No, I’m not joking; I’m serious. This didn’t used to be the case. When I started in the auto business in 1968, buying a used car was only for folks who couldn’t afford to buy a new one.
Back in the 20th Century, the reliability of new cars was so low (compared to today) that when their owners sold or traded them in, the used car was virtually “worn out”. Banks were reluctant to finance used cars. If a used car had been driven more than 50,000 miles, most conventional lenders wouldn’t consider it. If they agreed to finance any used car, they limited the term to 12 or 24 months, required large down payments, and charged very high interest rates. The mileage on odometers was routinely rolled back to far less than the actual. There was no CarFax report to tell you the condition of used cars. Some of you will remember the old saying, “When you buy a used car, you’re buying somebody else’s troubles.”
Today, everything has flipflopped. New cars are extremely reliable. Manufacturers’ warranties are much longer. The quality, reliability, maintenance costs, and safety are exponentially better than before. You may have heard Honda’s slogan about their certified pre-owned vehicles, “The Best New Cars Make the Best Used”. A high-quality new car maintained according to the manufacturer’s recommendations can be driven more than 300,000 miles with low maintenance and safety, but most trade them in long before they’ve reached that mileage. Today, many people buy new cars because of new styling, as status symbols, or because they still believe that used cars are too risky to buy. They trade in or sell their perfectly good used car and buy another new car. This affords you the opportunity to buy their trade-in at a bargain price. The new car they buy depreciates thousands of dollars the minute they drive it off the showroom floor. Used cars depreciate far slower.
If you’re looking for a better value and decide to buy a used car, just follow these basic guidelines.
- Research the best used cars with Consumer Reports, www.ConsumerReports.org. Their annual auto issue lists, not only the best used cars to buy, but lists the worst ones…the ones you should never buy.
- Consider buying your used car from CarMax, OffLease Only, or AutoNation. These are honest, transparent used car sellers that put their lowest price on every used car and their hidden fees are smaller than other dealers. The best site to look for that used car is www.AutoTrader.com.
- No matter where you buy your used car, insist on an out-the-door price. Do this research online and tell the salesman that your definition of an out-the-door price is “the amount you can write a check for, present it to the seller, and drive the car home.” Virtually all car dealers add hidden fees and unwanted accessories to their advertised and quoted prices. Getting an honest, out-the-door price will save you potentially THOUSANDS of dollars.
- Before you sign on the dotted line, take the vehicle to your independent mechanic for a complete check-over. This can cost $100 to $200 but it’s worth every penny. If the seller won’t allow you to do this…DON’T BUY THE CAR. They’ll often argue that their mechanic has rigorously inspected the car, but clearly this is not as reliable as your mechanic.
- Study a CarFax or AutoCheck report that should be provided to you by the seller. This prevents you from buying a car with a dangerous recall, one that’s been in a bad accident, or a flood. It also provides the maintenance record if it was service by dealer reporting to CarFax or AutoCheck.