In the late ‘90s, a popular consumer magazine claimed a certain SUV rolled over easily. This study was strongly debated; I doubt anyone remembers who was right. But the damage was done. The vehicle fell out of favor into the one-way pit of corporate neglect. As the dust settled, I purchased a used example of this otherwise reliable, well-built machine at an exceptionally low price. After five virtually trouble-free years, I’ve decided to replace my ‘98 Isuzu Trooper with something newer. And so begins my hunt for undervalued quality.
The contrarian investor buys stocks that are cheap and currently out of favor. He seeks shares whose price has been depressed by bad news or a temporary setback, which otherwise represent sound investments. These principles apply perfectly to the art of buying a used car. For those willing to venture outside of the Honda-Toyota mix of political correctness, amazing values await.
A contrarian buys quality. These days even so-called second-rate automobiles may possess excellent quality. If you can stomach the fact that your car is not quite the class leader (whatever that is) and resist the social pressures to “buy the best” (whatever that is), you can save an enormous amount of money on a used car, and not lose much of it later.
After considerable contemplation, I’ve concluded that the sweet spot for American automotive value is currently $16k. For sixteen Grover Clevelands, you can purchase a wide variety of gently used 2006 models, still under warranty and mechanically fresh. While we’re not talking about budget boxes here, it is true that 16 large won’t buy you a lot of what I call automotive fluff: leather and fancy electronics. Pay less and you’re looking at too much compromise (tinny doors are endlessly annoying).
Sixteen thousand it is. So what’s out there for contrarian car buyers?
Let’s start by eliminating the obvious. Hondas and Toyotas are immediately disqualified. We’re looking for a vehicle that’s suffered the slings and arrows of outrageous depreciation. Toyondas just plain don’t. Again, we also want quality, so Volkswagen drops entirely from our list. Unfair? Possibly, but both J.D. Power’s mob and anecdotal evidence suggest that VW quality’s leaves everything to be desired. And out goes VeeDubs’s familial relation, Audi.
In this pursuit, domestics rule. FoMoCo has plenty to offer the curious contrarian. A quick internet search unearths a fleet of sub-$16k 2006 Ford Fusions, a textbook casualty of the Detroit resale curse. The Fusion score high marks for drivability and reliability, yet sells for the same price as an econobox on the used market. As do the Five Hundred/Freestyle, which should take an even bigger hit when Ford re-renames them the Taurus/Taurus X.
In fact, just about any Ford product holstering the Duratec 3.0-liter engine qualifies as a suitable candidate. Mazdas equipped with ye olde six, the MPV and Mazda6 S wagon (not the sedan or the hatch), are decent, second-tier cars that sell for peanuts on the used car market. Pistonheads note: the Mazda6 S is a particularly attractive (i.e. unloved) stealth wagon.
One can’t talk about cheap— I mean, undervalued cars– without taking a good hard look at Chrysler cast-offs. Amateur CSI’s will find plenty of dried contrarian drool on used Town and Country minivans with three to ten thousands miles, selling for the magic one six.
The Magnum, Dodge’s chop top load lugger, rocks; or, I should say, sinks like a rock. With a little digging, you can find a well-loved 2006 Magnum SXT that listed for $26K selling for $16K.
Chrysler’s proto-CUV, the Pacifica, can also slip into our price range. And while the anti-green hedonist inside me craves a stripped 2006 Grand Cherokee or Commander, they fall just north of our self-imposed budget. Damn.
For the ultimate target-rich environment, type Saturn in the Search box. You can buy a used Ion for about the same price as a good washer and dryer set. I am especially impressed with the Ion Red Line— an imperfect sports car for sure, but redeemable at the right price.
And for the really daring contrarian, take a look at the crop of domestic minivans on their final death march. The Ford Freestar and Chevy Uplander may be hideous, but the discrepancy between msrp and what’s it gonna cost me is staggering.
The old adage says that a fool and his money are soon parted. If only it were that simple. A proud Camcord buyer easily pays $21k or more for a brand new model, replacing it every few years.
But the contrarian, with the clarity of an economist, pays $16k for a gently used Fusion or the like with a similar feature set. And then banks a $5,000 buffer to cover any (real or perceived) differences in reliability. Just who is the fool now?
88 Comments on “Car Buying Tips: The Contrarian’s Guide to Used Car Buying...”
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2002 – 2004 Mitsubishi Diamante VRX. Unloved, dead, Reasonably well built, full of psuedo luxury, reasonably fuel efficient, and more fun to drive than a CamCorDima (once you accept the torque steer).
Go to Autotrader.com or any other used auto website – look up a 2006 Mercury Grand Marquis LS – you can find them with around 20,000 miles and priced $16-17k. The LS comes with leather, autotemp control, traction control, antilock brakes, etc.
And, it is a car designed to last a long time, unlike a Mexican built Fusion, or a Five Hundred with a questionable CVT transmission.
One can tow a camper and haul a kayak at the same time with a Grand Marquis – and do so for many a year into the future.
“The old adage says that a fool and his money are soon parted. If only it were that simple. A proud Camcord buyer easily pays $21k or more for a brand new model, replacing it every few years.
But the contrarian, with the clarity of an economist, pays $16k for a gently used Fusion or the like with a similar feature set. And then banks a $5,000 buffer to cover any (real or perceived) differences in reliability. Just who is the fool now?”
Your argument would have merit, except everybody, and I do mean everybody, who I know that has a Toyota or Honda are getting all the mileage out of the vehicle that they can. Most have older versions with over 200k miles on them and when the time comes for them to kick the bucket, they buy a new version of what they had. They buy them so that they don’t have to take them into the shop (except for scheduled maintenance) and so they don’t have to get a newer one every few years. As always, YMMV.
Nice piece. I only wish it was out a year ago when I needed to buy a new (used) car.
In the future, what’s the best way to wade through all the information and find the sleeper models?
thanks
M
Saab 9.2X by Subaru.
-Extended GM Warranty
-Subaru Quality
-All wheel drive!
Whooda thunk it? I’m a contrarian. Is that a good thing? This was me in the late 90’s when I was buying used ‘92-’95 Tauruses for me and mine. Not as nice or as trouble free as a Camry, but a hell of a lot cheaper, comfortable…in a word – adequate.
Where I am at you can get a 2006 Hyundai Sonata with the V-6, moonroof, and 12k miles for $14-15. Perfectly adequate, reliable transportation.
A new Buick Lucerne CX at $26K, no thanks. But for $16K for a detailed rental return, it’s way more car than a Camcord.
Where’d you get that picture of the Trooper? It looks like a Japanese-market model, with right-hand drive and that whacky extra rearview mirror on the fender. But it has Massachusetts plates! Is that a photoshop job?
Gonna go with Taxman on this one. Surpised that you did not mention anything about the GM’s or Crown Vics, but I guess that they have probably fallen out of favor with the current fashion crowd.
To hell with the $16K – you can buy a low-mileage 2002 and up for a song. There’s a reason that the cops and the cab companies love em – they are cheap-2-keep. Parts interchange between years, they are easy to fix, and they last. Mileage is an average 18-24, city – highway, not bad for a big car.
A true contrarian buys an Aztec. Reliable, decently powered and very inexpensive suv.
I am not a true contrarian.
If your budget exceeds $16K, you can still save serious money without limiting your search to the big 2.5. Seller motivation provides some attractive buying opportunities. I bought a BMW 330ci (19K miles and one year old) from an individual who decided he just had to have an M3. My discount from new: $12,000. I estimate that my cost of ownership (depreciation and cost of money) after 5 years will have been $275 monthly. These situations are fairly common.
Come to think of it, that would bring my cost to $16,500.
I do like the Crown Vic/Grand Marquis, however, it would be weird to drive given that I am under 70 and employed in the private sector. Ha ha. Just kidding. There are tons more options to mention….
I can’t believe I forgot to mention the Pontiac Grand Prix. Talk about missing the obvious!!
A reasonable strategy as long as one is planning on flogging the living daylights out of the vehicle and essentially expect to sell it for $1800 on Craigslist in 8 years. If your plan on ownership is more in the 3 to 5 years keep in mind that catastrophic depreciation is going to continue. A major key is to maintain a national market for yourself by using Ebay, Craigslist, Autotrader, etc. Time and cash are more important than individual models.
DCX minivans are probably as good as you can get in that kind of market if that is what you are looking for. Also Fusions and Crown Vics are reasonable. Avoid limited model runs because you need to be able to cherry pick (why I would avoid Mitsubishis for example)and know every corner garage will work on it.
Traditionally, the depreciation doesn’t slow at all until it is 40% of original list for most cars. Some of the models you mentioned were likely sold for 80% of list brand new! I think you may be being some of these too soon. Go back to 2004 for a real bargain.
Another bargain. Watch for factory sponsored leases. If the mileage they offer is more than you use, they can actually make sense. Take the total cost of the lease and compare to the likely total cost of new with actual depreciation. Also, ask about discount for paying for the whole lease up front. You should save all the interest or walk away. These deals can work for you if the total cost works out to under 200 per month.
en devouring in purchasing a vehicle over $1k in this market (job and commercial) is not worth losing my peaceful state of mind. I’ll observe and develop patiently, while en devouring how I see fit for the time being. That said, I own a 91 240SX, great car.
Now I better get going, if I’m going to get the brakes working again, and maybe have time to change the dead shocks. LOL, If its to difficult, I guess I’ll just need to fork over another $200 or so to a mechanic. The total will be around $500 bucks then. Those are the my consequences with this path I choose, doing it this way is just what works for me. In the end (right now) I have a reason and opportunity to be intimate with my car and understand things better, I can feel confident in what I’m driving. Just need to pay the piper. Ironically, in a contrarian way, hah, no wonder I love to be a contrarian, I’m starting to understand myself, cool. Again Ironic, I was trying to understand my car. When in the pits make like a pit mechanic, or not, we still make progress naturally.
Whoa, whoever recommended the Grand Marquis is right on the money. I checked locally and found an 2007 LS (leather, power everything) for 18,500. Talk about a bargain. And in the 16k range I found a low mileage Marauder (great vehicle for Toronto traffic…no one will ever cut you off).
I was recently pursuing a similar strategy for a larger vehicle (before I was laid off) and think that if you can live with the lack of power, the 500 and the Freestyle are remarkable bargains. And good used Tauruses are available everywhere at prices even lower than 16k, with as little as 2,000km.
For my daily driver/beater I’m feeding waaaaay below the $16K range. Still, the same rules apply.
In a total apples to apples comparison, the Mazda 626 was 40% less money than an Accord. Same condition, miles, options, etc. Now at 236K mostly trouble free miles, it’s tough to argue that the Honda has better durability than the Mazda in this one case. Just stay away from the crappy Ford supplied slush box…….
Back up in the 16K range – haven’t seen mention of domestic pickups. God only knows how many 2006 Rams Dodge unloaded the last 6 months of last year. At least around here every tough guy swinging D!$& is driving one. Gotta believe they’ll be cheap cheap in a year or so.
Ironically enough, in 2002 I almost bought a Pontiac Aztec because it seemed a good contrarian bet. However, as fate would have it, I must have gotten the LEAST pushiest salesman in town, and I couldn’t force myself to initiate the purchase.
Keep in mind Grand Marquis are cheap used because they are cheap new. Currently, you can buy one for around $7K off MSRP.
jolo Your arguement woiuld have merit if the 21k Honda or Toyota never broke down.
Matt D states correctly so called second rate vehicles are still quite reliable.
Prices are different in Canada as is the weather, the Hondas and Toyotas do indeed break and they cost a fortune to fix.
A smart used car buyer can do quite well if he follows the guide lines, in this well researched and written piece.
Well done Matt.
I got a bargain on my “unloved” used car–an ‘02 Maxima. ‘02 was the year the Altima came out, and the otherwise lame-duck Maxima was upgraded to the 3.5L V6. On the used market, the Maxima was going for little more than the 4-cylinder Altima! The Maxima was actually slightly smaller, and better looking, with >250 HP.
“The old adage says that a fool and his money are soon parted. If only it were that simple. A proud Camcord buyer easily pays $21k or more for a brand new model, replacing it every few years.”
Why would they replace it every few years? I still am driving my 1996 Corolla (though I did buy it used with 5k miles on it), and could probably drive it for another 4 or 5 years if I wanted to (only have 105k miles on it). But I am looking at buying a new car for better safety features and good fuel economy and low emissions. That rules out all of the “contrarian” options listed. I am pretty much looking at Toyota and Honda, though Hyundai is looking pretty good these days.
Side airbags are only now becoming standard in a lot of models, so previous year models don’t look so good, so I am probably going to buy a new car. I am going to keep my car for 10+ years and I am not the only one who does this.
Contrarian new car purchases are also possible. I got a new 2002 Civic Si in January 2003 for $14,995 with 1.9 percent financing. It listed at $19,500.
Although not as sporty as I would have hoped, and kind of dorky looking (or unique and euro as I like to think) it was cheaper, had more power, and more features than the same year Civic coupe or sedan.
Now I can sell it for $10-11k or keep it, take care of it, and get 200k plus reliable miles out of it.
I think there are new 2006 Mazdaspeed6s out there, and they even have a Mazda engine. I think people just don’t want a 4 cylinder midsize sport sedan.
After tons of research, I got my ‘01 Trooper LS for $8500 off list in ‘01. Sure, depreciation is a huge hit. But I buy my cars and run them into the ground (300k-400k average) before I replace them. There’s something about no car payments that attracts me…..
Here’s a pearl:
2004-2006 Saturn Vue V6. 3.5 liter V6 and 5-speed automatic supplied by Honda…the same powertrain that’s in the Acura TL. Couple that with legendary Saturn depreciation, and you have one hell of a deal. I’m in the market for one for my wife now…
I think there are new 2006 Mazdaspeed6s out there, and they even have a Mazda engine. I think people just don’t want a 4 cylinder midsize sport sedan.
Those are almost all gone by now and have been replaced with ‘07 models (overproduced ‘06 models) that don’t offer any major rebates yet. If you were in the market for one, last winter was certainly the right time. Paying 22k (30k MSRP) for this untouched 6-speed rocket makes it a gem in my book.
Those Camcord buyers must be turning ‘em over, else how are Hondyota able sell 300K+ each every year.
For my 16K, i’d drop back a model year and go for a Lincoln LS. Best car Lincoln ever made, and a 2nd gen version could have stomped CTS/STS if they had the cojones to develop it.
Did Ford ever make the optional plate to protect the gas tank a standard feature on the Crown Vic/Grand Marquis? I know that’s been a pretty big issue with them and a few deaths, including State Troopers.
Back in 2004 I was able to purchase a new Grand AM Gt that had an MSRP of 24k for a little over 17k new. It’s the Fusion Orange one that not too many people wanted…I live in a small town and the dealer had it on the lot for a long time and made a deal I couldn’t refuse.
Needless to say, it will be driven till the wheels fall off.
I agree with the basic premise, but the numbers in the example make no sense to me.
I can see buying a car with a urban legend wrapped around it’s neck, but it has to be dirt cheap to the point where insurance isn’t a issue other then liability. It also has to be relatively easy and very inexpensive to repair.
Buying less then your first choice to save a couple thou makes no sense because all the fixed costs are the same and the car eventually has less residual value. In the end you pay the same or more for something that was your second or third choice.
But that’s just me, I prefer the extreme roads at either end rather then the middle road where you get attacked from both sides.
Another good deal used: Suzuki Aerio. Yeah, it’s ugly. But you can get a really good deal on a lightly-used one.
I’ve also noticed that you can get low-mileage Oldsmobile Aleros for cheap, although I don’t know what the reliability is on those (probably not too hot).
Would be nice to see an article like this centered around used vehicles for ~$8,000. Personally, for $16,000 I want a brand new vehicle with no miles on it yet.
Used maximas are a good deal, my purchase before last one.
“Did Ford ever make the optional plate to protect the gas tank a standard feature on the Crown Vic/Grand Marquis? I know that’s been a pretty big issue with them and a few deaths, including State Troopers.”
Uhhh… you have about a 1 in gazzilion chance of being rear ended as a civilian in a CV at a speed great enough for that to happen. It take A LOT of speed for that to happen.. most of them were 70+ MPH crashes. There is no car I have ever felt safer in than a Crown Vic.
Slightly higher up the food chain, I’m looking at a Caddy SRX. A sweet driving rig at bargain prices – 10/15 grand less than the BMW.
The Jaguar S Sedan looks gorgeous to me also, but these appear to have so many problems that people construct entire websites just to detail their personal stories of service problem purgatory.
So far no one has mentioned used Hyundai’s.
I’ve been musing over the idea that a repossessed Hyundai might be a pretty good bargain if the quality has improved as much as their supporters claim. I’m told that their used car value is about the same as if they’d been dropped by passing seagulls.
Opinions?
Hyundai is the catch-22 of contrarian car buying. Because Hyundai improves their quality so much every year, it would be difficult to buy a previous year model (of lesser quality). And contrarians don’t buy new.
I would second the idea of giving us another article or two like this, maybe review the $8000 area and the $12000 area. 12k is where I was comfortable buying a very nice used car, and 8k is still very decent. Below that would be pushing it though.
When the new Malibu comes out, the used versions of existing model should take an extra big hit of depreciation. They might be worth checking out for those inclined for contrarian values
I would avoid a used BMW. Chances are the original owner drove (or beat) the hell out of the car. From the 2nd owner on shall they learn what the BMW acronym really means – “Break My Wallet”…
Ford Focus ST, Mitsubishi Lancer Ralliart, and Nissan SE-R Spec V. Good grunt, great handling, and $10-12K used.
Matthew,
You had me until Uplander. Some cars are garbage at any price.
Otherwise, bravo! This is a great take on used car buying.
This article had a very good point, and a very debateable point. Overall you did a great job of covering both.
Point one is that you can get a great value out of an unpopular late model vehicle. That’s often true. When I purchase vehicles for a certain airline headquartered in Atlanta, I get 2004/5 Tauruses, Rangers and Windstars. Ironically they can be any color so long as they’re white. The prices usually range from $6500 (for highway miles) to $8500 and typically they’re good for another 10 to 12 years of commercial use.
The ‘magic’ $16k mark for my experience is a debateable point… but I understand why you used it. You have to put a cutoff somewhere or else there are simply too many scenarios to go over. Personally, I’ve found that on strictly economical terms… a ten year old compact vehicle that has been well maintained tends to be the best buy for daily commuting. A mid-90’s Mirage, Protege, or Sentra sedan that has been conservatively driven and well maintained can usually offer another 7 to 10 years of service with minimal depreciation cost and plenty of comfort. I actually have sold an awful lot of these models in the $2000 to $3000 range and given the price of gas, I think they’re actually better values than the Police Interceptors when it comes to long term satisfaction and ownership costs.
Specific models that are ‘in the news’ usually get a pop in their price these days because there are simply so many contrarians out there. However certain market segments and brands can be far more depressed due to a lack of new and competitive models in the new car market. Until last year you could get a Saturn for pretty much the rock bottom price in a particular segment regardless of the model. Now the S-Series of the late 90’s and early 2000’s go for more money than they did a year ago and the Vue is actually holding up it’s value as well. Gas prices are not so much the culprit as are new models which changed the consumer’s perception of the brand’s value. Minivans of today are depressed for much the same reason.
If you REALLY want to get an outstanding value in the market place, it simply takes a lot of research and patience. Buying a late model vehicle for cash with a ‘moderate accident’ record in it’s Carfax history is one possibility if you know how to access the claims records. Another is to focus on unpopular vehicles in their final year of production. I bought a 2004 Dodge Intrepid with leather and all the options (except a sunroof) for $3000 at one sale earlier this year. It was fleet maintained, highway driven (133k on the 3.5L engine) and ran like a top until I sold it to a Chrysler enthusiast.
One other method is to buy a vehicle that has a mechanical issue that is attributable to a recall. I bought a 1999 Volvo S70 GLT with about 150k and dealer records for $1850. The only thing it needed was to have it’s throttle body injection cleaned ($2 can of cleaner) and the recall work done on the engine. That, and one brand new driver’s seat for $150 (old one had a tear on a bolster) and I had a perfectly good car with an excellent dealer maintenance history.
There is an awful lot more to it than price points. In fact, if I were to sum it up in two words… it would be ‘asymetric information’.
Well that, and what Wee Willie Keeler said whenever the subject of getting a hit came up…
“You gotta hit em’ where they ain’t.”
“I bought a 1999 Volvo S70 GLT with about 150k and dealer records for $1850.”
What about Click and Clack’s take on Volvo reliability:
“We would expect the Volvo S60 to have Volvo’s typical level of reliability, which is to say, it should be very good. We wouldn’t expect much to go wrong while the car is still under warranty. Then, when parts do start to break at around 100,000 miles… be prepared to pay top dollar for replacement components.”
from CarTalk.
Is it smart to buy a Volvo with 150K on the clock?
I think this is a strong article on a relatively unmined subject. I do take issue with one point — I paid $16.6K for my Accord LX 3 years ago; not sure why people pay $21K, maybe to sit on dead cow skin?
I’d like to see comparisons of new vs. used vehicles. Like a 2007 Camry vs. a 2004 ES330. Or, a 2007 Miata vs. a 2002 Boxster.
Of course, it’s hard to control for the condition of a used car.
Maxo:
The problem with looking at cars worth $8K, is that every car on the market will someday be worth $8k during their lifespan, depending on wear and tear. And it is more complex to purchase a car that is more than one or two years old, because you have to take a harder look at its (individual) maintenance history.
I was tempted to look at used cars around $20-24K. However, in that price range, you are dealing with “wants” rather than “needs”, which also complicates such an analysis.
Hence, $16K is the sweet spot. It gets you a car of substance, with only the stuff you need, and still under warranty.
Maybe we’re just freaks, but our our ‘98 S70 purchased new bled.us.dry. Finally traded it in owing $5k over what it was worth because of massive repairs (complete A/C, ABS master, 60k miles). Disappointed to say the least, because it was fun to drive, mighty comfortable, and rock solid. Pity.
“The problem with looking at cars worth $8K, is that every car on the market will someday be worth $8k during their lifespan, depending on wear and tear. And it is more complex to purchase a car that is more than one or two years old, because you have to take a harder look at its (individual) maintenance history.”
I’ll have to respectfully disagree here. Looking at databases, test driving a vehicle, obtaining maintenance records, and having it independently inspected by a mechanic is not really difficult to do. There may be fewer vehicles… but the number of good ones are still in the hundreds of thousands.
Really. It’s pretty easy to buy a good ten year old car if you’re willing to do your homework.
dave and malle…
Yes… Volvos tend to have longer model runs than most other vehicles and their parts (pre-2000) are actually dirt cheap if they’re purchased from an auto recycler and NOT a dealer. Dealer service costs are what hurt most new car buyers. Volvo has too many dealers in most metropolitan areas and too many models that are long in the tooth. The result is that most folks who go to a dealer for maintenance will pay through the nose.
Volvos until the latest (40/60/80) generations were considered the pinnacle for durability and safety. The 850/S70 models can usually run in excess of 250k if they have been driven normally and properly maintained.
Like you, Up until now, at least, I’ve been a contrarian. I did my research and came up with a decidedly different answer, only because my requirements were different. The last time I bought a car, I wanted a used vehicle, but I could only afford something < $10K. That meant I was limited to an older model, with more mileage. I needed something that would last for at least another 4 years/50K miles, fun to drive, room for four, room for me (6’4”), and the ability to haul at least some stuff (drums, guitars, etc.). I wanted a vehicle that would be inexpensive to repair, with a ready supply of parts, good reliability, and something with the ability to get on and off an Interstate without wheezing. Oh, and something that would retain some value. My choice? Five years ago, it was a 97 Jeep Wrangler with 86K miles for $9K. Here we are five years later, and I’m still driving it. Repairs? Just one brake spring, and four new tires. It’s now got just over 120K miles on it, and it’s still going strong. The kicker is that 97 Wranglers are selling locally for…$9K. When I do sell, I’ll have essentially driven my TJ for five years for the cost of gas, oil, and insurance. Not a bad deal. My next vehicle will be a Jeep Wrangler, without a doubt.
Saabs tend to be excellent used car deals, because they depreciate rapidly over the first two or three years. A 2003 9-5 Aero should run you about $16k, and is insubstantially different than the $40k 2007 model.