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Feb 15, 2012

What type of used car will fit into my price range?

Let's take a look at some prices:
$10,000-$18,000 - This is the average minimum amount of money one would need to spend on a 'decent' car 3 to 4 years old. This would be a typical car (not a luxury car) sold from a new car dealership. They usually have, what would I recommend as a perfect choice, traded in one-owner certified vehicles that were sold new and serviced at the same dealership. Sometimes you may find such a car from a private owner. Usually such a car may last for another few years relatively trouble-free if properly maintained.
For $5000-$9000, you may be able to find a 6 to 9 year old used car with relatively high mileage which still might be in good shape. However, it may take a lot more time to find a good condition used car in this price range. Typically, independent used car dealers sell cars within this price range.
For $1000-$2000, you may be able to buy something that can serve as simple transportation to get from point A to point B. More than likely it may be a car with high mileage sold by a private owner. Dealers usually do not spend time selling cars or trucks in this price range. However, be prepared to spend much more money to keep such vehicle running. To learn more about what kind of vehicle you can afford for your hard-earned money, try to search the Car Sales websites where you can enter the maximum amount of money you intend on spending.

Decide how much you can afford

Set yourself a firm limit of how much money you want and can afford to pay for a car. The process of buying a used car can be time-consuming and stressful and it might be difficult to resist the urge to buy more expensive vehicle, especially when higher total price is hidden under "low" monthly payments. Often dealers could try to push you into buying more expensive vehicle to increase their commission. In fact, this is very common situation when people rush into buying a car or a truck only to realize later that they cannot afford paying for it. Thousands of people are searching the Internet for an answer to "How to get out of a car deal?" You want to buy something that you can afford, something that will not put excessive financial strain on your family budget, so you need to set yourself a firm limit.

Car value and price

Don't look for cheapest car. When it comes to used cars, "best deal" doesn't mean the cheapest one. Your goal is to look for a car in good condition for reasonable price. If you choosing between relatively cheap car that might have an accident in the past or was poorly maintained, needs some repair, etc. and more expensive one that is in excellent condition, I'd without a doubt choose the more expensive one. You will simply save on repairs and will have fewer troubles driving it. Don't think they sell it cheap because they don't know the price or they simply want to clear their inventory. If they sell it cheap, definitely there is something wrong with it.

Remember, proper price for a certain used vehicle is not the one indicated in blue or black book - they give you just an average price. The actual vehicle value big time depends on a car condition. Two cars may only look the same. One may have been maintained so poorly and the engine won't last long after you buy it. The previous owner of another vehicle may have been religious about maintenance, was using only synthetic oil, has done the rustproof and so on. Without a doubt, I'd rather pay $2000 more for this second car just to have peace of mind driving it. So, how to determine how much you will have to pay for a certain model?

Just to show you as an example, I search my local Auto Trader website for a three years old Honda Accord. The search result gives me more than 200 vehicles with the price ranging from $10,000 to $20,000. To be realistic, I know that for $10,000 I will not be able to buy something really good. The $20,000 seems to me too high. But there are quite a few cars for $13,000 - $15,000 price range with reasonable mileage - this looks more realistic to me. I also know that most new car dealers will be able to give me a discount from $1,000 to $3,000 if I use proper negotiation strategy (read below). So, in our case with three years old Honda Accord, I'd probably will be able to get the one in a good condition for $13,000 - $14,000 depending on mileage, options, etc. You can use the same strategy everywhere; whether is Miami Florida or Winnipeg Canada.

Taking a risk out of used car buying process

First, be prepared. Do as much research as you can. Read reviews, consumer reports, ask colleagues and friends, compare options, gather gas consumption data on the make and model you're interested in. Examine reliability ratings. Try to determine maintenance costs and upkeep, etc. Your goal should be to narrow your search to one or two models. Why? Because if you just enter a dealership without knowing what you want, chances are more likely than not that you won't be happy with your purchase. Later you may find out that it's simply not exactly what you wanted or what you can afford. Someone I know bought a used BMW wagon for quite a reasonable price. When he went for servicing, they discovered that the rear shock absorber was leaking. The price for the part alone was close to $1000! Finally, he sold his BMW and bought a used Camry that proved less expensive to maintain.
Another purpose to narrow your choice down to only one or two models is because when you test-drive a few different cars of the same model, it will be much easier for you to compare their condition and pick the best one. Recognizing a transmission problem during your test drive would be easier to do if you were to try a few vehicles of the same model instead of becoming confused by testing out different models.

Second, without a doubt, you should check a car's history records. This will help you to eliminate half of the vehicles from your list with potential problems. Vehicles that have been flooded or restored after serious accidents, those with rolled back odometers, heavily abused vehicles (e.g., ex-rentals), those with outstanding liens, etc., can be eliminated after simply checking the history record of the vehicle. In fact, it is not even a good idea to look into a car until you check its history. To learn further How To check a car's history click on this link: How to check a car history by the VIN number.

Third, Don't buy based on what you've been told because it may not always be the truth. Check out the car yourself very carefully. Ask a knowledgeable person who knows about cars to help you. Check my Illustrated used car checklist to learn what to look for in a used car.
As a final step, bring the car to the mechanic you trust for an inspection. A word of caution, NEVER give a deposit or sign a contract before the car is inspected.

Fourth, Be extremely careful when doing the paperwork. For example, if you buy from a private owner, make sure there are no registered liens against the vehicle and that the person who signs the Bill of Sale is the actual owner of the car. Check with the Vehicle Registration Authorities to make sure the car has not been stolen. If buying from a dealer, read the warranty policy and all the papers including the fine print very carefully. If it's a "Certified" used car, you'd be wise to check exactly what items were checked off and approved because sometimes the car might have a history of an accident in the past, come with a poorly maintained engine and still be Certifiable. Do not rely on a salesperson's verbal promises. Whatever is promised, get it in details in writing. Find out if the remaining original warranty will be transferred into your name. Different manufacturers have different warranty policies. For questions about vehicle registration, change of ownership, legal aspects, etc., contact your local Vehicle Registration authorities

New or used car

By choosing a used car instead of new, you can save some money. A new car depreciates fast, especially in the first few years. After 3-4 years, a car is worth only about 60-70% of its original price. As soon as a just-sold new vehicle drives out of the dealership, it drops a thousand or two in value as it suddenly becomes a used car.
Yes, it's nice to drive off the lot in a shiny brand new car that is covered with bumper-to-bumper warranty and if you can easily afford it, why not? However, I have calculated this many times with many people: even if a new car is sold with zero-percent financing, it will almost always cost you few thousands more than a good 3-4 years old used car.
It's easier to pay-off a used car, which gives you more flexibility. With a new car you could be locked in a lengthy contract and it's hard to get out of it earlier if for some reason you decide to get rid of a car before the contract expires. The insurance is also often cheaper for a used car. Another advantage of buying a used car is that you could buy a premium or luxury model for the price of a base small new car.
Of course, buying a used car is a bit of a gamble - some cars may be in a very good condition and others may have some hidden problems. You will probably have to spend some time and look at a number of cars before you find the one that you like. Hopefully, this information will help you with the whole used car buying process. You can also check my article what to look for when buying a used car with illustrations. We also have a section on car maintenance.

Used car buyer's checklist

Initially:
- Any "bad" records in a VIN history report?
- Any service records with mileage readings? Has the oil been changed regularly? Any major engine or transmission repairs? Last emission test?

Walk-around

Indications of possible problems:
- Does the car sit level or do any of the suspension springs appear sagging?
- Are the body lines not straight? Ripples? Misaligned panels?
- Does any part of the car appear to be repainted? Mismatched colors? Paint overspray? Different paint texture on different panels? Why? Accident? Corrosion?
- Does the driver's door have a free play in the hinges? Is it difficult to close?
- Are the gaps between the panels different on one side of the car compared to the other side?
- Does the car have many rusty spots?
- Is there a trailer hinge? Was the car used for towing
a heavy trailer?
- Any cracks, chips, scratches on the windshield?
Wheels and Tires:
- Are the tires of a reputable brand or a "no name" kind of product? Are all 4 tires the same?
- Any cuts, cracks or other damage? is the tire tread low? Irregular wear? Damage on the rims?
The suspension and chassis problems:
- Does the car look badly corroded underneath?
- If the vehicle has a frame, is it badly rusted? Does it appear repaired?
The interior:
- Any smell? Excessive perfume? Dampness?
- Is the driver seat or steering wheel worn excessively? Does it look like it was a rental or heavily used car?
- Any dampness under the carpet or in the trunk?
- Do all the electrical features work? Power locks, windows, mirrors, sunroof, wipers, remote control?
- Does the air conditioner blow really cold air?
- Do the heater and rear window defogger work?
- Do windows get foggy with the heater ON?
- Is the radio reception good?
- Does the CD player play disks
- Do you feel comfortable in the driver's seat? Space? Visibility? Mirrors, controls, steering?
- Is there a cruise control? ABS? Stability Control?
- Do all the seat belts work?
- Is the rear seat space sufficient?
- Does the vehicle have an additional ignition key(s), spare tire, jack and a wheel wrench?
Under the hood:
- Is there a burnt oil smell under the hood?
- Any leaks? Is the engine dirty or oily?
- Does the engine look sludged up under the oil cap?
Is the oil level low? Is the oil on the dipstick too dark?
- Does the engine oil on the dipstick have a "coffee with milk" color? (coolant mixed with oil)
- Is the transmission fluid on the dipstick too dark or dirty? Does the transmission fluid smell burnt?
- Is the coolant, brake fluid, steering fluid low?
- Are the battery terminals corroded?
- Any indication of poor quality repair work or lack of maintenance? (e.g. badly corroded battery terminals, very low oil level, etc.)

During a test drive:

Engine issues:
- Is the engine difficult to start? Is the idle rough?
- Any noises? Knocking, tapping, pinging, whistling, piston slap? Excessive shaking? Vibrations?
- Any smoke? (slight water steam is OK)
- Any warning lights come on on the dash?
- Is the engine oil pressure too low at idle?
- Any hesitations, sputtering on acceleration?
- Does the engine have enough power? Is it smooth?
Automatic transmission issues
- Is the time between shifting from Park into Drive or from Park into Reverse and the moment the transmission kicks in too long? (Long engagement)
- Any noises, jerks, jolts? A clunk when shifting into Reverse?
- When driving, any delays, slipping, shudder or harsh shifting? Is the overdrive working?
- Does the transmission downshifts when accelerated?
- Is there a clunk or jolt when coming to a stop?
Manual transmission issues:
- Any noises while accelerating or decelerating in any gear?
- Any troubles or grinding when changing gears?
- Is it difficult to shift into Reverse?
- Is the clutch slipping? Any noises, vibrations when the clutch pedal is pressed or released?
4WD issues:
Do you notice binding in turns? Do all 4WD modes work? Driveline noises? Vibrations?
Suspension and steering issues:
- Does the steering have a notable free play?
- Any knocking, rattling, creaking noises when driving over bumps or on a rough road?
- Does the car bounce a lot when driving over bumps?
- Does the car pull aside? Is the steering wheel out of center? Does the vehicle feel unstable? On a rough road? On a highway? In turns?
- Any humming, growling noises? Vibrations?
Brakes issues:
- Does the brake pedal go down too low?
- Does the brake pedal fee too soft (spongy) or too hard?
- Any brake pedal pulsation or steering vibration during braking?
- Any noises during braking? Grinding, screeching, squeaking?
- Does the vehicle pull aside during braking?
- Does the vehicle brake well?