Buying a used car is typically more of a headache than a new car due to high dealer mark-ups and not actually knowing what a dealer owns a used car for. That being said, you can save a significant amount of money buying a used car, One of the biggest hesitations when buying a used car is not knowing whether the car has been abused or in a prior accident. Other unknowns are whether the previous owner performed routine maintenance (oil changes, air filter changes, tire rotations, etc.). The good news, however, is that used cars are continually getting more and more reliable as the years go by. As the saying goes, “the best new cars make the best used cars.”
Find the most reliable used car:
Pick up a copy of Consumer Report’s used car reliability ratings to find detailed information on specific used car models you are looking for. It is important to check consumer reports even if you are buying a used car that you believe is reliable. While Toyota and Honda top the list as the most reliable automakers, you can’t assume that all their vehicles are going to be reliable. For example, the Honda Odyssey is considered a very reliable minivan, however, the 2000-2003 models had to have their transmission replaced or rebuilt more frequently than the average vehicle of the same age. Other resources online that have used car reliability ratings include: MSN Autos, JD Power and Edmunds.
Used Cars that are 2-5 years old typically are the best value. These “newer” used cars are past the steep part of the depreciation curve, have the latest safety features and equiptment, serious vehicle problems are more rare (engine/transmission replacement, faults in the cooling system), and some may even have the remainder of the manufacturer’s warranty left. Used cars 2-5 years old are a popular choice and should provide many more years of reliable driving.
Know your used car’s history:
Knowing your used car’s history is crucial to helping you make an educated purchasing decision. Many dealers will offer a free Carfax or Autocheck report, however, do not trust the history reports they print for you. Car dealer’s can easily manipulate the Carfax report to show no negative items (or withhold important pages). Be very wary of anything a car dealer tells you about a used car. They will tell you virtually anything to get you to buy the vehicle.
Many states do not require vehicle accidents to be reported to Carfax. The trusted vehicle history service you can rely on is Autocheck. Autocheck has exclusive data on auction frame damage, 2X the reported accidents vs. Carfax, and offers the only report with AutoCheck Score (which helps make your report easier to understand). You can also use it to easily evaluate and compare vehicle histories. AutoCheck receives its data from Experian, a trusted leader in automotive data.
Negative items to look for in your Autocheck vehicle history report are: accidents, two or more owners, fleet service, lease, or rental car usage, odometer roll back, corrected or duplicate title, emission test failure, or theft record.
*Two or more owners– if the previous owners of the used car you are looking at couldn’t wait to sell their car, why would you want to buy it? Two owners over a ten year span is not as bad.
*Fleet service or rental car usage– have you driven a rental car before? Did you take particularly good care of it, or did you drive the car with a lead foot and not care as much what happend to it? Rental cars are the result of hundreds of people abusing a car. Finally, would you rather buy a used car that one owner has driven and (hopefully) cared for, or hundreds of people have driven and [likely] abused?
Used Car Benefits:
Buying a used car will not only save you money, but also allows you to pay a less expensive insurance premium. Although your potential for a break-down is higher in a used car (as cars age, the chance of a break down increases), you are still saving money compared to buying a new car, even taking into consideration possible repair bills. If you are just looking for basic transportation to get you from point A to point B, buying used will save you money and is often a great choice.
Negative side of buying a used car:
Lets face it, the used car you are looking at is, well… used! Buying a used car could mean you are inheriting someone else’s used car problems. Used cars also typically carry a higher interest rate versus a new car (while your interest rate may be higher, the amount you are financing is usually less, which means you are still paying less money overall versus a new car). If you are paying cash for the used car then obviously interest rates do not matter.
Where to find the best deal on a used car:
Keep dealers honest by comparing used cars for sale at Cars.com and AutoTrader.com. These two sites offer the largest inventory and list used cars for sale by both dealers and private sellers. You can also find a good deal on a used car by searching eBay or Craigslist. There is a cost savings when buying from a private party because you don’t have to pay sales tax. You can save yourself approximately $1,050 on a $15,000 used car purchase by not having to pay sales tax (assuming 7% tax).
eBay Motors:
eBay has a huge inventory of used cars that are often not found on Cars.com or AutoTrader.com. eBay sells a huge amount of cars online, among the most popular are the Ford Mustang and Chevy Corvette. eBay lets you search locally within a specified mile radius from your home, or nationwide. Sellers on eBay are comprised of both individual sellers and car dealers. Keep in mind that buying from car dealers requires you to pay sales tax. eBay is a haven for car buyers looking for great deals, and the great thing about eBay is that you (the bidder) are in control. For peace of mind, make sure the eBay seller you are looking to buy from has enough positive feedback established. You don’t have to worry about paying for a vehicle and not receiving it, or fraudulent listings, thanks to eBay’s Vehicle Purchase Protection, which provides protection of up to $50,000 against certain losses associated with some types of fraud.
Once you have found the car you want to buy on Ebay, set up an appointment to see the car in person, if possible. Be sure to call the phone number (if any) listed on the auction and speak to the seller directly (ask any questions you may have and give yourself peace of mind). If the car is too far away, you can contact a mechanic in the city where the car is being sold and arrange for an inspection when you arrive. eBay also makes available a 150-point inspection service (purchase required) through SGS Automotive. SGS has a nationwide staff of trained inspectors, and offers: online reports available within 24 hours of your inspection, 150-point condition report, and interior and exterior photography. SGS makes buying “sight unseen” a little easier.
Know the trade-in, private party, and retail value for your used car:
Researching used car prices and values at KBB, NADA, and Edmunds is a must when shopping for a used car. Each of these sites has their own methods for valuing a used car, and in some cases [the value] can vary by thousands. KBB is the most popular used car valuation tool for consumers, but all three sites should be analyzed. If you have an account with eBay, you can search for the vehicle you are looking for (year, make and model), and view the results of completed listings (e.g. the winning bid of the vehicle you are looking for).
The used car bait and switch at a car dealer:
Before you visit your chosen dealer for a test drive, make sure you call ahead of time and confirm the vehicle you are coming in to test drive is still available. Some dealers might even tell you the car is available (knowing very well the car is gone) to attempt to bait &Â switch you. You can call up the dealer and speak to a different sales rep to verify vehicle availability (but beware that this could backfire on you, as salespeople are notorious for talking to one another, making sure they aren’t helping the same customer). Nonetheless, if you drive to a dealer and you are “bait & switched,” promptly get back in your car and drive away.
Negotiate the best price for a used car at a car dealership:
Once you have driven the used car and performed an AutoCheck (with positive results), your next step is to negotiate the best price on the car. Your first step is to request a rock bottom price via email (first initiated through Cars.com or the dealer’s website). It may require several emails back and forth to the dealer to obtain their best pricing. If the dealer already has your contact information, you will need to submit an additional request online using someone else’s name (create an alias, and new email address). Dealers are more likely to give a complete stranger a better price than someone they have already been in contact with (or test drove). A dealer has your contact info if you have provided your driver’s license for a test drive. In your emails, request dealer’s rock-bottom out the door price, including all taxes and fees (make sure you provide them with the county you live in for tax purposes, and whether you need new plates or transfer plates).
Once you have obtained the dealer’s best price via email, your next step is to visit the dealership and get a better deal. Used cars are marked up heavily (the sticker price on a used car is typically marked up $4,000-$6,000). Keep in mind the car’s sticker price will differ than the used car’s Internet price (in most cases). You should have a very good idea of what price to offer the dealer after using the above links to research used car values. Your goal is to negotiate the lowest sell price possible in person. Ask the dealer to provide a full bill of sale with all the taxes and fees included. Go through the bill of sale line by line to ensure you are not paying any prep or service fees, or any other bogus items. The only items that should be on the bill of sale for a used car should be the following: sell price, documentation (doc) fee, sales tax and license & title (commonly known as TT&L, tax, title, and license).
The last line on the bill of sale is your out the door price, and this is the number you need to negotiate. The out the door figure includes all the taxes and fees. By negotiating the out the door price and not the sale price, you prevent dealers from hiding bogus fees and other miscellaneous charges in the “middle” of the bill of sale. The out the door price is the final number that you would either a) write a check for, or b) finance.
When negotiating the best out the door price for a used car, your biggest bargaining points are:
– You can find a similar car (same year, make, and model) with similar miles at another dealer (or private seller)Â for less.
– You don’t necessarily need the car right now (it is more of a want than a need).
– The car is only worth “x amount of dollars” to you, and are not willing to pay any more. OR- you feel the car is only worth “such and such amount.”
– Time is on your side, and you can wait to find the best deal (however, make it aware that when you find the right car at the right price you are ready to pull the trigger right away) — Car dealers want to sell you the car now, so if you slow play it and make it seem as though you don’t have to make a purchase today, you will have more bargaining power.
Have a trusted, non-biased mechanic do a thourough inspection on the used car you are looking at:
Once you have arrived at a price you are happy with, your next step is to put a fully refundable deposit to hold the car and have a trusted third party mechanic inspect the vehicle. Make sure the dealer puts in writing the deposit is 100% refundable.
Do not settle for a certified, “dealer certified,” or vehicle that has received a 125-point inspection. These inspections are done by mechanics employed by the dealership, who do not have your best interest in mind.
CarMax:
CarMax is a good place to buy a used car with little stress. CarMax sales associates are not paid on commission, so they are not going to try to rip you off or manipulate the sales figures (as you will often find at a standard car dealer). That being said, you can not negotiate the price at CarMax, so the price you see online or on the vehicle’s window sticker is the price you pay. If you have done your research and find this advertised price to be good (and can’t find a lower price anywhere else), buying a used car at CarMax is not a bad way to go. CarMax is known for streamlining the car buying process (one person takes you from start to finish), which often saves you time and hassle.
Tips for financing a used car:
While used cars have higher interest rates than new cars, you can still obtain a competitive rate. Start by shopping interest rates at your local bank and credit union to see how low of a rate you qualify for (in my experience, customers have obtained the lowest rates from their local credit union). Your employer may also be affiliated with a credit union. Many credit unions will discount their loan rates further if you use “auto deduct” for your car payment, and/or activate other services such as checking, online bill pay, etc. Most banks and credit unions have no pre-payment penalties, which enables you to pay the loan off early, saving on interest charges.
Don’t buy a used car without AutoChecking it first.
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