The name Karl Benz may not ring any bells when buying a car. But words like cruise control, cubic capacity or even catalytic converter may be familiar to many car-buying folks.
Well, in 1886, Karl Benz unveiled the first modern car to the world, called the Benz Patent-Motorwagen.
Two decades after saw the release of one of the first cars produced for the masses, the Ford Model T (aka Tin Lizzie). Fast-forward to 2016, and privately-owned cars are near necessities for many families. No one rides a horse to work anymore, especially not in Accra. Given the sheer cost of owning a new car, many private car buyers will be looking to the used car market for options. In this guide, we will give you a step-by-step guide on how you can move from being just a dreamer to a real car owner.
Why Buy Used Cars
- Price: They are cheaper to buy. Used cars typically cost much lower than new models. Determinants of the value of a used car include age, current condition, make/model, subsequent upgrades and personalisations, etc. Exceptions are made in the case of used vintage/classic cars, which can cost more than the first purchase price. In many cases, however, buying a used car is not an option, your budget simply dictates that you do.
- Reliability: In not so many years back, a car will probably be on its last leg as the odometer neared its 150,000 km milestone. That is not so much of the situation today. In terms longevity, the cars of yesterday cannot hold a handle to cars of today. If properly maintained, modern cars can reach and surpass 300,000 km of usage, which is twice as long as before.
- Depreciation: The depreciation rate of new cars can be quite staggering. Drive a new car out of a car dealership and you probably are looking at a car that can fetch 20% less than it cost you. Within a year, the same car could sell at 70% percent of its cost price. The sweet spot for owning a used car (which feels like new) is within its first three years of usage. Within year 1-3, the value of a new car typically depreciate by 30-50%.
Used Cars to be Cautious Of
Irrespective of the make, specific car models are sometimes plagued with unique automotive problems, which leave a sour taste in the mouth of its owners. Thankfully, Consumerreports.org has conveniently compiled a list of modern car models with below-average overall reliability. Visit the site to look up those car models in question. If you intend to purchase any of the listed cars, research the peculiar problem(s) associated with that car. But generally speaking, it’s also good to avoid buying the following types of vehicles, regardless of which model they are.
- Electrical problems: Cars bedeviled with electrical problems can incur high repair costs. You might end up spending significant amounts to diagnose the cause, purchase the replacement parts, and have the replacement part fixed.
- Price too good to be true: If a car costs significantly less than prevailing market prices, it’s possible the car was stolen or it has grave automotive problems. Whatever the reason could be, walk away from a deal if something doesn’t feel right.
- High mileage: The longer a car is used, the more that the car will need non-routine repairs and maintenance. Avoid a car which, for your intents and purposes, is over-age.
- Flooded cars: Three main factors expressly determine the extent of damage caused through flooding. They include the depth of submersion, the time period the car stayed submerged, and the saltiness of the water. The car seller may not give or even have all the details you made need to make a wise purchasing decision. It is best to avoid a flooded cars unless you are prepared to handle worst case scenarios resulting from the flooding.
- Shoddy body repair: If you observe that the car has numerous defective body parts and and repairs, chances are there are even more defective areas you are not seeing. Restorative work on the car can be very expensive, especially when all those loose parts on the car give way.
- Metal rust: Restorative work on extensive metal rusts can be quite expensive. Get a good idea of how profound the rust is before making a purchase commitment.
The 5-Step Buying Process
What is your Budget?
Many prospective car owners need to secure some kind of payment plan to purchase their preferred vehicle. A good rule of thumb to keep in mind if you will buy on the car credit is, the monthly payments shouldn’t exceed 20% of your take home pay. We outline the usual payment options in the next subsection. Armed with these, and other payment plan options not mentioned in this article, you should be able to settle on a realistic budget.
Banks & Other Financial Institutions
Auto loans can be accessed mainly through banks, savings & loans institutions, and microfinance companies. These loans are usually secured with the car you intend to purchase. Thus, a default on the loan results in the institution taking full possession of your vehicle. Financial institutions typically require you pay a portion of the purchase cost of the car. The remaining amount is spread over an agreed payback period. Do well to compare the interest rates and terms of different financial institution before finalising on the company to partner with.
This is an alternative route as against taking an auto loan directly from your bankers. The dealership applies for the load on your behalf through it’s partners. Be sure to compare the rates the dealership gets for you with the rates you can get if you applied for the loan yourself. As there is the likelihood that the dealer could present you with marked-up rates, it is key you are aware of prevailing bank rates. Don’t forget to ask for a better deal when your dealership present you with a quote from its credit partners.
You can get a better deal selling your car on your own than trading in your vehicle with a dealership. In a trade-in deal, you swap your used car for a another one. Usually, you also have to pay the price difference between your old car and the new one you are exchanging it for. A trade-in deal is essentially exchanging the cost of time and effort needed to sell a car, for a single seamless process. To get the best possible deal from a trade-in, find out prevailing market prices if you had to sell your car. Also make your car look like a good bargain. Negotiate the deal for your trade-in car and the dealer’s car separately.
Read more trade-in tips on bankrate.com.
What are your Preferences?
If every car buyer was given a blank cheque to go shop for a car with, our streets will probably be splurged with luxurious and exciting cars you only see on the Mondial de l’Automobile motor show. So back to reality. In deciding what car to buy, functionality is key. Musing over the following questions should help you narrow down your search:
- Reliability Rating: Even with the same car make, some models have better reliability ratings than others. Thus, finding out the reliability of any car should not only be, make versus make, but also model versus model. Find out more about the ratings of your favourite model on consumerreports.org.
- Number of passengers: How many people do you need to carry in the car on a regular basis? Family size is a key indicator. Also factor in the age of children as that also adds to the weight the car has to sustain as well as available seating space.
- Distance: What is the daily average distance you commute? Do you drive through heavy traffic regularly? Consider buying a fuel efficient car if traffic or distance is a major concern for you. Regardless of your commute behaviour, a fuel efficient car always saves you money.
- Road surface: What is the nature of the roads you will drive on daily? Asphalt and other highway surfaces are more friendly on a car’s suspension. Unpaved roads have varying degrees of smoothness. For highly uneven road surfaces, your new car should have enough ground clearance to avoid making contact as you drive on them.
- Cargo Size: Do you need to regularly move cargo around? What type of cargo will that be? These questions will help you choose between buying a hatchback, a minivan, a SUV, a pickup or regular midsize saloon with a trunk.
- Other brands of the same type: Many car buyers have their favourite car brand(s). After you have settled on the specific type of car and brand you wish to buy, it still pays to look at other car brands which can perform just as good as your favourites. There is the possibility that the other brand may have a better value offering.
- Running Cost: It is not unusual, that similar cars of different makes may cost the same to buy. However, the maintenance cost could be very different. It is not difficult to acquire information on the regular maintenance cost for various car. Making an online search and conferring with your mechanic should give you enough information. Factor in the short term as well as the long term running cost of the car when making your decision. Some cars may have low short term running cost but depreciate much faster.
- Resale value: If you have to sell the car you are about to purchase later in the future, it will be unwise for you to buy a car which will fetch you very little sales value. Get a car that can hold it’s value over time but the onus lies on you to also maintain the car well. Few cars sell well when they are well worn-out.
Where to find Used Cars?
So you have gotten to the point where you have an idea of how much you want to spend and what type of car(s) you prefer. The big question: Where should you start looking? Thankfully there are many options available to fit every buyer class
Without even moving an inch from your home, you can search, buy and have a car delivered right at your doorstep, although it is best to always see a used car first-hand before you pay for it. A cursory Google search for “buy used cars in ghana” will retrieve a tall list of sites you can search for cars on. However, to make easier, it is best to start your search on our cars page, where we make it easier to narrow down your search based on the search filter you feed in. On our site, you can find sellers who are either online sellers or offline car dealerships.
Offline Car Dealerships & Individuals
Used car dealership shops are all over the country. Stopping by a couple of them should also give you a fair idea on how much your preferred car costs. This however involves a lot of legwork and may not be as fast as searching online. The main advantage with physical shopping is you get to inspect the car first-hand. Private car sellers also drive around with “for sale” or “buy me” stickers pasted on their windshields. As you also move around, keep your eyes peeled for such cars. You may get lucky to get a very good deal from such sellers.
Let say you have a relative or close friend overseas who you trust can get you a good car at a bargain price, then buying a used car overseas could work best for you. However, one hurdle remains: IMPORT DUTY. A poor estimate of how much it will cost you to clear the car at the ports can make you pay more than you will have paid, buying the car right here in Ghana. Gcnetghana.net, a business to government website, is a great resource to help you know the procedures and also estimate the clearing cost at the port.
Inspect and Road-Test
As stated earlier in the previous section, it is always better to have a first-hand inspection of the car before you pay for it. So this step is probably the most important of all. We have broken the inspection process down into 4 subsections to make it easier for you to cover the essentials. Key to going through the inspection is to have your mechanic or someone appropriate go with you. A fuller inspection guide can be found on popularmechanics.com.
- Chassis number: The Vehicle Identification Number (VIN) or chassis number of any motor vehicle is its 17-character fingerprint. No two cars in the world share the same VIN. VIN specifies the manufacturer, specifications and features of any particular car. The VIN can enable you confirm if major modifications have been made on the car, such as the owner swapping the engine for one with lower capacity. It is also needed when you want to, for instance, check the vehicle history on autocheck.com.
- Service history & Other documents: There is the possibility the owner may have service logs and/or receipts for the vehicle you intend to purchase. Request to have a look at them if they are available. The car manual, if available will be nice to have.
- Interior: Any blemishes in the seats and dashboard may or may not be glossed over depending on your taste as well as the extent of damage. Missing accessories like the jack, radio or spare tire may be ignored but also factored into the cost of buying the car. Also inspect the operability of the windows, air conditioner, wipers, radio, mirrors, etc. Try the foot pedals to see how they feel and view their state of wear. Watch also for signs of flooding such as stale smells or rusts under the seats. Finally discern whether your first-hand observations tally with what the mileage on the odometer says.
- Exterior: Observe the paint job on the car for wear and cracks. Observe also for different shades of paint on the car, panel gaps, and other repair works done on it, carefully noting badly done repairs, missing trim pieces and rusty body parts. Missing or damaged wiper blades or wheel cups may be ignored. Finally note the wheels on the car. Find out if there are any missing wheel nuts, and differently sized tires or rims.
- Underbody: Inspect the general state of wear on the tires and note if the tires are unevenly worn out. Bounce the car 3 times and observe if it pounces more than 2 times on its own. See if there are any signs of leakage in the shock absorbers or signs of rust on the brake pads and rotors. Look under the car for signs of rust, dents and bends, repairs and welds, and fluid leakages under the engine.
First check the engine for worn belts, unsheathed wires, loose or corroded clamps, fluid leakages shortages or grime, dirty air filter, etc. Move on to run the engine by first turning the key to “on”. Observe any anomalies and warning on the instrument panel and any other noise from the engine. Get the car started and observe if some warning lights on the instrument panel fail to turn off. Also note any undesirable noise or whether the engine fails to idle after some time. Finally try to change the gear to have a feel of the pedals and how the car reacts.
On the road, listen for any noise coming from the suspension, excessive wind noise, vibrations, knocking sounds at higher engine speeds, and extra noise when the car goes over a rough surface or when it moves in tight circles. Also observe how the car bounces on rough surfaces. Note if the car veers to one side when you are driving straight or when you apply the brakes. Pay attention also to how the brake feels and whether it feels the same every time you apply them. Again note the performance of the car as the gears change and as you try to accelerate quickly. Have someone on the outside observe the exhaust smoke, wobbly tires, and the performance of all the light. Keep an eye also on the instrumental panel to note any anomalies or faults. As you bring the car to a stop check for any leaking fluids or noise from the engine.
The Owner Matters
It pays to observe the seller of the car in order to make some inferences. Take notice of any unusual behavior and observe if he/she generally looks trustworthy. Ask the seller questions about the car such the accident history, performance, problems, warranty terms, and why he/she is selling it. Ask also about certain observations you made as you inspected the car.
From Negotiation to Ownership
The final all-important step comes after you have carefully reviewed the previous 4 steps. Anything short of that and you could acquire a car you wish you hadn’t. Up to this point you are armed with how much you can spend and how much the car is averagely worth. The first thing you do is negotiate the price.
- Decide ahead of time how much you will like to spend on the car. There is the likelihood you can exceed how much you can afford if you are overwhelmed with the buying process. It is often better to have someone accompany you or pause negotiations to think through the transaction.
- Ask for a reduction right from the first phone call or meeting. Use the reduced price as your starting point for further negotiation. You get to gain the advantage of beginning the final negotiation at a lower price.
- If there are other additional costs like dealer fees or registration, negotiate the total price. Explicitly ask the seller to give you the total purchase cost before you start final negotiations. But beware of unnecessary add-on costs.
- Don’t be afraid to start low. It might be your lucky day to get a sweet deal for a good car.
- Don’t feel pressured to buy the car at all cost. Be mentally prepared to walk away from the deal if the price is not right.
- Note that this is essentially a business transaction so emotions need to be kept in check. The seller may try to use your heightened emotions against you. Don’t fall in love with the car or what the seller is saying.
- Arm yourself with enough information to let the seller know you have done your research and that he is competing with other sellers for your money.
- Put all promises made by the seller in writing.
- Secure your financing before you go to haggle the seller.
If the issue of price is done and dusted, the last thing you do is the paperwork. Have the seller complete the registration and ownership transfer with you before the last payment is made. Don’t forget to collect other essential documents like the road-worthiness and insurance certificates if applicable. With all the paperwork fully completed, you are now ready to drive home with a big grin, a depleted bank account, and the sound of your new found toy!!!