Advice for Buyers (A Primer)
We seek to be intentionally different by seeking to put the needs of our customers first. This may be your first car purchase, or you may be replacing an older vehicle. Either way, we hope you’ll choose to do business with us. If we don’t have the car that fits your needs, we’d like to offer a few guidelines for your prospective purchase.
A car or truck purchase is large and important expense. We depend on our cars to get us where we need to go in a safe, comfortable, reliable and trouble-free manner. Most people drive their cars for many years. Choosing wisely may help lower your long-term maintenance costs.
The true cost of a car isn’t the purchase price alone.
The price includes the yearly cost of scheduled maintenance, unexpected repairs and fuel costs.
PURCHASING A CAR: WHICH TYPE WILL YOU CHOOSE?
Broadly speaking, there are five types of purchase choices.
- New Cars
- Late Model Used Cars (Fleet/Lease)
- Used Car Customer Trade-Ins
- Private Individuals (Purchasing Directly)
- Salvage, Rebuilt or otherwise “Branded”
NEW CARS depreciate rapidly. Ever hear the phrase “being upside down” in a car loan? If you have to sell a car before you’ve paid off your new car loan, you’ll discover that your 1-3 year old car may be worth only 60% of what you paid for it. Wouldn’t it be better to buy a 3-4 year old car for 40% off the original new car sticker price?
LATE MODEL USED CARS (defined as 2-4 year old cars) are almost ALWAYS “fleet & lease”… although most retail dealership employees will try to avoid admitting this - just try asking your uber-friendly salesperson! If it’s not a private owner trade in, chances are pretty good the title will show the name of a corporation (fleet) or the name of a financial services firm (lease).
Why are there few-to-no “late model” (2-4 year old) used car trade-ins? Think about it for a moment. Private individuals are not willing to take a 40-50% loss (several thousand dollars) on their “new car” (see above). Repossessions are the exception to this general rule - owners who were financially unable to make car payments (and pay for car maintenance).
USED CARS CUSTOMER TRADE-INS generally fall into two subcategories:
- ONE OWNER, 7-10 year old vehicles, originally purchased new by the trade-in customer. These are generally good cars, but usually have 90,000-130,000 miles on them. Price/Value, a verifiable past maintenance history, mechanical and cosmetic condition should be important considerations. If a 7-10 year old vehicle with 90,000 miles is priced at $8,000-$10,000, is that truly a good value when compared to the price of a 3-4 year old vehicle? Also, larger car maintenance bills are most likely to occur after 100,000 miles. People often prefer to trade while the car still has value and let someone else worry about tie rods, struts, engine intake gaskets and the like. Do you have a good mechanic?
- MULTIPLE OWNER, high mileage vehicles, usually about 10 years old. In my personal opinion, these should be avoided. If you buy a car with 150,000 miles on it, realistically, how many miles will you be able to drive before needing to replace the engine or transmission, at a cost that exceeds the value of the car? Meanwhile, this is the “high cost” period of ownership, when each trip to the mechanic may mean $300-$800 per visit in repairs. If you own a car like this personally (many do): keep your service receipts in a folder or envelope, and periodically add up how much you’ve spent in repairs in the prior twelve months. If your car is 10 years old, worth around $3,000-$4,000 (Kelly Blue Book Private Party Price) and you’ve spent $1,000 or more in repairs last 12 months… it may be time to start looking for a replacement vehicle. See below for more discussion on high mileage vehicles.
PRIVATE INDIVIDUALS from whom you can purchase will generally fall into one of the two categories shown above. If you can find a 70k-90k one owner car from a private individual, these may be a good bet. However, certain caveats are in order:
- The car should be checked by an independent ASE certified mechanic. A car that costs you $8,000 up front and needs $1,500 in repairs is no different than paying $9,500 for a car.
- BE SURE you are actually purchasing from the owner shown on the title. One of the current, fairly common scams on Craig’s List and Facebook Marketplace is misrepresentation of identity by the car seller. Basically the way it works is that the (re)seller buys a car from a private individual. The title is left blank by the original owner. Typically the (re)seller will advertise the car on CL or Facebook. When you call to look at it, often you will be asked to meet in a parking lot somewhere. Once you’ve paid for the car, the (re)seller is gone, untraceable. Undisclosed problems are common, including mechanical issues, problems getting the car titled due to liens, incorrect info on the title, etc. Another common gambit is the (re)seller – sometimes working from home – will say they “are selling this for a family member who is “ill, in a nursing home, elderly, deployed, or (insert excuse here).” Bear in mind - you may have no recourse for misrepresentation or fraud in these instances, so be sure you’re actually dealing with the owner shown on the title!
SALVAGE, REBUILT, or BRANDED
Definition: This is a car with a salvage title, rebuilt title, or branded title is an auto that has been previously declared as a total loss by an auto insurance company. Often this has occurred as the result of a major accident resulting in significant damage in excess of the value of the car. Other “branded” cars include manufacturer “buy backs” (lemons, mnfg. recalls), flood loss cars, etc.
Why to avoid: Many of these vehicles have had significant mechanical, frame, or body damage. Do-it-yourselfers buy these salvaged cars on the cheap and rebuild them as inexpensively as possible. Even though the car may say Ford/ Toyota/ Chevrolet/ etc., you’ll be driving a car that was built in someone’s garage, not the factory. One should remember that modern cars are complex systems with thousands of precision-engineered electrical and mechanical parts. Often damage to important sub systems, like steering, suspension, electrical systems, etc. can’t be accurately detected until the car is back on the road, resulting in significant repair costs.
CARS WITH HIGH ODOMETER MILEAGE
We are accustomed to purchasing milk at the store with a “best used by” expiration date. Likewise, cars have a limited, measurable service life. 15 or 20 years ago, cars were considered “used up” at 100,000 miles. Today, cars are commonly driven to 150,000 miles and more. However, as one approaches and passes the 130,000 mile range, the odds of having to replace an engine or transmission rises significantly. Besides the engine and transmission, hundreds of other parts are nearing the end of their service life. Things like idler arms, engine mounts, bearings, bushings, hydraulic lines, suspension, struts, CV joints, head gaskets and more can eat up a monthly budget. At each visit to the mechanic, a few hundred dollars more has been spent. The “book value” of a car is hypothetical and meaningless when the miles are so high that the car is near the end of its service life.
OTHER NOTES: A RECENT CAR HISTORY REPORT AND MECHANIC'S INSPECTION ARE ESSENTIAL FOR ANY USED CAR PURCHASE