Take Advantage of Savings Opportunities

Physician's Money Digest, October31 2003, Volume 10, Issue 20

With auto dealers offering certified-usedvehicles, more and more car shoppersare deciding to purchase used carsrather than new, more expensive ones.In addition, used-car prices have been falling, asincentives on new cars and leases have created a surplus.By employing some simple strategies, you canensure that you get the most for your money whenyou buy a certified-used vehicle.

Facts & Findings

Most certified-used cars are available after comingoff 2- or 3-year leases. Dealers inspect the vehiclesbefore putting them on the market. Many offer anadditional warranty on top of whatever remains fromthe original warranty, as well as 24-hour roadsideassistance and rental-car reimbursement.

Kiplinger's

According to an article in , the warrantyon a preowned Lexus extends 36 months from thedate of purchase, or a total of 100,000 miles. Besidesoffering roadside assistance, the carmaker will giveyou a free loaner car while your car is being repaired.If your car breaks down on a trip, Lexus will reimburseyou for up to 3 nights of lodging and meals andup to 5 days of renting a car.

Reduced prices:

Many car manufacturers have Web sites that letyou search dealers' inventories for certified-used cars.You can also check listings at other Web sites, includingwww.cars.com, www.carsdirect.com, and www.autotrader.com. The best deals canoften be found on luxury vehicles.

Certified Savings

Once you've picked out a car, compare prices.Keep in mind that an older model car's price isreduced when a dealer offers incentives on a newermodel of the car. The used car's price also will dropwhen the model is redesigned. Edmunds.com is agood place to start your comparison-shopping. Othersources, such as the National Automobile DealersAssociation pricing guide (www.nadaguides.com) andKelley Blue Book (www.kbb.com), provide values thatare comparable to suggested retail prices.

Kiplinger's

Overall, the biggest percentage gap between new- andused-car prices can be seen in low- and mid-pricedsedans and SUVs. found that the followingvehicles represent good certified-used car deals:

  • 2001 Buick LeSabre Custom. Price: $14,000;2003 price: $26,370. General Motors adds 3 monthsor 3000 miles to the existing 36-month/36,000-milebumper-to-bumper warranty.
  • 2000 Honda Odyssey LX. Price: $18,700; 2003price: $24,860. Honda's certified preowned cars comewith a 12-month/12,000-mile comprehensive warrantyfrom the date of purchase.
  • 2000 Volvo S80. Price: $20,200; 2003 price:$37,140. Coverage lasts 6 years, or 100,000 milesfrom the original date of purchase. You pay a $50deductible on repairs.
  • 1999 Jeep Grand Cherokee, Limited 4WD. Price:$16,800; 2003 price: $34,465. Jeep extends powertrainprotection on its certified-used vehicles for 8years, or 80,000 miles from the original purchase.
  • 1999 Lexus GS 400. Price: $28,300; 2003 price:$48,400. Lexus's warranty is the most generous andoffers coverage for 3 years after purchase, or100,000 total miles.
  • 1998 Mercedes-Benz E320 Wagon. Price: $24,300;2003 price: $49,970. Mercedes' original warranty isextended for another year, or a total of 100,000 miles.

Deal Protocol

After you have found the right car at the right price,you are ready to visit the dealership and negotiate a deal.Car shoppers who are armed with information oftenhave better luck getting a good deal. As you bargain withthe sales representative, bear in mind that your targetprice should fall between its trade-in value (ie, what adealer is likely to give you for a used car) and its retailvalue (ie, what a dealer will charge you to buy it).

Shopping mantra:

The last step before making an offer is to do acheck-up on the used car. Obtain the car's vehicleidentification number and look up its history atCarfax.com. The site reviews databases for ownershiphistory, accident reports, odometer readings, and titlefraud. The true purchasing poweris vested in you—the ability to walk away from anydeal you don't like.