I do have a few tips as far as buying a used vehicle is concerned though.
Ideally you’ll either have the money, or you’ll have your loan through somewhere besides the dealership. If you need to or want to finance through the dealership, then when you’ve selected your vehicle the first thing you need to discuss and get in writing is the bottom line price. Car salesmen are trained to game the finance system to increase and obfuscate the total cost of the vehicle. They may float a very attractive monthly payment plan that ends up costing you hundreds or even thousands more over time. This is where a lot of their profit comes from.
Inspect the vehicle. If you know a mechanic then see if you can either bring them to the dealership, or ideally bring the vehicle to the garage so they can look at it thoroughly. Salesmen obviously are not going to point out flaws in the car they’re trying to sell you. Even the most congenial, no-pressure salesmen I’ve worked with have neglected to mention things like major rust issues on the rocker panels and under body, bubbling paint, et cetera. The mechanic isn’t going to be able to ascertain everything, but rust and basic wear and tear items that will need replaced soon will stick out to a trained eye.
Drive the vehicle. And I don’t mean around the block on flat roads (which is what they’ll want if they come along, which they don’t have to). Accelerate heavy to check for smooth acceleration and shifting. Brake heavy to check for quiet, even operation with no pulling to one side or the other. Drive over railroad tracks or potholes and listen for rattling.
Research the scheduled maintenance of the vehicle you’re buying. If you’re looking at something with 90,000 miles and you see that several parts should be replaced at or around there, inquire as to whether or not they have been, and adjust your price accordingly.
Shop around. Sites like Cargurus are invaluable for finding exactly what’s available in your area.
Know your credit score when you’re shopping for an auto loan. My credit union told me I was eligible for 1.59% APR when I began shopping, but after I picked out my vehicle and brought them the invoice, they told me my score had dropped 30 points and that the best they could do was 4.5%. I looked my score up on my phone, and it had actually increased. I shoved that in their face and they went into the back for a few minutes before coming out and giving me an apology…and 1.59% APR. They pulled this on me either thinking I was an idiot, or they were upset when I declined the credit insurance they wanted to sell me.
The dealership is not on your side. Your bank / credit union is not on your side. Your insurance company is not on your side. They all want your money. Period.
Another vote for GEICO as a company with reasonable rates that actually does its job after an accident.
Stay away from salvage, could have all kinds of issue and will have horrible resale value.
Look at Toyota, Honda, and Mazda. Mazda doesn’t have as high a resale value as Toyota or Honda, so you can sometimes get more car for the money and they’re still reliable and fun to drive. Helped my girlfriend get a 2013 Mazda 3 just over your price range last year with 60K miles.
Don’t beat yourself up, I remember looking up insurance rates for Detroit and being astounded that an 18 year old kid in would pay $4,000/year for basic insurance. Your high insurance rate is mostly a function of your state,not your carrier. I have Allstate for my property insurance, but generally found GEICO cheaper by 20% or so. Definitely recommend shopping for insurance every few years. Sadly, customer loyalty means that it is a good excuse for companies not to be competitive. Especially true with cable providers. GEICO has been excellent at handling claims.
Just to give a comparison. I managed to get $4K auto premium, only by being a bad driver (2 accidents and 2 tickets in 3 year) and drive a Tesla. Once I found out my 7-year old Model S was only worth 22k or so. I canceled my collision insurance and vowed to drive more carefully.
I’d seriously consider dropping collision on an car over 4 or 5 years old. Although I don’t really understand how no-fault state works.
I don’t have better advice than what you’ve got as to a new car.
But definitely avoid salvaged car. My first car out of college was a used Honda Accord. It was freshly painted and when dumb 23 year old me saw the salvaged title, I asked what does that mean. The seller told me, it means it is been in minor accident. It was generally a fine car, but mechanic told me that my car had spent sometime under water, and had number of weird things rust that shouldn’t have happened to garaged car in California.
If you have a Carmaxx near you I would check it out. They have their inventory on-line as well. My daughters bought their current vehicles there and have been very happy. One was a 30k Hyundai and the other a 7k Jeep Compass. Neither in the time they have owned them have had any mechanical problems.
Not sure of the legal meaning but I know around here we once had warnings about dealers bringing in cars from states that had massive floods. Salvagers would buy them, clean them up and then take them elsewhere to sell them. You can imagine the problems water damaged vehicles might have.
Water damaged cars have way more problems than mold with them. I think selling those things without some sort of disclaimer that states clearly that’s a flood damaged car should be illegal. I’d take a golf ball sized hail hit car any day though.
As far as far models are concerned. I agree that Toyota and Honda are probably still the leaders in reliability. I am currently driving the Subaru because (much like Michigan) here in the Berkshire Mountains I drive on steep hills in heavy snow. Subarus are full time All-Wheel Drive AND have 9 inch ground clearance, about 2 inches higher than any comparable vehicle. Also very good reliability reputation.
I disagree with this, but I’m generally buying gently used cars. May not be as useful or worth it on an older car, but I don’t see why if it comes with some length of bumper to bumper coverage. But, there’s a cost associated with that piece of mind.
Carmax and Autonation are national used car sales dealers. The cars they list are ones they actually have purchased and you are buying directly from them. Both feature “no-haggle” pricing, which can be both good and bad. Good because you know what the price is and won’t spend much time haggling with sleazeball car salesmen, but bad because sometimes you can get a better deal from a dealership that is willing to negotiate, especially if you have your eye on a unit that hasn’t sold in a while and they want to get rid of. My assessment of places like these are that they often have OK prices, but not great ones. They claim to focus on better quality recent models and that they carefully inspect each vehicle to qualify it for sale. But you know it’s car people, so that could be all bullshit.
Truecar, Cars.com, and Cargurus are all aggregators of vehicle listings. They pull together inventory from numerous dealers and you can search and filter and find what you want. Years ago Truecar used to list the dealer cost and then also listed sales figures of the car you were looking at so you could see what kinds of room you had to work with in negotiation and also whether the initial price was a good, bad, or ugly deal. They got into some trouble with dealerships that didn’t like the information they were providing, so over the years Truecar has changed a lot and isn’t quite as useful as it used to be but can still be used to get a no-haggle price although I think again if you’re a good negotiator you can do better. And now I think a lot of sites will tell you the “good, bad, ugly” rating on a price.
I like that Cargurus and a couple of the others will also tell you things like how long a listing has been up and how the price has changed since it was listed. I believe that generally each month a used car hasn’t sold the dealerships will knock the price down a bit. They really want to move them; they make good money off used cars.
My wife and I got lucky when we bought a used car. It was a 5 years old, but less then 20,000 miles.
We did get screwed because we got pressured into getting the warranty. We got a good price on my trade in and a good price on the car, but still ended up paying too much.
I would not worry too much about buying used cars, especially if you just need something to go from A to B. If who ever you are talking to won’t let you get it inspected, just walk away. If they will, get the mechanic to look at it.
Somethings might need to be fixed, or need to be fixed closer down the line, but you just have to price that in. And if the car has low mileage, you might get a car in near mint condition, just without the perks of the modern car.
Most mechanics are pretty honest these days, and most figure if they don’t do a good job, you won’t come back to further repair the car if it breaks down. And between word of mouth and yelp, a lot of mechanics seem more honest these days.
Oh, and if possible, arrange a loan with a bank before hand. It should save you half an interest point or more.
Jeff, keep in mind that if you can save money on the insurance by switching companies, you can use that savings to apply to car payments to get a better car.
Because if I’m doing my maths correctly, you were spending about $300 per month on car insurance for one car, which is totally outrageous.
Imagine if you could get insurance for $100/month. That would leave you with $200/month you could use for a car payment instead.
Subaru is another manufacturer I would add to your list. All their vehicles are AWD which can be nice in a place that gets snow and ice like Michigan. They’re another Japanese brand but not as popular as Honda and Toyota, so the resale prices aren’t as high.
In my experience buying a gently used car about two years ago, Carmax and Carvana were a bit more expensive than the dealerships’ internet pricing and their selection was nothing to write home about. On the other hand, they will deliver which may be helpful if you don’t currently have a car to get around. Of the aggregators I found CarGurus had the best filters for what I was after. The inventory on all of them is more or less the same though, so use whichever one you’re most comfortable with.
Oh yeah, I just thought of this: just like in every other arena, extended warranties are not worth it. They don’t cover stuff that wears out. It’s a better idea to set aside money for car maintenance and repair.
