How to get a great deal on a used car

There are plenty of options for buying a nearly new car. We are defining this as a car that is one year old with less than 12,000-15,000 miles. Many consumers don’t want the hassle of buying a used car. My dad liked to buy a new car and run it until it died. He wanted to know the car was only driven by him. You would think he didn’t shop for cars all that much with that philosophy, but he did. He didn’t buy them, but loved to shop for them. For me, I like to squeeze ever dollar out of a purchase, including buying a car. Here are a few strategies for getting that nearly new car at a huge savings.

Know the real value

Before you start looking for a great deal you need to know what a great deal is. I am not talking about looking at Kelly Blue Book or other sources to find out what dealers are selling for, not that KBB information is a bad thing to know. When you look at a vehicle’s new MSRP you can get fooled when looking at used cars. Comparing a slightly used car offered at $8000 off of the original MSRP might seem like a great deal if you don’t know the new after rebates and discount price for that car was $6000 off MSRP. You are essentially only getting $2000 off for buying a used car. Some companies offer a lot right off the top and other’s do not. So, being informed a year or two out on industry and company practices can help when it is time to buy a vehicle.

A couple of years ago I was looking for a Dodge Challenger. I was shopping new and used. Used car prices for a stripped 2014 SXT were about $20,000 to $22,000. I found new Challengers in my area for around $24,000 after big rebates and discounts. However, I found a dealer two hours away from me that beat my local pricing by another $2000 which matched some local dealers for similar used Challengers. You really need to use online pricing to help you either negotiate a better local price or at least be aware of what a great deal is.

Time of Year

Timing will help you get a better deal on a car. Everyone knows about holiday sales due to the advertising. If a consumer buys a new car they often trade in their old one, causing dealerships to have more supply around that time. The last week of the year is a good time to buy a car, so used car supply is pretty high just after the new year.

Here in the Midwest, we have winter. That causes car prices to drop as consumers don’t buy as often in the poor weather, especially after the holidays. Prices will take off in spring though, so you have a two or three month window where car prices are $2000-$3000 lower on a $20,000 to $30,000 car. If you are trading in your vehicle expect to also receive less for it than you would a few months earlier or later. If you are trading in a junker, it won’t matter so much. This winter discount isn’t a widely discussed savings, so a little planning can really save you big if you can work it that way.

 

Car Buying Service

Some companies work with dealers for better pricing. Usually the amount of savings these services actually provide are overstated. However, it didn’t cost me anything, so I gave USAA Car Buying Service a try. There are other services out there you may be associated with too like AAA, credit unions and warehouse clubs like Sam’s. I entered what I was looking for and received three offers. One was local, just down the street, one was out of state, but within a couple of hours. The best offer was about the same distance away, but in my state.

I went back and forth with the online dealer’s salesman looking at different options and I was very surprised that this dealer was $2000 less than I could buy locally, even after going back and showing the local dealer my out-of-town offer. They wouldn’t even try to match it. Some dealers operate on a different scale and are able to offer their cars less than other dealers can due to kickbacks they get from Dodge or whoever.

Dealer auction purchases

Dealers have access to auctions for nearly new cars. Many of these are former company leases or rental cars, so they will have more wear and tear than a privately owned nearly new car. You can get an idea of pricing prior to the auction if the dealer has some experience in this area. A dealer can look at the system and find out how many cars that are similar to the one you are looking for to get an idea of how much it will go for and then ultimately how much they will pass it on to you for. I went this rout the last time I purchased a car.

I purchased a one year old Chevy Impala for under $20,000. Other dealers were charging $24,000 or more. Make sure you check multiple dealers in your area as they may have different regions they get their auction cars from. Dealers there were only 20 miles apart from me looked for auction inventory in two different areas, one in Detroit and the other in Pittsburgh. Keep in mind the dealer can’t guarantee you a price, mine was nearly $900 more than the original estimate, but I also wasn’t under any obligation either.

Web site pricing

Getting prices from all over the country can only help you get a better deal. Whether you travel a bit and purchase a car or use that offer to get a better deal locally, the more information you can get the better. Online pricing involves both dealers and individual sellers.

eBay.com

Originally the place where private sellers could advertise their cars all across the globe. However, dealers have taken over and dominate the listings now. Individuals are still advertising, but dealers have since seen the light and are willing to offer better Internet pricing than they offer in the showroom in many cases.

Autotrader.com

Millions of cars are advertised on Autotrader. The site is clean and the filters work well. Quickly find the used or new car that fits what you are looking for. Autotrader also provides advice on car shopping with articles about how to get deals, financing and more.

Truecar.com

TrueCar is similar to Autotrader, they have tons of listings and provide a filter for quick searches. I like the TrueCar price rating that lets me know how much of a deal I am getting compared to retail on a given car. It is kind of like combining KBB estimates with actual advertised pricing.

TrueCar is also what powers the car buying services like AAA and USAA, so you can do that on their site too.

Rebuilt Title Cars

Most car shoppers won’t even think about buying a car that has a salvage or rebuilt title. I understand there is more risk involved. I purchase a salvage title car about ten years ago, it was an Impala too, I seem to like them. The model was a year old, site unseen via eBay across the country, was a rental car and in a wreck. What could go wrong with that purchase? I knew I was making a risky move, but I paid about half ($9000 Vs $17,000) for what I could get a similarly equipped used car locally with a clear title.  I drove the car for more than a hundred thousand miles before any real issues started, so my risk paid off.

You should know the difference between salvage and rebuilt titles. Depending on your state, a salvage title car will need to pass a special inspection and mine came with extra hassles of providing receipts for parts, etc. Rebuilt titles can be titled in most states just like a used car as the extra hassle of inspections have already taken place. Still, check with your local BMV to make sure before purchasing any salvage or rebuilt title car. A flood title to me is more of a risk down the road. What you see isn’t always what you get. I know a previously wrecked vehicle can have frame issues, but flood cars can cause water to get into the wiring causing rust and longer term issues that aren’t easily seen at time of inspection.

Ebay has a ton of salvage and rebuilt title cars. You can search for them specifically. Go to eBay Motors/Cars and Trucks and then use the filter on the left side of the page. Go down to the refinements option and a box will appear with more filters. Click on the “Vehicle Title” option and you will see the different types of titles that you can search for.

You can get a great deal on a rebuilt car on eBay. I was recently looking at a 2014 Challenger (can’t get that car out of my head). The car had 12.500 miles and came with a rebuilt title due to damage in a real quarter panel. It was black, which wasn’t my color, but I watched the bidding the last few days and it was really low going into the last few hours. As with any bidding, some cars will be bid on at a routine rate with a mild uptick at the end. Others will balloon in the last hour or so. The Challenger was still under $8,00 in the last hour. It jumped a little in the last ten minutes, but was sold for less than $9000. That is half of the car’s value with a clear title.

One thing to look for, dealers will often bid on their own cars if the bid prices are too low. It isn’t allowed by eBay, but you can get an idea if this is happening because how many eBay shoppers with 0 feedback make their first purchase a rebuilt titled car?

Conclusion

There are several ways to get a great deal on a new car if you are comfortable with the added risk. Knowing the real value of the car you want is the first step and then you can calculate your risk/reward number based on the type of purchase you make. I have went all the way with a salvage title and I have used a dealer to get a less than perfect used car. Both were good choices for me, but you will have to determine what is best for you. Whatever purchase option you choose, even buying new, become informed with dealer visits and online research. You should be able to save thousands off of the best local dealer price.