Beating Broke

Personal Finance from the Broke Perspective

5 Strategies to Buy a Used Car without Being Scammed

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Besides your home, one of the biggest expenses you will face is purchasing a car.  Unlike a home, cars do not appreciate.  They are a depreciating asset that lasts for a finite period.  Choosing the correct type of car within the price range you can afford can have long lasting consequences on your finances over the years.

John (name changed) is a 21 year old college student.  He was in the market for a new-to-him car, but he knew he didn’t want a car loan.

He found the perfect deal on Craigslist.  The car was listed for $9,000, but John knew that it had a Kelley Blue Book value of $12,000.  John met the owner, went for a test drive, and paid $9,000 in cash.  John was proud of his deal—until he went to transfer the title and learned the great deal he had just bought was a stolen vehicle.

Now, John, the smart student who didn’t want to go in debt for a vehicle, is out $9,000.

Everyone knows that dealer prices for used cars are usually at Blue Book value or higher, but the up side is that if you buy from a dealer, you don’t have to worry that the vehicle is stolen.

But what should you do if you want to find a good deal and don’t want to rely on a dealership?

Used Car Scammed
Original Photo via John Lloyd on Flickr

The investigator on John’s case recommended taking these precautions:

Try to buy used vehicles from family or friends.  The best thing you can do is buy a used car from family or friends who are upgrading their vehicles.  You know that the vehicle isn’t stolen, and you also have a good idea how well the vehicle was maintained.

Be wary of a good deal that is significantly below Blue Book value.  If a seller wants to sell a car for much less than it’s worth, be suspicious.  In this case, you should think of the old adage, if something seems too good to be true, it probably is.

Don’t trust a seller who only has his cell phone number as his means of contact.  If the seller won’t give you any personal details or ways to contact him besides his cell phone, he may have something to hide.

Run a CARFAX check.  Running a CARFAX is a good idea no matter where you’re buying the vehicle.  A CARFAX will tell you how many owners have had the car, whether it’s been in an accident, how it was maintained, among other information.

Run a VIN check.  Using the free service VINCheck, you can see whether or not the vehicle you’re considering buying has been stolen.  Had John done this, he would have been tipped off immediately that something was not right with the vehicle he wanted to buy.  As it turns out, his vehicle had been shipped down to Mexico where the VIN was altered.  The vehicle was then brought back to the U.S.  When John went to register the title, he discovered that the VIN he had did not exist.

Buying a car from a private party can be worthwhile and save you money if you take the proper steps.  If you don’t, you could find that the bargain you purchased was actually a very expensive lesson.

Have you ever had trouble buying a vehicle from a private party or know someone who had trouble doing so?

 

Car Trouble Part 5: Finale

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It’s been a couple of months since I last updated this series.  You can go back and read the preceding 4 parts if you like. (part 1 | part 2 | part 3 | part 4)  The basic summary is this.  One of our cars blew it’s timing belt and royally messed up the inside of the engine.  We decided to rebuild the engine, and amongst all that fun, we bought another car and were left with a third car that we really, really, didn’t need any longer.  When I ended part 4, I enthusiastically wrote that we might soon be done with the whole fiasco.  Boy was that wishful thinking.  Here’s how it all wrapped up.

The folks that had looked at it and were excited about buying it couldn’t.  Terrible credit would be my guess.  (All the more reason to brush up on improving your credit score.)  In any case, we never heard back from them.  According to the research I’d done, the car was worth about $4100, and we had it listed at what we thought was a fair price of $3500.  Not a premium, but what we thought was enough of a discount to make it attractive.  Unfortunately, that wasn’t necessarily true.

HDR chevyWe got plenty of calls by just parking the car in a well traffic-ed lot and even a few offers.  The best of them was $2800.  We just weren’t ready to let it go for that price.  We owned the car, so we weren’t paying a dime to keep it, besides registration, and insurance. Registration is fixed, and the car was older.  We’ve been around the insurance bit before and made sure to get a good insurance quote comparison.  So, neither is very expensive.  So we had the numbers on our side to hold on to it and not let it go for a ridiculous amount.  The best, in a funny-ha-ha sense, offer we got was to trade the car for two snowmobiles.  It probably wasn’t a terrible deal, but what am I going to do with two snowmobiles?

So, the car sat.  And sat.  And sat.  For four months, it sat.  And, to be completely honest, I was ready to get rid of it.  It was just one more thing that was floating around out there that needed to be finished off.  So, I expanded the net.  I posted the car on a couple of free internet classifieds sites.  A couple of weeks later, I got a couple of phone calls.  And, some wheeling and dealing later, some folks came down and bought the car for their daughter in college.

We ended up taking $3000 for it.  Much less than we would have liked, but our desire to get it off of our books overrode our desire to get that extra bit of money out of it.  We could have probably held out for the larger amount and maybe gotten it if we had wanted to hold on to the car for a longer period of time.  We were on the verge of a storage issue though.  Whether we like it or not, it’s going to eventually snow, and then it would have to be moved from where it was parked and brought back home.  Where we would have to move it as often as it snowed so that the plows could come through to plow the road.  Inconvenient to say the least.

We’re glad to have it gone.  We’ll use the money from it to pay off the loan we had to take to pay for the rebuilding of the engine on the other car.  That’ll take care of that payment and get us back on track with our debt repayment.  Even with our less than aggressive plan that we’ll be going back to, the numbers look good.  We’ll be debt free with the exception of Mortgage and student loans sometime in 2013.  Two years seems like a long time, but considering we started this journey over 5 years ago, it’s just a drop in the bucket.

Here’s to hoping that wraps up the car trouble for the immediate future!

photo credit: Brian Johhnson

Car Trouble Part 4: Almost Done

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If you need to catch up (It’s been since early March since the last update) here are parts 1, 2, and 3.  And this, this is part 4.  And yes, there is likely to be at least a part 5.

When we last left off, we had bought the suburban, and the other car had yet to even have the motor torn down to see what was wrong with it.

We finally got an estimate and gave the go-ahead to work on the engine of the Alero.  It came back at about what we thought it was going to be.  And the grand total of about $3400 was pretty close too.  It’s a pretty large number, but we breathed a small sigh of relief for no more surprises there.  In order to pay for the repairs, we had to take a new loan out on the Alero.  We owned the Alero in full, so it kinda sucks having to take the title in and sign paperwork for a loan on a car that you used to own.  On the other hand, it’s nice to have that asset to use when needed.  Imagine what the result could have been if we had still owed on the car!

Fixing the CarWe’ve also taken a couple of longish trips with the suburban.  And with the price of gas, we’ve felt every mile of them.  But, for those trips, the necessity is there.  We’ve now taken two trips that have included the whole family, even the dog.  It’s pretty nice to not have to try and find someone to watch the dog while we’re gone, or to find a kennel for him while we’re away.  In the case of the kennel, the extra cost in gas easily pays for itself.  We’ll be taking a long trip next month to see my parents.  It’s well over 900 miles from here, and it generally takes us a full day (with a motel room in the middle) to get there.  We’ll take the dog with us.  I’m sure the savings on kennel won’t overcome the extra cost of gas on this trip, but it will still be nice to have him with us.  Aside from a few pangs of regret when I fill it up, I’m glad we ended up getting the Suburban.  And, even the gas isn’t that bad, it’s just that the tank is twice as large as either of our cars’ tanks.  It adds up so much quicker.

Since we have the Alero back, and it works, it’s time to thin the herd.  We’ve decided to sell the Cavalier.  Based on what it books out for, we think we should be able to get enough out of it to pay off the loan we took on the Alero.  If that happens, we’ll be back to owning the Alero outright again, which will be nice.  We’ll still have a payment on the Suburban, but it’s worth the upgrade.  We haven’t listed the Cav just yet, but put a big sign in it’s window and then parked it at the parking lot at work.  The parking lot has wonderful frontage to the main intersection in town and can’t be beat, since I don’t have to pay to park there.

Surprise.  We parked the Cavalier there Friday night.  Today, (Sunday) I went and showed it to a couple who liked it.  They’ll be going to the bank tomorrow, and as long as they can get the financing to buy the car, they think they’ll take it.  If all of that goes through, it could be nearly the shortest sale time of a car ever!  I guess we priced it right!

Hopefully, we’ll find out whether they are going to take the car tomorrow, and if they do, be able to pay off the loan on the Alero on Tuesday.  With that puzzle piece out of the way, and barring any unforeseen other car issues, that could set us up for the final installment of the car trouble series later this week!  I can only hope!

photo credit: dawnmichele