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The Ultimate Guide to Buying a Used Car

What would you pay to be the ‘first owner’ and have that ‘new car smell’? Is it worth the instant depreciation of driving your car off the lot? If your answer is, “Oh hell, no,” we have your ultimate guide to buying a used car.

Get Your Game On

  • “I can take time to think about it.”
  • “I can ask for details. I can ask a ton of questions. I can pull out my phone and Google it, if I want to.”
  • “I can walk away from a pushy, evasive, or aggravated seller.”
  • “This might be the best deal I’ll ever get. If I miss out, I can live with that.”
  • “Probably, this is not the best deal I’ll ever get.”
  • “I buy only when I am ready. Not pressured. Not in a hurry. Ready.”

Your best chance to buy the right vehicle at the right price and time is to make well-informed, unemotional decisions. Some car buyers love the process and the challenge. Some want to get in, get out, and get on with their lives in their new used car. Luckily, the modern car-buying experience can cater to both. Either way, no ‘ultimate guide’ is the ult without a nod to the psychology of car buying.

Books are written and careers are made on the ability to negotiate a product. Salespeople regularly appeal to your emotions and values, and even your instinct to be polite. They draw out at least 3 refusals before letting go of a sale. They “get the boss to cut you a special deal” that everyone else gets, too. One New York Times blogger includes this: “Creating FUD (Fear, Uncertainty and Doubt) in your client’s mind can be a good thing because it will lead to serious consideration of your concept.” While the author emphasizes knowledge, passion and clarity, he also understands that fear and uncertainty work.

Your work is to remain calm and avoid the risks inherent to totally natural emotions. After all, it’s an exciting, expensive, important purchase. If you can remain just a little bit separate from your emotions and the seller’s emotions, chances are you will have a better buying experience. We’re a buzz-kill, we know, but we’re on your side.

These things are not your issue: “I’m only selling my car to pay for (an important, emotional reason).” “I’m totally commission. I only get $200 per car I sell.”  And yes, we’ve really heard this one: “It’s not worth my time to show you that discount car.” The seller’s motivations, needs and drama are not reasons for you to buy the car they want to sell you.

But we’ll come back to this later with ‘Red-Flags and Checklists.’

Do Your Research

“Best of” Varies … A Lot

Luckily for us, groups like Car & Driver, JD Power, US News & World Report, and Cars.com, are looking out for car buyers. They offer priceless expertise on the quality of a car and how it compares to similar vehicles. You’ll find insight into the general factors that affect a car’s value.

And, surprise!, sometimes a car you don’t expect makes the top 5 for that make, model, and year. Sometimes, the brand you do expect doesn’t even make that year’s top 10.

So. Best of what? Not all rankings are the same. Commonly, “best of” lists include reliability, safety, ownership costs, resale value and reputation. Count on a mix of some, all or none of these as you research. It’s important to know what the source based their review on and to investigate the car qualities you care about.

The value of a used car is based on many factors, including age, features, and condition, but also location and reputation. There are several places to find the estimated value of a car, specific to your area. Kelley Blue Book is one standard source and has a long history of valuing used vehicles. (It’s good to look at multiple sites.) You also have the ability to make independent comparisons by checking out your local Auto Trader, Carmax (which has set prices), and Craigslist.

In our experience, it is hard to buy a “lemon” that has been built in the last 5 years, has been well maintained, and has had no accidents. The car makers are that good, these days. A little research will show you the reliability, satisfaction, safety and value ratings. You’ll find out about recalls or scandals, from air bags to emissions. But no “best of” can rate the interior comforts and colors you like best. The design, the lines, the history, and the identity you feel by getting behind the wheel of your car.

Condition

The more you know about the vehicle, the better. This way, you can enter in exact mileage and package, plus extra features like gps or an upgraded audio system. All of these add to (or take away from) the value of the car. Google the car’s make, model and year to find recalls. Check with the seller to confirm these have been taken care of, and you can save yourself a trip to the mechanic and days with loaner vehicles or Ubers.

Speaking of “the more you know,” if you have the vehicle identification number (VIN), you have access to the public history of that exact car. A used car can have a hidden story. “Flood cars” that make their way to unsuspecting buyers are an ongoing reality, especially in Texas and Florida. (Carfax offers a free check for flood cars, along with what to watch out for.) A car may look almost new … because it has had major body work following a major accident. Ouch. How much is the seller obligated to reveal? The answer varies from state to state and depends on the type of seller.

Your car in 3D and Smell-o-Vision

Go to ‘school’ before you go to the car lot! Check out videos on how to inspect a used car, for example this one from popular Youtuber Chris Fix. Great tips are a click away.

Too often, we look only at the four sides of our six sided vehicle and the readily visible interior, such as the seats and dashboard. Any motivated seller will take the time to clean and polish these major visuals. Do a walk-around inspection of the headlights and signals. Turn on the wipers and the defroster and the radio. Turn on every darned thing. Feel the brakes – are they firm and responsive when pressed? The roof and hood take the brunt of the weather, causing clear-coats to peel and paint to fade, so look up top.

Look under the hood, of course, but look beneath the vehicle, inside the compartments and door jambs and crevices, too. If you’re likely to look and say, “Yup, that’s an engine,” bring backup, someone who knows about cars. And check out the checklist at the end of this guide.

Take your time. A confident seller shouldn’t mind. Look for signs of wear, rust, leaks, cracks, damage, broken and missing parts, and any condition issues. You are buying a used car, so you expect condition issues, of course. Your goal is to make an informed decision. Your goal is to identify significant issues and to anticipate future expenses.

Use all of your senses. Is there an odor? Does the salesperson say, “We can get that out, no problem”? Tip: if they could, they would have already. Odors tell you about the previous users, such as pet owners and smokers. Do you hear knocking on the test drive? Noises can clue you to all sorts of expenses or irritations – from an engine problem to poorly sealed windows and doors, to blown speakers.

These aren’t deal breakers. It’s up to you to decide what you can live with. However, you can use them to your advantage when negotiating your vehicle or making additional requests, such as detailing.

The Hidden Cost: Google It & Factor It In

Necessary maintenance, repairs, and registration can add significantly to the short-term costs of your vehicle. Will you have 1 month or 16 months before your tags expire (as some states transfer the tags with the car)? How much life do you have on your tires? How much for a simple oil change? Look at the common costs associated with a car – repairs and scheduled maintenance – and consider how soon you will have to take those on.

A cracked windshield may cost more to replace than you expect –  even a mid-range sedan’s windshield can cost nearly a thousand dollars to replace, thanks to the technology built into modern cars. Speaking of technology, many manufacturers only support and provide software updates for a few years. This means you may need to pay to upgrade your infotainment and navigation systems.

It isn’t all repairs and maintenance, either. Yes, small things like 5 miles per gallon make a difference when it comes to hidden costs. Say, Car A gets 32 mpg versus Car B, which gets 27 mpg. At 15,000 miles, $2.39/gallon and 55% city driving, Car A saves you $207 per year or $2,080 in 10 years.

Fueleconomy.gov offers a calculator with side-by-side comparisons of years, makes and models. You can put the 2017 Toyota Camry you have your eye on up against the 2015 Dodge Charger you dream of. … And yes indeed, that 4 cylinder Camry is the better bet for mpg. But hey, now you know. On the less whimsical side, you can put comparable makes, models and years together and let this website illuminate you with the difference in just 2 mpg.

Dealerships

Authorized dealers. All-inclusive car dealers. Used car chains. Family-owned local businesses. Credit union car lots. Rental car sales lots. Brick-and-mortar shops. Online shops. Or a mix of both. Overwhelmed yet?

“Dealership” covers a lot of buying experiences, and each one offers advantages. Sometimes, it’s a lower price – made possible by shopping a wide geographical area. Sometimes, it’s a car’s availability to drive and inspect – not possible with a car that is five states over. As for disadvantages, most of us have a story of regret or frustration, of falling for the crazy stuff dealers can do.

Take the time to explore what’s out there and decide on a process that feels comfortable and safe, and meets your needs. One benefit of a dealership or a large chain? They usually have the technicians to inspect and certify (more on that later) the vehicles on their lot. They may have the size and resources to help with repairs and maintenance.

Private Sellers

Without a middle man, you have room to save money while the seller has room to make money. & that appeals to a lot of buyers. However, we suggest only car-savvy shoppers consider this option because the risks to the buyer are much greater.

The internet is full of cautionary tales. Private sellers do not have to meet the same obligations and regulations of a licensed dealer. Still, you have more flexibility to negotiate a good deal for a good car when you do your research. If you know the seller and the car, you may be able to trust in the history and reliability of your purchase.

‘Certified Pre-Owned’ & a Trusted Mechanic

True story: once upon a time, ‘pre-owned’ cars were just called ‘used.’ That polished, attractive term alone says a lot about the countless ways sellers pitch their cars. What exactly does ‘Certified Pre-Owned’ (CPO) mean? Sometimes a lot, and sometimes nothing at all. Generally, it means the car is a newer model with low mileage, perhaps even a former rental car or lease vehicle. It has been inspected and possibly reconditioned. It doesn’t mean the oil has been changed and the scheduled maintenance performed. Generally, it may mean the car comes with an extended warranty and additional peace of mind, such as roadside assistance. It may not mean that the inspection meets the manufacturer’s standards. Get the picture?

‘Certified’ cars are generally more expensive up front, but often, the inspection and support you receive are worth the price. Another route is to take the vehicle through an independent inspection. For example, in many areas, AAA offers low-cost inspections by AAA Approved Repair Providers. At worst, you are out the cost of the inspection; at best, you can feel more secure in your purchase, particularly if you buy from a private seller.

The Price of a Used Car

It’s easy to find out your buying power before you ever see the vehicle. Lots of great options require only basic information and a ‘soft’ credit check that doesn’t affect your credit score. Quicken Loans, your own bank or credit union, even insurers like USAA.

But what is the true cost of your car? Generally, it is the vehicle price plus fees, factoring in interest rate and length of the loan (not to mention the running costs). In early 2019, with a very good credit score, a typical 36-month interest rate was 5.33%; 48-month, 4.72%.

Carmax has a “true cost” calculator that includes estimates of tax, title, tags and fees for every state. In California, a vehicle that costs $15,000 has an estimated $2500 added cost. (In Texas, it’s $1,225.) Financing $17,500 with ‘good’ credit and an interest rate between 6-9% for 36 months, the monthly payment is close to $550. At 8% for 48 months, the monthly payment is about $430.  … Here’s the kicker. In the end, you pay less with the higher monthly payments. How much less? About $760 less.

Expect an 11th-hour add-on, the extended warranty. Research your options – the dealership isn’t your only source for a warranty, and you don’t have to decide right away. Ask the dealership how much time you have to consider their offer. One, sometimes they will come back with a better deal, and two, sometimes you will find a better deal from an independent company, including your insurer.

Red-Flags & Checklists

A State of Mind

  1. You are calm, relaxed, and knowledgeable, a 21st Century, informed, kick-ass car buyer. (But you’re not a jerk.)
  2. You are a pragmatic car hunter – looking for that balance of vehicle, price, and issues you can live with.
  3. You smile at red-flags or head for the door to avoid these:
  • Emotional appeals (seller needs money, seller likes you and wants you to have the car, etc)
  • Attempts to influence your decision (urgency, “you deserve this,” “wait until your friends see,” etc)
  • Evasions, vague answers or minimizations (“you have plenty of room in the trunk”)
  • Trust language (seller seems trustworthy and even points to their own character, can’t show you where their promises appear in writing, etc)
  • Resistance to independent inspections
  • Anger, impatience, frustration, dismissiveness, or other unprofessional behavior.

A Used Car Checklist

  1. Make, model, year, mileage to get the basic Kelley Blue Book value
  2. Vehicle history (public records of repairs, accidents, recalls, maintenance, and after-market modifications)
  3. Engine compartment components, belts, and hoses (look for leaks, seeps, rust, cracks, breaks, wear, missing items, and add-ons)
  4. Engine fluids (check the oil, coolant, brake, and automatic transmission)
  5. Under carriage (look for leaks, seeps, rust, cracks, breaks, wear, missing items, and add-ons)
  6. Visible body issues (windshields, but also fenders, doors, and roof racks)
  7. Visible interior issues (seats, dash, roof liner, panels, knobs, pockets, and carpet)
  8. Electronics (lights – exterior and interior, gauges, check engine codes)
  9. Tire wear and 4 matching tires and wheels (plus clean brakes)
  10. Odors, sounds, and vibrations (all things unusual to see, smell, hear, taste, feel or touch)
  11. Clean registration, title, and proof of ownership/authority to sell (in some states, license plates and tags that will stay with the vehicle)

Here you have it, the ultimate guide. At the same time overwhelming and enlightening, with insight into the research, inspection and car-buying process. What makes you hate or love your purchase? Your confidence in yourself, which comes from preparing yourself for that big purchase. Finding a seller you develop an easy, professional relationship with. Paying the right price for the right car.

How awesome is that?

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