Buying a Used Car

Supply and demand is one of the major factors in determining how any commodity will be priced in the open market, and this is certainly true of used vehicles. If you haven't read the article on this website about Making Sense of the Trade-in Allowance, I would recommend that you do so. The point that I was trying to make about the relevance of the book trade-in values to the actual cash value holds true on the retail side as well in that the book retail value is not always what you can expect to pay for a used vehicle.

The good news is, that most of the time, you can expect to pay less than the book retail value, and for much the same reason as why the actual cash value of a trade-in is usually less than the book trade-in value. This is because the database from which these numbers are generated is from retail transactions reported by dealers, most of whom show overallowance on the trade-in, and inflate the retail price of the vehicle being purchased accordingly. That being said, however, one must realize that not every retail transaction involves a trade-in, in fact, a large percentage do not. Therefore, the book retail value is less likely to be upwardly inflated as the trade-in value, or at least it is less likely to be upwardly inflated to the same degree as the book trade-in value.

In my experience, most of the front line used vehicles that we sell, are priced below both Kelley Blue Book and NADA retail. If a vehicle is a hard to find car, or it has exceptionally low miles, or is better equipped than most of the similar models on the market, then it will most likely be priced above book retail. Factors that contribute to this variance in market price and book price are a smaller sample in the book publishers' database and simply supply and demand. The books typically show retail prices for average vehicles. If a vehicle, by virtue of its mileage and condition, rise above what is average in the market, then it will fetch a better price from a retail seller, as well as from the dealer when the vehicle was acquired for his inventory. Also, please realize that due to their diminshing numbers, the older the vehicle is, there will be less pricing data, and therefore the book values will be less reliable.

These things are really just basic economics, but when shopping for a used car, it is important to understand.

Price is just one factor in determining a used car's value. As a consumer, I want to make sure that the car that I am buying is a good car that will be trouble free, and that has not been on a journey through hell in its life prior to taking up residence in my driveway. One thing that I tell all of my customers is that buying a car is really a crapshoot, and since it is a machine, there is no guarantee that it will be troublefree. There are, however, some things that you, as a consumer, can do to hedge the odds in your favor that the used car that you are buying will be a good car. As a salesman, I want my customers to be happy with the vehicles that they purchase from me, and fortunately, I work at a dealership where the owner sincerely wants to put quality merchandise on his lot, and wants all of his customers to be satisfied with their total buying experience.

I would recommend that before buying a used car, you obtain a CARFAX®. The CARFAX® will identify the vehicle by VIN, make, model, and year, and will provide detail in all of the checks against total loss, damage disclosure, accident indicators, lemon law buy-back, odometer inconsistencies etc. Also, it will show you when it was titled, how many owners, and where the vehicle was titled. This way, you can be sure that you are buying a vehicle with a clean title. As a dealership, we run CARFAX® on every vehicle that we buy, and on every vehicle that we take in on trade; as a consumer, you should also use this valuable tool, and obtain a CARFAX® on any used vehicle that you are considering purchasing.

No one wants to shell out a bunch of cash for a used car, and then immediately have to put tires and brakes on the car. Ask for documentation as to what was done to the vehicle in the dealers' reconditioning process. For every used vehicle that we sell, I can show you a shop report on what we did to it.

Do some research on how other consumers have rated the vehicle that you are interested in buying. There are many online sources for this information. I like Edmunds.com as a source of information about reliability ratings, original warranty, and owner reviews of used vehicles.

If you want information about a vehicle's fuel efficiency, the EPA posts a Fuel Economy Guide for each model year, and you can download these by year from their website, www.fueleconomy.gov. These guides are organized by type of vehicle within a model year, and show the EPA fuel economy ratings for each model.

Safety is important for everyone. If you want to know how the vehicle fared in the crash tests that the National Highway Traffic Safety Administration performs, go to their website, www.safercar.gov. On this site you will find crash test data for most vehicles, along with an explanation of how they were tested.

Used vehicles can provide a person with many miles of good service at a fraction of what you would pay for a new one.

--Bob Crabb