Cars….ah sweet cars. I am going to be honest. I am not a car person. It is not my thing, but I do prefer new cars. I know what you are thinking, “New cars! That is a terrible investment!”. But here is the thing, I am not purchasing cars as an investment. That would be a terrible idea unless you are purchasing a Porsche or classic car that may retain some value. No, I am purchasing a car for one reason. To get from point A to B (possibly with an RV in the back). That is all. I do like new cars and actually purchased my last 3 cars new and off the lot. Car buying, when it comes to new cars, can be tricky.
That being said, I am not here today to talk about buying a new car, that will be for a later day. Today I am going to talk about how you can get the best deal on a car if you are clever. Car buying 101.
But first, I would like to do a eulogy to the cars that came before:
- 1996-1997: A white Nissan Sentra I bought from my dad.
- 1997-1998: A red Nissan Pulsar! Anyone remember the T roofs! This was a hand me down car from my brother but man did I feel cool in it.
- 2001-2003: A brown Nissan Stanza. This was a hand me down car from my grandparents. I think I paid them $500 for it. Not particularly cool, but I felt cool in it. Like Macklemore, I made frugal look cool.
- 2004-2011: A green Suzuki Esteem named the Green Lantern. Bought for $4,000 at an auction, I was the coolest cat in town. Most people don’t even know that Suzuki made a car. Sadly this car died the one time my sister-in-law drove it. It was the day after our wedding and the Green Lantern died in the middle of one of Boston’s big tunnels. If you know anything about cars, this is the worst/most dangerous place to have your car stall- a busy tunnel with no room on either side. Still, I fixed it and drove it for a few more months then traded it in for $4,000. What a steal! This car was my favorite one ever. I had it for 7 years and even had a vanity plate for it. “GRN LTRN”. Yup like the superhero. I had the license plate until it melted in the recent Tubb’s Fire. So many good memories in this car….
- Briefly in 2010: A sweet silver Honda Accord. Stick shift/manual of course like the Sentra and Pulsar. I think I paid $5,000 for this and sold it for $4,000 within 1 year.
- 2011 – 2017: A Nissan Altima. Once the Green Lantern broke down we did not feel comfortable driving it from Massachusetts to Tennessee. So we dropped by the dealer and bought a brand new Nissan Altima. I leased this car for 60 months at 0% down. That is what I could afford and so that is what I did. I think the purchase price was $21,000. This car was doing well and only had 45,000 miles on it when it melted in the 2017 Tubb’s Fire.
- 2011 – Present: Toyota Camry. We had shipped the Green Lantern down to Tennessee. It continued to have minor problems and one-morning post-call, after working for 24 hours, I put the key in the trunk and snap. It broke right off. I was done with this car! I called my wife and we drove straight to the dealership and I bought a brand new Toyota Camry. Maybe not a rational purchase, but once again this was 0% down and 60 months financing. I think the purchase price was $22,000 and as of today this car has 55,000 miles on it and is going strong.
- 2017 – Present: A Toyota Highlander. This is the replacement for our melted Altima and the care I will be talking about today. It is a 6V with 5,000 lb towing capacity and the ability to carry 8 people. Bigger than we need, but step 1 towards my RV dreams. The purchase price was approximately $31,000.
All in all, I think I have spent around $70,000 on all of the above cars when you take away what I sold them for. Now there was upkeep involved over time but that is true with any car. Not too bad for 22 years of driving, particularly considering I have plenty of friends who have spent $70k on just one car.
So as promised, the best way to buy a used car is…. Through family. I mean seriously. My first three cars were bought from my dad, brother, and grandparents and cost me close to nothing. Now this is not really practical, but still has to be the hands-down best way to buy a car.
Ok, so what if buying a car through the family is not an option? Well, then my favorite way to buy a used car is…
Drum roll, please……….
A car auction! Preferably a dealers auction
Now I am going to be honest, I have not done this since the Green Suzuki Esteem in 2004 but I can tell you it is the most affordable way to buy a car. How does it work?
Find an auction
First, there are two types of auctions. One is open to the public. The second is opened to licensed car dealers. The best deals are at the licensed car dealer auctions and that should be your target.
These auctions occur weekly or monthly depending on the site and all sorts of automobiles from low end to high-end personal cars to even commercial vehicles. Many of the cars come from rental agencies looking to unload their old cars when buying newer models. Some come from other car dealers such as cars that have recently come off leases. The best deals are the ones sold by insurance companies, but you have to be more skeptical with these purchases as they may have been totaled or have some other major problem with them.
Public auctions are open to everyone. But I think the best auctions are the ones for dealers. To gain access you must be a registered auto dealer. So, in this case, it helps to have friends who own auto dealerships. That is how I gained access. Without that contact, you might as well forget this endeavor.
What do you want?
You should go into an auction with an idea of the kind of car you want. Do you want a sedan, an SUV, a truck? 4 door or 2 doors? Luxury or practical? A specific Make or Model? All types of cars will be available at all price ranges. My Suzuki was basically a go-cart in a car body. Not fancy, but got the job done and was affordable.
Inspect the car
Once you are in, you have the chance to inspect the car, but not drive it, while it’s in the lot. This gives you a good chance to look for major body damage that was poorly fixed, kick the tires, and look under the hood. A basic idea. Also, I would recommend checking the VIN. With smartphones these days you could do a quick check on Carfax or some other site to learn about the car history.
Bid…well watch your friend bid
After that it comes on the block for auction and it is a fast-paced game like any other auction. In the end, the winner gets the car and has to pay cash for it. It now belongs to your dealer friend (remember you actually are just a guest and spectator).
Pay for the car
Once the car is paid for it can be driven off the lot. From there you will need someone (preferably your friend) to draw up the title, taxes, and registration transferring the car to you. This will cost a few hundred dollars more.
In a normal situation where the dealer is selling it to an unknown party, this is where the markup occurs. For instance, my Suzuki Esteem could have easily been sold for $4,000 more than what it was bought for in 2004. Luckily there is no mark up for you! Thank you amigo…make sure to take your friend out for a nice dinner and some drinks. They just saved you some serious money.
What is the danger of buying a car like this?
Well, the biggest issue is the unknown problems. For instance, if you missed that the car smelled like smoke, then you are hosed. You may never get that smell out. Or maybe the car has an oil leak or some other engine problem it could cost you hundreds or even thousands. I am not a car guy so I can’t really even imagine a bad scenario that would be missed, but you get the point. Those savings just went out the door.
The liability is less for an auto dealer because they typically have mechanics that can fix these problems. You do not.
Buying a car from an auction is not a bad way to go. It can be quite affordable and if you have someone who knows what they are doing (i.e. your dealer friend) then you should be okay. If you do not have a dealer friend, there are some go-betweens/agents but this will obviously cost more as you have to pay for their services. Still, it will likely be cheaper than buying a car from a dealer.
What are your thoughts? Ever bought a car at an auction? What’s your favorite way to buy a car?