Cars
Great Deals on Used Cars
Snap one up before demand pushes prices higher.
By Jessica L. Anderson, Associate Editor
From Kiplinger's Personal Finance magazine, June 2009
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As the new-car industry slides deeper into misery, the used-car market is holding rock-steady. In fact, the forces that have sunk sales of new vehicles-tight credit and a shaky job outlook-have helped buoy used-car sales. At the same time, used-car dealers are flush with vehicles that they have to price low enough to undercut fire-sale prices on new cars.
SPECIAL: 2009 CARS | |||
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SLIDE SHOWS: Our Top 10 Picks for Best Used Cars | ||
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PLUS: Your 5-step game plan for buying car | ||
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Behind Our 2009 Car Rankings | ||
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MORE: Kiplinger's Car Buying Guide | ||
Ben and Wendy McCurdy of Farmington, Minn., near Minneapolis, found a 2008 Ford Taurus at the nearby Apple Valley dealership for just $18,000. That's a couple thousand dollars less than prices they found elsewhere-and way below the $27,000-plus they would have paid for a 2009 Taurus after a recent $4,000 rebate. Originally in the market for another Honda Accord to replace their 1997 trade-in, the McCurdys were swayed by the price on the fully loaded Taurus, the low mileage (just 10,000 miles on the odometer) and the "certified" designation. As a certified used vehicle, it was inspected by factory technicians and sold with an extended warranty. Plus, the original basic warranty for three years or 36,000 miles was still in effect. "We knew we wanted a recent-model used car so that it would have some warranty left and low mileage," says Wendy. "It could act like a new car and we could really get the value out of it." It didn't hurt that the car had leather seats and Microsoft's Sync technology for seamless cell-phone calls and MP3 playback.
Where The Deals Are
Don't spring for a late-model used car without first checking prices for the brand-new model. According to a recent Edmunds.com survey, many new cars are actually cheaper than the year-old model when you factor in low-rate financing.
Some of the sweetest deals are for three- or four-year-old luxury vehicles. Three years ago, leasing was going gangbusters, so the used-car market has plenty of freshly off-lease vehicles. Because luxury vehicles are leased more often than nonluxury models, supply is up and the pricing is pretty favorable, says Tom Kontos, chief economist for Adesa, a vehicle-auction company.
Another segment in which you can score a deal is SUVs. Last summer's soaring gas prices led a lot of owners to dump their vehicles-and resale values plummeted. Although SUV prices have started to inch up as sales of gas guzzlers improve, prices overall are still about 10% less than they were a year ago. Even among nonluxury sedans, there are good buys to be had, notes Mark Scott, of AutoTrader.com. Because the market didn't fluctuate as much for these cars, the savings are less. But prices are still down about 5% to 8% from early 2008.
Don't expect the deals to be around forever. Dealers aren't getting as many used cars as trade-ins, rental com-panies are hanging on to vehicles longer, and leasing has slowed-all of which will reduce the number of used models flowing into the market. As supply tightens, prices will go up.
Narrowing Your Options
Visiting a dealer is now your last step instead of your first. Perusing online auto listings at sites such as AutoTrader.com and Cars.com, you can glean almost all the information you need without setting foot on a lot. In addition to pictures and prices, online listings include options, mileage and the vehicle identification number, which you'll need to check the vehicle history.
Once you've narrowed your choices to a specific make and model, log on to Edmunds.com to get current transaction prices. Its dealer retail price is the average of what consumers are paying at dealerships, and the private party price tracks deals between individuals. Edmunds also has average prices for certified used vehicles. Kelley Blue Book (www.kbb.com) and NADA Guides (www.nadaguides.com) are useful tools as well-if you're financing through a bank or credit union, it may limit your loan to no more than the car's listing price in one of these guides. But the numbers they list are suggested retail prices, and that's just the starting point for negotiation.
Reader Comments (5)
Posted by: VJ at 05/03/2009 12:43:33 AM
Here's a site that helps buyers quickly see the cars for sale on eBay around their city. The interactive and visually rich interface makes shopping for cars a quick and fun experience. FindYourAuto.net
Posted by: JDL at 05/07/2009 12:20:33 PM
So let me get something straight, They were going to pay $27,000-plus for a 2009 Taurus and that was after a $4,000 rebate? Huh, didn't Taurus' cost like 15k a few years ago? The smartest move they could have made was to keep the 97 Accord. It was paid for and will be running long after the 08 Taurus is dead and gone.
Posted by: RJS at 05/08/2009 04:27:41 PM
JDL...loaded '09 Ford Taurus SEL with AWD stickers at $33,345. There may have been a time in late '04 where you could have driven a Taurus off the lot for $15k, but that was a significantly smaller vehicle more akin to the current Fusion and was in process of being replaced by the then new Ford 500. And while I agree their old Accord was paid for, 2008 models from any manufacturer have to meet significantly higher safety and emissions standards than their old '97 Accord did, making this a smart purchase.
Posted by: TheWholeStory at 05/10/2009 05:11:26 PM
Not the best reporting......how much did they get for the 97 accord on trade-in. The price that they paid will be influnced by the trade-in. If they lowballed the trade-in, they are likely to get a better price. This information needs to be presented as trade-in value is a negotiated item. That ultimatly affects buying price.
Posted by: Bob at 05/11/2009 10:13:26 AM
While I would love a hybrid,I am yet to see a deal on one, new or used. I would still pick a smaller car with better fuel mileage over any hybrid out there. If the economy does recover, we know that high gas prices will return. Remember, that even with $4 gas, $4000 saved on a vehicle purchase price would buy 1000 gallons of gas. At 30MPG that will take you 30,000 miles. Too many of my acquaintances aren't considering the big picture.