Just bought a car from salesman at a dealership, and he handled all the finance stuff; took about 30 minutes from test drive to getting keys. No finance guy needed. It was a huge dealership, too.
My strategy is to buy used cars for somewhat less than the overall cost of a lease, then drive it into the ground, or down to a condition where it is probably most sellable to a teen as their first car. I drive well over the mileage limits of a lease.
It happens to be easier for me to pay cash, so it might be better for me to target vehicles available for under 10k. Your circumstances may vary. Unlike cuse, I’ve had no problems with older vehicles. I feel like my sweet spot right now is a single-owner vehicle just after the warranty runs out from a reputable dealer. They liked it enough to keep it, probably had no major problems that made them give up on the vehicle, and it’s undergone some level of maintenance even if not CPO.
I’m more accepting of risk and variance, but I keep my investment in a car to a level where I can manage if I need to replace it earlier than expected.
Let me share with you about buying used. My most recent experience was being the point man for my parents who are retired middle-class Boomers with a penchant for buying unreliable American junkmobiles that they sink tons of money into. I got really tired of watching this play out over the years and was determined to end it. It’s a tough needle to thread because my dad has an emotional weakness for cars and instantly vetoes anything sensible. When I wrote out all the criteria, it was basically a Cadillac with Toyota reliability at Fiat prices. Obviously I had a ton of work to do.
My first piece of advice is cast a wide net, make a list of must-have, like-to-have, and non-essential criteria, and whittle your search down to one or two vehicles. Seems like maybe you have done that. Then go to the forums for that particular model and soak up everything you can. What are the major issues the model faces and how significant are the repairs? What do people like, dislike, regret, etc.? What/where are the best deals? This is how I discovered that the latest Honda CRV had a major engine flaw.
After a long process of narrowing it down we decided that a pre-owned Lexus SUV (backup: Toyota) was their target. It was the only thing that met our ridiculous criteria for luxury, reliability, and price. Leasing made no sense because they don’t utilize the mileage they’d be paying for. Lexus and Toyota have nice online portals where you can enter the VIN number for “your” (read: any) car(s). This allows you to see official records for that vehicle including the production specs / options and service history performed by a Lexus/Toyota service center. I did this for many dozens of vehicles that popped online and that met the initial criteria over a six-month period. I have a few takeaways:
(1) The vast majority of used cars are not local trade-ins. Most of these cars are purchased at auction and then delivered to the dealer.
(2) Used car auctions are shady as fuck due to differences in reporting requirements in different states. This opens the door for title washing and other methods of hiding flood and collision damage. A single collision–no matter how trivial–is a notable black eye on a history report.
(3) Several vehicles that were represented as non-collision on 3rd party reports were, in fact, serviced for collision in the official service logs. Carfax etc. provide plausible deniability to an unscrupulous seller. Some garages do not report to the Carfax-type services. I also saw maybe one or two that had a recurring issue that I might tag as a lemon or whatever.
(4) Independent used lots seemed way more likely to be selling wrecked cars.
(5) There is a large disparity in the care of vehicles by their owners. You should absolutely focus on this when buying used. People are fucking animals. Do the work and avoid getting something that’s been rode hard and put up wet.
In the end, I was able to find a Certified Pre-Owned that was both local (not auction) and had an amazing service record. It was owned by some lady that drove ~8k miles/year, but she still took it in for every routine service. CPO can be total bullshit and the extra cost is usually not worth it because unscrupulous dealers can game the inspection, but this was an actual cherry and the price was too good (main value of CPO is the extended warranty).
We contacted the internet sales manager as the first contact to lock in that price, then I went in person to inspect the car. It was immaculate, so we inquired about holding the vehicle until my parents could arrive (several hours away). Dealership wanted $500 nonrefundable that could be applied to the purchase which we agreed to. They arrived the following day, wired the cash, did the papers, drove it off in fairly short order.
There wasn’t much for the closer to do except pitch an extended warranty which I’ll talk about a bit. I discovered on the Toyota/Lexus forums that internet sales for the official manufacturer-backed extended warranties (only consider these btw) are actually a thing, but the details were murky. Most of the confusion, I believe, comes from restrictions on selling across state lines, but it depends on the state(s). There are some other technicalities regarding new/used/CPO, when the warranty can be purchased, and hard caps on years/miles that I don’t remember. Here’s the takeaway: I contacted one of the recommended sellers and he was (a) able to sell to our state and (b) quoted prices that were way lower than our dealer’s best price. This is something I would have never been aware of without internet deep diving.
I’ve also leased before and was able to find some deals. Not sure if this still exists, but I leased a Honda once where the residual value in the contract was just way off the actual market value. Somehow I negotiated a $200/mo payment with $0 down and was able to flip the car for +$2k at the end. You need to consider doing this to avoid paying for depreciation that isn’t true market value, but it kind of requires having cash on hand to buy the car outright when the contract ends. Seems like there are ton of bad leases out there too though. Your mileage may literally vary.
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I bought it from the dealership for the residual at the price set forth in the contract and sold it to a private party. I had to pay sales tax which is obviously significant, but it was net $2k to me. Had I simply turned the car in I would have overpaid for depreciation according to the market. If market is less than residual, congratulations–you got a “deal” and can turn it in without doing more work.
I think any strategy that involves purchasing vehicles more frequently (even if purchasing used) is going to be more expensive than buying new and driving it into the ground. Plus isn’t there a premium to purchasing CPO which eats into the savings of purchasing used?
CPO definitely has an undeserved premium in most cases, but it depends on the make, the dealership, and the specifics of the CPO program. “We only certify the best” is meowchow and isn’t really held to any serious truth in advertising standard afaict. You can get the 150+ point inspection fairly cheap from a good independent mechanic. I don’t think you have to dig too hard to find examples of complete junkers being certified by scummy dealerships. The value comes from the extended warranty, free maintenance, roadside assistance, loaner cars, etc.
Do you happen to recall what model year this engine flaw started with? My wife’s 2013 CRV is already burning oil, and I wouldn’t normally expect to see this happen until after 150k miles.
17-18
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Buying new is not a bad strategy if you keep it long term. The depreciation evens out.
Forgot to say that you should absolutely be able to sell it to a dealer. In my case, I had a private buyer lined up way before the end of the lease. If you think you have equity maybe shop it to dealers first if you want the least amount of hassle.
It’s amazing how many people don’t start with a list of what they want (or don’t want). It’s like they expect to know in their gut when they see the car.
It seems like several posters in this thread value the peace of mind they get from a good warranty, so their car shopping should probably begin with what differences there are between manufacturers for coverage. I assume some car shoppers don’t realize that they value this when they first start shopping.
I’m no car expert, but I have experience talking to people who are thinking about buying a car and asking them questions that lead them to consider exactly what they want or don’t want. I’m usually not telling them anything they don’t already know; I’m just making sure that they know that they know.
Some people are completely superficial and look for a car that is basically a fashion accessory. Some people are more practical. Some people just have cost as the overwhelming priority and I have to walk them through the idea of considering gas mileage and reliability as important facets of long-term cost.
A lot of people focus on what the monthly payments will be. Then, they try to find the nicest car they can fit into that slot, but if they’re not smart, they end up accepting bad financing terms to fit their budget, often without even realizing it. Probably the best advice for people like that is to shop for a car loan before shopping for a car. This may seem like common sense, but it’s stuff that educated people with jobs that suggest they are smarter than average don’t do.
Cliffs: Figure out what you want and figure out your budget before picking a car.
Never, ever buy an extended warranty from the dealer. Ever. You can buy one for half the price from someone else. And it should go without saying but don’t buy the scratch guard / key replacement / etc. And have financing before you go to the dealer or pay cash.
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What does ‘leasing terribly’ mean? Our friend here has had to wait months for her’s…
Also I’ve done some basic research and “run the numbers” and I can have a monthly payment of like $300-$400 for $3500 down on a lease and I’m fine with this. Does this sound pretty standard or should I be paying less?
Redacted for privacy.
This is going to sound a little contradictory from the guy buying the CPO cars, but basically one of my personal economics rules in life is to always turn down any extra warranty or insurance anyone offers me for anything that doesn’t involve a huge chunk of my net worth (ie home/renters insurance) or my life (health insurance). If I can afford to replace it without suffering, I don’t even think twice about it.
It’s as simple as this: they’re turning a profit on those warranties and insurance policies, so from an EV perspective they win and you lose. Are you willing to pay them to sweat the variance? If so, why?
For me the big thing with the CPO is the convenience factor, given that I don’t work the type of job where I can duck out of an office for an hour or two to handle a car problem without losing pay and given that I am so reliant on specific days of the week for my income.
It’s also that every used car myself or my parents bought had major problems, even when we paid trusted mechanics to spend a couple hours inspecting them for us. Never had a major problem with a CPO car.
Edited to add: I would never buy a “certified pre-owned” car from anything other than the dealership of the manufacturer that made it. Like I think it’s pretty safe to buy a CPO Mazda from a Mazda dealer, because their rep is on the line on those. I’m not trying to buy a “CPO” Mazda from Joe’s Used Cars.
What is the provenance of your CPOs? The theory with CPOs is that mfg dealerships will cherry pick the best available and send the rest to auction. If most mfg CPOs are auction buys, it kind of deflates that theory.
Agreed. Any insurance, covering anything other total financial ruin, is normally a waste of money.
For a lot of people, losing their car while they still owe a significant chunk of cash on it would be devastating. But if you can afford to self insure, it’s definitely the right play.
Grunching:
If you want to buy a new car (yes, I know, used is a better deal), then I’ve found the following strategy to be very effective:
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Go to your local dealership(s) to test drive and see what you want to get. Negotiate with them for whatever they’re willing to give you that day. No matter what the offer is, walk.
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Use the car manufacturers website to find every dealership within a 300 mile radius of where you live. Check their inventory online (can be done on the dealershi[ websites). If they have what you want, email them and ask hem to give you their best offer. Keep getting best offers and emailing back and forth seeing who will match or beat. Phone calls to dealerships are necessary here, and if the dealerships aren’t too far, possibly a drive. Get the best price you can online doing all this back and forth. Ignore Kelly Blue Book, it’s garbage and you can almost always do better then it’s “fair purchase price.”
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Go back to your local dealership that you started with. See if they’ll beat the best offer you got online. If not, they’ll almost certainly match it, especially if you start walking out the door when they say no.
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The best time to do all this is towards the second half of December, especially close to the new year. Bonus points if there is a new model coming out of the car you want.
All this will save about $100 to $300 versus what I’ll pay, at the cost of all the extra time and effort. Whether or not it’s worth it is situation and person dependent. (Some people actually enjoy playing this game, where for me it’s not worth the cost in hours and irritation.)
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