A lot of people ask me how I paid off $33,555 of debt in less than 3 years and what I could make the biggest difference for them in terms of their bottom line. Knowing how to buy a decent used car and save money on what you should be saving money on is one of the fastest ways to put money back in your pocket. If you haven’t already read the post I wrote about how my girlfriend and I sold our over priced cars to get out of debt and get a better ride then check out: How My Girlfriend and I sold Both of Our Cars and Pocketed $13,800 Cash In Under One Hour…
If you value your freedom, and dislike having to make payments on things, then you are going to like what I have to say here. On the otherhand, if you enjoy overpaying for luxuries which depreciate in value over time and cost you a bunch of money, and your dreams, then you should probably stop reading now.
So, when buying a used car, there are a couple of guidelines that I recommend.
1. Firstly, Detach Emotion From the Car Buying Process:
You are buying a tool, and not a toy. If you want a fancy toy go buy a motorcycle, it will cost less to maintain and be more fun to ride. I don’t care how shiny the hammer is all I care about is does it hit nails well?
A car is good for one thing: getting you safely and quickly from point A to point B. All the other fluff that goes into cars is designed to sell you. Yes, driving fast cars is fun, but that is not what a commuter car is designed for. I’m all for driving fast on the track but that’s what a day at COTA is for, and that would probably cost more than my whole car…
2. Know Before You Go: Do Your Research Upfront and Know if a Car Has an Issue with the History
Research your cars before you show up.
Ask for the vin and check it with a service like Carfax or Vincheckpro (less expensive but checks all the major databases just like carfax).
Check the profile: if the car that is being sold is shot with the same angle or with the same background then you are probably being sold to by a “dealer” or even worse… a junk reseller…
Like this one:
Ask the seller if it’s “Original Paint” – last thing you want to do is spend all that time driving out to see this ‘great car’ and come to find that it was totaled or busted up real bad and then replaced with non-original manufactured parts grabbed from a scrap yard, then “affixed” somehow to the frame…
3. Ask Your Mechanic: Do you know a Grease Monkey?
If you don’t have a personal mechanic that you trust, that knows you by your first name and you know at least a little about their personal life, then ask your friends who they use. If they tell you one of the national tire brands then ask the next freind till you find a mom and pop you can trust. Worst case scenario you can just drive it over to one of the big boys and /or meet the seller there to get it looked at. You aren’t going to be paying for repairs but you want to get it looked at by a mechanic that can give it a once over for any major problems like transmission or motor issues.
4. Made in Asia is a good thing:
Not all asian countries are alike. Japan and China are not at all culturally alike, yet they tend to be all roped into the same category. One thing that differentiates them entirely is something called TQM (Toyota Quality Managment). TQM, right after WWII, was implimented in Japan and resulted in the smaller companies like Toyota and Honda eventually being able to compete with the major western manufacturers like Ford Motors, GM and Crystler.
Because Toyota focused on designing the car Right and not just FAST, it resulted in huge savings of time and money on the back end (in recalls, law suites, and disatisfied customers). What this means, is that you get a better car, which lasts longer and needs less mechanical maintenance = save more money.
5. Old Dogs Can Learn New Tricks: Shop like you’re a Grandma
A mid sized sedan, 4 door, 4 cyclinders, and with under 100k miles will have lower insurance and maintenance costs. If you can shop like your 70 year old grandma would then you will live like warrent buffet does some day. Wealthy and never needing to work a day longer in your life but choosing to do so out of pleasure rather than to just pay the bills.
6. Check your car’s Value Using Kelly Blue Book:
Working at a Motorcycle dealership we used a system of checking bikes for resell when we wanted to know how much a customer was losing his or her respective shirt.
nadabikes.com is what we used to estimate the value of a used bike and what we (as a dealer) should pay for it in order to make a decent profit (*cough* gauge them *cough*), but it was basically the KBB of the bike world.
Brian, the guy who I worked with, had been there for about 7 years. He told me about the mileage estimation that KBB uses to base their values on and it’s right around 9,000 – 10,000 miles a year for used cars. So a 10 year old car should have right around 90,000 miles in order to be considered good condition. An 11 year old car, 100,000 miles and so on. (1)
So If you shop for a car that is under 100k and is 10 years old you will see values right around the KBB values on their site. Which means that you can estimate, based on how far you drive daily, how many miles you will put on your car in a give 6 months and estimate the rough resell value should you choose to sell that car and get a new one.
This means that you now know the before and after price estimates based on our criteria.
1 – original paint
2- 10 years or older
3 – under 100k miles
4 – Japanese manufacturer
5 – Less than $4,000
7. Ways to shop: Craigslist / Facebook Market Place / Local Used Dealers / Asking friends
If you are looking to save absolutely as much money as possible, and are in no rush to buy a car, AND you are to put in the work to go hunting for deals then craigslist is a great place to shop for your next used car. Just know that you will want to be extra thruough about checking your cars and bring a friend who works on cars and/or is actually a mechanic. Craigslist is not for the faint of heart…
What you may find may shock you, but avoid calling on folks that don’t have pictures, or that have pictures that look like what you saw in another picture. Dealers sell multiple cars, distressed sellers sell A car. Buy from distressed sellers, not junk dealers.
Facebook Market Place:
A growing place to shop locally, kind of like a step up from craigslist. People can see (for the most part) your network and see if they know someone you know. In a way its better than craigslist because there is some social pressure to not lie or cheat people; however, keep in mind there are hundreds of thousands of fake profiles out there just floating around from spammers and scam bots… so be careful.
If you see a car for sale, click on the sellers face icon in that post and it will show what else they are selling. If you notice that they have more than 2 cars, then they may be a junk dealer and I would advise to just simply avoid them.
Local Dealers: Calling around to get a better deal
I prefer this method because this is the only method where reputation becomes an important factor. Car dealers, though they are known to try and scam you, will not sell a damaged car if they are a respectible name in the market place.
I’m not talking about the folks that buy a house and put a bunch of junk cars in their front yard and sell cars on craigslist. I’m talking about the folks that go hundreds of thousands of dollars into debt to get commercially zoned as a dealership, are located right next to a Walmart shopping center, and who actually pay for advertising on the radio still. Those jokers.
If you are not in a rush for your next car then you can shop around with the local big fish used car dealers to try and score a deal last minute.
Here’s what you do: run a quick search for local deallerships to see what used inventory they may have available. Cars you find which meet the following criteria:
1 – original paint
2- 10 years or older
3 – under 100k miles
4 – Japanese manufacturer
5 – Less than $4,000
If you find a car that meets this criteria you can go ahead and call the local dealership and ask them what they have available. If they tell you anything but the one you found then hang up.
Dealers are trying to get rid of inventory at the end of the month and cannot make a profit on a car that is sitting there and not selling. Dealers will try and buy undervalued cars that folks don’t want and then resell for a mark only if they think it will sell based on national sales data of similar vehicles in similar conditions (aka KBB).
You have the advantage of not keeping inventory and not needing to buy the car, thus you can walk away if things get too heated or you feel you are under too much pressure from the salesman. Don’t think that you have to take there deal, because you don’t you can walk.
Ask your Friends:
Lastly, and this is a good option for most, ask friends through your network who may be selling their car. Chances are, you know someone that is moving, doesn’t need the car, or just want’s to sell it to get a new car. If this is the case, and it meets the above criteria, and your mechanic checks it out and it looks good then go ahead and buy it. Just make sure that you transfer the title to your name using your local DMV as a resource to make sure you have all the right forms.
Always check the VIN for the history report.
You can use these free online tools to get the gist of the history of the car:
- National Insurance Crime Buero – NICB’s VINCheck is a free service provided to the public to assist in determining if a vehicle has been reported as stolen, but not recovered, or has been reported as a salvage vehicle by cooperating NICB member insurance companies.
- National Highway Traffic Saftey Administration – you can check to see if there are any active recalls on your car.
- Vehicle History Report – VehicleHistory.com provides you access to information from public databases on the vehicles history.
Once you’ve checked those resources, if you’re interested in getting more data that helps to ensure you are investing in a reliable used vehicle and not a lemon, check out Autochecker.com or Carfax.com reliable data backed by Experian and other big data.
To Wrap Things Up:
Once you find a keeper it can take only a couple of minutes to get the car transfered to your name (assuming that you have cash and the seller is willing to part that day with their vehicle).
If you are able to find a car right at 100,000 miles or under, between 10 and 12 years, with original paint for under $4,000 then you are right in the money spot.
Chances are, as long as you’ve followed the other steps, you will be able to use this car for a good 20,000 more miles before needing to sell it for a new one and since most Japanese cars retain their value fairly well it’s a pretty good guess that you will either be using this car for “free” or even make a small profit on it.
If you found this interesting or useful in your car search please click the share button and leave a comment below with any questions you have.