By on August 1, 2012
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Used cars give automobile buyers the best possible bang for the buck– except when they don’t. As a professional dealer, I could tell you stories of used car calamities that would make public transportation seem like the only sensible option. Tales of stitched together death traps that looked as new as the day both cars were born. Cars with supposedly clean registration papers that turned out to be hotter than Peachtree Street in mid-August. Instead, I’m going to tell you how to buy a used car without getting your proverbial clock cleaned.

Finding an appropriate used car is a pretty simple business: decide what kind of car you want, research it online (especially model and brand-specific enthusiasts’ sites) and then go out and find one.

You can find a great car at a variety of sources: private, owner, independent used car dealer, used car superstores, new car dealer; even a “buy here / pay here” lot might stock a great vehicle or two (credit the law of averages). On a percentage basis, I’ve found that private owners and independent dealers offer the best bang for the buck. Conversely, your neighborhood impound lot or public auction is a no-no nadir.

When you make contact with the seller, ask for the car’s VIN (Vehicle Identification Number). That’s the government-mandated ID code welded onto the car’s chassis (and attached elsewhere), and listed on the car’s registration papers. Thank the seller for the info, tell them you’ll call them back, and hit the ‘Net.

Plug the car’s VIN number into Carfax’s or Autocheck’s on-line database. For a nominal fee, these sites will tell you if the car’s been flooded, torched, stolen, crashed, rebuilt, salvaged or had its odometer rolled back. The information on these sites is not all encompassing. But it can save you the cost of having your mechanic inspect a vehicle that is not worth your time.

Equally important, it’ll let you know if the car was a rental, a fleet vehicle or had a long series of owners (i.e. sporty models with neglectful owners are financial time bombs). Cars that have been recently owned for a short period of time may either have nasty issues that the seller may not want to disclose; such as powertrain issues and failed emissions. Or it may be that the seller is a curbstoner who makes a convenient side living by flipping cars to those who know little about them.

This due diligence must be done, but the information on these reports is far from perfect. Any damage not filed in an accident report won’t show up. Arbitration issues can also fall through the cracks. When TTAC alum Frank Williams checked an Audi he once owned, the report made no mention of the fact that Audi bought back the car under Lemon Law provisions.

To fill the holes in a used car’s mission critical history, it pays to dig a little deeper.

Contact the service department at the brand-appropriate dealership and ask the service advisor for a maintenance report. By law, dealers can’t print out the information or give the owner’s name. But they CAN verbally report a car’s service history. If you’ve got the wrong dealership, contact the seller and ask where the car was serviced.

This brings us back to your most important source of car-specific information: the seller.

After you’ve secured the VIN and done your homework, call the seller back. There are dozens of excellent questions you can ask, and one you shouldn’t: what’s the price? Avoid negotiating price for the same reason you wouldn’t bid on a house without looking inside.

Here’s how I do it:

“I like to catch up on maintenance whenever I buy a car. Can you tell me where the car was serviced, what you’ve done lately and if there’s anything else I’ll need to do in the next year or so?”

“I usually have my cars inspected at ‘x’. If I like the car, would it be OK to have it inspected?”

I always use conditional words and phrases– “Can you… would… do you know…is it possible.” It’s non-threatening, and the polite approach encourages the owner to provide additional information. It also can help you thresh out who is the genuine owner and who is the opportunist.

Thank the seller; you’ll call them back when you’re ready to see the car in person.

If confidence is still high, it’s time to determine an appropriate price. Forget Ebay, Kelly Blue Book and NADA. For popular late model used automobiles, Clearbook is the only pricing guide that matters. Edmunds,com can also be a solid cross-reference when it comes to late model vehicles.

If there aren’t any recent or enough listings, go to your local bank or credit union. Tell them you’re looking at buying a used car and ask them to print out an industry wide pricing guide called the Manheim Market Report (MMR).

The MMR lists wholesale and retail used car prices based on millions of recent transactions. Although the MMR is not for public consumption, almost all financial institutions with an auto lending department have access to this information.

Time for a bid? Nope. Time for a test drive.

Every year I plan on improving the content of this car buying series for your benefit. The world changes and with that, this series will continue to reflect what is new and important for you as a car buyer.  I invite your feedback. Especially if you want share your recent used car triumphs and tragedies below.

 

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35 Comments on “Annual Edition: How to Buy a Used Car – First Contact...”


  • avatar
    snabster

    For insurance purposes, what it the best valuation tool for older cars? I know when I plug my car in ( a 97) there just isn’t enough data.

    • 0 avatar
      twotone

      All of my 25+ used cars (never bought a new one) have been through private owners.

      First, buy the owner; second, buy the car. Do they look like the type of person who cared for their car? I’ve walked from cars just by looking at their home and yard.

      Carfax, etc. won’t tell me if it’s a car worth buying, but it will tell me if it’s not worth considering.

      A pre-purchase inspection is critical, but service records are even more important. A PPI is like looking at a photo, service records are like watching a movie.

      I have yet to be burned on a used car purchase.

    • 0 avatar

      Just because a car has more than 1 owner before you buy it, may not mean there is a problem. High performance cars usually are the victims of short term leases and early trade ins. One of my friends traded in his GT-R after just 9000 miles.

      Also, Car Fax isn’t always reliable. Some jerkoff tried to sell my cousin an old C-class with a “clean car fax” – but it was obvious front end damage had occurred. When people repair cars without reporting it to insurance, the car fax is clean.

      TWO TONE

      The pre-purchase inspection is crucial. I think people should ask a dealer to inspect it for paint alterations, body panel rigidity and steering component issues.

  • avatar
    redmondjp

    One thing that bothers me about most used car dealers is that they typically throw out every last scrap of documentation and service history that may have come in with the vehicle. Sometimes a quick phone call with the previous owner (when cooperative) can be very informative!

    • 0 avatar
      stevelovescars

      I agree, Redmond, that’s one fo the reasons I prefer buying cars from private sellers. In all fairness, though, one of the reasons people trade in cars to dealers rather than retail them themselves is to avoid contact with future buyers. Dealers also have to protect the identity of previous owners (by law in most states) so maintenance receipts showing this information have to be disposed of.

  • avatar
    W.Minter

    Two other great questions to ask private sellers:
    1 Do you think this car is fine for a smoker?
    Good answer: I don’t know, I do not smoke.
    Bad answer: I don’t know, I never smoke inside the car (i.e. I truly enjoy smoking all the time I’m in that stinky hole.)
    2 Sometimes I have to transport a dog, do you think it will fit inside?
    Good answer: I don’t know, I never owned a dog.
    Bad answer: (10 minutes dog talk deleted).

  • avatar
    Geekcarlover

    Thanks for the tips. In 30+ years of driving I’ve never purchased a “new” new car. I’m cheep and would have a nervous breakdown thinking about the depreciation that hit me when I drove off the lot.
    I’ve had some great buys and have been burned to the third degree. The best rule I’ve learned is to assume you are going to walk away. Go out of your way to find stuff wrong. If you can’t find a true deal killer, buy it.

  • avatar
    Volt 230

    There is a dealer in the area that only sells damaged cars that are rebuildable, some with major damage, some not so bad. I am looking into a Scion xA that only has slight front end damage and has an excellent price.

  • avatar
    raded

    What about selling a used car? I’m trying to offload a now unnecessary Saturn and I’m having some issues. I think the Saturn-ness of it is scaring people away.

  • avatar
    lahru

    The biggest mistake that I see, I sell new and used cars, is the involvement of a second or third person or mechanic in the purchase. let them focus on the overall condition of the vehicle. So many times I see someone beg off on a soundly mechanical and conditonal vehicle due to someone’s opinion on price only.

    Let the 2nd and 3rd parties determine the car mechanically and have them tell you the truth.

    You decide if it is worth the price.

  • avatar
    duffman13

    Excellent advice. I might add a few points, especially geared towards those looking for performance cars:

    Forums: they are really good for niche cars, basically anything someone would be proud to own. I have had good luck with Audiworld and later quattroworld, ClubRSX, and currently am enjoying S2ki. If you like to wrench on your own once buying the car, the right forum will have walkthroughs and tips on just about everything. OTOH, I checked out a couple forums for my wife’s Mazda3, and there is not nearly the amount of information or knowledge base out there.

    Continuing on the forum topic, ask the seller if they are on a forum for the car, and if they would be willing to give you their username. Look up their old posts. Your previous owner might have hoonage, accidents, etc. that they didn’t tell you about. You’ll also learn about their maintenance habits sometimes and level of knowledge of the car. I offered my forum info to my last 2 buyers. I don’t know if they looked, but they would have learned a bit about my cars, i.e. they had been driven hard, but were meticulously maintained.

    On service records: I’ll generally give someone the benefit of the doubt on oil changes and alignments if the car drives fine. But look up the service schedule on the car and ask what *major* services were done. In cars I’ve specifically looked at or owned, I wouldn’t buy a 100k BMW 3 without the cooling system overhauled, or a 60-90k timing-belted VAG product without the belt, tensioner, and water pump done. Or I’ll try and negotiate a grand off the price. Knowledge of the maintenance schedule and what has been done should always be used to your pricing advantage.

    These topics have served me well in used car buying in the past, hope they help others.

    • 0 avatar
      ExPatBrit

      Good advice, if the person selling the car doesn’t know what should have been done that’s a big red flag to me. That person has probably done Jiffy Lube oil changes and midas brakes.

      Vehicles that have check engine and “bulb out” warnings on the cluster.

      I might still buy the car, but I am going to allow a generous margin for putting it right.

  • avatar
    Prado

    To avoid curbstoners, Google the phone number listed in Private Party Ads. If you get recent ‘cars for sale’ hits in the search results, avoid.

  • avatar
    Feds

    Above all else, buy a car before you need it.

    The worst deals I’ve ever saddled myself with were “oh shit, something irreparable has happened, and I need a car tomorrow”. Just like buying groceries when you’re hungry, you’ll end up with a cart full of regret.

    However, my two most recent used car purchases have been great successes: 1998 Pathfinder. Purchased in December ’08 for $4,000, drove until November ’11, at which point the strut tower separated from the lower frame rail. Good news: covered under a recall. Better news: Nissan put me in a rental for 2 months while they figured out the buy out. Best news: Buyout was $5,300. Only used car I’ve ever made money on.

    Pathfinder replacement: ’93 Mazda MPV. 220,000 kms when I bought it, but every service record back to the dealer invoice. Clean as a whistle, tight as a drum. Mechanically good, new tires, etc. Bought it for $1,500, cert, etest, tax in. I’ve put ~20,000 km on it so far with only one major repair: $300 for a new exhaust system. Even if it pukes a transmission tomorrow, I’ll make most of the money back in parts. It’s the Steve Lang special really: Unpopular model, unpopular segment, brown on brown.

    • 0 avatar
      Toad

      You can always rent a car while you shop for a new one. A one week car rental leaves plenty of time to line up financing and do some comparison shopping.

    • 0 avatar
      Patrickj

      This worked out doubly for us this year. I bought a used car from someone we know in January, anticipating our daughter would start driving late in the year.

      The car has run very well, and when one of our other cars needed uneconomic repairs recently, we had a spare car and could take our time shopping for a replacement.

  • avatar
    Caraholica

    Steven, what is it about Clearbook that you like? It seems to me that it strongly undervalues high mileage Honda prices in the Los Angeles area compared to recent transaction prices. Maybe this is a subset that has a goofy market here. They all go for a fortune, mileage doesnt seem to count in the usual way,especially with maintenance records.

    Excellent article, you are clearly an expert. Buying the owner is an underappreciated factor. Thanks.

  • avatar
    ajla

    TBH, if I’m shopping something like a 3-owner ’90 Allante, I won’t be expecting a lot of service records from the current owner. If they have some records then that’s great, but I’m not going to let a lack of them scare me away and I won’t let their existence raise my offer that much.

    I own older cars, and am pretty much a DIY-only person. I keep receipts, but a prospective buyer won’t have any knowledge about the level of care I took on any install work.

  • avatar
    supremebrougham

    I’m in a bit of a bind at the moment. A few months ago I acquired a 2002 PT Cruiser. I local dealer that I do banking for had it on his lot. The mileage was a bit high at 176k, but the body was good, and the mechanic I took it to said it would be okay, other than needing a rear wheel bearing. $2950 plus TTT and it was mine. I’ve put about 600 miles on it and have discovered that it needs in addition to the wheel bearing, a water pump, which I was told was about a $4-500 job. I just don’t want to deal with it. So I put it up on the List of Craig, listed it for $3350 after determining that NADA said it was worth $3725. I would take $2900, but no serious bites. I had one guy email me and ask if I would take $1000…I said NO!

    I don’t know what to do. I don’t want to take such a hit, yet I don’t want to sink a lot of money in the car, and it’s just collecting dust in my garage.

    Thoughts???

    • 0 avatar
      ajla

      Get a Carmax offer?

    • 0 avatar
      Steven Lang

      Call a few shops. Get it fixed. Drive it.

      You’re complaining about replacing a couple of three to five pound parts in a 2800+ pound car. Get it done and stop doubting yourself in the ‘sunk costs’ of the past.

      Good luck!

    • 0 avatar
      duffman13

      That NADA value seems seriously high.

      We sold my wife’s 2000 civic EX 2 years ago, with 150k on the clock and no service records to speak of. I doubt she maintained the car before we started dating, and it had seen better days (several accidents so faded/non-faded paint on different body panels, interior trim not great)

      KBB ‘good’ was in the low $3k range. I listed for $3500 and got $3300, probably could have pulled more but the car wouldn’t have sold as fast. Over the list of craig as well.

      The Party-Time Cruiser doesn’t retain near the value that a Civic of that genenration does. Nor is it as desireable car as a beater on the used market. I haven’t heard anything bad about reliability of that vintage PT Cruiser, but Chrysler products are generally not well-regarded there.

      I hate to say it, but to move the car, you’ll probably take a bigger hit than that, I’m thinking a $2500 is going to be the selling price. I would leave it listed where it is for a month, and if you don’t get any bites drop the price to $3k even. And nobody is going to buy the car for your price with a known $800 in maintenance costs on the near horizon.

      Seriously consider Steven’s comment – It’s cheap, reliable transportation. Do the water-pump and live with the wheel bearing for a while. You’ll en up getting your money’s worth out of the car.

      The biggest mistake people make financially with a car is hocking it the second a medium-size expense comes up, which is to be expected with a car of that age. It’s still a paid off car, and is only costing you equivalent of 4 car payments on a $10k car note to fix.

  • avatar
    chicagoland

    Use Edmunds Private Party sale prices. People shopping private party are looking for ‘deals’ and will not pay “Blue Book”.

    I sold a 9 y/o Escort for around Ed’s PP value, and had asking of $2500. Blue Book was $2900, trade in was $1000, so unloaded it for $1800. Could have gotten $200 more, but it was gone in one day, and no worries of stalkers, grinders, con artists, etc, calling all hours of the day.

    That PT will only sell if you advertise for $2900, and take less. Again, private partiers want a ‘deal’ or theyd go to BHPH. What helps is that is a 2000’s car, to low income buyers ‘newer is better’ and 90’s cars are ‘old’.

  • avatar
    jeffzekas

    Steven, what do you think of St Vincent’s Car Lot?

  • avatar
    Polar Bear

    I buy my cars direct from the first and only owner. I prefer low milage, privately used cars. I avoid dealers. Not only do they charge more, in my area they are famous for clocking the milage.

    Spend a couple of hours with the seller. Insepect the seller as much as you inspect the car. Get a sense of who he is. Do small talk. Ask lots of questions. Be friendly. Don’t annoy him by starting to haggle before you even seen the car. Don’t use high pressure tactics. Create a win-win situation.

    Some people buy cars based on how much they can get the asking price down. This is a mistake. What you should look for is a good well kept car. If it costs 10% more than the average market value, so be it. It will be worth it in the long run. As for the negotiating, if you are friendly and polite the seller will usually come down to his “real” price without you even asking.

    If you have looked at a number of cars of the age/model you want you will know when you found a nice one. It is worth putting in the time to look at many cars of your choice model to develop a feel for how they are. When you have that experience, the look, the driving feel, the sound and even the smell of a well kept car will be obvious. I know within 30 seconds if a used car is any good. All the testing and inspecting is just to confirm it. So unless the price is way out of line, buy the good car before someone else does, and be happy.

  • avatar
    packard

    The other way to determine if you are dealing with a curbstone seller is to see the title. A curbstoner doesn’t want to pay the registration fees so he holds an open title. An open title is endorsed by the previous owner but the name of the new owner is left blank. Generally you can just ask the seller if the car is titled in his name. A curbstoner will usually tell you he is selling it for a cousin, or other family member.

  • avatar
    Junebug

    +1 on “OTOH, I checked out a couple forums for my wife’s Mazda3, and there is not nearly the amount of information or knowledge base out there.”

    yes Sir- I did the same when we got our daughter a Mazda 3, the forums for that are pretty lame. Now my GTI on the other hand….

  • avatar
    SuperACG

    I’ve posted this before, and I’ll post it again…

    Another comment stated doing a google search on the phone number. Great Idea! I never thought of that! What I do is simply google-search the car’s VIN.

    Oftentimes, you will get old (or recent) listings for the vehicle in question. In the case of my Focus, I found the listing for it from the dealer the current owner bought it from. A year earlier. Also checked out with the purchase contract I found in the glovebox.

    I saved myself from getting burned by a Golf TDI by simply google-searching the VIN. I found two “For Sale” postings on the TDI Club by two different members. I looked up the member’s profiles, and read all of their postings. I essentially pieced together 5 years and 100,000 miles of history for this car, and it had PROBLEMS GALORE! The current owner had it for 10,000 miles and was done with it. When I test-drove the car, it overheated and stalled out! I offered him $1000 because I predicted I would have to sink about $4000 to make it right. He didn’t respond. I bought the Focus.

  • avatar
    Troy-Thom

    Firstly, you need to know your budget level. Set your budget and check out the internet to give you details about what all car models will come within your budget range. Do not forget to include insurances, maintenance and running costs in this. Also if you are getting a loan, make sure that you look for some better options for the best deals around town. I heard about Automotix that used car are very genuine here and provided with full warranty.

  • avatar
    mechaman

    Looking at finally replacing an ’03 Taurus, it’s seen better times, but money is tight. A note of no more than $150 a month is what I’m looking at. Anybody got an idea of a ‘top five’ sedans about the size of my old Bull, that I should give a hard look at?


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