How To Buy a Used Car (without sipping lemonade)

I’ve never really loved cars. If you’ve been reading this blog for a while you’ll know I get little joy from spending big bucks on automobiles. But two short months ago when Carl’s 2005 Subaru Impreza got smucked by a flying truck wheel I was happy to have walked away from the car accident mostly unscathed. The nightmares of flying wheels kinda sucked, but still having a head to dream with is lovely, thankyouverymuch.

After the car was written off, it became apparent that Carl and I needed a replacement vehicle and thus had to spend some bucks on a car. Our insurance company paid out a good part of the cost (yay), but like most claims the cost to fully replace a destroyed vehicle is never a wash (boo). So given our tight budget I knew that a used car fit the bill and I asked you guys to Squawkback and share your best used car buying advice.

Well, you guys rocked this Squawkback beyond my wildest dreams and helped us replace our car. In fact, we ended up getting two used cars using your awesome advice and I want to share what worked best and what rocked most. So here’s my tale of buying two used cars on a tight budget with your advice added in! Thank you!

How to Buy Used Cars By Owner

Many readers advised us to seek a private seller locally through classified newspaper ads or to seek used cars for sale online. The reasons are simple: there tends to be less financial fuss, less marketing mess, and a lot less BS when it comes to buying used cars by owner. Here’s how I ended up buying a used 1992 Subaru Justy for $1,500 just a mile from where I live. This was to be a temporary car.

subaru justy manual used cars

Getting Started and Knowing Your Budget

Doctor S @Finance Your Life says:

  • I just do not see the value in buying brand new cars when used cars with 10 miles on them are 30% cheaper. Research and the internet have changed the way car buying takes place. Put in the amount of research and you will find a car equating to your efforts.

This just about sums up my thoughts on buying a used car over a new car. By considering newer used models Carl and I hoped to save thousands of dollars over buying new. Besides, we both like older Subarus since our written off Impreza did a darn good job of keeping us alive.

Amphritrite @Future Queen of the Universe says:

  1. Ask your friends and family where they bought their used cars.
  2. Decide what you can afford, at what interest rate or whether you’ll be buying with cash.
  3. Figure out what styles you want and what your lifestyle needs are: truck, SUV or car.

We spent two solid weeks asking friends, family, and colleagues for any leads on a used Subaru Impreza. Carl wanted to replace his written-off AWD car and would settle for nothing less than a manual transmission. Given our budget of $20,000ish (the insurance company only gave us $17,000) we knew a used 2005 Impreza was on budget, but supply was scarce.

Where to Find Used Cars For Sale

TStrump @The Strump says:

  • Craigslist is always a great source but beware of lemons. Watch our for rebuilds – they are cheaper but have usually been in accidents and may not drive the same.

We searched for used cars online via sites like: Craigslist, Autotrader, Kijiji, Buy and Sell, and everywhere in between. But we got lucky when I mentioned our Subaru search to my massage therapist. While she worked on my whiplash she mentioned her Subaru mechanic (Ivan) and gave us the goods on his credentials and the used cars he buys and fixes up for sale.

Ivan didn’t have any leads on a used Impreza since they don’t enter the market often, but he had a 1992 4WD Subaru Justy that could tide us over until a suitable Impreza became available. The Justy was a rebuild and the interior wasn’t gorgeous to look at, but it was safe and we trusted the mechanic. Everyone we spoke with said, “Ivan was the Subaru mechanical man to trust”, and this means A LOT in a very small town. Besides, a $1,500 4WD beater could easily be resold in our area. So buying this used car was a win for us.

Reasons to Buy Used Cars Locally

Ray @Financial Highway says:

  • Make sure the car is not from out of province, if it is make sure you get ALL the information you can get your hands on. A friend of mine purchased a car he did not know was brought in from a different province and when he got in an accident he had major issues with insurance company.

Buying locally in province became important to us because insuring an out-of-province vehicle can be a hassle. Besides, bringing a car back to B.C. from another province is an ordeal – Canada is no small country to travel and flying by plane to one province and then driving back was a challenge given our schedules.

Get Your Used Car Inspected

Sara says:

  • After deciding you think you want a particular car, take the car to your usual shop and get it inspected. Carry the inspection results back to the seller and use that to negotiate a better price if something needs fixing. Or, you might not want the car at all after the results of an inspection! Totally worth the $100-150 it will cost.

Getting a used car safety inspected is wise advice and can save you money on the deal if repairs are likely. But because we bought the Subaru Justy from a highly respected local mechanic, we didn’t feel the need to get it checked by another shop.

How To Buy a Used Car From a Dealership

After three weeks of hunting for the perfect private seller with the right car I wasn’t opposed to buying from a dealership if they had the goods. The time spent poring over used car ads, calling private sellers, and checking out cars was adding up – and a lot of the time a private seller didn’t know the details on their own car!

Carl and I grew grumpy (and frustrated) but having the Justy on hand made waiting for the right car possible. But after a long search we abandoned the original plan of getting a Subaru Impreza and instead bought a used 2007 Subaru Forester for $21,000 from a Honda dealership. Here’s how it happened!

subaru forrester used cars

Why Buy a Used Car from a Dealership?

Melanie Reformed Spender says:

  • While you can sometimes get a better deal by cutting out the middle man, I would not go as far as to say never go to the dealer. A good dealer has minimum standards and has access to a lot of cars that you would never find in private sale.

We started calling dealerships just two days into our search. The supply of used Subarus by owner was low, and dealerships had stock and the ability to source the car we were looking for. Our challenge was that not a single dealership had a used manual Impreza in stock to sell.

Know Your Time Line, Do Your Research, Find a Used Car

Treva says:

  • I bought a used car last summer from a dealership. Before I bought it I did a LOT of research on the edmunds.com, kbb.com, and consumerreports.org (well worth my weight in gold for the subscription price). I unfortunately only had two weeks to figure out what to do and I would have preferred a full month.

Having the time available to hunt for the right car at the right price is a key component many car seekers don’t consider. Carl was growing concerned that an Impreza would take MONTHS to enter the market. So he decided to be flexible and widen his criteria to ANY decent AWD Subaru (Outback, Forester, etc.) with a manual transmission, excellent maintenance record, and low mileage.

Contacting Dealerships

Spending It @Spending It says:

  • Send an email to around 30 car dealers who have your car for sale. Tell them what you want and that you are sending a similar email to 30 competing dealerships and that you are going to buy from the dealer that gives you the best price.

This advice I think works best in larger cities when there are many models of your preferred vehicle on the market. In our small area of Canada (B.C. Okanagan) all the dealerships work together to deliver cars to customers. Since the Subaru dealerships were all in bed together it was impossible to negotiate a deal by playing them off each other.

So what Carl ended up doing was calling and emailing ALL car dealerships in our area (like Honda and Toyota) to see if they had any Subarus on trade in – and this is where we found some luck. A Honda dealership three cities over had just got a 2007 Subaru Forester on trade in. The car was in perfect condition, had only 45,000km on it, and boasted a manual transmission with a nice trim level. The fact it had heated seats was a super plus. ;)

Get Maintenance Records and an Inspection

Beth @Crummy Mommy

Do you want to own your pre-loved car forever? If so, make sure the major maintenance has been done regularly. Make sure that regular oil changes have been done! If the timing belt hasn’t been done by 100,000km, that’s a) something that you’re going to need to get done and b) a fairly decent sign that the car hasn’t been serviced and maintained regularly. If the previous owner has all their maintenance records, ask for them, look them over, even give the shop that does the regular maintenance on that car a call and ask about it.

We tried not to fall in love with the Forester, but we did. The car was in exceptional mechanical order with the previous owner providing all the maintenance records. And because Carl grew up on a farm repairing and maintaining heavy equipment, he knew a thing or two about checking for wear and tear on a used car. We knew we wanted this car, but only if the price was right. So we decided on our Bottom Line and as a couple agreed upon the price. The initial sticker price of $23,888 was WAY out of our budget.

Bargain and Be Ready to Walk Away

Orion, a Licensed Automotive Technician, says:

  • Don’t leave out the dealerships and used car lots in your search to find the right car. With our economy the way it is, some of the best deals can now be had at these places. The value of all vehicles has dropped considerably in the past 6+ months due to the lower costs of the new models. I find that a lot of private sale vehicles are priced a lot higher than used car lots. This is generally the case because the private seller has an idea of what there car was worth last year, and has likely invested more money in the car than it will ever be worth in today’s economy. Used car lots are hurting for sales these days and they need to move vehicles to stay afloat so do bargain with them.
  • Bargain down to the right price, and bargain you must. Everyone wants top dollar for their car but that has changed in the buyers favor. Use your acquired vehicle inspection and local market research to get the price down to a fair value.

Carl bargained like crazy. He called the dealership. He visited the dealership. Then he called again to say, “My wife would like the car more if it was $500 less.” The funny thing is, blaming me (the wife) for not wanting the car unless it was under a certain dollar value WORKED. The key to negotiating is to be fair, respectful, and be willing to walk away from the deal. The dealer dropped the price three times to reflect Carl’s knowledge of used Foresters and their real market value. Carl also offered to pay in cash – which was a huge win for sealing the deal. But because I was willing to walk away from the car if the price wasn’t inline with market value the dealer had no choice but to concede to the price. So we negotiated the car for $20,600.

Beware of Vehicle History Reports

Mr. NtJS @Not the Jet Set

  • CarFax reports aren’t a bad thing, but you need to know how to read them. Our month-long login caught a dealer’s lies (that truck had been worked like a dog), and confirmed a individual’s story of a vehicle’s history (the one we ended up buying).

The Honda dealership we dealt with was quick to present a CarFax report showing the “accident free” status of the Forester. The problem is, these “vehicle history reports” may not be worth the paper they are written on. Many insurance companies and police departments don’t report accidents to CarFax and these omissions can lead a buyer to think a car is accident free. Furthermore, some of these car reports are only updated periodically, which could miss a recent accident and leave you buying a busted lemon with hidden damage.

Ray @Financial Highway says:
The program CBC Marketplace did a story on vehicle history reports which is well worth a read.

This story is Canadian but is applicable across North America. When the Honda dealer presented the CarFax on the Forester we knew the right questions to ask and pretty much showed little confidence in the report. The dealer agreed that car history reports were a “nice to have” tool but were not entirely accurate. We found that test driving the car, looking for bodywork, and getting an inspection were FAR more valuable to us in verifying the car’s integrity than this report.

Beware of “Dealership Fees”

Carl’s Brother (a lawyer) says:

  • Dealerships like to add fees onto the price of a vehicle at the end of the deal. Be ready to see anywhere from $300-$1,000 in fees tacked onto the agreed upon price and don’t pay it. These fees may be called “registration fees”, “dealership fees”, or “documentation fees” and exist to pad profits.

I was horrified when I saw $300 added to the price of the Forester AFTER we spent HOURS negotiating the $20,600 price. The sales guy tried to sneak it in by banging his bling on the table, swooshing his pen in the air, and shrugging off the fee as a part of doing business. The frustrating thing is after spending the better part of a day wheeling and dealing, it’s easy for a buyer to be worn down by the process and eager to end the pain by just paying the darn fee. But don’t.

Because we knew about this fee in advance, Carl outright refused to pay it. The sales guy, who had chest hair in need of some serious manscaping, was stunned when Carl pointed out the bogus fee and said, “I’m not paying this.”

The sales guy challenged us and said, “You’d refuse to take the car just because of $300?”

Carl stayed strong and held ground. He said, “No. I’m taking the car, I’m just not paying that fee.”

After another 20 minutes of bickering over $300 Carl got his way and had the fee removed from the cost of the car. Victory.

Conclusions on Buying Two Used Cars

There are as many ways to buy a used car as there are people. But to drive away with a deal the best advice I could share would be to listen to Squawkfox Readers. Whether you buy used cars online, by owner, or through a dealership it’s wise to wait for the best vehicle for your specific circumstances. The best used cars are the ones that fit your budget, suit the needs of your family, and don’t cost you in repairs after driving from the lot.

After buying a used Subaru Justy for $1,500 (by owner) and a used Subaru Forester for $20,600 (by dealership) I can honestly say there are positives and negatives to both routes. The key is to be flexible when searching and to not fall in love with an automobile before the papers are signed.

Today we love both our used cars and are thrilled with the decision to forgo a sporty Impreza for a more comfortable Forester. I’m also happy to have my first car (the Subaru Justy) in over 12 years and have some mobility on the farm in the winter months since riding a bike in the Canadian winter is a little tough at times. Maybe one day I’ll become a car-loving person and ditch my bicycle. Well, maybe not. ;)

Your two cents:

  1. Beth June 10th, 2009

    If you ditch your bicycle, do tell which ditch it’s in, so I can bring my truck and give it a loving home ;)

  2. Andy June 10th, 2009

    First time poster, long time reader.
    Love AWD in Canada and have been driving my Subaru since 98. You should have look south of the border. With the current exchange rate you could almost bought a brand new Subaru from Seattle. The warranty is transferable and if you bought a legacy/outback you wouldn’t need to pay for duty because of NAFTA treaty (made in US).

  3. Imee June 11th, 2009

    Thanks for these tips. My parents bought a used van a few years ago and I think they could’ve done better. Now they’re thinking of buying a brand new car, but not a luxe one, so I think they should consider buying a proper used car.

  4. ABCs of Investing June 11th, 2009

    Sounds like Carl got a good deal on the car – of course he probably could have built a house addition in the same time… :)

    Buying used cars is kind of like buying a (used) house – you have to look at lots and lots to get a feel for the market and what is/isn’t a good deal.

    As you know – looking at dealer cars takes time but private sale visits are a huge time suck. Looking for a specific type of car only makes it harder.

    I’m not sure if I would buy a used car in the near future – you do save a bit on depreciation (not as much as a lot of people think though) but the amount of time to do a proper used car search is a lot.

  5. Alanon June 11th, 2009

    I am a big fan of walking away from a dealership. In fact I have a standing rule that I never buy on the first visit. Salespeople love to push the emotional buy buttons. They also love to talk about the monthly payment instead of the total cost.

    I know you are a proponent (fanatic) about being debt free, but have you considered leasing a car? I leased an infiniti for 39 months and the dealership paid for everything from oil changes to tires and a break job. They provided emergency roadside assistance, rental car while it is in the shop… Etc. When computing the cost of buying a car, you really have to think about the total cost of ownership.

    Incidentally, when the lease was up we returned the infiniti. A relative had a vw jetta that they gave us for free. I put $5000 into it the first year for tires, 80k service, brakes and bearings. That was a full year of lease payments on the infiniti, or 2 years of payments on a new jetta… Of course it has been trouble free ever since… So that cost drops with each day that passes… My point is that you really do have to look at the big picture with car ownership, not just what you manage to wring out of the sales guy

  6. Melanie Reformed Spender June 11th, 2009

    Great post! I’m honoured to be quoted.

  7. Aman@BullsBattleBears June 11th, 2009

    These are some great tactics that work! I have walked away from dealerships and been able to get great deals and now, with the current economy, its even a better way to leverage further savings compared to those that try to negotiate on the first visit.

  8. Carl June 11th, 2009

    Car shopping. Not something I want to have to repeat for a long time, especially given the circumstances…

    Importing from the States is something I considered, but the cars I was looking at (Imprezas & Foresters) are made in Japan. The duty on that would probably have eaten a significant chunk of any savings. Add to that the time, paperwork, and hassle of making a trip for this, and it really wasn’t worth it for us.

  9. marci June 11th, 2009

    Welcome to your new Forester from my Forester :)

    When negotiating the price on my Forester back in 2000, I was also prepared to walk away from the table and that’s what brought the car price down. I had done my homework, knew the price of the car elsewhere (but at a dealer I did not wish to deal with ever again) and said, “Here’s the price of the car at so-and-so’s. You need to beat that price or I will be buying it elsewhere.” They finally saw it my way. It pays to do your homework.

    And congrats on finding two used Subaru’s – they are rare creatures indeed! Most people hold onto them until they drop – which takes forever! Mine is 9 years old with 115,000 miles on it, and I thought when I bought it to keep it 10 years or 250,000 miles…. but looks like now it will be 20 years or 250,000 miles… :) Or til it rusts apart (none so far) here at the coast.

    Good post!

  10. Sagan June 11th, 2009

    I think I’ll stick to my legs, bike, and public transit, but thanks for so much great info!

  11. cheryl June 11th, 2009

    My husband & I are looking for a used car right now. It hadn’t occurred to us to question the vehicle history report, or to try to bargain down all those administration fees (which tacked $1,000+ onto the price of a car we saw and liked this week). Great info! Thanks!

  12. Sara June 13th, 2009

    I third walking away at a dealership because of fees. I was working with a dealership in town that I liked their service folks, not so much the salesmen. I wanted a base Jetta TDI because I hate spoilers and lots of extra things I never use. I went to another dealership slightly out of town that had the exact car I wanted at a better price but I wasn’t sure about their service dept. So I let the in town dealership know about it to see if they would beat the price. They bought the car from the other dealership instead and matched the price.

    BUT, they started tacking on the fees, including a “coating” on the undercarriage that supposedly helps you find your car if it has been stolen and sold for parts (in Mexico is the implication as I live in TX). I refused to pay it that $500ish – told them I didn’t ask for it and wouldn’t buy it. Finally, the manager dropped the price of the vehicle by that amount “so that they could sign me up for the insurance”.

    Since I was okay with the price I negotiated, I agreed, but the real moral of my story is they will keep coming down if you can wear them down. I should have said don’t bother with the insurance papers but I will take the extra discount for my trouble.

  13. Hayden Tompkins June 14th, 2009

    You honestly, cannot overestimate the importance of an honest mechanic who is on your side. Getting a car checked over first by said mechanic is worth its weight in gold.

    P.S. Our SAAB has heated seats and YES! we are fans.

  14. Jude June 15th, 2009

    Kerry-

    My dad swears by the car buying process here: http://excarsalesman.typepad.com/

    I haven’t tried it yet, but I might because it looks good. However, I’m probably not going get a car for a long, long time.

    Jude K.

  15. Doctor S June 22nd, 2009

    haha thanks for using my thoughts, I never thought they would come in handy!

    I am in a weird pickle now, the car I bought 3 years ago has had some issues lately. One mechanic told me he has never seen more rust underneath a car in his life. I wish i did a better job of inspecting the underneath of the car when I first checked it out. I did not think to ask them “Can you guys get this car up in the air so I can take a look at the undercarriage?” Not sure how that would have flown with the dealership.

    I hate cars.

  16. Kerry June 22nd, 2009

    @Doctor S So sorry to hear about your car woes. Can you get a second opinion? Sometimes one mechanic’s “worst ever” is another mechanic’s “whatever”. :)

  17. Susanne July 23rd, 2009

    I bought a used car from a small local garage. If you live in a small town, just ask around, you will find out who sells lemons and who knows their cars.
    I have a 1992 Acura Integra with 225K on it. Though I’ve replaced the rusty drivetrain/muffler/fuel components, this car just keeps on giving. I’m only the third owner and I’ve put almost 100K on the car.

    and yes, push the dealer’s buttons. Years ago I bought a Honda civic, the dealer wanted almost $10 000, I laughed at him, offered him 6 and walked away.
    A week later he called to say the car was being moved off the lot and that I could have it for 6500.

  18. Kevin Jones July 4th, 2010

    Just go to Carmax, if your car has issues they take care of everything for you as long as you get their extended warranty. Then you have a huge company standing behind the car if something happens as opposed to a private party who wont pick up your phone if something happens after the sale.

  19. Joan Jobs July 20th, 2010

    I do buy used cars for convenience and of course I can save a lot of money. I always consider dealers or stores that are credible. It will be better if you will buy a used car from a person whom you trust. Nevertheless, there are many reputable stores and car dealers wherein you can buy a used car that looks and performs as a brand new one.

  20. Neal August 12th, 2010

    My experience is keep the car until it has to be towed to a junk yard! I did this with a Mercedes 180 that I bought in Vancouver (it is not sold in the States) it was in the price range of a Chevvy. It had to buy it because my Plymouth totally disintegrated, and it was gutless, the upholstery was peeling off the ceiling and the front seat was broken. It burned oil and was gutless. I had a VW diesel that oil penetrated the overhead valves and once in a while it would belch a mass of oil fumes that drove other cars off the road, I did not stick around when this happened. Then I got “lucky”, it was totaled by a gravel truck, no one was injured but the car was a total loss. My current car is 15 years old and it runs great, a Subaru Outback. I figure that it will be around until it has to be towed to the junk yard someday. KEEP YOUR CAR UNTIL IT REALLY DIES!

  21. Sean November 3rd, 2010

    I havn’t bought used in years, but apply the same ideals to buying new. In 2001 we bought a new civic and as we got down to it, I told the saleman straight out if he didn’t come back with the price on the I wanted he’d see the back on my jacket leaving toot suite (however they did try for another $300 they didn’t push to hard) and in the end messed up as they couldn’t locate the colour, so they put us into a rental car, in 04 we went back and bought an Odyssey and used the same saleman as we where returning customers the sale went very smoothly. Now my daughter is driving that same little civic, and we bought an 09 ranger, for this I did look used but because the market was so soft it didn’t make sence to buy used when we could have new for almost the same price. This time I was hit in the face with add on’s including the dealership fees, stood my ground and and after about 3hrs I got the truck for a little less then the sale price, without any extra fees. So in short do your homework, research what you want to buy and be prepared to walk away…and you’ll find the process isn’t so bad!

  22. Aunt Cloud September 11th, 2011

    Glad to find like-minded Subaru fans. Our almost-brand-new Outback is parked outside – very gently used, this year’s model, and I fully expect it to drive me to my kids’ university graduation (they’re in elementary school).

    We also have a 2005 Corolla which was bought new, is lovingly maintained and carefully driven, and is not going anywhere soon. I’m still a little grumpy about having to buy a second vehicle because our workplaces have changed, kids are growing and have their activities, and taking public transit or biking to work are not always feasible.

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