Everyone's looking to save money in this economy, and the purchase of a used car or truck is one of the single biggest expense consumers will face this year. Cars would be one of the items on my list never to buy new. So how do you know if you're getting the best bang for your buck when buying a used car?
Meet Carsabi. Carsabi is an automotive search and comparison engine that tracks over a million cars nationally from dealerships, auctions, and classified sites to present the best deals in your area. I had a chance to talk with Dwight Crow, CEO of Carsabi, to get some awesome tips on buying used cars. The following tips from Dwight all comes from number crunching data they've collected to save you thousands of dollars.
Buy Your Car from a Private Party
We all know dealers make money by selling cars for more than they pay for them. If you're willing to find a deal on Craigslist or other classified sites, you'll save at least $2,000 on average. Take this for example. Dwight crunched the numbers on clean title 2000-2011 Toyota Corollas nationwide -- median savings is just over $2,864! This holds no matter what the year of the car is, so when buying a 2003 Corolla you could either pay $6,000 private party or $8,864 at a dealership -- your choice! In case you think this is a fluke, Dwight also ran the numbers on the top models from Chevrolet, Honda, Toyota, BMW, and Ford with savings averaging over $2,000 from each major manufacturer!
Don't Trade Your Old Car In
In an obvious corollary, dealers also make money by buying your used car at a lower price than your neighbors are willing to pay for it. And yes -- selling an item to a stranger in a dim parking lot for thousands in cash sounds like an uncomfortable situation! However, don't do this! Selling a car within your community should occur in a public place during the day time and will probably involve a quick test drive and possible trip to the mechanic and bank. Make sure you accept payment with a cashier's check you see created personally. Selling a car yourself should only take a few hours, and will net you significant cash -- referring back to the example above, you'll get an additional $2,000 from selling to a private party rather than accepting the KBB Trade in Value. Three hours of work for $2,000, sounds good to me!
Buy Luxury Later
We all love the leather interiors, the adrenaline rush while you're flooring your new sports cars, or the intangible elegance of the Haute Voiture -- sometimes having something nicer is worth the extra price tag. Dwight says that you don't actually need to pay much extra to own a luxury vehicle no matter what your dealership tells you. Since luxury cars are in high demand during their first few years and less so thereafter, they depreciate incredibly quickly compared to their economy brethren. Dwight plotted BMW, Audi, and Mercedes-Benz prices against the Toyota Camry -- you can own them for a fraction of the original price if you're willing to wait just a few years before making the purchase.
CarFax Anything You Even Consider Buying
The next tips are two critical ways that you can reproduce the reliability of a Certified Pre-Owned vehicle at a fraction of the price. Dealerships add value by providing reports on a car's previous history and providing a mechanism for a car return in case yours turn out to be a lemon (known problematic vehicle). Thankfully, CarFax compiles this information from the National Motor Vehicle Title Information System and millions of mechanics nationwide to reports to them.
Dwight also noted: "We can't emphasize enough how important this is -- car fraud is very profitable, and this quick step will give you the information you need on any potential purchase."
Take Your Potential Purchase to an OCD Mechanic
Certified pre-owned generally includes a much vaunted 100-point inspection guaranteeing your car is in working order, and it'll cost you a hefty premium. Why not take your potential purchase to your local trusted mechanic (specializing in your vehicle) and get this same inspection done yourself? It will take an hour or two and cost around $100, but this is significantly less than what you'd pay for the CPO certification, and has an added bonus: if your mechanic comes back with the expected grocery list of tune-ups and filter changes that are to be expected on any used vehicle, you can use this as a bargaining chip to drop a few hundred bucks off the asking price.
I'll leave you with my two biggest tips on buying a used car: consider your budget and do your research. So if you're looking to buy a used car, Carsabi is a good place to start. Have you had any bad experiences with buying a used car?