NMA Article: 5 Essential Used Car Buying Secrets
By Eric Peters, Automotive Columnist
The biggest “secrets” of successful used car buying aren’t really secrets — they’re just not very well-known to those who don’t buy used cars regularly. Here are the five Big Ones that people inside the business learn from experience. Once you know them — and apply them — your odds of being ripped off, or just getting a bad deal, fall to almost nil.
Secret Number One:
Each used car is an individual.
Probably the biggest downside with used car buying over new car buying is that you’re often forced (or at least, tempted) to make a spot decision on a car you’ve found — because there’s literally not another one exactly like it available across the street, as would be the case with a brand-new car.
Other than color and options/equipment, one new car is as good as any other. They all have zero miles on them — and full coverage warranties. And when it comes to color and options, you can order whatever you want — and skip what you don’t.
You don’t have to think about the car at all, really — just the price.
But with used cars, even two same-year, same-make cars will be different in terms of such things as their condition, mileage, service history — and so on. You’ve also got less choice when it comes to colors and options/equipment.
That means you have to worry about the car as much as you do the price.
Practical Tip: Know how condition/mileage affects price; use options (their presence or absence) and color, etc. to your advantage.
Value guides such as Kelley Blue Book and the National Auto Dealers Association provide price ranges for any given late model used vehicle that will help you judge whether the price for the specific car you’re looking at is reasonable — or not. A car with lower than average mileage with near-perfect paint, etc. can be worth 20 percent or more than an otherwise identical/same-year, same-make car in average shape with higher mileage.
If the used car you’re looking at is heavily optioned, that will usually increase its value (and price). However, if the car doesn’t have a feature you wanted — or it’s not your first-choice color — you can use that as a haggling point. The seller wants to sell the car — and unlike a new car salesman who can just show you another car in the color you prefer with the options you want, the used car seller has to work with the car he has. That can give you an advantage; be sure to use it.
Secret Number Two:
Don’t spend more than you planned on.
Whether it’s getting sucked in by “low monthly payments” (and taking your eye off the total purchase price) or paying a much higher interest rate on a loan than you should have, it’s dangerously easy to end up knee deep in debt.
Practical Tip: Keep to a strict budget; know exactly what your limit is before you begin negotiating the price of the car — and shop for money (the loan) before you even begin shopping for the car itself.
It is especially important to “shop money” first as interest rates on used car loans tend to be higher than interest rates on new car loans — and used car loans can also be harder to get, with fewer choices available. The worst deals are usually those offered on-site by a used car dealership. Your bank or credit union is almost always going to be a better bet — but the point is, shop around. Don’t wait until you are signing papers at a dealership to think about how you’ll finance your purchase.
If you intend to pay for the car outright, a great way to impose money discipline on yourself is to bring along no more cash than you have decided (beforehand) to spend. Avoid bringing a checkbook; it may tempt you to just “cut a check” for more than you planned to spend — especially if your judgment has been clouded by emotion. And: Never, ever buy a car with a credit card. Ever. The only exception is when you know you can payoff the entire thing at the end of the month, before the card issuer nails you with usurious monthly compounded interest.
Secret Number Three:
Know what you are buying.
There are more than 600 different makes/models and sub-models (cars and trucks) out there. Even within a given brand (Ford, Toyota, etc.) the lineup can be very confusing, with seemingly endless trim and equipment levels. This makes it harder to get what you want — and too easy to end up buying (and paying more) for stuff you don’t really need. Also, the less you know about the particular model you’re looking at, the easier it is for the seller to mislead you, overprice the vehicle — or outright rip you off.
Practical Tip: Learn as much as you can about the car you’re interested in — as well as competitor models — before you actually start shopping. This goes for new as well as used cars, but with used cars, it is even more important to learn about possible weak points (for example, some makes/models are known to have not-so-reliable transmissions) that are more of a potential issue, since the used car will have less (or maybe no) warranty coverage. You also want to know what options/equipment were standard vs. optional not just because that affects the specific car’s price, but because you don’t want to be conned by a seller who claims the base model car he’s selling is “loaded” — and so on.
The best way to get hip to a car is to read a wide variety of material. Start with the automaker’s web site, where you’ll get PR spin but you’ll also get specific facts and stats, too. Then read as many reviews in the press — print and online — as you can. This will expand your knowledge base even more by giving you some subjective and objective pros and cons from auto industry experts who drive new cars for a living. Reviews will often compare/contrast a given model with its main competitors, too — which can be very helpful. It’s also a good idea to consult consumer-oriented publications that report on quality and customer satisfaction (JD Power, Consumer Reports, etc.) and do a search for “lemon” and the name of the car you’re considering, in order to alert you to any potential defects in design or major problems that you don’t want to become the next owner of.
Secret Number Four:
Every used car is something of a pig in a poke; meaning — it’s hard to know it how it was treated by its previous owner, or what might be on the verge of falling apart and costing you a pile of money. A vehicle with a manual transmission, for example, may be very close to needing a new clutch — an $800 repair, on average. Many import cars (and increasingly, domestic brand ones, too) require timing belt replacement after “x” mileage. Then there are little things like brake work, passing the emissions test (in states where that’s required before you can register the car and get plates for it) and so on.
It’s important to know as much as you can about the vehicle’s mechanical condition not just to know what you may be in for, but also because it’s potentially a huge haggling point in your favor. For example, if you know the car you’re looking at is going to need a clutch/brake job (or new tires) then you can haggle the price down by the amount it will cost you to get the work done. There’s nothing wrong with buying an otherwise solid used car that needs a clutch or brake work — or whatever — so long as you don’t end up paying for it twice by paying too much for the car itself and then again to have the problems taken care of.
Practical Tip: A knowledgeable friend or an independent inspection by a shop you trust. If you have a buddy who really knows cars, and the make/model car you are looking at specifically, ask him to come with you to check the car out. Even better, ask the seller if he would have a problem with you taking the car to a shop for a once-over (at your expense, of course). If he does have a problem with that, walk away. Quickly! The seller is almost certainly trying to hide something. On the other hand, if the seller doesn’t mind having the car looked over, it’s likely he’s an honest person — and someone you can do business with. If your shop finds any problems or work that ought to be done, the two of you should be able to hash out a mutually agreeable compromise on the car’s selling price that reflects the cost of the repairs that will need to be made.
Secret Number Five:
Do not get emotionally involved.
This is the last (and probably most important of all) the “secrets” of successful used car buying. The danger is a lot like what happens when you were in high school, a bit liquored up — and having fun at a party where members of the opposite sex were involved. You tend to do things you end up regretting the next day — and would never have done if you’d been thinking clearly.
Practical Tip: Remember Mr. Spock from TV’s “Star Trek”? He approached everything logically — and without the distracting effect of emotion. That is how you want to approach buying a used car. Use your brain, not your heart. It can be very helpful to have a supportive friend or family member come along with you, especially if you have asked them beforehand to keep you on a even keel. The bottom line is, a car (used or new) is just… a car. There are probably thousands out there just like it (or close enough) that there is no rational reason to get emotionally invested in one of the potentially many — especially if the deal appears to be too good to be true.
It almost always is.
5 Essential Used Car Buying Secrets
© 2008 NMA