Why next year's too late to buy a used car

If you are shopping for a used car, buy it now for the best deal. That's the word from analysts at Kelley Blue Book, who say you could pay 4 percent to 6 percent more for that car if you wait for the first three months of 2012.

Used car prices went for a roller-coaster ride in 2011. With gas prices hitting $4 a gallon early in the year plus shortages of some new cars resulting from the Japanese earthquake and tsunami, used car prices surged. High-MPG cars rose especially quickly; shoppers were eager  to boost their mileage and cut gas costs. But after peaking in June, gas have fallen back below $3.50; used car prices overall are down 10 percent; and those for high-MPG cars have plummeted by 20 percent.

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Good deals abound now in this low-demand period when most people focus on shopping for holiday gifts instead of cars. But that traditionally changes with the start of a new year and a sizable increase in demand. And price increases are likely to be higher than the historical 1 percent to 4 percent for the first quarter. Because of low new-car sales two and three years ago, the supply of trade-ins and lease returns will be tight in supplying the used-car market, said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book. "Due to that potential supply shortfall next year, values may increase 4 percent to 6 percent," Gutierrez added.

Shopping for the best deal

If you are considering a used car, here are some points to consider:

-- Look for a good used car with lower resale value. Cars that hold their value are a great thing if you are selling a used car. If you are the buyer, not so much. For instance, both the Honda Accord and Ford Fusion (pictured above) are on the Consumer Reports list of best used cars. But a 2009 Accord LX (which enjoys typically high Honda resale value)  will cost about $16,070 from a dealer, according to Kelley. A 2009 Fusion S, which does not hold value as well, is selling for $14,320 -- a savings of $1,750.

-- Ponder your trade-in value. If you have been thinking about trading your old car for a new one, the dealer scramble to find good used cars might net you a strong trade-in. If that is your situation, however, it makes sense to wait to attempt a trade-in, probably until Spring, when demand always surges.

-- Verify the history of any used car. Check with CarFax and its chief competitor AutoCheck, which get reports from insurers, police departments and other sources on accidents and disasters. If you are considering buying from a dealership, it may be able to show you these reports for the cars you are considering. Otherwise, it costs $34.99 from CarFax and $29.99 from AutoCheck for a single vehicle report and $44.99 at both for multiple vehicles. Be especially cautious about any vehicle that came from a state where there was flooding during Hurricane Irene last fall. A high number of cars were flooded during that storm.

Photo courtesy of Flickr user wnealis

when somebody offers you free car fax report about the car there is nothing wrong in checking it out.. also decide how high you want to go during negotiation..

[Osprey4]

We just purchased a used car for my college grad. We looked at about a dozen cars before making an offer. Both independent and new car dealers seemed anxious to negotiate even below the price listed on the internet car site. One unique requirement was for a five speed (my son's choice). Looking at cars in 4-5 states, we were only able to find maybe 10 for each model we considered.

We ended up at a new car dealer making a ridiculous offer on an 05 Corolla. He gave us the whole thing about "need to talk to the sales manager", but within a few minutes accepted our first offer, then was able to beat the interest rate we had gotten from another lender. We were out of these about $1500 ahead of where I expected we would be.

The Carfax report was helpful insofar as we knew the car had been purchased, driven and maintained locally. But we paid a local Toyota dealer to perform a stem-to-stern evaluation. Only one thing showed up, a bad battery that the selling dealer agreed to reimburse us for.

[usedcarinspections.org]

Jerry,

A Carfax (or AutoCheck) report contains no information about the CURRENT condition of a used vehicle. Too many people are using a Carfax report as a substitution for a pre-purchase inspection.

7 problems with a Vehicle History reports.

First, if the vehicle has been rebuilt (or salvaged) Carfax can only report this if the States' DMV changed the vehicle's title to "salvage, rebuilt, reconstructed, etc..." However, there are some states that do not indicate remarks on their titles such as "savage, rebuilt, true miles unknown, thief recovery, etc..." Also, if the insurance company does not notify the state that they have totaled a vehicle, the DMV will not change the title to 'salvage, rebuilt, etc..." For example, a few years ago, State Farm was sued for not reporting over 30,000 totaled vehicles to the States' DMV. Since the titles were never changed to salvage, Carfax shows these vehicles to have "clean" titles. These totaled vehicles were sold to salvage yards, patched together, and re-sold to the public with the original titles and a "clean" Carfax report. It is not uncommon for a professional pre-purchase inspection to find accident and frame damage on a vehicle when the Carfax report shows "no reported Structural / Frame Damage" or "Accident / Damage".

Second, there is no database for body & frame shops to report accident damage and repairs, and not all insurance companies disclose or share their accident information. Carfax readily admits that there are thousands of accidents, each day, which will never show up on a Carfax report. Even if Carfax reports an accident, it cannot tell you the extent of the accident damage, or the quality of any repairs. Only a professional inspection by a Frame Specialist can give you that information.

Third, used car dealers know the limitations of a Carfax report. Some dealers knowingly buy vehicles with frame and accident damaged which have a "clean" Carfax report. They sell these damaged vehicles to unsuspecting buyers showing them the "clean" Carfax before they purchase. Bad vehicles are purchased every day because the seller/salesperson talked the buyer out of a professional inspection by showing a "clean" report. A vehicle history report cannot tell the buyer the current condition of the vehicle.

Forth, Carfax does not have any type of reporting mechanism with the tens of thousands independent repair facilities across the United States. Most of the Carfax reports have little or no repair information compared to the millions of automotive repairs performed each day. Even if Carfax reports a repair, it cannot tell you if the problem was fixed correctly or if there are additional mechanical/electrical problems with the vehicle.

Fifth, some States require an annual safety and/or emission testing. A safety or emission test is very limited in its testing and like a repair history, it cannot tell the buyer the current actual condition of all the vehicle's components and systems.

Sixth, Carfax is a "History" report. There is a time lag between when a vehicle's title was changed to reflect a "negative" comment and when Carfax actually reports the title's new information. This time lag can allow a damaged vehicle to be re-sold before Carfax can report the negative information about the vehicle.

Seventh, search the web for complaints against Carfax. Many consumers have filed complaints and lawsuits that Carfax deceives their customers by concealing the limits of the information it collects. When confronted by irate customers, Carfax hides behind their disclaimer. (FYI, Carfax does not allow phoned in complaints).

The perception for a used car buyers is that Carfax offers comprehensive historical information about used vehicles, but the reality is, the information contained in a Carfax report is incomplete, limited, misleading, may not be current, and in some cases totally inaccurate. This difference between the used car buyers' perception, and reality, will cause them to make bad decisions based upon incomplete information provided by a Carfax report.

A used car buyer should also question the cost effectiveness of a vehicle history report. A Carfax report sells for $34-$45 vs. a professional pre-purchase inspection for around $150. Pay the $34-$45, and you still don't know the current condition of any mechanical or electrical system, you still don't know for sure if the vehicle was in accident(s) or the quality of any previous accident damage, and you still don't know if the vehicle was abused or well maintained. Only a physical pre-purchase inspection by an ASE Master Technician (for all mechanical & electrical systems) and a Frame Specialist (for body and frame problems) can determine the true condition before you buy.

The #1 reason bad cars are purchased is the buyers' inability to determine the true condition of the vehicle before purchase. A history report cannot be used to determine the true current condition of the vehicle.