A bar­gain hunter’s guide to used car shop­ping

Chicago Sun-Times - - DRIVE HOME - BY PHILIP REED

If you’re shop­ping for a car, you may al­ready know that buy­ing used is a smart move that greatly ex­pands your choices.

The key is know­ing where to look. Buy­ing a used car will not only save you money, but will also al­low you to shop high­erend brands, says Ivan Drury, Ed­munds.com’s se­nior man­ager of in­sights.

For ex­am­ple, maybe you wanted a new Toy­ota Camry. In­stead, he says, you can save about $5,000 and get a three-year-old Lexus.

Be­cause of the bank­ruptcy of Hertz ren­tal car agency, along with the many cars com­ing off lease, there are a lot of used ve­hi­cles to choose from, says Jeff Huang, who at­tends auc­tions as the re­mar­ket­ing sales su­per­vi­sor at West­lake Fi­nan­cial Ser­vices.

“A good used car is a real value propo­si­tion — and there are def­i­nitely deals to be had,” Huang says.

Shop­pers look­ing for great bar­gains will find them in cars that are more than seven years old, says Mark Holthoff, used car ed­i­tor at Klip­nik, a web­site for used car en­thu­si­asts. “That’s be­cause the de­pre­ci­a­tion curve has mostly been flat­tened,” he says.

For ex­am­ple, a 2014 Mercedes-Benz E-Class sedan, cost­ing $70,000 new, now sells for about

$20,000.

Shop in the right place

New cars are only sold by fran­chised deal­ers, but used cars can be pur­chased from a va­ri­ety of sell­ers: • Used car de­part­ments at new-car

deal­er­ships.

• Used car su­per­stores such as CarMax. • On­line used car sell­ers such as

Car­vana, Shift and Vroom.

• Car ren­tal sales lots.

• In­de­pen­dent used car lots.

• Pri­vate par­ties.

• Pub­lic auc­tions.

You’ll typ­i­cally find the new­est and more ex­pen­sive mod­els at new-car deal­ers’ used­car lots, the only place to turn if you want a cer­ti­fied car with a war­ranty and fac­tory fi­nanc­ing. Prices are likely to be higher than other lots’ but ne­go­tiable.

Na­tional used-car chains such as CarMax, on­line re­tail­ers and ren­tal car agen­cies also of­fer newer cars, of­ten with re­main­ing fac­tory war­ranties.

You can also get a loan and buy ex­tended war­ranties. Prices are typ­i­cally no-hag­gle.

In­de­pen­dent lots, pri­vate par­ties and pub­lic auc­tions typ­i­cally deal in older or

cheaper cars. The up­side is that you may find a 20-yearold one-owner cream puff, cheap. It does hap­pen. But most cars have had sev­eral pre­vi­ous own­ers, and a check­ered past is not rare.

Plus, you’ll have to ar­range your own fi­nanc­ing.

Ad­just your ex­pec­ta­tions

There is a built-in risk-ver­sus-re­ward el­e­ment to used car shop­ping: The more you’re will­ing to spend, the less chance the car will need re­pairs and over­due main­te­nance. Here’s an over­view of the three price lev­els of used cars:

• High-end used cars: If your bud­get is over, say, $20,000, you might con­sider get­ting a cer­ti­fied pre-owned (CPO) car from a dealer. Shop­ping for a CPO car is eas­ier be­cause it’s pre-in­spected and comes with an in­cluded war­ranty. While you’ll have to pay a pre­mium, you’ll also be able to buy a car with more mod­ern tech­nol­ogy and safety fea­tures. Of course, you can al­ways buy a non-CPO car and pur­chase an ex­tended war­ranty.

• Midrange used cars: A sweet spot for used car buy­ing is a three-year-old ve­hi­cle com­ing off a lease. Many of these cars will sell for 40% of their orig­i­nal price and still re­tain a new-car feel, ac­cord­ing to Drury. An­other source of nearnew bar­gain­priced ve­hi­cles is car ren­tal lots. Ac­cord­ing to an iSeeCars anal­y­sis, Hertz ve­hi­cles are sell­ing for an av­er­age of $1,389 be­low mar­ket value.

• Older used cars: Many peo­ple are afraid that cars from seven to 15 years old will re­quire costly re­pairs. But Holthoff points out that new cars can ef­fec­tively cost the owner $1,000 a month in de­pre­ci­a­tion.

“You might have to spend money on a re­pair, but de­pre­ci­a­tion is a con­stant,” he says. To off­set re­pairs, set aside $100 a month so sud­den me­chanic bills won’t de­plete your sav­ings.

It’s best to buy older cars from pri­vate-party sell­ers be­cause you can get a bet­ter idea of the me­chan­i­cal con­di­tion, Holthoff ad­vises.

A used car dealer will show you the ve­hi­cle his­tory re­port, but a pri­vate party might have the ser­vice records and can an­swer many other ques­tions.

Look for un­ex­pected value

The used car mar­ket is vast and, if you can spot an out­lier, you can save big money.

Here are a few ex­am­ples of how to find that di­a­mond in the rough:

• Cars that haven’t been re­cently re­designed will sell for less. Check car sites such as Ed­munds.com to find out when the last time ma­jor changes were made to a model.

• While there is a stigma to buy­ing a used ren­tal car, the ve­hi­cles are well-main­tained and priced lower than buy­ing from deal­ers, Drury says.

• If a car dealer’s ve­hi­cle his­tory re­port shows you are look­ing at a for­mer ren­tal car, leave and buy a sim­i­lar one di­rectly from the ren­tal agency’s sales lot. You’re likely to find it cheaper.

• Be will­ing to travel to an area where the car you want is less pop­u­lar. For ex­am­ple, all­wheel-drive ve­hi­cles sell for less in the south­ern U.S., where win­ter driv­ing isn’t a fac­tor.

• Be will­ing to travel to a more com­pet­i­tive mar­ket. A Honda dealer with a city to it­self has less pres­sure to dicker on a CPO ve­hi­cle than a dealer in a city with three or four ri­vals.

• Used lux­ury cars of­ten of­fer the big­gest sav­ings, ac­cord­ing to Holthoff. The money you save on the pur­chase can be used if any re­pairs are needed.

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