After having decided to take the plunge into buying a used car this time either for yourself or for family, knowledge of following tricks and traps comes in handy

Be clear about your reasons to go for a use car

• It could be just to have a hands on grip upon driving
• You may want to jump the segment
• Extra car for spouse or kids
• You may want to go for 100% finance
• Simply save some money upfront

Whatever may be your reasons to decide for a used car, be crystal clear about them and try to stick to them till you find your dream drive.

DON’T BE EMOTIONAL BUT BE OBJECTIVE ABOUT YOUR PURCHASE

• Define your budget and stick to it
• Narrow down model/brand choices and stick to it
• Be clear upon how old a car you are ok with

Define your budget and stick to it

• You might want to define a budget range upfront before starting to research for a used car
• Better define two types of budget ranges- one for used car and another for new car in case you don’t find a good quality used car or you consider keeping the said car for 5 or more years
• Never define budget as magic figure but always as a range say with 10% + variation
• A good rule of thumb to arrive at your budget in case you also want to go for car finance is as below

30% of you monthly income is considered as potential EMI outlay by the banks. Suppose your EMI outlay in Rupee terms arrives at Rs. 12000/-, now depending upon the number of years you want to go for finance, you can arrive at a ball park loan amount with following simple table

Narrow down model/brand choices and stick to it

• Deciding upon a particular model/ brand can be tricky as you can be misled by myriads of choices available or you can simply get overwhelmed and confuse yourself.
• When deciding brand, your previous prejudices about certain brand positioning in new car segment can sort of contaminate your choices of used car. It could be based on personal / peer experiences
• While shortlisting models/ brands to pursue, following rule of thumb always helps
  • Who will use the car
  • Average kilometer running on daily basis
  • How many years you plan to keep the car
  • What appeals you most?

                           Features- mileage-maintenance-resale value

Be clear upon how old a car you are ok with

After narrowing down target model/ variants, the next big decision is how old a car are you psychologically ok with.

• Sometimes going too back on certain cars changes generation (not just face lifts)
• Considering spare parts and post service support availability on too old cars can pose a difficulty
• Government’s policies related to phasing out of very old vehicles can pose head winds
• Bharat Stage Pollution norms can be a tricky thing to deal with in case of very old cars

PRICE DISCOVERY OF YOUR TARGET VEHICLES

Having narrowed down on range of car models and your budget, the trickiest part is that of finding correct prices of your chosen car. We suggest a crisscross approach to finding fair market value (FMV) which in essence is arriving at prices vertically as well as horizontally to have a better idea

• Vertical Discovery ( from corresponding new car prices)

            Depreciate 20% for 1st year from the ex-showroom price and then 10% for every year to arrive at vertical discovery (Note: this is a very generalized notion of arriving at depreciated prices                because a host of factors can come into play as km run, owner serial, accidental history. Even every vehicle has its own depreciation rates and then facelifts/ generation changes also need              to be taken into account). Thus we have a horizontal discovery angle to it as well.

• Horizontal Discovery ( from corresponding used car prices)

           By checking out similar model, variant, km type certified cars available online/ offline, you can arrive at reflective prevailing prices of your target vehicle. The prices of only certified cars                     should be compared this way otherwise it may creep in error of judgement. Similarly, the vehicles of similar RTO plate should be compared as different RTO plates within same parameters               can have drastically different resale values.

These two discoveries can be added and divided by 2 to arrive at a median price of your target vehicle. Rest will depend upon the physical examination and exact quality of the vehicle which can sway the actual price by 10% +

PHYSICAL EXAMINATION AND QUALITY OF VEHICLE

While the quality of a vehicle is pretty subjective a term and is quite dependent upon the observer however there are some intuitive tell tale signs that you should follow and try to investigate.

• Overall standing of the vehicle including but not limited to shine, difference in color of various panels, waviness of panels, etc.
• Cockpit feel in the driver’s seat including but not limited to loose screws , knobs, gaps in fitment, etc.
• Fading of color/ texture at frequently used places like key holes, power window buttons, steering, gear knob, sag in the driver’s seat, etc.
• Signs of rusting, if any.
• Tyre condition, dryness, tyre date, mixing of brand in four tyres, stepney condition, etc.
• Any peculiar noises (metallic or otherwise) while starting/ idling from cabin, bonnet or under body.
• Visible smoke from silencer/ dip sticks point.
• Sludge / rust on battery terminals.
• Oil spillage on engine casing, etc.

For more information, tips and videos on physical examination check out our blog/ edu-portal.

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