Purchasing Used Vehicles

socala4

if dealers shop at auctions, i don't understand why i should be so afraid when i go with an expert mechanic.

You can't compare your situation with that of a dealer:

-Dealers aren't interested in long-term ownership, but in a car that is good enough for him to make a profit on the mark-up. Very different agendas.

-Similarly to a stock investor, a dealer invests in inventory, some of which will be profitable, and some of which will create losses, so a dealer manages his business with the expectation that he will get a few lemons in order to earn a profit across the entire pool of cars. You, on the other hand, are buying just one car to own over the long haul, and can't afford to get any lemons.

At an auction, you only get to conduct a brief inspection, without a road test. You may not even get to perform a compression test. You likely won't have time to run VIN's and investigate title. You can catch certain problems (rust, excessive wear, etc.) while others may be easily missed, the latter of which may be the very reason why they're at auction in the first place.

So it's a risk. If you can't afford to end up with a lemon, I'd pass. If your budget allows you to take a risk,then a dealer's auction would be worth considering, assuming you can get into one. On the other hand, I'd probably pass on those auctions that are aimed at retail buyers, those seem to be dumping grounds for poor cars that couldn't be sold by other means.

Also, be on the lookout for all of those Katrina cars that are making their way across the US. Beware of title washing efforts that may hide a car's true origins.

ayyate

I agree. I have done this more than once without problems. In effect, the bank or credit union holding the title takes payment from the buyer and signs off on the title. The buyer leaves the bank with the car and the title. The bank may insist on an electronic funds transfer or cashiers check - inquire first to avoid embarrassment and wasting time. If you are a AAA member, you can also call them for free advice.

yogiowner

that is the answer i was looking for...thank you so much...

i've been very wary of finding a "katrina" or other car that should be junked.

i've proceeded with the 'nothing is free' mindset. so my true objective is to get a reliable car, without paying thousands more than i should. i've got blue book values from kbb and nada (both of which are a bit inflated). But that's okay. the offer of the dealer/mechanic taking me to the dealer auction came through a colleague. i was a bit suspicious, but he's what he calls a motorhead. i'm not prepared to end up with a lemon. so i'm instead looking for a dealer..

being from nyc, the dealers have more scams running than one person could believe. the advantage that i have is that i am a certified public accountant with excellent credit. therefore, i have a good general idea of what the accord or camry should be worth. the problem is that the market is bearing a value of a couple of thousand more than the car is worth.

but i guess, that's the game.

thank you for your thorough answer..

if anyone has any suggestions, please feel free to post them...

steine13

that i am a certified public accountant with excellent credit. therefore, i have a good general idea of what the accord or camry should be worth...

Give you joy of your career, but neither qualification imparts any car knowledge upon you.

Take me, I'm a rocket scientist :-), and all I know about cars I learned elsewhere.

the problem is that the market is bearing a value of a couple of thousand more than the car is worth.


Kind of a contradition in terms, isn't it? The retail value of the car is exactly "what the market will bear". The wholesale value is actually based on what a dealer can get for the car, minus the profit margin he needs or wants.

The only way around that is patience and luck. Lots of both...
-Mathias

yogiowner

it's not a contradiction in terms. i'm certain that the business population know exactly what i am speaking about.

further, i've not professed to know about cars..that's why i'm here. however, i do know money...quite well. and i do know when something is overvalued. it doesn't take a rocket scientist to figure that out.

you are right, though the only way around this car buying madness is patience and luck. coupled with a lot of common sense and a good mechanic. that will reduce my chances of getting a lemon. even still, it will be a crap shoot to some degree.

raybear

In the case of a large national bank it is highly unlikely you'll have the title present when the car is purchased.

yogiowner

anyone out there know how to find a reputable dealer?

bigdveedubgirl

Word of mouth is the best, ask around, at the very least you will find out where not to go. Also, check to see if the dealer you are considering is a member of the Better Buisness and check their status.

biancar

Besides what bigveedubgirl said, also check to see if your area has something like a "Consumer Checkbook" or similar organization that rates local services. You could check through your local newspaper's business section, too, if you have the patience for it, see if anything comes up positive or negative about the ones you're considering.

Personally, I find that a visit to the dealer will tell me quite a bit just on first impressions. If a dealer has ADM stickers on the cars, I leave. If the salespeople seem professional, well-spoken, and assertive without being aggressive, that seems like a good sign.

There was a topic here on edmunds, although I think it's now "read only" on "How to find a reputable dealer." Check around under the Smart Shopping forum and you'll find it.

yogiowner

thanks guys!!

raybear

Google them.

ftrain

I think I want a Honda Accord, but money is a challenge, and so I need to find the best deal I can. So I'm considering buying used or certified pre-owned, but wondered if someone could tell me if I'm missing something. Using both AutoTrader, but also the Edmunds TMV pricing for used cars, I analyzed a 2003 used Accord LX with 25,000 miles, in "clean" condition, automatic transmission and front side airbags, and got an estimated dealer retail price for a certified pre-owned vehicle of $17,883. I then priced a new LX with relatively the same specs, and got an estimated TMV price of $19,304. I know Accords are supposedly great, reliable cars, and I appreciate that they hold their value, but how can it possibly be that a three year old car, with 25,000 miles already on it, can demand a price within $1500 of a brand-spanking-new edition of the same vehicle. Why would anyone buy a used Accord when for only $1500 they can get a new one? And if nobody would do that, then how could they demand such a lofty used price? Obviously economics says that people buy them, but I just don't get it. Am I missing something?

socala4

Accords hold their value well, which both reflects their popularity and helps to keep them popular. That being said, your point is well taken, that used car doesn't exactly scream out as being a great value, now does it? (That's particularly true when you remember that the used car has not only been used, but will probably also require the use of more costly financing if you require a loan -- because of the greater depreciation of the underlying asset, the interest rates for used cars tend to be higher.)

That being said, I'd be more inclined to make the final judgment by comparing the invoice cost, less factory-to-dealer and factory-to-customer incentives of the new car, to the wholesale Edmunds and KBB prices of the used version. (TMV is just a market average; with good negotiation skills and research, you should be able to achieve an above average result.)

I'm of the opinion that a lot of people who think that they are bargain hunting by buying a 1-2 year old used car often end up overpaying. The buyers are so convinced that they have figured out The Great Secret to Car Shopping ("You lose money the minute you drive it off the lot, I'll let the first owner absorb all of the depreciation!") that they gleefully overpay just by getting a slight discount as compared to new, and probably end up with a more expensive loan to boot.

The dealers are happy to serve this market -- witness the growth of the CPO business -- but the cars aren't always a good value. I found it funny the other day when I visited a dealership that was selling a used version of my car, with about the same option packages and more miles on the clock, with a window price above the MSRP that had been on my car when it was new! (And I didn't pay anything close to MSRP.) While I would presume that I could negotiate a final price well below what was being asked and what I had paid for my car new, the fact that they even posted that in the window tells you something about the price ranges that they would hope that they could get you to consider.

steine13

Now, you're not missing much. You pretty much nailed it. Used Accords typically ain't no bargain.

And the reason is that people will pay that price. For one thing, they believe that buying used will save them money, on general principle. This works pretty well with Buicks, but not with Hondas.

Then they look at "so much a month". Since new car loans typically run 60 months for these cars, and used-car loans can be had for the same length of time, "savings" of $30 per month can be achieved. If that knocks it from $310 to $280, the lower payment will be attractive to some buyers.

Better yet, buy a NEW Accord. If you spend a lot of time in the car, it might be worth it.. and there's $750 dealer cash on the new ones...

Good luck,
-Mathias

british_rover

Keep in mind that some times manufacturers will offer special rates on their CPO cars. I do not know if Honda does this but they might.

The savings of getting a 3.9 or possibly lower interest rate might help a little.

Rover offers 3.9 APR on its CPO rovers which is a better interest rate then you can get on any of their new vehicles.

Also most banks now dont differentiate between new and used. They just go by model year and perhaps mileage. A used 2005 car will qualify for the same rates as a new 2006 or used 2006. A used 2004 car might have slightly higher rates but depending on the bank may not.

yogiowner

how much do you guys think one can get a new fully loaded honda for? what about a legacy? (generally speaking, of course)..

lcw1

I found a nice 2004 Camry I like to buy from the largest dealer in the south. The price is about $500 cheaper than a comparable one else where. The catch? It was leased in Mobile Al during the hurricane season. The car fax does not indicate that it was treated for water or flood damage but it mentions that it was operated in a flood area. I checked all I could for water damage after googling the internet for pointers but since I am not a mechanic I don't trust my ability.
First I am leary of why the car not being sold in Mobile instead of Florida and second would a very large dealer take a chance and sell a flooded car.
Thanks for the opinions.

cccompson

The fact that it was leased in and of itself would explain why it is now being offered in Florida.

The fact that it was a leased vehicle operated in Mobile last summer would be enough for me to steer clear of it.

It is quite easy for a car to sustain water damage that will not be apparent.

$500 (more for a different Camry) is a very small price to pay for piece of mind and to avoid the risk of a heavy hit later.

raybear

Honda what? Legacy what? There's too much spread in the models.

yogiowner

alrighty...

honda accord 4 door lx or ex, subaru legacy 4 door sedan middle level model; both automatic transmitions...

thanks in advance!

raybear

I'll let someone else handle the Honda, the Legacy has some pretty hefty rebates and incentives in the New England region right now so you can expect up to $3000 under invoice.

yogiowner

thanks!! I'm in the nyc area, however, i may get lucky. I think I'm going to look at the legacy, just because I'll get a better price w/comparable maintenance expectations.

from my research the legacy is a pretty solid performer with an excellent maintenance record.

If anyone has any information that it's not so good with maintenance, please let me know.

thanks again guys!!

salespro354

You should consider the Chevy Impala. Read the consumer ratings, sure the editors don't rate any gm car other than the corvette well, but you will find that you can purchase a 2005 with under 30K with a 75k mile warranty from GM for under 18k. I have sold both Toyota's and GM, I can guarantee you that if you maintain the Impala it will go to 200k miles without any major problems.

salespro354

Be sure to research the Pontiac Vibe, 34 Mpg on highway. They are a great car, atleast worth a shot to look at. You can probably get you a 04-05 FWD Model for under 15k. Again I know somebody who has put over 150k miles on theirs so far. We rarely see these cars in for service.

yogiowner

will do..based on ratings, i never thought about the gm cars. but i will do more looking into it..

what do you think about the legacy?

johnnyhfm

If you purchase a car from an individual and the car has a bank loan and therefore a lien, how do you make sure that the seller will satisfy the lien with the purchase money?

kyfdx

1) If the bank is local, you give him the money at his bank, and they provide you with a release of the lien..

2) If the bank is out-of-town (like GMAC, for example), you make the check out to the lienholder.. If it is for more than the payoff, they will send the seller back a check for the balance..

This is the way I do it... others may have differing opinions...

regards,
kyfdx

johnnyhfm

Thank you...

mbkaiser

Small used car dealership has approximately 50 cars on lot. Most cars either are marked with price, or sticker that states $1500 down. 3 cars on the lot are only marked with $1500. There is no reference to this being a down payment amount. The cars have substancially higher value. Are they required to sell the cars for this amount? There are no other prices or documentation physically posted to the cars.

british_rover

It is a BHPH(Buy Here Pay Here)lot. That 1,500 down is what it requries to drive away with the car then you pay like 50 bucks a week for a year and a half or something.

If you add it all up you are paying thousands more then the car is actually worth.

qbrozen

to answer your question, no, they are not required to sell you a car at any price. Its a privately owned business. They could write "Free to everyone but Qbrozen" on their cars if they want to.

ghulet

...but this seems like a decent deal, especially with the 5-speed:

http://chicago.craigslist.org/car/169356627.html

I wouldn't be too afraid, and it's a last-gen (as in, looks newer), no trans issues, and it's 20% the price of a new one.

kyfdx

Good:

Honda
manual
body looks decent

Bad:
15K/yr for 8 years.. definitely miley..
LX... no sunroof or alloys
1st year for this model.. though any problems are probably worked out by now.

I'd say it is a fair price... not a screaming bargain... but, considering what they want for most Hondas... and a manual Accord in that body style is definitely rare.

ghulet

...yeah, I'd rather have an EX, but considering I had skin cancer on my head last year, I guess I could live w/out the roof :P . Not sure if '98 had a 'first year' engine as well, but Hondas (along with a few other makes) seem to not have so many 'first year' teething problems. Heck, I see plenty of '95s going for $4k around here, and most have rust (Chicago), so this seems fair.

reefbreak

Looked at a nice 04 Pathfinder (Platinum edition) the other day. Clean, 12k mi., listed at $23,000. Two items caught my eye on the CARFAX. One, it was a former fleet vehicle. Two, it was sold at auction back in August 2005. I e-mailed the sales manager on both items, especially "Where has the vehicle been since August 2005?

His first answer was "In answer to your questions regarding the Pathfinder, it was a Nissan Corporate vehicle for one of the executives."

The second answer was "Our (dealership) owner did purchase it in August of 2005, meaning to utilize it for personal use at his summer home. (So, yes, was the auction buyer.) Recently he realized he not only doesn't use, but rarely even gets to the summer home."

Certainly answers I'd like to believe, but they sound pretty smooth. Thoughts?

rroyce10

..... Nothing really out of the norm here ...

Most vehicles come from auctions, including some new ones ...

Would I keep a vehicle at my summer home for my convenience.? .. of course I would -- "if" I had a summer home ..l.o.l...

If you have any doubts, check on the Nissan service computer, then spend a few bucks and have a good body man "eye ball it", and then ask the owner personally ..... next.



Terry.

yogiowner

hi all,

i found a used honda is decent condition (bent front wheel hubcaps, though, which worries me about the overall condition of the car) for just under $17k, with 20k miles. it's at a major dealership in nyc.

can anyone tell me what to look out for when i sign the final sale contract? the negotiating was aggressive and kinda fun for me..the manager and the salesman told me that i was pretty tough...

any thoughts out there? thanks in advance...

exb0

What to look out for?

Look out for a used accord lx for 17k. Brand new 2006 Accord lx invoice is $18590, minus dealer cash of $750, equals $17840. You can buy this car easy for that much, and if put a little effort into it, you can dip into the holdback. Even carsdirect says that the target price is $17840.

Good Luck.

yogiowner

Thanks! I've not seen that number for a new lx. can you explain a bit more about the holdback? i could potentially negotiate with Potamkin with this information.

thanks again.

zodiac2004

The second answer was "Our (dealership) owner did purchase it in August of 2005, meaning to utilize it for personal use at his summer home. (So, yes, was the auction buyer.) Recently he realized he not only doesn't use, but rarely even gets to the summer home."

Certainly answers I'd like to believe, but they sound pretty smooth. Thoughts?

If you have a problem believing that story, you should'nt be trying to buy used cars from dealers.

socala4

In the "Purchasing Strategies" thread on this board, there is some discussion of the holdback. Short answer: Dealers of most brands collect from the manufacturers about 2-3% of either the invoice or MSRP of every new car that they sell, so that their true cost is actually several hundred dollars below invoice. (Sometimes, the formula is different -- for example, BMW doesn't have a "holdback", but does pay bonus money based upon customer CSI scores -- but the point is that there is extra floating around that reduces their effective invoice cost.)

One thing -- dealers get very touchy when you mention the "holdback", you can even see in the Purchasing Strategies thread what an emotional issue it can be for them. While you can sometimes negotiate to get a below-invoice deal by dipping into the holdback, bringing it up by name can create a lot of ill will.

isellhondas

Holdback doesn't fall to the bottom line as profit. It helps pay for flooring and advertising.

I don't mind it when people bring this up. I do remind them that we also have this nasty little thing called OVERHEAD!

Kirstie_H

But this discussion is about used vehicles, on which there is no holdback. We've got a holdback discussion if you care to venture there.

yogiowner

hi again guys! you all are great with the answers you've given me thus far.

the 2007 subarus are due out in three weeks. how much below invoice can i get a 2006 2.5i limited edition? what about the GT model?

theflush

I'm looking at buying a 2001 Toyota Sienna LE with 75K miles. The additions to the standard LE features include rear captains seats and alloy wheels. It has new tires, new floor mats and is very clean and drives well. This local used car dealer has a reputation for standing behind what he sells. Best offer so far on a no-trade in purchase is $10,995 + TTL. If I trade in my 99 Ranger 4WD with 117K miles (no responses in real world trade in value forum, but CarMax offered $2,500)I'll get $4,500 for it for a difference of $6,495 + TTL. I think in Ohio there is no tax advantage to trading in on a used car like there is on a new car. My thoughts on this deal is that the straight purchase offer is an OK , but not great deal and that if I'm trading in it becomes a better deal because he is not trying to steal my trade in. I know the best bottom line option is to sell my truck myself, which is what I usually do. What does everyone think of this potential deal?

raybear

I'd start my negotiations at $1,000 under invoice less rebate (varies by region). There is a $500 dealer incentive on Legacy models this month. Include dealer fees in the price. Don't wait too long and you can't afford to be choosy over colors.

steine13

A new one is about twice the money -- if you get the CE, which has everything except heated mirrors and tint -- and has seven years less and a warranty.

Before you buy the '01 at any price, consider having the front valve cover gasket pulled... the 3.0 does not stand up well to 11,000 mile oil change intervals, and it's a bear to fix. Good engine if it's maintained, though.

I'd offer you my '03 with 53k for $13 and change, but the wife she kill me :-)

-Mathias

yogiowner

thank you very much. i test drove the car yesterday. i love it. presently with the dealer has offered me $300 off invoice and $2000 rebate afer tax. i would like to bring it as close to if not directly to $20K. The MSRP for the vehicle is $25,920. How feasible is this? I would like to complete this transaction within the next ten days.

Btw, i gave up on the hondas. because they are so popular, they are overpriced. but i guess that's life.

freaka

Hello all,
First off, I'm excited that I found this message board and I am hoping that I can get some good advice. I haven't made great decisions on cars in the past and would like to change that.

Anyway, my situation is as follows:
I currently am financing a 2002 GMC Envoy with a high payment. It has 73k miles and I still own about 11k with 2 years left on the loan. I bought this used 2 years ago. It is in good shape still as I take care of it. Basically, I was recently married and we really want a house so I'm looking to cut costs in various ways. The truck is absolutely killing me on gas. I spend roughly about $500 per month.

I was at the dealer today and am looking to buy an 05 Nissan Altima with low mileage. I loved the car. Everything about it. The problem is, the negotiating. They tried to get me to commit today on buying it and kept lowering the deal. To no avail, I would not commit as I did not feel comfortable with what they were saying. After coming home and hoping on line I figured out that although they said they would pay my Envoy off, the numbers work out that the price of the Altima was increased by 2k. If I took the trade in out of the equation, I could get the exact car for the exact maximum payment per month that I was looking for.

Now, I realize that they have to make money and I would not expect to walk out of there ripping them off. My question is how do I get them to at minimum, meet me half way and take 1k off the final price? I have a call into the salesman to question this and to tell him straight out that if they knock 1k off, I will deal.

Another question is I was wondering if it is a BAD idea to go 72 months on a loan for a nissan? I hear and read that they hold value and run for a long time. If I did the 72 months they would throw in the gap insurance but I'm more worried about trading in the altima after 3 years and being belly up on it because of the extra year.

Like I said, my ultimiate goal is to save money in some way. Going to the Altima alone will save me money in gas which is a huge benefit. Would that be enough of a benefit. Should I maintain my payment amount and switch to this car and let the gas difference be my money savings? I drive a lot so I really don't want to buying a higher mileage car.

Any advice would be greatly appreciated.
thank you!!

ghulet

Sounds like the dealer was basically offering you about $9k for your trade-in, since you owe $11k and he added $2k to the price of the Altima. Most dealers here will tell you it's a better idea to negotiate the trade-in price separate from the new car price. I'm fairly confident you could get more than $9k out of an '02 Envoy unless it's a mess. If the dealer is low-balling you on your trade (unless you haven't tried to negotiate it higher--have you?), you should consider selling it yourself, paying off your loan and negotiating a price on a new car.

This leads me to my next question: I understand one of your motives in getting rid of the Envoy for the Altima (gas mileage) but in so doing, you're considering taking on a 72 month loan? How exactly is this going to save you money, other than at the gas station? Find out the dollar amount of interest on the 72 month nut and you'll see what I mean.

Also, as far as mortgage lenders are concerned, it's generally worse to have a new 72 month note compared to a car you're two years away from owning. It might be a better idea to just sell the Envoy when you're ready to do the financing on the house, you may even have a bit more money than you owe, buy a beater for a few months, get the house financed, then buy a new car when you feel comfortable in your new digs. Taking on a car note then trying to finance a house, unless your debt to income ratio is really great otherwise, is a no-no.