Finding used-car bargains

With the economy in its greatest turmoil in decades, fewer buyers are willing to make a major investment in a brand-new car or truck. Yet the need for basic transportation still exists, no matter what a family’s economic situation. Thus, many astute car shoppers are instead considering pre-owned models these days. The good news is that there are great bargains available on what are very reliable used vehicles.

Depreciation is the biggest long-term cost of any new vehicle purchase and by the time a typical car or truck is just a few years old it has lost more than half its value. That means a car that cost $30,000 three years ago is likely to sell for around $14,000 on the used market. The average car for this age will have about 40,000 miles on the odometer, which not a lot for a modern car where a 200,000-mile lifespan (with the proper maintenance) is becoming common.

Essentially, there are two trains of thoughts on buying a used car. The first is simply to get the lowest price possible on a vehicle with acceptable performance, comfort and reliability. The flip side is to take the money you might spend on a bare bones, bargain-priced new car and instead obtain a much more luxurious used model for the same capital outlay.

These days it’s fairly easy to do some research to learn about virtually all cars and trucks built and sold over the past decade. Various Web sites can provide plenty of information about which models were available in a given year, the trim levels that were offered and a list of standard equipment and options.

There is also plenty of information to help shoppers estimate a price for a given pre-owned vehicle. Unlike new models, however, the costs of which are based on the manufacturers’ retail prices, the market establishes the transaction prices of used models. That price can vary depending upon condition, location and even by color.

The most important step for a use-car buyer is simply to ensure that a given model comes with no hidden problems or undisclosed history. Fortunately, this is easier today than it has ever been. One simple solution is to simply buy the car from a reputable dealership. Many will offer a comprehensive warranty on late-model vehicles.

What’s more, most new-car dealerships also participate in manufacturers’ “certified” used car programs that include a thorough inspection plus a warranty. While this is the most expensive way to buy a used car, it’s still quite a bit cheaper than choosing a new model and still gives nearly the same level of confidence.

When buying from an individual party, however, buyers need to take extra care. Potential pitfalls include cars that come with undisclosed problems. One example is a model that’s been damaged in a flood. Although states require salvaged cars to say so on the registration or “pink slip,” unscrupulous sellers are known to move cars from state to state to “clean up” the paperwork.

To avoid this sort of rip-off, experts suggest used-car buyers have the VIN (vehicle identification number) checked before handing over any cash. That number is found on the dashboard visible through the windshield on the driver side. A number of organizations can check this number for you online. Among the best known is Carfax, which charges a varying fee based upon the thoroughness of the report.

Although a VIN search will disclose any reported problems, it can’t tell a used-car shopper about many issues with a car that easily go unreported. If a car was damaged but repaired without an insurance claim, it’s unlikely to show up in a report, for example. That’s why consumer advocates universally recommend those buying a vehicle from a private party have the car or truck professionally inspected by a mechanic before taking ownership.

Plan to spend $75 to $150 to have a qualified technician perform a pre-sale inspection. A mechanic should be able to assess various systems and components, such as the engine, transmission, brakes, suspension and so on.

A good mechanic should also be able to determine if there has been previous body damage or other signs of trouble. If major problems are indicated, consider these to be deal-breakers. If there are only signs of minor trouble, such as incomplete maintenance records or wear-and-tear type repairs that will likely be necessary down the road, this information may be used to renegotiate a lower price with the seller.

One of the toughest elements of buying any car these days, new or used, is financing. It used to be that a dealership would be happy to finance a car because money was plentiful from myriad lenders and it meant additional potential profits. With the current credit crunch, however, cash is king. Those needing to borrow should pre-check with their own bank or credit union to see what sort of rates and maximum loan amounts are available, and how large a down payment is required. These days the more a buyers can put down on a vehicle, the easier it is to get a loan, and that’s the case nowadays whether one is acquiring a used car or a new one.