a used car is worth.

Use this link to Kelly Blue Book and walk through the steps an actual sales manager would when looking to purchase your trade in. Now, subtract from that a retail cost for any repairs needed to get the car into good running and retail condition. The ridiculously low price you come up with is the figure a large percentage of the public is willing to sell their car for. I have had really good luck over the years by offering an amount just above trade in value for good used cars around 5 years old with less than 100K miles.

Even if you don't like to negotiate it is still good to have the knowledge of when to walk away from someone who is trying to take advantage of you. As long as you are disciplined and don't get emotionally tied to a car you are looking at, these few tips could save you thousands on your next purchase.