Several folks have asked me how to buy a used car, so I'll post my
response here....
First thing, a friend loaned me a great book. Wish I remembered the
title.... I just tried searching for "How to buy a used car" at
Amazon, and I didn't see the book there, but it's been ten years or
so, so I no longer remember the advice. But in those ten years I've
bought two really wonderful used cars, relatively cheaply. In 93 I
picked up an 89 Saab Turbo Convertible with 45K miles for $17K. The
LOW Blue book was 21K. In 97, I picked up a 94 Honda Accord Wagon
also with 45K miles for $14K, which was Low Blue book plus or minus a
few bucks. So this strategy was last tested in '97.
So, definitely peruse your favorite book store looking for books and
tips. The book I got was written by a former car salesman.
Here's the basic strategy: buy your used car from a new car dealer.
Reasons:
1. It will be in pretty good shape. New car dealers have the budget and
to fix up the problems. They have mechanics on salary, so the car
will
be in good mechanical shape, and almost certainly safe.
2. New car know that every day a used car sits on their lot, they
have to pay
theft/damage insurance on that car. Also, it takes up parking space
that another car could be using, so they also pay rent for the parking
space. So they are very motivated to sell that car as soon as
possible,
even if that means selling it cheaply.
3. They are new car salesman. They hate used cars. In reality this can
mean that:
4. They royally screwed the last owner, and this means there is lots
of room
for you to screw these guys over, AND they will still make a profit.
They screwed over the original owner that traded the car in: they
sold
him his new car at an exorbitant markup, and then they took from him
his used car at a very low price. You know, they told him his
used car
was in terrible shape, ugly, and was in low demand. Their profit
margin,
due just to screwing over the last owner of your new used car was
maybe
$6K to $9K dollars, or more. Your goal is to take that $6-$9K
from the
salesman. See how noble this endeavor is? You get to be Robin Hood!
5. Due to the above, no one knows how much that used car cost them.
New cars have an
invoice
and the car salesman knows how much it cost. Few people could
figure out
what their used car costs them. Maybe Dave in Finance. But that's a
maybe.
6. Most new cars are the same. They are easy to price. Each used
car is unique. No one knows what that used car can go for, or when it
will be sold, so by refusing your offer, they are taking on a great
deal of risk.
So these are the reasons that new car salesman can make an attractive
mark to target during your used car purchase. It's up to you to find the
right used car. The recommendation there was to get a bunch of
Consumer Reports and Kelley
Blue Books, and for each car you're interested in, check out the
safety, reliability, and maintenance costs with the Consumers Reports.
Then use the blue books to plot the car price
over time. You should see a curve where the car price plummets in the
first several years, and then begins to flatten out. That it was
claimed, is often around year 3 to 5. You want to look for cars when
the curve starts to flatten. You also want to note the price.
Start searching for your car. When you find one... because you have a
how to buy a used car book, you can recognize and counter all the
standard tricks the wiley car salesman will use against you.
So approach the saleman, offer your price, which may be something like
a few K under the wholesale bluebook, and start negotiating. When I
bought my Saab, the asking price was $24.5. I paid $17K, it took me 6
hours to do so, so I made $6500 that day. Similar story with the
Honda. Both cars have been very reliable and lots of fun to drive.
Where I failed, was a failure to optimize the money on the resell.
The book I picked up suggested the following: drive your used car for
2-3 years. Then sell it to a private party. Since you bought the car
so low, and at the flat part of the curve, it's very likely you can
sell it for more than you asked for it, or pretty much the price you
paid for it, plus or minus a few hundred. If you can do that, then
you just drove that car for 2-3 years for free. I should have done
that, but the Saab was too much fun, and I was too lazy to want to go
through the process again.
Let me know if this works for you!
