43 Autos: Used Cars

Buying secondhand saves massive amounts over the course of your driving years. Not only do you pay less upfront, as each year passes you spend less for insurance, ownership taxes, and interest (if you borrow). Follow these strategies whenever you shop for pre-owned cars.

43.1  Ditch the Car

You don’t have to worry about shopping if you don’t need a vehicle (see Chapter 44).

43.2  Consult Buyer’s Guides

Each year, reputable sources rank the best used models in each vehicle class. These guides save you hours of research and boost your chances of making a good purchase.

  • Consumer Search. Aggregates opinions from reliable sources and lists the “best reviewed” cars. Visit ConsumerSearch.com.
  • Edmunds. Lists the “best bets” in used vehicles. Visit Edmunds.com.
  • Consumer Reports. The leader in guides, but unless you visit the library, you have to pay for the information. Read the annual Used Car Buying Guide.

43.3  Look for Models That Retain their Value

Depreciation is biggest single cost of car ownership (see Chapter 38). If you plan to someday resell the car you’re buying, favor used models that depreciate slowly. Buying guides list which models hold their value the longest (43.2).

43.4  Look for Models With Low Fuel Costs

   43.4.1  Favor Vehicles With High Fuel Economy Ratings
If gas averages $3.50 per gallon and you drive 15,000 miles a year, a 25 MPG improvement in mileage saves you $1,050 annually, or $5,500 over five years. For MPG data on hundreds of vehicles, visit FuelEconomy.gov.

   43.4.2  Favor Vehicles That Use Regular Gas
Avoid vehicles that require premium gas and save $50-$75 per year.

   43.4.3  Favor Manual Transmissions
Make a clutch decision: these cost less to buy and repair. They also improve a vehicle’s gas mileage.

   43.4.4  Consider Hybrids or Electrics
You’re no greenie, but a Toyota Prius will make you look like one.

   43.4.5  Consider Diesel Fuel Vehicles
The upside: diesels cost less to operate, fetch higher prices on resale, and last longer. The downside: diesel vehicles cost more and so can the fuel. If you’re torn between a diesel (such as the VW Jetta) and a gas engine competitor (such as the Toyota Yaris), compare their overall costs of ownership at the Department of Energy’s Alternative Fuels Data Center. Visit AFDC.energy.gov/calc/.

   43.4.6  Consider Flexible Fuel Vehicles (FFVs)
These run on a mixture of gasoline and 85 percent ethanol or methanol, also known as E85, the price for which usually runs 10-15 percent less than regular gas. But because E85 contains less energy content than gas, the car’s MPG will drop. Whether the price break outweighs the lost efficiency depends upon current gas prices and the car’s performance. For a current list of gas stations that sell E85, visit E85Vehicles.com.

43.5  Look for Models That Cost Less to Insure

   43.5.1  Avoid Vehicles With High Theft Rates
Some vehicles attract thieves because of poor alarms or a strong demand for replacement parts. Search online for the latest data about which cars get stolen most often.

   43.5.2  Avoid Oversized Engines
Many insurers charge higher premiums for larger engines. (My RAV4 has a peppy V6 engine and because of that I pay an extra $120 per year. I think the pep is worth it.)

   43.5.3  Check Insurance Costs Before You Buy
Visit Edmunds.com to gauge the costs to insure different vehicles. Once you focus on a specific model, call your insurance agent and ask for the estimated premium. Also, get a list of safety features that trigger discounts and look for used cars with those features.

43.6  Consider Reliability

   43.6.1  Read Consumer Reports
Each year, the editors survey more than a million vehicle owners about seventeen different trouble spots. Results appear in the annual Used Car Buying Guide.

   43.6.2  Search for Recalls
The model you like may have been the subject of one or more recalls. Visit SaferCar.gov.

43.7  Consider Safety Ratings

   43.7.1  Review NHTSA Ratings
The National Highway Traffic Safety Administration uses a five star safety rating system that covers front crashes, side crashes, and rollover resistance. Visit SaferCar.gov.

   43.7.2  Review IIHS Ratings
The Insurance Institute for Highway Safety (IIHS) tests for frontal offset crashes, side impact crashes, roof strength, and rear crash protection/head restraint. Visit IIHS.org.

   43.7.3  Read Consumer Reports
The annual Used Car Buying Guide republishes crash data from the NHTSA and IIHS, so you only have to consult a single source.

43.8  Choose Where to Shop

When you shop for used cars, you typically have two choices.

   43.8.1  Consider Dealers (More Expensive)
Dealers have big overheads, and their prices reflect those expenses. On the other hand, they’re convenient and often provide limited warranties (read the provisions carefully before you buy).

   43.8.2  Consider Private Sellers (Less Expensive)
Private parties don’t have the overhead dealers do, so they can sell for less. Review current listings at AutoTrader.com, eBay Motors, Cars.com, and Craigslist.

CODA: GOVERNMENT FLEET SALES

The General Services Administration (GSA) leases vehicles to federal agencies. When leases expire, typically after three to five years, the GSA holds public auctions. All vehicles are sold “as is” and all sales are final. Bidders can’t test drive the cars or take them to mechanics, but they can start engines and inspect interiors. Despite the obvious risks, you might be able to score a low price that leaves room to cover all but the most costly repairs. The GSA auctions off 40,000 cars and trucks per year. For details, visit AutoAuctions.gsa.gov.

43.9  Prearrange a Loan

At this point, you know your model and whether you’re buying from a dealer or private party, so you know the likely price range. Unless you have enough money saved up, it’s time to pick a lender (see Chapter 42).

43.10  Inspect Vehicles

You’ve done the research and, if you’re borrowing, the loan is prearranged. Welcome to the dance. It’s time shop for cars in all their metallic—and plastic—glory.

   43.10.1  Test Drive the Car With an Inspection Checklist
A short spin tells much if you know what to look for, so use a checklist.

   43.10.2  Review Records
Complete paperwork suggests the car was treated well. Ask for a copy and study the details.

   43.10.3  Order a Vehicle History Report
If the car checks out based on the test drive and maintenance records, use its VIN to order a report that details the ownership history, title problems, and, in many cases, service and repair records. The report may also list accidents, but only if those mishaps made it into the system (beware: the lack of a listed accident isn’t absolute proof that none occurred). If the report shows problems, you can shift your search to another vehicle before you pay for an inspection. Order vehicle histories at CarFax.com, AutoCheck.com, or VehicleHistory.gov.

   43.10.4  Schedule a Mechanical Inspection
Unless you’re a confirmed motor head who can inspect all aspects of the car yourself, take this indispensible step before you commit to buy. Plan to spend $100-$150. Obvious point: don’t let the buyer pick the mechanic. If you don’t know any mechanics, contact your local AAA office or run through the tactics for picking repair shops in Chapter 41. Anyone who regularly inspects vehicles should follow a standard checklist. Ask to see it in advance.

   43.10.5  For Cars With Body Work, Visit a Body Shop
If the car’s been in an accident, and if despite that misfortune you’re still interested, have the vehicle checked by a reputable body shop.

   43.10.6  Check for a Warranty
If the seller offers the car “as is,” there’s no warranty and you bear the risk of any problems. If a warranty exists, read it carefully before you buy (including the inevitable exceptions and exclusions).

43.11  Haggle

   43.11.1  “Can You Match the Online Price Listings?
Most guides list separate prices for dealers and private party sales. The leaders are Consumer Reports New & Used Car Price Service, Edmunds.com Pricing Reports, Kelly Blue Book, and NADA. Bring along printouts for some show and tell.

   43.11.2  “Can You Match the Recent Local Sales Prices?
If a 2003 Honda Accord with similar mileage sold last week in your state for $9,500, you can use that to convince your seller to drop the $12,000 asking price. Where to find sales data? Try the advanced product search at eBay.com. Enter your make, model, year, and check the box for “completed listings.”

   43.11.3  “Problems Exist. Can You Drop the Price?
If the inspection uncovered some issues, but they weren’t enough to scare you away from the car, use that information to argue for a lower price. Go to websites that estimate repair costs (see 41.7.1), and  argue that the sales price should drop by at least that amount. Show the seller all the relevant paperwork.

   43.11.4  “Here’s My Offer.”
The seller is at $12,000. You’d like to pay $11,000, but haven’t made a counter-offer yet. Consider making a $10,000 counter that signals your acceptable price and steers discussions into the “let’s split the difference” territory.

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