How to Buy a Used Car | Ultimate Guide to Purchasing a Pre-Owned Vehicle
Purchasing a new vehicle is a big investment and already daunting enough of a task — and while buying a used car, truck or SUV might be cheaper, there are all sorts of other potential risks involved. Heed the tips and expert advice in our following pre-owned car buying guide to avoid some common pitfalls and drive away a happy, hassle-free customer. In this guide, we’ll cover:
- What to Look For When Buying a Used Car | It Begins with Proper Online Research
- 5 Tips for Buying a Used Car: Expert Advice from Motoring TV’s Bill Gardiner
- Car Depreciation | A Closer Look
Used Car Buying Checklist: 6 Tips from Mega Site Kijiji
- Luxury Used Cars: The Pros & Cons of Purchasing Pre-Owned High-end Vehicles
- Used Car Checklist: 6 Things to Remember
1. What to Look For When Buying a Used Car | It Begins with Proper Online Research
Just as they do on roads and highways, cars and trucks generate a lot of traffic online, too. Where you might check your local news outlet’s website every morning to learn what’s happening in your city, car enthusiasts take to the web to learn about the newest cars, and talk about the cars they own, the cars they want, and the ones they think are best avoided.
And it looks like the used car market continues to grow. What's driving this growth? According to this piece by Forbes, a major reason is people opting for younger used vehicles as compared to those that are nearing the ends of their useful lives.
Questions to Ask When Buying a Used Car: Check the Discussion Forums – What Issues Do Current Car Owners Have?
You may not consider yourself a car enthusiast, but even so, it’s worth paying attention to some of that car-related chatter. The Web is rich with discussion forums dedicated to just about every make and model of car or truck, and among that talk are clues you can use to make a smart used vehicle purchase decision.
Among all the discussions about aftermarket wheels and lowered suspensions, you’ll find conversations about what’s gone wrong with people’s vehicles.
Knowledge is power: the key is not necessarily to avoid a car you discover has a less-than-perfect reliability record; after all, no car will be flawless. What we suggest is to learn as much as you can before you buy so that you know what you’re getting into
On the surface, many of these exchanges will look like little more than griping, but you can bet that if one person has had a specific problem with their car, other owners of the same make and model will have experienced it too.
Throw in a few vehicle-obsessives, and the discussion will eventually come around to what causes the problem, and how to fix it, even if the car in question isn’t a typical target of car lovers. Know how to look for these discussions, and you’re well on your way to learning what goes wrong most often with any given vehicle.
On that note, what exactly goes wrong with cars as they age?
According to this Consumers Reports reliability survey, even the best cars develop problems as they rack up the miles. Here's an interesting look at particular things that go wrong over time:
Case Studies: problematic vehicles and finding solutions
But what if you have your heart set on a particular model, only to discover that there are a number of potentially expensive problems that could crop up on a car with no remaining warranty coverage?
Knowledge is power: the key is not necessarily to avoid a car you discover has a less-than-perfect reliability record; after all, no car will be flawless. What we suggest is to learn as much as you can before you buy so that you know what you’re getting into, as with these examples.
Say you’re an urbanite who likes the Smart Fortwo for its small size, low fuel consumption and neat design cues. Do a little digging and you’ll find evidence of a few common quirks, like a transmission that won’t shift into reverse (discussed here on Club Smart Car forum), or a failed heater fan (discussed at Smart Car of America).
And sometimes, you learn how to fix one of those common problems yourself: some Fortwo owners have heard this unpleasant noise coming the clutch (like in this YouTube video) which is caused by a lack of lubrication.
Here’s a video, from the same Fortwo driver, showing how to lube the clutch actuator and keep things quiet.
Not all problems will be that easy to fix. BMW’s turbocharged engines are known for fuel pump failures that cause serious driveability problems or a car that won’t run at all – as discussed in at Bimmerfest.com thread.
You may not consider yourself a car enthusiast, but even so, it’s worth paying attention to some of that car-related chatter online.
Any repair involving an engine’s timing chain promises to be labour-intensive and expensive.
In GM’s 3.6-litre V6, a stretched timing chain is caused by too-long oil-change intervals recommended by the car’s oil life monitor (like in this YouTube video), and in Nissan’s 4.0-litre (VQ40) V6 engine, a pair of timing chain guides can wear out, causing a whining noise and potential driveability problems (discussed at Nissan Help).
Technical Service Bulletins (TSB): Some help from the Auto Manufacturers
Many of the issues listed above have been addressed through technical service bulletins (TSB), documents issued by manufacturers to help its dealer service technicians diagnose and repair common faults in a vehicle. These are distinct from recalls, in that they don’t entitle you to a free repair; instead, they’re designed to save the technician (and, hopefully, you) time that would otherwise be spent on a lengthy diagnosis.
Once a manufacturer recognizes that a significant number of vehicles are coming into dealer service bays with the same problem(s), it will have its engineers come up with a process to help technicians identify the fault and then lay out a repair procedure, which may include redesigned parts. (Unfortunately, this indicates that many vehicles are reaching the marketplace without undergoing sufficient durability testing, but that’s a story for another day.)
These service bulletins are available to everyone, but usually not for free. The National Highway Traffic Safety Administration (NHTSA) maintains a searchable TSB database, but only provides summaries of the bulletins.
Researching the pros and cons of a potential used vehicle purchase takes a bit of digging, but can pay off for the diligent shopper.
AllData and EautoRepair.net
A company called AllData runs a subscription service that gives you access to all service bulletins related to a particular model, but doesn’t grant access to specific TSBs for research purposes; the same goes for EautoRepair.net.
Various private discussion forums
That said, you will come across bulletins in discussion forums, but usually only if someone posts it as it relates to a discussion about an issue with a particular vehicle. NissanHelp.com has a section listing all of the service bulletins Nissan has issued for all of its modern models.
Your best bet on a budget? Use the NHTSA’s database to look up TSBs for the vehicle you’ve got on your mind, and then search the web for the document number (all TSBs are numbered). If you’re lucky, that TSB will have been discussed and/or posted in a forum where you’ll be able to see the details.
Conclusions: Online Car Research is a Powerful Tool
The online world is an imperfect medium, but can be a powerful tool when used properly. Researching the pros and cons of a potential used vehicle purchase takes a bit of digging, but can pay off for the diligent shopper.
2. 5 Tips for Buying a Used Car: Expert Advice from Motoring TV's Bill Gardiner
Buying a second hand vehicle makes economic sense.
New cars depreciate in value, and in a used vehicle, that loss has likely been absorbed within the first three years.
And according to Bill Gardiner, mechanic and tech guy from Motoring TV, there are usually plenty of kilometres left to be added to a three-year old vehicle.
“If the service work has been done in the first three years, there will be a lot of life left past that point, and there’ll be a lot of retained value,” Gardiner says. “The overall quality of vehicles has come up so far, and a vehicle is viable for so much longer. If it weren’t for road salt and our climate there’d be a lot of mechanics like myself looking for work.”
Gardiner is talking mostly about vehicles that have been leased from new. At the end of three years, those vehicles can be purchased outright, or returned and auctioned off.
“We’re seeing really good value in off-lease cars that were corporate vehicles, and that were maintained in accordance with the manufacturers service intervals,” Gardiner says.
Regardless of how old or where a used vehicle is purchased there are several items to which attention needs to be paid.
1. LOOK AT THE OVERALL CONDITION OF THE VEHICLE.
Does it appear to have been driven hard and abused, or does it look like it has traveled further than the indicated mileage? “If the odometer reads 150,000 km and the rest of the car looks like it has traveled 300,000 km, that’s a warning sign,” Gardiner says.
2. CHECK FOR SIGNS OF COLLISION DAMAGE, OR POORLY REPAIRED BODY PANELS.
This sometimes requires a bit of a trained eye, but in good sunlight sight along the length of the body. There shouldn’t be any waves or wrinkles in the panels, unless they are part of the overall design of the vehicle. Check to see that all of the paint colours match – often a repaired panel will be a slightly different shade than the rest of the car. Check the gap around doors, hood and trunk, the space should be even all the way around.
3. WHEN YOU FIRST START THE VEHICLE, LISTEN TO THE ENGINE FROM COLD.
It should be quiet without a great deal of clattering noise. Then, take the vehicle for a really good test drive. Don’t just go around the block. Pick a time of day when you have the opportunity to get the vehicle out on a highway, and travel at highway speeds for 10 or 15 minutes. “After you’ve driven at highway speeds, find a safe place to pull over and listen to the engine again. Does it rattle, or clatter, or sound significantly noisier than it did when cold?” Gardiner asks. “If it does, that’s a good indication that the engine has a lot of wear on it.”
4. ON THE TEST DRIVE, PAY ATTENTION TO HOW THE TRANSMISSION SHIFTS.
In an automatic, the shift points should be crisp, not slippery or mushy. In a manual gearbox, there should not be a lot of play in the shifter mechanism.
Also, pay attention to the car’s road holding ability. Does it pull to the left or the right while driving, or while braking?
“And if the vehicle is a front wheel drive, pull a U-turn and wind the steering tight to the left. Unwind, and go straight. Does the vehicle feel like it still wants to turn left? Do it again, but go right this time. If it feels like it wants to continue going right, the vehicle has a condition we call ‘memory steer’,” Gardiner says. Memory steer is often caused by a problem with the upper strut mounts.
5. IF YOU CAN, GET A MECHANIC TO PUT THE VEHICLE UP ON A HOIST.
Gardiner says to check for signs of any localized rusting in the undercarriage, and for any fluid leaks in the powertrain.
Lastly, Gardiner says driving habits play a large role in how long a vehicle lasts. While it is sometimes not possible to tell whether a vehicle has had multiple drivers — say a second family car or a company car that all of the employees are allowed to drive – a single driver vehicle will usually be in better shape.
3. Car Depreciation | A Closer Look
When buying a used car, it's probably a good idea to understand auto depreciation and the impact it has in the pre-owned journey.
One wouldn’t think buying a new car would lead to someone becoming depressed. But a study commissioned by Kijiji Autos suggests otherwise. In fact, they’ve coined a new term to describe the issue: Depreciation depression.
“It’s a pretty interesting subject,” said Scott Neil, head of Kijiji Autos in Canada. “No one else in the market was looking at it.”
The online advertising site, which helps private sellers and dealers alike market pre-owned vehicles to millions of Canadian buyers, decided to investigate why people choose to purchase used. They also wanted to understand how vehicle buyers felt about new vehicle depreciation. An Ipsos Reid poll conducted in September surveyed more than 1,000 Canadians, all who were asked about vehicle depreciation.
According to the Ipsos Reid poll, 30 per cent feel annoyed by depreciation, 18 per cent feel sad, 16 per cent feel upset, 8 per cent feel mad about it, and six per cent get depressed.
“We wanted to find out what people knew about depreciation, and how it made them feel,” Neil said.
Auto Depreciation = Depression
Depreciation, simply put, is the loss of a vehicle’s value over time. And, according to the research, nine out of 10 Canadians acknowledge a new car loses about 15 per cent of its value the moment it leaves the dealership lot. Some buyers would seem to be OK with that figure, happy to be the first owner of a brand new vehicle – and enjoying the entire experience. Others, however, view the experience entirely differently. According to the Ipsos Reid poll, 30 per cent feel annoyed by depreciation, 18 per cent feel sad, 16 per cent feel upset, 8 per cent feel mad about it, and six per cent get depressed.
So, if buying new is a depressing thought, the option is buying used.
According to the survey, when looking at expenses such as maintenance, insurance and vehicle payments, a buyer could expect to save about $114 a month buying used as opposed to new. And, not all vehicles depreciate as quickly or as much as others. For example, Neil suggested that there is a perception that domestic automobiles depreciate more rapidly than imports. In some cases, that’s not true. Cars with lower rates of annual depreciation, measured between 2010 and 2011, included a 2010 Cadillac Escalade at six per cent, while a 2008 Honda Pilot was at eight per cent. Both are respectable figures, and a lower number is always better.
Vehicles that depreciated the least include the Cadillac Escalade, as well as model year 2007 BMW X3 at five per cent and 2000 Buick Century at eight per cent.
Here are some interesting stats from Edmunds.com:
4. Used Car Buying Checklist: 6 Tips from Mega Site Kijiji
Buying Used, Whether From A Private Seller Or A Dealer, Means Doing A Bit Of Investigating To Ensure Receiving The Best Value For The Money. These Tips Were Suggested By Kijiji:
1. SHOP LOCALLY, AND BE SURE TO MEET THE SELLER OR VISIT THE DEALER IN PERSON.
Also, attempt to determine the vehicle’s history, and ask to see a Used Vehicle Information Package (UVIP), and if available, a CarProof Vehicle History Report.
2. HIRE A TECHNICIAN TO PERFORM A PROFESSIONAL INSPECTION.
While no one is infallible, the inspection might help shine a light on any deficiencies.
3. GO IN COLD.
Try to arrange the test drive when the engine is completely cold, as it should give a good indication of how the car starts, regardless of how long it’s been parked. It’s also always interesting to test drive a car when it’s below freezing outside to see how quickly the engine warms up and begins providing heat.
4. INSPECT THE CAR YOURSELF, AND CHECK IT INSIDE AND OUT.
This is a great way to get to know the vehicle, and to find any issues with worn materials, tire treads, or rust that may need attention. If anything requires remedying, pointing the issues out to the seller may help in price negotiations.
5. CONSIDER THE MILEAGE AND THE AGE, AND SBUDGET FOR REPAIRS.
Vehicles today are built to last much longer than vehicles built decades ago. However, you may need to consider some maintenance, such as timing belt replacement, when a vehicle has accumulated over 100,000 kilometres.
6. BE SURE TO TAKE THE CAR FOR A TEST DRIVE.
And endeavour to go further than just around the block. How does it handle various road surfaces, does it clunk going over speed bumps, are all of the electronics – including windshield wipers — working as they should?
5. Luxury Used Cars: The Pros & Cons of Purchasing Pre-Owned High-end Vehicles
by Chris Chase
For the last few years, a good friend of mine had been contemplating buying a sports car; something quick, fun and reasonably efficient that he could use for year-round commuting to his job in downtown Ottawa.
At one point, he had narrowed his choices to two very different cars—a VW GTI or Mustang GT—but couldn’t commit. Then, he had a revelation: for a price not much higher than either of those cars bought brand new, he could buy a three-year-old Porsche Cayman. This is a guy who had literally hemmed-and-hawed between the GTI and ‘Stang for three years, then went out and bought himself that Cayman not two weeks after he realized a used one would fit his budget.
He’s not the first to figure out how to make owning a used luxury car a reality, and he won’t be the last. Here’s a brief look at the ups and downs of following his lead.
Luxury vehicle depreciation game
Luxury cars tend to scare off many used buyers, mainly because they can be expensive to maintain once the warranty has expired, but there are ways to get behind the wheel without breaking the bank.
The first ace up your sleeve is depreciation, the rate at which a vehicle loses value after it goes home with its first owner. The difference between the new-car selling price and what it’s worth after a given period of time is a vehicle’s resale value. The rate of depreciation varies model to model based on a number of factors, including the brand’s reputation for durability, the vehicle’s desirability, and the incentives that were/are available on the same car brand new.
If desirability alone dictated resale value, then most luxury cars and trucks would depreciate very little, but there are factors that affect premium vehicles that are less common in the rest of the marketplace.
Luxury cars tend to scare off many used buyers, mainly because they can be expensive to maintain once the warranty has expired, but there are ways to get behind the wheel without breaking the bank.
For one, many upscale vehicles are leased, meaning there’s a steady flow of used models as vehicles are turned in at the end of those leases. That makes for a healthy pool of popular vehicles like the BMW 3 Series, Mercedes-Benz C-Class and Infiniti G35/G37/Q50. Demand for these cars is relatively high, but so is supply, which helps dampen resale values somewhat. Higher-end luxury cars, like the BMW 7 Series, Lexus LS and Benz S-Class, lose value more rapidly, largely because few used buyers are willing to risk the big repair bills that come once these big, complicated cars are out of warranty.
Value and volume
Canadian Black Book is the publication car dealers use to set asking prices on used cars. Once only available to dealers, it was opened up to the general public as a shopping tool, and it’s one of the most useful ones you’ll find for sussing out a fair price for just about used car or truck available in Canada.
At the time this was written in the fall of 2014, a 2011 BMW 328i with automatic transmission and leather seats is valued by Canadian Black Book (a resource used by used car dealers to set asking prices) at just over $20,600, about half of its new MSRP of $41,500. By contrast, a 2011 Honda Accord EX-L V6 started out as a $33,000 car, but was actually worth more than that BMW after three years, at $21,350. The Honda retained 65 percent of its value, while the BMW was worth half its MSRP.
In 2011, Toyota sold its RAV4 crossover for $32,385 in top-end Limited V6 trim, and after three years it was worth $24,450 (with optional leather seats). At a Mercedes-Benz dealer, a similarly-sized 2011 GLK 350 carried an MSRP of $43,500, but would be worth $29,825 (also with optional leather) after three years. The Benz was worth more, but retained 69 percent of its value, to 75 percent for the Toyota.
Most manufacturers, luxury and otherwise, offer CPO programs now, but they’re most useful for luxury buyers, particularly for the extra warranty coverage.
And while there aren’t any mainstream vehicles to compare it to, the Mercedes-Benz S-Class is a good example of how much depreciation affects cars at the very high end of the market. A 2011 S550 sold new for $123,500, and three years later was worth a relatively affordable $53,000.
As with any car, reliability is also a factor in whether a used luxury vehicle is a worthwhile choice. The unfortunate truth is that many upscale cars aren’t as dependable as more affordable vehicles. Some of that has to do with the complicated nature of some features common in upscale cars.
My friend bought his Cayman through Porsche’s certified pre-owned (CPO) program, through which used cars are subject to a mechanical inspection, and those deemed eligible are sold with manufacturer-backed extended warranty coverage. In Porsche’s case, this adds two years and 80,000 km to what’s left of the factory warranty; cars whose factory coverage has expired get a two-year warranty valid up to 160,000 total kilometres.
Most manufacturers, luxury and otherwise, offer CPO programs now, but they’re most useful for luxury buyers, particularly for the extra warranty coverage. Many upscale cars are considerably more complicated than those sold by non-luxury brands, and the high-tech components and systems built into them are expensive to repair and maintain. Plus, parts and labour are usually more expensive, and repair procedures specialized.
CPO programs are partly a marketing gimmick for automakers, and they do typically mean higher prices on used cars sold under a “certified” pre-owned banner, but they can be a very good value for used car buyers. In the upscale vehicle arena, the extra warranty coverage alone can be worth the extra cost, as it takes the edge of the anxiety of maintaining and aging luxury car.
6. Used Car Checklist: 6 Things to Remember
Finally, in summary, here's a checklist to get your pre-owned journey started. Some of these points have already been discussed above, but hey, it's a good way to end off this long resource.
The first thing you’re going to want to determine is how much money do you have to spend? Having at least a ballpark figure will be the first step in narrowing down your search further. It’s a good policy not to spend every last penny you have on the outright purchase and set aside some dollars for insurance, as well as possible repairs or necessary maintenance.
Is a loan part of the equation? You have a couple of options: if the vehicle is on a lot, you can go through the dealership to secure financing. Or, you can seek the services of a third-party such as a financial institution. Remember first to figure out what monthly payment you can comfortably afford to pay.
It’s time to ask yourself a few more questions, like:
- What is the vehicle going to be primarily used for (work/school commute/pleasure?)
- Do you need room for two, five or seven passengers? Coupe or crossover?
- Any brand preference? Colour?
- Automatic or manual? Will you be driving in snow? Front, rear or all-wheel drive?
- Which safety options are must-haves? Airbags, traction control, blindspot alert?
3. Find your vehicle
Once you have a pretty good idea of what you want, it’s time to make some house calls. While there are countless ways of buying used from online ads to parked cars with “for sale” signs plastered in the window, visiting a (reputable) dealer lot is usually a safer bet in terms of coming across a vehicle that has been given the once-over by licensed mechanics.
Even better is if you find a dealership that offer manufacturer certified vehicles, which are pre-owned models that have undergone thorough inspections using guidelines set out by various automakers. While more expensive than non-certified examples, they can offer peace of mind.
If you’ve chosen a dealership as the place to buy from, it is still your responsibility to make sure the car is in the condition you want and free of any hidden surprises. Do a thorough visual check for things like mismatched paint sections, gaps in body panels, rust, leaks in the engine bay, bald spots or nails in the tire tread, and anything else that might raise a red flag. Activate the lighting and electronics to see if everything works. Make note of any rips or stains on the interior — any issues you find can give you some bargaining power.
5. Test drive
It’s time to go for a test drive. Drive on the road and on the highway, if possible, and listen for any odd sounds when travelling over varying road surfaces. If you feel vibration in the steering wheel or clunking over bumps, it could mean the suspension needs to be looked at. How do the brakes feel? Applying pressure to the pedal should be smooth and free of excessive squealing or shuddering. Again, any issues discovered at this time may be brought up during the negotiating phase and/or may be repairable before you take delivery.
6. Due diligence
After finding the used car of your dreams, ensure it doesn’t belong to someone else or has been in a million accidents. Locate and record the Vehicle Identification Number (VIN) found just below the windshield on the driver’s side dash. With the VIN, you can use an online service such as CarProof or ICBC to check the claims history and whether there are any liens on the car.
Last but not least, before signing the purchase agreement you may want the opinion of a third-party mechanic to look under the hood and give it the thumbs up.