Buying or leasing a new car right out of the showroom can really pump up the adrenaline. And in the first few months of ownership, you'll probably be smiling as you tool around in your newest toy.
But that smile may fade once the adrenaline wears off and you realize you could have had an even better car for the same money. Or you could have saved thousands of dollars simply by taking the keys with 30,000 miles already on the odometer.
These days, used cars have never been more reliable. And it's not just Toyotas and Hondas that can rack up the miles without a hiccup. Just about every auto maker has sharpened their game. Nowadays, it's hard to find a car that isn't expected to go 150,000 or 200,000 miles with proper maintenance.
With that in mind, here are five steps you can take to ensure you get the biggest bang for your buck.
1. Slightly Used Cars Are the Best
In the past, I looked for deep bargains -- cars that had 75,000 to 100,000 miles on the odometer. But I found that many of those cars had deferred maintenance or repairs ($1,000 for a timing belt here, several hundred for new spark plugs, etc.), and I realized I was shelling out more money than I had bargained for to get the car working in proper order.
That's when I started buying slightly used. As auto makers boost the quality of their cars, they're offering ever-sweeter warranties. For example, when I bought my then two-year old Honda Accord, it was roughly halfway through its original five-year 60,000 mile coverage.
Not only was I able to buy the car for $10,000 less than the newest model Accord at the time, but I also had the assurance of knowing that if anything went wrong with the car, the repairs would be covered under the warranty for the next two years.
2. Pay Up for a Check-Up
If you are serious about a certain car, ask to have your mechanic look it over. It costs $100 to $150 for an inspection, but your mechanic may spot real problems that cost 10 times as much to repair. This is especially important if you're looking at a higher-mileage used car that is out of warranty.
If your mechanic finds trouble, ask the seller to pay for the repair. If they balk, there are plenty of other used cars for you to look at.
3. Skip the Ultra-Bargains
It is tempting to buy a heavily discounted car with a range of minor, but fixable, problems. But chances are good more problems are lurking, and this is precisely the kind of car that will rack up hefty repair bills year after year. You are better off spending more for a car that has been well-maintained and is in tip-top shape.
4. Know Your Style
Carmakers offer distinctive traits. German cars tend to handle well, but may have a harsher ride than you like. American cars have smooth rides, but may not handle especially well. Japanese cars tend to operate very quietly and efficiently, but often lack a sense of panache and gusto. (The distinctions are narrowing but the stereotypes still hold true.)
Once you know what you want, you may want to test drive an example at a new car dealership to ensure that the car drives as you had hoped.
5. Watch the Re-Sale Values
A range of websites such as KBB.com can tell you the average sales price for cars by year and model and can clue you in as to how cars hold their value. For example, the Ford Fusion and the similar Honda Accord typically come with similar price tags when new, but the Honda Accord will usually hold onto its value and sell for more than the Fusion will after a few years.
Generally speaking, U.S. and Korean-made cars don't hold their value as well as their Japanese and German rivals, though the gap is slowly starting to narrow. Some cars maintain their resale value year after year. A 2002 Porsche 911 could be had for about $30,000 in 2007. And it's worth just as much today.
Then again, the companies with the poorest resale value may be the best bargains if you're looking to get a good deal as a buyer. If you're looking for deep bargains, check out the 'orphan brands' or models that have been recently discontinued. For example, once the parent companies of Saab, Pontiac, Oldsmobile, Saturn, Plymouth and Mercury decided to discontinue those brands several years ago, they plunged in value, even through they were substantially similar to their peers that survived.
The key to getting the best deal on a used car is to find a vehicle that offers a blend of quality and reliability while avoiding ones that are too old or come with an offer that is too good to be true.