I will be talking quite a bit about car buying in the following days. The posts will be generally derived from our experience during the past several days in this matter. I am hoping to cover all the material in my head in about 5 parts (probably even less). Although, this series of posts won’t be a *comprehensive guide* by any yardstick, I am hoping that it will be a handy reference for people who are in the market for used cars. All inputs and/or tips will be appreciated.
Let’s start the series by visiting a few common dilemmas faced by people who are looking for used cars.
Used Cars vs. New Cars
If your budget is between $4000 and $12000, you won’t really have any confusion here; there is only one option for you - used cars. Confusion starts taking shape when your budget goes beyond $12000. It usually strikes your heart when your good friend pops a question to this effect “Instead of spending $12500 for a used intermediate sized sedan, why don’t you spend a little bit more and buy a brand new compact sedan?“. For example, instead of buying a used 2002 Toyota Camry (50K miles) for $12500, why not buy a brand new 2007 Toyota Yaris (equally reliable) for about $14500 drive-out price? The argument makes sense IF - you really don’t *need* a larger car, AND if you can afford the extra couple of thousand dollars.
To avoid this confusion, first decide your budget before you start looking for a car - and stick to it. Then, decide what type of car (small, large, loaded, base version, etc) you *need*. Believe me, in the long run, it will be easier to adjust to a smaller, slightly older, less equipped car than it will be to adjust to a larger payment. Also, be cruel when it comes to filtering your *needs*. I will laugh at you if you tell me you need leather trim, a 6-CD changer, and dual-zone climate control. Once you decide these two parameters (budget and needs), the rest of the things will just fall into place automatically.
By the way, if a good brand new car is within your budget, in my opinion, you should go ahead and buy it - it will be worth the additional costs (high depreciation in the initial years). You just can’t put a value for the peace of mind (due to the complete warranty coverage and due to the knowledge that your car wasn’t abused by some jackrabbit idiot for the last 20,000 miles). Just make sure you take the true cost of ownership of the car into consideration before you jump on just the sticker price.
Larger Older Cars vs. Smaller Newer Cars
This confusion occurs after you have fixed your budget and are looking for different cars within that budget.
We faced this situation last week when we had a choice of two cars that came to almost the same drive-out price. The first car was a 2002 Honda Accord EX (V6, leather, and totally loaded) with 69,000 miles, and the second one was a 2005 Toyota Corolla CE (base model with very few extras - didn’t even have power windows) with 21,000 miles on it. We loved the Accord for the power and all the bells and whistles, but there was absolutely no doubt that the Corolla had a lot more reliable life left on it (with proper care) than the Accord. Plus, the Corolla held enough room for our needs, and had enough power to cruise the highways even with full occupancy - so we finally went for the Corolla.
This confusion can get very difficult sort out, especially if you get blinded by the “goodies” from the larger (more loaded) car. The key here is to avoid making an impulsive decision and revisit your needs. Do you really need the V6 engine? and 815 cup holders? and leather upholstery? If you feel even the slightest hesitation in deciding between the cars, the best thing to do is - DON’T decide. Just go home and sleep over it; you will certainly think more clearly on the following day [btw, that's exactly what we did in our case].
If you noticed, I am comparing between a Honda and a Toyota in the example above; I am sure I would have chosen the Accord if it was a choice between a 2002 Honda Accord and a 2005 Ford Taurus. Keep reliability ratings in mind when you are making your way out of such confusions.
Private Party vs. Dealerships
Generally, cars offered through dealerships are a couple of thousand dollars more expensive than those offered by private parties (individuals). However, there are some positive aspects of dealing with a car dealer, namely, the freedom to spend as much time as you want in inspecting a vehicle, getting free CARFAX reports (most dealers will pull one up for you if you request), having a variety of cars at a single location, and some accountability.
That “accountability” part might be surprising for some people, but I do assign some weight to it. A car dealership can be easily sued if they fail to disclose structural damages to a vehicle; they have a lot of reputation to lose in such cases (for example, here are some cases in Virginia) - even in the case of “as-is” sales. *Generally*, established car dealerships, representing reputed car manufacturers, won’t deliberately try to sucker you into buying a lemon [you can imagine the kind of attention a dealer will generate if he sells me a damaged Toyota vehicle that still has factory warranty on it - without disclosing the damage]. Plus, dealerships also offer the the “certified used” programs through which you can buy a vehicle with factory warranty (albeit at a higher price). Of course, exceptions are always there (there are plenty of rogue dealers - and bogus *certified* programs), so I would not extend this as a blanket explanation for all dealerships.
On the other hand, almost all private party sales are considered as “as-is” and generally there will not be any written documentation involved. There is no incentive of “maintaining reputation” as in the case of an established dealer. Plus, there is no “higher authority” (for example a manager, or BBB, etc.) to lodge a complaint. Your only recourse in case a private party deal goes bad would be a small claims court - that too if you have ALL the proper documentation for your deal.
Automatic Transmission vs. Manual Transmission
Technically, there is no *confusion* here - you either can drive a manual shift or you can’t. Generally, manual transmission cars are available for cheap - and are better maintained (according to what I have observed). Manual versions don’t fly off the car lots as fast as the automatic versions and dealers are more *agreeable* to negotiations on these cars - the difference could easily be in the range of couple of thousand dollars for popular cars.
We had an extremely good deal on a 2005 Toyota Matrix with just 14K miles on it, but we had to give it up because we both are not very comfortable with manual transmission (although we can use it).
Go manual if you can and save some money.
However, keep in mind that you will have some trouble selling a manual transmission in future as increasing number of people get used to automatic transmissions. The money you saved while buying the vehicle could be easily lost while selling it.
That’s all I can think of right now as far as confusions are concerned. Tomorrow we will discuss a few things about vehicle history information and how you can make the most of it. So stay tuned.