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Dear Frugalites, do you want to know how to get a sweet deal on a used car? Meet “Lucky,” my new, used car. Today, I will share my secret recipe for how I saved thousands of dollars on the purchase of this car. I hope you will find a gem in these tips should you find yourself in need of a used car sometime in the future.
Identify a Target Car
As I described in my article about When to Say Goodbye to an Old Car, I rely heavily on my trusted mechanic. About two years ago, I asked him what car would be best for me to buy next, as I knew my previous car, Rosie, wouldn’t last forever.
We discussed various options that he felt might work for me. I told him I wanted to stay within the compact class, as I liked getting good mileage and saving at the gas pump. In the end, he recommended a Toyota Corolla, which has one of the lowest ownership costs around and is quite reliable.
I took his advice to heart and decided right then and there that my next car would be a Corolla. It didn’t hurt that I had an elderly cousin who had driven hers, like, forEVER. She told me, “It never needs anything, just an oil change!” Yes, I’d like to have a car like that!
Play to your Strengths to Minimize Risk
Although I am a bit handy around a car, I am not a mechanic. Confidence to assess a vehicle on the spot is not a skill I possess. Therefore I chose not to go to auctions as it is too much of a risk for me. If I had a mechanic friend who would be willing to accompany me, I might try it, but I don’t.
Similarly, I decided to emphasize cars in my search that already came with the “Safety Certificate” required for registration, limiting any significant repair expenses after purchasing the car. I am an excellent online researcher, so it was a no-brainer to start my car shopping online. I found that using a combination of AutoTrader and Kijiji Autos worked best for me.
Know Your Market (and other markets, too)
So, even though I still had a working car, I began to research the local market for the Toyota Corolla. I live within an hour’s drive of a city of about 175,000. I started there, as it is close and easy to drive to if need be. Right away, I was disappointed. The prices were high! Three hours from me is a much larger city of almost a million people. The prices were much better! It seemed like everyone who lived in this city wanted to sell their Toyota Corolla. It is a very common car in this city which was good news for me.
I researched the Toyota Corolla prices in this big city until I knew them inside and out. If you gave me year and mileage, and condition, I could give you a solid guess on the price. A 10-year-old car would be a reasonable goal based on my current finances. There were so many in this market that I felt confident I could find one with low mileage.
I added one further price saver to the mix: a manual transmission. The Corollas with stick shift were $1,000 cheaper than the ones with an automatic transmission. I decided to go with the manual, which I enjoy driving.
Find the Best Price to Match Your Budget
So, my ideal Toyota Corolla would be ten years old with a manual transmission with a mileage of around 100,000 miles. I have good reason to expect to get quite a bit more out of a car like this: “Auto owners and experts alike peg the Corolla’s life expectancy at between 200,000 and 300,000 miles. For comparison, the moon is 238,855 miles from Earth!”
Woo Hoo! Although I’m not planning to drive Lucky to the moon, it would be nice to have many miles together.
In the large city market, my target car was priced around US$5,000 and at dealerships, often as high as US$6,500. Really above my budget, as I wanted to closer to US$3,000. Somehow, I needed to find a bargain!
Compare Your Options
I poured over the ads for my target car within a driving radius of 3 hours in every direction and came up with three options. Here they are for your review:
#1: US$2,400-2005 Corolla, Automatic Transmission, 100,000 miles.
- Body Condition: Poor – Rocker Panels and rear wheel wells rusted through
- Maintenance: New Exhaust, patched exhaust leak, new brakes, two sets of rims
- Required for Safety certificate: UNKNOWN
#2: US$3,000-2008 Corolla, Manual Transmission, 155,000 miles
- Body Condition: Decent – Substantial “ding” in the back right that didn’t affect safety certificate
- Maintenance: New all-season tires, winter tires used for two seasons
- Required for Safety certificate: At least new brake drums (approx. US$250)
#3: US$4000-2011 Corolla, Manual Transmission, 100,000 miles
- Body Condition: Almost perfect
- Maintenance: Brand new Michelin Tires, brakes redone last year (pads, drums, rotors), recent oil change, no winter tires or rims
- Required for Safety Certificate: The owner said “very little.”
Assess Your Seller to Limit your Risk
Lengthy conversations with each of these owners on the phone included basic questions about the car. I assessed how conscientious the seller was with the car and how much they knew about cars with questions like:
- Did it get regular oil changes?
- Has it been oil sprayed?
- Were there any accidents?
- How many owners?
I was also quite interested in why these sellers were selling the car, and I would ask if there was any major problem with the car and then gauge their response.
Negotiate to Get That Sweet Deal on a Used Car
Several factors arose: My friend who was helping me was unwilling to drive to the location of car #1, which was over 3 hours away. I don’t blame him! As well, the body condition alone made this a poor choice. Car #2 was the closest, within an hour’s drive. However, I wanted to keep the mileage low, so car #2 was not appealing. I also wanted to keep the age of the car within ten years, if possible.
Car #3 was looking like the best. But the price was too high for my budget. I called the owner and stated I would be willing to come tomorrow with cash to buy his car. I knew he had already purchased a new car, and the old one was sitting in the driveway. Would he take US$3,200 for his car After a brief pause, he confirmed if I would, indeed, come tomorrow? Yes, I would! He accepted my offer.
So, I had the car of my dreams for US$3,200.
The Bottom Line
The next day, my friend and I drove to the big city and picked up my new car. That week, my mechanic did the safety inspection, and my new car Lucky didn’t need ANYTHING for the pass! How Lucky!!!
While I had initially wanted to buy a car with a safety certificate, nothing in my price range came with one. Dealerships were selling my target car with safety certificates for around US$6,500, sometimes with a short-term warranty, too. So, there was a cost associated with that lower risk. To meet my budget, I had to assume the risk of getting the car safetied myself.
One of the tipping points in my purchase was that I liked the seller of Car#3 and trusted him. It was a single-owner car, and he maintained it well. He accepted my lower offer, so I felt the risk was worth it.
Even if Lucky had needed something for the safety, it still would have been worth it. As a matter of fact, she still needs a panel in her front end to protect the electrical from the elements. My mechanic is ordering this, and I’ll have him install it when the part comes in. It’s an investment in Lucky’s longevity and will likely cost me only $US160.
From Zero to a Hundred in the Comments Section!
Do you have a target car for your next purchase? What are your strengths and weaknesses when shopping for a used car? Have you ever gotten a SWEET deal on your dream car? Tell us about it in the comments!