Buying A Used Car From a Used Car Dealer

by Steven J. Owens (unless otherwise attributed)

My first rule about buying from a used car dealer is, DON'T. However, if circumstances leave you with no alternative, here are my four rules for buying a car from a dealer. These also apply towards buying from a new car dealer, of course.

  • 1) they're not trying to sell you a car.
  • 2) this man is not your friend
  • 3) information is power
  • 4) money talks

    Rule 1

    The first, and most important rule of buying a car is to understand what kind of interaction is going on. You may think you're there to look at the available products, decide which one matches your needs and your wallet best, and buy it. THEY think you're there to fall in love with a vehicle so they can extort money from you to get it. "Oh, let's not worry about price yet, let's find something that's right for you and then we'll find a way for you to afford it!" is the standard come-on line here.

    I've had car salesmen even say "Nothing seems to have struck a nerve"! I'm not there to have my nerves struck, I'm there to shop for a car! But they don't want you in a rational state of mind. They want you to sit in the car, to envision yourself in the car, "buy-in" to owning it, before you start negotiating for it. You have only one card in the negotiation stage, but it's a mighty powerful one: your willingness to walk away.

    The best ways to avoid this are to know what's going on and to figure out exactly which car you're going to buy before going shopping (see rule 3).

    Rule 2

    Car salesmen are highly skilled at being fundamentally rude while being superficially polite. It's one of the best ways they can pressure you to buy a car without getting you pissed off. It confuses most people, who aren't comfortable being rude back to them because the salesman seems to be so polite. He's lying to you, pressuring you, and trying to scam money out of you, but he's being so nice about it!

    Again, the best defense against this is to know what's going on and to do your homework before going in to buy. Then you can focus on the numbers and the black and white and ignore his pitch. See the section on negotiation, below.

    Rule 3

    Information is power. They have it. You don't. Fix this. Specifically, figure out which of a handful of cars you want to buy before you go in to buy, so you're not car "shopping", you're car "buying". This cuts down the variables by a huge amount, makes you more confident, and makes dealing with the salesman a lot easier. See below about how to do it.

    Rule 4

    Money talks. Do everything you possibly can to arrange your car money before you go in there. DO NOT ENTER THE DEALERSHIP TO BUY until after you've arranged a loan.

    Obviously the best way is to wave a wad of cash under the salesman's nose when you start talking price. It drives the salesman nuts. They can just taste that money and will twist and turn like a fish on the hook, trying to get a hook into you so they can get their hands on that money. It's nice to turn the tables on them like this, and a hell of a lot of fun. It also gives you a lot more leverage in the negotiation process.

    I bought my first car with cash, $900. Not a lot, but I accidentally did the about the best job I could have done. I had a car-knowledgable friend along who vetted the mechanical soundness of the cars, and I just kept saying, over and over again, "I have $900 and I want to buy a car." The salesguy kept showing me cars with $2100 and $1600 price tags and I kept saying, "No, I'm not going into debt. I have $900, I want to buy a car." Keeping in mind that any car you get for $900 is going to be a jalopy, I did surprisingly well.

    My brother outdid me a few years ago. He was in the negotiation stage for a jalopy and the dealer was jerking him around on the price. So he pulled out a wad of $100 bills and counted out a stack of them on the table, said "Take it or leave it." The dealer grumbled, but took it.

    If you can't afford cash, which includes most anybody who wants something more than a jalopy, then the next best thing is a pre-approved bank loan. Talk to several banks, see which ones give you the best deal. If your bank won't give you a loan, ask the loan officer for advice on what your options are. Whatever you do, do NOT let the loan wait until you're in the car dealership.

    Negotiation

    Burke Leone's excellent book discusses the different sales and negotiation tactics they use, and how you can best counter them. The simplest advice (and probably the best piece of advice I can give in the scope of this article) is to take a notebook of your own, and write down the numbers. The used car salesman does this negotiation every day, he knows all the angles and all the tricks. A verbal conversation is "loose" and gives him room to maneuver. Eliminate that by turning it into a written conversation that's facilitated by verbal discussion. This also lets you keep track of the numbers.

    Don't let them rush you. Don't feel uncomfortable about making them wait as you write things down. The silent treatment is one of their better weapons against you here. Don't let them wander off and leave you by yourself. Trust me, they need you more than you need them. If they start walking away, call them on it, ask them where they're going, ask them if they want to sell you a car or not. If they bullshit you, collect your things casually and start walking out the door. If you get out to your car, then just go to the next car lot. There are a lot of car lots out there.

    Once you've got the numbers written down on paper, make sure you maintain control of the pen and paper, don't let them use them. Keep your arm cupped around the notebook, so they can't just casually slide it over and take control of it. If they ask to use it, tear off a sheet and let them write on that :-). Don't let them change things around in the middle of the deal. Write down the numbers, make sure you have a clear picture. Remember, a contract is "a meeting of the minds", you're writing things down to make sure you have a clear picture of what the deal is and to make sure you both have the same picture.

    There're a lot more details on this, which Burke Leone covers in his book (I'm turning into a regular Burke Leone fan club here). For example, the last-minute "Oh, gee, my supervisor says I offered you too much for your trade-in, we'll just have to drop that a few hundred dollars..." Also the variety of last-minute add-ons they'll try to sell you (you want air in them tires?). I can't cover them all here, and if I tried I'd end up just plagiarizing Leone's book.

    Do your homework before you go in (see below) and set some realistic prices for your car and your trade-in value. Be aggressive, but don't be greedy. If you start thinking you can con them out of more car for your money (or more money for your trade-in) than is reasonable according to your research, you're playing right into their hands. Remember, they're pros conning people out of their money, you're an amatuer.

    Also remember, you can't con an honest man. Be an honest man (or woman, as the case may be) and be ready to walk away from any deal that plays too strongly on your greed.

    Getting the Information

    I've divided this section into three parts: spending the time, finding the information, and deciding what to buy.

    Spending the Time

    Buying a car is going to be a time-consuming process. Expect to spend three or four afternoons visiting dealerships and kicking tires. Figure to spend at least 20 hours total, when you add in calling around for loans, reading up on the process and on cars, etc. But reasonably, you'll spend that time over a month or more. In fact, I think the best thing to do is to set a specific date four to eight weeks in advance, when you will do the actual buying. Until then, only do research. Don't think of car shopping as a task you need to finish, or even as a process you need to go through, but as a hobby you're temporarily aquiring :-). Take a friend along with you when you go window-shopping, to have somebody to talk to and to have somebody to keep you from buying on impulse.

    Finding the Information

    I highly recommend anybody considering car shopping check out Burke Leone's excellent book on the topic. Also (or maybe first) check out www.edmunds.com, an incredibly useful web site by the Edmunds car magazine people, chock full of handy used car information. They have extensive informative pages on how to get the best out of car-buying, not to mention detailed information on every make and model car and fair prices, and a free "lemon check" service.(*)

    Now, how to get the information? If you knew exactly which car you wanted, you could order up the full Edmunds' report, figure out exactly how much the dealer is paying for the car, and offer them that plus a few hundred for profit (check out the Edmunds web site for further details on this process).

    Note: The Edmunds Web site also has some for-pay services, of course, and they'll even sell you a car; I haven't checked out Edmund's car-buying service, but remembering them from the use I got out of their site a couple years ago, I'd be more willing to trust them than a car dealer. In general, the online car-buying services have been getting really good consumer reviews, by the way. A pretty successful example of web sites that perform better than the original business :-).

    Also, there is the NADA guide, called the blue book, although often it's yellow. It tracks what dealers paid for and were paid for used cars across the country. You can get a consumer version of it at the bookstore. I don't find it much use, but it's better than nothing. Your bank has the dealer version, which includes full information, for example on how much a car is worth for trade-in, and how much $ various options add to the price of the car. That's the price the bank uses to determine how much money they'll loan to you and it's the same price the insurance company will use to determine how much to give you if the car gets wrecked.

    The dealer version of the NADA book is hard to get ahold of. I lucked out; my banker got his new version of the book the day I was in checking on car loans and I managed to get the previous month's copy from him. Of course, that was many years ago, and by now it's completely out of date, but it was a learning experience. If you can't get the dealer version of the book, you can still find out the "real" value of the car; figure out what car you're interested in, you can call your bank and ask them how much the "loan value" of the car is.

    Deciding what to Buy

    However, most people don't really know what car they want, and that's where they get a little lost. There are a couple things you can do about this. The following is very much my own opinions, and they may not be right for you, but understanding how I made these choices should help you decide how to make your own choices.

    Books

    Buy a car book - Edmunds puts one out, but the one I used myself was the Consumer Guide To Used Cars. Most of them have statistics and black and white photos of the car models. I liked the Consumer Guide book (not Consumer Reports; although that magazine is excellent, I bought their car book and I didn't find it as useful as the Consumer Guide To Used Cars) because it had text descriptions of the cars, the history of the car, notorious defects of problems, etc. Keep this with you and refer to it every time you look at or see or think of a car you think you might want. Many of these books give pricing information, but I prefer the dealer version of the NADA bluebook. Still, it's nice to have handy.

    Clones

    One of the big tricks to figuring out which car you want is that most cars exist in two or three incarnations, some so identical that they're listed as a single vehicle with different brand names in the Consumer Guide book. A good example I can think of offhand is the Suzuki Sidekick and the Geo Tracker. They're made in the same factory in Canada. Another example is the Dodge Omni / Plymouth Horizon (which, by the by, happens to have a VW Rabbit engine in it, though I'm told the engine has different mountings and fittings to prevent you from using parts from it interchangably with a Rabbit engine).

    Knowing about clones helps you narrow down which cars are acceptable to you, and gives you a handy negotiating tactic; you can always threaten to go across the street to the other brand dealer. But you still have to decide what car you like.

    My Old Subaru GL-10 Turbo Wagon

    Obviously you have to factor in your needs; for example, I like having a station wagon if I can get one; most of the time I don't really need the extra cargo space, but the car still performs about just as well as an equal sized car. My favorite was my old '86 Subaru GL-10, not that I'd recommend anybody buy one of that year/model - mine seemed to fall completely apart just after the 10 year/100Kmiles mark. Every month, like clockwork, there was another major repair. I spent a lot on repairs on mine; and there are several major design flaws. but aside from repairs, it was my top favorite car ever. If you have a lot of road trips to make, you might want to get a leaner car for fuel economy, or even a larger car for a more comfortable ride.

    After spending all that time and money fixing my old Subaru, where every single time the part cost almost exactly twice what the mechanic expected it to, and I constantly ran into obscure problems most mechanics didn't know about, I decided if I couldn't afford a new Subaru, I wanted a car that's cheap and easy to fix. Let's face it, if you buy a used car, you're going to have to get it fixed sooner rather than later.

    My Criteria

    So after a lot of homework and talking with mechanics and car-knowledgable friends, I decided to get a car that:

  • 1) is at least a 6-cylinder engine
  • 2) was domestically manufactured
  • 3) was in production for 4-6 years

    6-Cylinder Engine

    The general trend seems to be that 6-cylinder and up engines are overbuilt a bit, which means they last longer. So the better bet for a used car is at least a 6-cylinder engine (seems almost nobody these days sells 8-cylinder engines anyway). 6-cylinders come in two flavors, slant or straight. Damned if I can remember which one is supposed to be better, but ask around and see what mechanics say.

    Domestic Manufacturer

    Domestically manufactured cars tend to have parts that are cheaper and easier to find. This is a simple matter of economics. Of course, a foreign car proponent would say that foreign cars don't break down as often; they'd be right. Foreign cars that don't break down as often also tend to be more expensive, often to the point that if I'd had that kind of money I would have been shopping for a new car of a cheaper breed.

    Also, with domestic cars it's a lot easier to find a mechanic who knows them, because there are more of them around, and mechanics work on them more often. Sure, you can find specialists who're worth the extra cost, but what happens if you're stuck in the middle of nowhere with a broken down car (this has happened to me)? Factor all of this into your decision-making and choose what's right for you.

    Long Production Run

    The same economic logic applies to the idea of finding a car that's had a long production run. That means there are a lot of them out there, which means that most of the bugs are known and there are a lot of spare parts. Watch out for cars that are produced for four or more consecutive years, but have a redesign somewhere in there - for example if they retooled the production line. Friends who follow these things tell me that's a pretty good sign there were design flaws.

    My Current Car

    By the way, the car I have at the moment of this writing is a low-end 1990 bonneville, ex-police car, that I got pretty cheaply at the beginning of 1997. It's a bit bigger than I'd like, and it could get better gas mileage, but it's lasted pretty well so far, and has only needed minor repairs. The two biggest problems I have with it are an amazingly lousy turning radius (which makes parallel parking a bitch) and general lack of space; even the front & back seat seem, well, not cramped but not nearly as spacious as you'd think, given the size of the thing. The trunk is not roomy and the glove compartment is tiny.

    But it handles amazingly well for a car that size and it goes like a bat out of hell (when I need it to :-). It's essentially an oversized sportscar. Go figure.

    Deciding Your Rules of Thumb

    Once you've figured out your priorities, then you have to choose a car that you'll like. In the long run, driving a lot of cars is the best way to really know what you'll like, but it takes a lot of time. One tactic I figured out was to think of cars I'd owned and driven and either didn't like or really liked, and then look at their stats in the Consumer Guide book.

    For example, if you didn't like a particular car because it seemed too heavy, look at how much it weighed. If it seemed too big, look at its wheelbase measurements. If you found a car sluggish in accelerating, check its weight and the horsepower and figure out the ratio. Do the same for cars you like. Juggle the numbers and figure out some acceptable ranges. I found I like cars that weigh around 2700 pounds and have around 150 horsepower. That's roughly 5.5 horsepower per 100 pounds. Cars with a longer wheelbase will ride more smoothly, as will cars with bigger tires (15" or 16" instead of 14"). Of course the longer wheelbase means it'll be harder to parallel park, so look at the turning radius. Some car guides will list turning radius. Most will list stopping distance as well.

    You can establish rules of thumb like this, and then use them to narrow down the range of cars to think about to a more managable number. Once you've narrowed the range a bit, go out and drive some cars, see if there are any trends in what kinds of cars the dealers have, whether some cars are more commonly available used (you can drive for a better bargain with them) or rarer (they'll be harder to get cheap).

    I tend to give a lot of emphasis to the sheer weight of the car in my analysis, since inertia is inertia, no matter what other tricks the designers used to make it handle and stop better. Plus the simple numbers are relatively easy to calculate, and simple to apply, unlike the bewildering variety of numbers and information the car manufacturer advertising throws at you.

    However, you can't rule out good design. A well-designed suspension will make a heavy car drive much better because the weight will be distributed differently. For example, a poorly designed suspension will cause the car to tend to roll up towards the outside of a turn (i.e. the inertia puts more weight on the outside pair of wheels). A well designed suspension will cause the car to sink in and distribute the weight more evenly in a turn. The weight-to-power ratio is in reality not a simple flat number, but a distribution of numbers across a curve. The car will tend to accelerate better in some gears and speeds than in others. So even if a car looks borderline in your preferences, give it a drive and see how it handles in reality.

    Finally

    Finally, when you find some car that just seems right, look through the car guide to see if it has any different-brand clones, or any close cousins. Check them out and see if they're just as good or if you're willing to live with them. Once you've got a small handful that you want to buy, figure out all the pricing details (especially if you're buying new - check out the Edmund's website for details on how to get all the information, so you know exactly to the last dollar what the dealer paid for the car) and go out to buy.


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