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Tips For Buying A Used Car – Written By Someone Who Just Bought One!

October 19, 2010 · 185 comments

in Car/Driving, Misc Tips, Personal Finance

My oldest son turned 16 years old in June. We had discussed pitching in to help him get a car, but in the end, I was not comfortable with the type of car he would be able to purchase with the amount of money that was available.  Then an idea struck me when I looked at the odometer on my husband’s lease car:  I could let my son drive the lease car for the remaining 6 months of the lease contract, and purchase a new/used car for my husband.  That way, we wouldn’t have any mileage overage fees when the car was turned in, and my son would have a vehicle to drive for awhile.  (Side note:  we never wanted to lease a car in the first place.  The vehicle was originally leased by the company my husband worked for. When he changed jobs, he was stuck with the car and the lease contract.)

So, now that we decided we were going to purchase another car, we then had to figure out how to pick a vehicle.  I had been perusing ads and such ever since my son turned 16, so I had a good idea of what might be a good deal or not.  I knew we wanted to buy used, but I was hesitant to purchase a car off a guy on the street, as I know several people who have been burned by private purchases.  I decided I would buy through a dealer, also because I wanted a warranty on the vehicle. Since I knew ‘who’ I wanted to buy from, I then needed to find a vehicle I liked.  The following are the steps we took when deciding on a car:

  1. Research different vehicles: Safety was my number one concern, so I researched vehicles extensively using the Insurance Institute of Highway Safety website and also safercar.gov.  I only considered vehicles that had earned 5-star safety recognition. (One thing to keep in mind regarding safety assessments:   Small cars are compared against small cars and SUVs are compared against SUVs.  So, if a small car earns 5 stars and a medium SUV earns 3 stars, it does not mean the small car is safer.  It means for a small car, it is about as safe as it can get.  But, I am sure the five star small car would still probably lose in a crash against a 3 star SUV.)
  2. Decide what options are needed: Once I narrowed down the vehicles I would consider, I made a list of ‘must haves’ for the vehicle.  I knew I needed airbags in front and back, leather seats, automatic transmission, and decent gas mileage.  Everything else was negotiable.
  3. Scan inventories: Using Edmunds.com and Cars.com, I performed scans on each of the vehicles I was considering in order to find the ‘biggest bang for the buck’.   (After we purchased our car, I was reading an article on the Car Negotiation Coach website  that suggests using www.autotempest.com to perform vehicle searches, as that site combines data from many different sellers like cars.com, ebay motors, etc.)  I also looked at new cars too just in case there was some screaming deal out there.   I used a formula I created to determine a ‘cost factor’ for the car, based on ‘available miles left to drive’ and cost. (Cost factor=miles available to drive on the car/cost of the car.)  For example, let’s say I was thinking of a Ford Fusion that had 20,000 miles on it, and it was going to cost $16,000. I was assuming I would only drive the car to 100,000 miles.  Therefore, I would get 80,000 miles out of this car (100,000-20,000). 80,000/16,000 = 5, and the higher the number, the better.  If I compared that vehicle with another where I would get 90,000 miles and the cost was $15,000, the second car was a better deal because it had a factor of 6 (90,000/15,000).   I know that no two cars are identical, but I knew what my requirements were, and the other options really didn’t matter.  Therefore, I was able to use my cost factor to decide which car would yield the best deal for us, even if the cars were not exactly the same.  (Update:  I also looked at the Carfax report for each car we were considering.  If the car had an accident in it’s history, I crossed it right off the list.  Most of the dealerships provided a free carfax report online for each vehicle.  If there was a charge for the Carfax, I crossed that car off my list too.  Thanks to Biz of Life for mentioning the Carfax report, as I forgot to reveal the importance of the report originally.)
  4. Contact the dealer: I searched, and searched, and then a deal jumped out at me.  It was a 2009 Chevrolet Malibu with just 3,000 miles on it, and for $16,800. (I admit, I was curious why this car was turned in after just 3,000 miles.)  It was leather, decent color, airbags everywhere- it was perfect. Of course it was midnight when I found it, so I sent an email to the contact person at the dealership.  Immediately Monday morning, I was contacted by the dealer.  He told me that the vehicle was ‘mismarked’ on the internet, and it was really supposed to be $17,999, but they would honor the internet price.  When asked why the car only had 3,000 miles, I was told that the car was bought at their dealership by a retired couple a year previously, and that they had since bought a boat.  They turned in the car and bought a Chevrolet Avalanche, which was better suited to pull a trailer than the Malibu.  Everything he told me could have been a lie, I have no idea.  However, the car was coming with a 3 (additional) year warranty, and 48,000 miles.  So, if the car was garbage, at least I had some recourse.
  5. Test Drive: This one is obvious, but I went to the dealership the same day to test drive it. It drove beautifully, and had everything we wanted.  I didn’t hear any scary noises, and I checked all the buttons to make sure everything worked.  All was good. (As a side note, I had test drove many other vehicles at other dealerships during our search for a car.  At the end of one of my test drives, I wanted to verify that the vehicle I was considering had curtain airbags in the back seat.  When the dealer researched the car and found out it did not have the airbags I was looking for, he said to me “why does it matter- do you plan on getting in a big crash or something?”  I wanted to hit him.  I said that my kids would be in the back seat and that nobody ever plans for a crash.  I then walked away, and I would not have bought a car from him to matter how good the deal was.  Lesson:  Make sure you are comfortable with the salesman and the dealership before making a purpose. You want to at least feel like they have some integrity.)
  6. Offer a price: I knew that since it was ‘mismarked’, I wasn’t going to be able to negotiate the price down much. However, it was already a good deal in my book, so I wasn’t too concerned.  I ended up purchasing the vehicle for $16,500, which resulted in a ‘cost factor’ of 5.9 (97,000/16,500).  That was the best deal I had come across by far for a vehicle with leather seats.  Plus, it had a fantastic warranty.
  7. Financing:  I researched used-car rates, and I was not enamored with any of the financing deals available. Therefore, we ‘financed’ the car ourselves. However, if you are going to finance a vehicle, it is good to check and see where your credit score falls in Fico’s credit score range. Also, go a step further, and make sure you have a nice, clean, credit report in order to get the best rate possible.

We have driven our Chevy Malibu for over a month now, and it has worked out perfectly.  The car has been problem-free, and I cannot tell you how much easier it is when there are 3 drivers in the house.  One of the best things is that I truly feel we got a good deal on a good vehicle.  However, it took a LOT of research and test drives to find a deal we were comfortable with, but it was totally worth it the time and effort.

Do you have any additional tips or steps you follow when purchasing a vehicle?

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{ 34 comments… read them below or add one }

The Biz of Life October 19, 2010 at 8:00 am

The cash for clunkers program actually drove up the price for used cars because many perfectly good vehicles were destroyed, so you have to be very price conscious now. To your points I would add, get the carfax report to make sure the car hasn’t been any accidents or floods.


Kris October 19, 2010 at 1:49 pm

Hi Biz – I too read the cash for clunkers program inflated used car prices. You are 100 percent right on the carfax report, and they are usually free to view online too. I really should have added that because viewing the carfax was part of the process. I think I will go add it now (and give you full credit)!


Roshawn @ Watson Inc October 19, 2010 at 8:32 am

I am so glad that you actually found a great deal and that you don’t have buyer’s remorse. I have never calculated the “cost factor” but vigorously use KBB as a gauge of the cars true worth. Great point about the Carfax report too Biz


Kris October 19, 2010 at 1:49 pm

Shawn – the ‘cost factor’ was something I just made up to help me differentiate good deals from bad ones. However it worked quite well for me!


Roshawn @ Watson Inc October 19, 2010 at 1:54 pm

Very interesting… I may have to play around with it the next time I’m in the market!


Nicole October 19, 2010 at 8:43 am

Great post! In early November I’ll have a reader story up at GRS about buying a new car (for those who are interested in new rather than used).


Kris October 19, 2010 at 1:50 pm

Nicole – I will look for your post on GRS and promote it properly! I am contemplating another car in March, so I am sure I will learn something from your post!


Squirrelers October 19, 2010 at 1:48 pm

This is a good list, very comprehensive and basically comparable to my own approach to buying my last car.

I would add Carfax to the list, as I weeded out cars based on what I saw in that report. Some especially good deals had a history, which might have been why they were especially good deals!

Overall, while I bought my last car used with the idea of avoiding the immediate depreciation effect of driving new car off the lot, I recommend that everyone be careful doing so. It seems like you did a lot of homework, and that’s great.


Kris October 19, 2010 at 1:58 pm

Hi Squirreler! I did look at Carfax reports, but left it out of the post (originally). It is in there now. Thanks for the feedback!!!


Crystal @ BFS October 19, 2010 at 2:54 pm

I love the cost factor tip! I’ll have to use that next time I’m in the market!


Kris October 19, 2010 at 8:26 pm

BFS – hopefully my self-invented cost factor formula will work for anyone!


Aloysa October 19, 2010 at 3:51 pm

I hate buying cars. Mostly I hate the experience of choosing and trying to have a minimal contact with a pushy used car salesman. Last time we needed a car, we spend 10 hours at the dealership! What a nightmare it was. But I got a price I wanted and a car I needed.


Kris October 19, 2010 at 8:27 pm

Aloysa- that is why I love the internet. You can look at inventories so easily and you don’t have to set foot in a car lot until you pretty much know what you want. I cannot stand being hounded at all. Glad your 10 hours at the dealership resulted in a good deal for you though.


First Gen American October 19, 2010 at 4:23 pm

Wow..sounds like the used car salesman I walked away from. He also told me that an old lady was driving the car I was looking at. He thought he had the deal in the bag and when I started to walk away, he became very rude and angry at me. He really was counting his chickens before they hatched.


Kris October 19, 2010 at 8:28 pm

Sandy – It is amazing how snippy they can be when things don’t go their way. I am glad you walked away from him!!!


Money Reasons October 19, 2010 at 5:01 pm

I have a 2003 malibu, I hope that the minor annoyances that plagued my car is fixed with the newer cooler look version!

My main problems have been with the air conditioning system and fan.

I don’t have any time other than to check out the local sheriff’s sale.

Sounds like a great choice you made! I wouldn’t mind having the new version myself 🙂


Kris October 19, 2010 at 8:29 pm

MR – The only problem with the new version is it doesn’t have great ‘pick up’. I guess that is what you get with a 4 cylinder. The gas mileage is great, and it is a comfortable ride. I recommend it!


Money Reasons October 20, 2010 at 6:54 am

Sounds like a good deal, not to mention that the styling is sweet!!! 🙂


retirebyforty October 19, 2010 at 5:16 pm

Is there anyone that doesn’t hate used car salesman? I only dealt with a few of them in my life, but I always felt taken advantage of at the end of the conversation.

If I’m in the market for used car, I would scan craigslist and give my self plenty of time to look around. Don’t go to the dealer when you need a car in a week, they will smell blood and go for the kill.

We just purchased a new car so I have more idea there.
– check Overstock.com for new car price. This will be your baseline and don’t pay over this price.
– do your business with the internet sales manager. Just email all the internet managers in your area and see what is their best price and make them compete against each other. Should be equal to or better than Overstock price.
– check internet for strategy. These and more – go at the end of the month, end of the day, bring a friend, know invoice, etc…

But if you deal with internet sales manager, it is much easier and you just need to make sure you know the invoice.

You probably want to add the expected repair cost to your “cost factor” equation. No more German cars for me, that’s for sure.


Kris October 19, 2010 at 8:32 pm

RB40 – You are so right, you never want to make a major purchase quickly, the sellers will completely take advantage of your situation.

I didn’t know that Overstock sold cars. I will definitely check that out.

I agree that repair cost is something to consider. However, there are so many variables that I don’t think I could cover that. Not to mention all the opinions of other people. I hope that most cars are pretty reliable nowadays, but I don’t think that is true unfortunately….


retirebyforty October 20, 2010 at 1:21 am

Overstock just compile the price from all the internet sales manager in the zip code. It’s pretty helpful actually.
Also Google the specific car forum. Usually there is a “price paid” topic and you can see what people paid recently.


Andrew @ 101 Centavos October 19, 2010 at 7:38 pm

That’s a good story. I used a similar factor when I bought my truck on Ebay motors. Not sure if I can find the spreadsheet now, but I remember that I had existing miles, expected miles and price as inputs for one rating. Another rating had different weights assigned to features in relation to desirability. We have a 14 yr old, so we’ll be going through this experience in sooner than we think…


Kris October 19, 2010 at 8:34 pm

Andrew – the time to buy that 3rd vehicle will definitely come sooner than you think. However, I cannot say how much easier my life as a parent is with a 3rd driver in the house.


Suba @ Wealth Informatics October 19, 2010 at 8:58 pm

We bought both our cars new. But we know for our next car, it will be used. The cost factor sounds like a nice idea. I will use it when it is time for our next car. I didn’t have a trustworthy mechanic to check the car out thoroughly when I was going to buy initially. When I was looking for a car for my sister we knew someone who recommended a good mechanic so that worked out. I still don’t know how to check out a used car myself or how to find a good mechanic.


Kris October 20, 2010 at 8:13 am

Suba – I don’t have a good mechanic either. That is why I wanted to go with a car that would still have warranty. Plus, the carfax was clean, so hopefully it will all work out. So far, so good.


Car Negotiation Coach October 20, 2010 at 12:21 am

Thanks so much for including me! Sounds like you had a good approach.

And I really like your cost factor calcluation. I’ll have to put that one in my notes. Did you come up with that formula yourself?


Kris October 20, 2010 at 8:12 am

CNC – I am a notorious formula-maker. I was getting a little overwhelmed by all the choices, and I was really looking for the best deal on a vehicle that met my specifications. So, I knew I wasn’t real comfortable driving a car with over 100k miles, so I was trying to figure out how much the miles up to 100,000 would cost me. I then made up the formula. It definitely worked for me, and it was a way to even the playing field in a way and just compare cars using the resulting cost factor.


Credit Cards October 22, 2010 at 1:00 pm

Good and all the pints covered. The most crucial is the cost that would be spending on minor, repair or changes post buying.


Forest Parks October 24, 2010 at 10:34 am

Awesome article and far more real world than my attempt. I don’t currently own a car as it would be suicide here in Cairo…. Well maybe not that bad but not a good idea!


Katie October 25, 2010 at 8:22 pm

Hey there,
Theres a great post I have bookmarked Tips On Buying A Car ,
it has been a a great help to me.


used car buying February 8, 2011 at 10:24 am

Best tips ever! The most important part is to check the engine and test drive it. Be careful when choosing a used car.


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vehicle inspection services December 1, 2011 at 2:29 pm

You can get a history report on the car but don’t rely fully on them. Those reports are great for seeing if the car has been in any big accidents or is stolen, but a lot of little fender benders don’t get put on the reports. You should really have the car looked at by someone the really knows cars. Then you can use what they find as a negotiating point for the price.


Kris December 2, 2011 at 8:47 am

Good point. I know I have had some small things taken care of on my cars that never were reported to insurance companies or anything.


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