This guide to buying a cheap electric guitar is just my own opinion, although I do think it's going to be helpful to anyone looking to start playing guitar on a budget. Bear in mind that where I mention an ebay seller it is because I had a good experience with them. You may not experience the same!
My background. I've played guitar for over thirty years and own several guitars, which I play regularly. Mainly I play Rock and Zep style heavy, rhythm, lead and bass. I've played in bands, my greatest moment practicing for six months for performances of Joseph and the Technicolour Dreamcoat which had to be note perfect. And yes, some of my guitars are really cheap. Also I don't have stacks of wonga to heave in the direction of a genuine Les Paul. So I do look for a good deal.
What Not To Buy: Basically, anything with a famous name from China, and be very suspicious of European sellers. I've seen sellers from Portugal and Spain that ship from China. These lovely, handsome, beautiful gitars are pretty well all fakes, and often very poor ones, with ludicrously high postage. They are most likely made in the same factories that produce the low priced entry level guitars and of the same materials.
What to look for when buying. Well, good ebay feedback of course! Whether you are buying from an individual or a shop the feedback will give you an idea of the seller's honesty. I would definitely avoid anyone who keeps their feedback private.
The description. Personally speaking I like sellers who are honest in how they describe their item and detail any flaws. You can make an informed choice rather than being disappointed when the item arrives. And frankly a couple of minor dings aren't really going to affect the sound of a guitar although they may affect the bidding.
How many guitars are available from the seller? If a shop has multiple items the same then you have a good chance of getting a replacement if there are any major faults on your item. Not only that, but if the item is branded to a shop, then they will have generally bought in reasonably quality guitars with their own name on the headstock. In general most cheap guitars have good fretboards and wood to wood fitting.
If you are buying from a private seller do some searches through Google to see whether the guitar you're looking at is available from a retailer, and how much it costs. This will give you a good idea of how much to bid up to. For example I've looked for Gould guitars after a couple came up and they retailed from between £90 to £175 according to model. A good tip for this is to open one window with the item you are interested in and another window to search in so you can compare. Switch between the two.
On some items you really will take a chance if the price is low enough. I would call this a Wot the hell its so cheap! bid. Usually this will be a Buy It Now item. Look at the Swift guitar example below. If bidding, simply decide in advance what you want to bid up to and do not exceed it.
If you're really looking to start out in electric guitar playing, consider a kit. These can range from£60+ to£120 and quite often include a small amp, leads, strap, tuner and sometimes even an instruction cd. Personally I'd say go for something in the lower price bracket as most people who start out in learning the guitar never actually manage to stick with it past the first few months. Just look at the ebay listings which cite lack of time, loss of interest or Never Got Around To Learning But it was a Nice Idea as reasons for selling. No point in spending a fortune for something you won't really use very much! Some people may dispute this and say that an expensive guitar is easier to play, which is true. However, an expensive guitar is just that, expensive, and you won't necessarily get your money back if you sell it later. Worth the money if you can play, though!
Check out that the guitar you are looking at is actually full size. Some cheaper guitars are smaller than the original design, i.e. Fender strats. My wife has one of these, although its smaller size does suit her hands better.
What will you get? Normally a serviceable guitar with maple neck and plywood body if the finish is opaque. If it is a translucent finish you may get a solid wood body, but I'll bet you it will be strips of solid wood which have been stuck together to make a whole. If you want cheap, so what? It will still sound better than plywood.The tuners and pickups are likely to be usable but of average or poor quality. You certainly can't expect Schaller tuners and Seymour Duncan pickups. They can all be replaced when you can afford it. If necessary. Also don't expect the guitar to play terribly well straight out of the box. Once you've got your guitar do some Googles to find hints and tips on setting up a guitar so it plays a lot, lot better. It is a lot easier to set up a guitar than most people think. Or even know about!
Once you have learned to play a bit more than three chords, and can actually pump out a tune, maybe some of your favourite lead riffs and can play along to some songs on cd there's only one way to go. Upwards and more expensive but even then the same rules apply when buying. But if you can't afford a more expensive guitar then you can still improve the one you have in the interim by fitting new pickups. Again a google search will give you an idea of what's available and how to fit them. An ebay search will reveal quite a few sellers of pickups up to 15 ohm, ideal for screaming rock and lead guitar.
As a learner don't be put off by a cheap price! A professional musician may not think much of your guitar but it will be good enough to learn on and whether it's worth you spending more on a better instrument! And remember the aim of the exercise is to learn to play! Not to pose with a '91 Gibson you can't get a tune out of!
Four case studies.
1.I bought a 1970's Hondo Les Paul copy for £15 quid in a boot sale. The neck and body were good, but well used with a lot of small marks. I set the action lower. The pickups were complete rubbish so they came out and were replaced with two 15ohm jobs from CH Guitars on ebay.co.uk. Now it plays really well and sounds excellent! Total cost, about £35. My wife adores this guitar!
2. I've always liked the shape of the Gibson SG special so when I saw one marketed as a Swift SG copy at £49 +£12 p&p from nowthenourkidshop on ebay.co.uk I just bought it as a Wot the Hell purchase thinking that if they action was good enough it could always be improved with better electrics. After initial set up, which took about half a day, I realised it played really quite well indeed. Even better, I measured the output from the pickups and they came in a 12.02 k and 11.5k. Big surprise as most cheap guitars have pickups ranging in the 4.5k to 5.0k range. These pickups don't sound half bad either. On the down side the finish was adequate to good but with minor flaws. Still at that price I might give it a weird and wacky paint job. The fittings were utiltarian rather than best quality, but they all work well. I'm perfectly happy with this guitar and feel that with the pickups it was good value for money. I play it a lot and that's the main thing!
3.My daughter took her bass guitar back off me and so I had to look for an inexpensive replacement. I ended up with a Stagg P bass kit. This again I set up for low action, and the pickups were O.K. but not great. So they came out and a set of Seymour Duncan P bass pickups went in. It sounds good, plays well and I have a lot of fun jamming along to CD's with it. Total cost about £175. Mind you, I sold the little amp that came in the kit so recouped some of the money.
4. I'd sold some stuff on ebay and had a virtual wad of cash sitting in a virtual wallet in my pay pal account when I saw a nice red slimstick telecaster guitar from CH guitars. I'd bought some pickups off of him so I had had a good experience of his items. At around £170 it didn't quite come into the really cheap category but I got one anyway. This was an example of what you pay a little more for. Superb action, straight out of the box. Fine fittings and a good sound. Unusual styling of the headstock is unique although makes the guitar a little heavy at the tuner end. The pickups are fine but a bit underpowered for my playing. I'm afraid they may have to be replaced. My favourite guitar in looks and playability.
So that's about it. Good luck in your search. And stick with the learning, everyone has a lead solo in them! davebegood

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