How to buy a used car. Part 2
Choosing the right car
You won't get a good deal if you just browse from a dealer to dealer without knowing what kind of car you are looking for. Once you know your budget, the next step is to narrow your choice down to a few makes and models. Consider your daily driving needs and decide what is important to you, what features you need in a car. Do you commute long distances to work? Then you probably want your car to be cheap on gas. Are snowy roads common where you live? You might want your car to have the anti-lock brakes (ABS). Do you like long weekend trips? You probably need your car to have a cruise control. However, be realistic; don't limit yourself with one particular feature. For instance, If you are looking for only a 4WD wagon for occasional outdoor trips and your budget is under $5,000, your choice might be very limited, but you might be able to find quite a few small or mid-size sedans for this price that also can suit your purpose.
Once you have an idea what kind of car you want, search the Autotrader and see what is available for sale within your price range. Try to avoid first-year models, as they usually have more glitches. Write down your possible choices and compare their gas mileage, reliability, safety ratings and other features; read reviews, research common problems and complaints. Read more: what to research when deciding on a used car. This will allow you to narrow your search to just a few makes and models.
Cost of insurance
The cost of insurance varies a lot depending on the make, year and model of the car, driver's experience and many other factors. Even the color of the vehicle makes a difference. We recommend getting a few insurance quotes to compare before buying a car.
What mileage is OK for a used car
In general, I would not recommend buying a car with a very high mileage. To put it into numbers, more than 155,000 miles or 250,000 km is probably too much; however, a "low mileage" does not mean "a good car." Of course, the less miles, the better, but don't put too much value on the mileage alone without considering other factors like mechanical condition, options, reliability, how well the car was maintained, etc. I've seen many 'bad' low-mileage cars: some restored after accidents, others poorly cared for and some even with their odometer rolled back, which is still happening, even though it's illegal. Again, checking the used car history records can help you avoid this kind of lemons.
When considering between cars of different brands, again the one with 50,000 miles but with proven reliability could be a better choice than the other one with 40,000 miles, but with poor reliability records.
Ideally, look for something under 80,000 miles or 130,000 km, but it all depends on your budget. If you cannot afford a low-mileage car, pay more attention to the mechanical condition.
How old is not "too old"?
I would not recommend buying an old car even at a "bargain" price, especially if you live in the Rust Belt where rust is a big problem. No matter how many new parts you put into an old car, it will still be an old car that will need more and more repairs later.
I'd say, avoid anything older than twelve-fifteen years, or older than ten years
If you live in the Rust Belt. A perfect choice will be a three to five year old car because the price is greatly reduced and you will still have a few trouble-free years of driving.
One important detail: what is listed in the ad is a model year, not the production year. A car produced in July 2007 could be listed as a 2008 model, but the car produced in June 2008 can also be a 2008 model that is almost a year difference. Check the date when the car was manufactured. You can check for the first registration date in the used car history report or check the manufacturer's label. Read more how to check it in our illustrated used car checklist.
Buying 1-2 year old used cars
Sometimes you may come across a one- or two-year-old used car. On one hand, it might be a good deal, since a new car depreciates the most in the first year and there is still some warranty coverage left. On the other hand, the main question is how this car ended up on a dealer's lot, because usually people tend to keep their cars for at least three-four years. Most of lease or finance contracts are also have three to five years terms. One common source for one-two year old cars is the car rental companies, as they typically lease their cars for one or two years, after which the ex-rental cars find their way to the dealer lots. Another possibility is that the car was either bought back or traded in because there was some problem with it that the previous owner couldn't live with. It also could be an insurance write-off after an accident. Either way, if you want to buy a one or two year old car, try to find out where it came from and have it thoroughly inspected. Running the car history report can help. By the way, if you are looking for a one-year old car, you might be able to buy directly from a car rental company; read below.
Is it worth to buy a car 'as is' or in need of some repairs?
I would advice against buying a car that needs some repairs, even if the price is low.
Very often, used cars like this need a lot more repairs than it may initially seem.
A friend of mine has bought a twelve-year old Honda 'as is'. It was drivable, but "minor body repair" was needed. It was very cheap though, only $1200. During the safety inspection, more problems were discovered and my friend had to spend another $600 for the new brakes and suspension repairs. To pass an emission test has cost him $350 more for a new catalytic converter and tune-up. A body repair added another $500. Then, after a week of driving, another problem came up and the test showed no compression in one of the cylinder. Another $700 has gone. In the end, this car has cost him just over $4000 (after adding new audio system, battery, etc.). For this money, he could buy a much better car in good condition. Again, the point is, no matter how much you spend on an old clunker, it still will be an old car that will need more and more repairs.
Who sells used cars?
1. New car dealerships.
New car dealers usually price their cars a bit higher than you'd see at independent used car lots, but you more likely to find a good used car in a new car dealer's lot. They often have one-owner trade-ins or lease returns, sometimes even with all maintenance records. Of course, buying a used car from a new car dealer does not give you a hundred percent guarantee that the car will have no hidden problems. Even a 'Certified' used car, although less likely, could have some issues. Of course, new car dealers are more responsible and if something goes wrong, it's easier to deal with them. Overall, a new car dealership is the best place to shop for a good used car.
2. Independent used car dealers.
Independent used car dealers usually sell their cars a bit cheaper, but there is more chances to get ripped off or get a lemon hidden under "this week special."
3. Private owners.
Private owners usually sell used cars cheaper and they are more flexible on price. The best scenario would be if it's a first owner of the car and all the service and maintenance records are available. Be aware, if you're buying a used car "as is," it means there is no warranty and in most cases if the car breaks down even on the very next day, you can do nothing about it. When buying from a private owner you should make sure that the person is the real owner of the car, and the car has no liens or any other legal obligations. If you want to know about how to transfer the ownership, how to register the vehicle, or how to check it for liens, contact your Vehicle Registration Office (Department of Motor Vehicle). A word of advice: try to avoid dealing with curbsiders. Here's what happened to someone who contacted me. The person bought a car from a curbsider and in an effort to save on taxes, arranged the deal as a private sale. Later the buyer checked the history and found the car was written off in a different State in the US due to an accident and the mileage was noted to be a lot higher than the curbsider stated to him. After repeated attempts, this person could not even locate this "dealer."
Buying a used car from a rental car company
If you are looking for a one- or two-year-old vehicle, one of the possibilities is to buy directly from a car rental company. Often it could be a lot cheaper than buying from used car dealers. Of course, there are some risks involved: some of the rental cars could have been poorly maintained; others could have been involved in accidents.
On the plus side, a one- or two-year-old vehicle is still covered by a factory warranty. Once a friend of mine wanted to buy a one-year old Toyota. We checked new car dealers, but what they had was too expensive. By chance, we found a one-year old Toyota at a local car rental business. It was a lot cheaper than from the dealers, so after inspecting it thoroughly my friend bought it and it worked out well - he was very happy with the vehicle.
If you want to buy a used rental car, look for reputable brands like Hertz, Avis, Enterprise, etc. Once you find a car, check vehicle's maintenance records and definitely have the vehicle thoroughly inspected by your mechanic. In addition, check with the car manufacturer on the warranty coverage.
Making a list
Check the car sales websites, such as Autotrader.com or Autotrader.ca for Canada. Make a list of suitable cars with the options you need. The Autotrader.com offers you to save cars you like into "My Cars" section if you sign in. You can even download an iPhone or Android Autotrader.com app that you can use to search for new, used and certified cars near you, including dealership and private seller listings.