4 Used Car Mistakes to Avoid

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  • Buying any type of vehicle is a big decision, and that includes a used car.
  • While a used car may work better for your finances, be sure to avoid the pitfalls that could arise.

Steer clear of these at all costs.

Some assets, like homes, tend to gain value over time. But cars generally work the opposite way. Most of the time, vehicles lose value the moment you drive them off the lot. If you need a vehicle, you may be inclined to purchase a used one rather than pay up for a new one.

But while buying a used car could be a solid money-saving move, it's easy to fall into certain traps. Here are four critical mistakes it pays to avoid at all costs.

1. Passing up a test drive

Since a used car may not be as substantial an investment as a new car, you may be inclined to forgo the test drive and buy a car that seems to check off all the right boxes. But that's a decision you might regret. Test driving a vehicle will help you determine if it's comfortable and whether it really meets your needs, so there's little reason not to take that step.

2. Not having a mechanic look it over

When you purchase a used car, it can be difficult to know exactly what you're getting. That's why it's crucial to have a mechanic inspect the used vehicle you're thinking of purchasing.

If your goal in buying a used car over a new one is to save money, then the last thing you want is a string of hidden repairs to pay for within months after driving that car away. It makes sense to pay a small fee to have the used car you want to buy inspected.

Keep in mind a mechanic may find a few minor issues with your used car that aren't necessarily deal breakers. But if a major issue is uncovered, you want to walk away from that deal.

If you're buying an inexpensive enough used car, you may be able to raid your savings and pay for it outright. But given the way used car prices are up these days, chances are, you may need to finance a used vehicle purchase. If you apply for an auto loan with a less-than-stellar credit score, you may get stuck with a higher interest rate. The result? Higher monthly payments.

There are a few things you can do to raise your credit score pretty quickly. First, you can check your credit report for errors and correct those that are working against you (for example, a delinquent debt you settled long ago). You can also boost your credit score by paying off a chunk of credit card debt -- though to be fair, if you're forking over a sum of money for a down payment on a used car, you may not have the cash to chip away at your existing balances.

4. Assuming you'll save money on auto insurance

While it's true used cars tend to be less expensive than newer ones, and the value of a given vehicle tends to impact insurance costs, you may, in some cases, wind up paying a comparable rate to insure a used car as you would for a new one. You shouldn't assume buying used will mean paying a lot less for auto insurance.

To snag the best deal on an auto insurance policy, shop around with different companies before locking in your coverage. Keep in mind that boosting your credit score could result in lower car insurance premiums, so that may be extra motivation to bring that number up.

Buying a used car could make more financial sense than buying a car that's brand new. Just be sure to avoid these blunders in the course of that big purchase.

RELATED: See The Ascent's guides to the best cheap car insurance and best car insurance companies.

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