The many levels of used cars

Posted Monday, May 20, 2019

When you hear the term “Used Car” what comes to mind?  In todays world there are many levels of used cars ranging from a car that is 1 to 2 years old to one that is over 10 years old.  The fact of the matter is as soon as you by a new car and drive it away it has now automatically become a used car.  When shopping for a used car it is helpful to know what level of used car you want to buy and how much you can spend.  Often these two things can be at odds with each other.  We all would like to buy the newest car with the least amount of money.  The key factors that will determine what level of used car you can buy ranges from a credit score, amount of money down, any open auto loans, and provable monthly income.

When looking at used cars you can divide them into four levels.  A level one car is five years old or newer. These would include certified pre-owned  vehicles or lease returns.  Some of these vehicles may still have a factory warranty left and are less likely to have any major mechanical failures. They typically have low miles and are as close as you can get to buying a new car with much less depreciation. Buying a level one car normally requires strong credit and the ability to afford either a higher down payment or monthly payment.

A level two used car is five to nine years old.  These vehicles would no longer have any factory warranty left but are still eligible for after market service plans.  These service plans can cover major mechanical components which can protect you in case of a break down.  They tend to have higher miles and show more signs of wear.  They are still financeable and are more affordable then level one cars.  These vehicles do not require strong or good credit, but in order to compensate for lack of credit a good down payment is usually needed.

A level three used car is ten years old or older.  Theses cars tend to have very high miles and show a lot of wear.  Most of these cars do not qualify for any service plans due to year and mileage.  These vehicles are often cash cars because they are too old for financing through a sub-prime lender.  They are often sold as “buy here pay here” cars because the dealer is the one financing the car.  No credit is required but in the case of “buy here pay here” the dealer will require a down payment and weekly payment thereafter.  These cars have the highest chance of breaking down because of age and mileage but are the cheapest of all the levels.  This would be a last resort purchase or if you wanted to buy something inexpensive for cash.  If you have proof of income, proof of address and a down payment chances are you can buy a level 2 car and not have to resort to “buy here pay here”.

Level four cars would be any classic or antique automobile.  Values can range from extremely high to low depending on rarity and condition.  They tend to not be financeable due to age and are often paid for in cash.  No service plans would be available, but these vehicles are typically collectables and not often driven regularly.

Not knowing what level of used car you are able to buy can make car shopping difficult, leading to disappointment and aggravation for both you and the dealer.  Knowing your credit situation, amount you can put down and how much you can afford monthly will help buy the right level car and should make your car shopping experience less frustrating and time consuming.