Hacking the Used Car Purchase | Hacker News Reader

Hacking the Used Car Purchase

blog.carsabi.com

289 pointsdw5ight123 comments

I'm surprised they didn't mention "Have friends", which can often save far more money than any of the listed tips.

It's worth remembering that you are not the only person that you know that buys cars. Often friends and relatives are considering buying a new car and want to get rid of their old one in an easy way. Make sure you let them know that if they are going to trade-in that you might be interested in their old car.

My brother's first car was a Subaru with 250K miles that our friend's family was replacing. Instead of trading it in my brother offered $50 for it. They decided to give it to him instead.

My first car was a Corolla that my uncle was going to trade in. I offered him the trade-in quoted price ($1500). Two years later I sold it for $3600 on Craigslist. I would have gladly sold it to a friend for $1500 though.

There are plenty of people that like to buy cars from dealers and do not want the hassle of craigslist and are willing to trade in. If you're in the market for a car, make sure your friends and family know!

I wholeheartedly agree with this. Having connections and keeping your eye out for potential cars to buy can make a huge difference.

The first car I bought, a 97 Opel Corsa, was going to be scrapped by a friends neighbor until I stepped in. It had been sitting without use for ~18 months. The parts needed were minimal. It cost me €150 and 6 bottles of wine. It still drives absolutely perfectly.

The second car I bought was again going to be traded in/scrapped. $20 later and a can of 44K to clean out the engine it passed smog and has been running since.

tl;dr it pays to keep an eye out for cars that people are looking to sell. Offer to take them off their hands for a reasonable price and you'll find they're very receptive.

that's partly because in Europe your insurance is through the roof so people throw away perfectly fine cars since they don't want to pay $6K/yr for a civic

Pretty much everything in Europe is more expensive when it comes to driving. Tax, fuel, insurance are all higher than the American equivalent. In Ireland insurance for young males is ludicrously expensive due to the heightened probability of a crash.

Where do you pay that much? I have lived in Germany and Switzerland and had various cars. Liability insurance never was more than 700 dollars per year.

English car insurance, especially for young men, is expensive. A 22 year old programmer driving a 1996 Honda Civic 15,000 miles a year for social and commuting to work would be paying about £950 if they shopped around but could be paying over £1,500 if they weren't careful. (That's fully comprehensive. And it's for a small town population 100,000)

£950 = $1497 = €1146

This can go very wrong - I would advice against doing car deals with friends. If something very expensive breaks soon after purchase it can create a lot of stress for both you and your friend.

The only way I'd buy a used car is if i knew why it was being sold -- if a friend makes a lot of money and wants to sell a 5 year old well maintained car because he's buying a new one, sure. If someone has an S2000, has a kid, and needs something with more seats, score. Otherwise, adverse selection seems to be a big deal.

The point of buying from friends is that they rarely stick you with a known lemon.

Yes, and I wouldn't trust a story of the provenance of a car/reason for it being sold if it were NOT being sold by a friend.

Also, my friends maintain vehicles well, which is a major factor in their survival past 100-125k miles with minimal ongoing maintenance. I like cars with turbos, high compression, etc., so it's a bigger deal.

They also missed "be a mechanic" which allows you to get even better deals than merely "having friends".

Also the grand ultimate maneuver: "have friends who are mechanics."

I smell disruption!

1: Dealers cost ~$2800 more on average, but they may also provide $2800 of value to some people. For instance, many dealers add a 6 month warranty, clean up the car. More importantly, buying from an affiliated dealer can be seen as safer because too many complaints can cause the dealer to lose their affiliation.

2: I was the impression that the standard scam for trade-ins was to inflate the trade-in value. It makes a customer feel better if they get $500 more for their trade-in than if they get $500 off the price of the new car even though it works out the same.

3: Buying luxury later does not necessarily save money. Some brands depreciate more than others. Toyota & Honda depreciate the least, but BMW is pretty close.

You can't go to a car dealer and get an "inflated" price for your current car without buying a new car from them; they're getting their $500 one way or the other. It's a bad idea to sell cars to dealers. Their entire profession revolves around capturing the spread between car buyers and sellers.

Also, a BMW 3-series depreciates ~$7,000 in the first 2 years; a Toyota Camry depreciates ~$3,500. Those numbers aren't pretty close.

From what I understand, a car dealer makes the bulk of its profit from its maintenance department. Most of the time they make very little profit from your used car, it's usually just resold to a wholesaler. The dealer is usually only interested in reselling relatively new cars of the same make. The biggest reason they take trade-ins is because it makes it easier to make a sale and it makes it easier to play with the numbers.

So yes, you shouldn't sell to a dealer, but if you don't know why you can be conned when you're surprised by how much they actually offer for your trade-in.

A BMW 3-series costs about twice as much new as a Camry, so that seems like equivalent depreciation to me.

Used cars are actually a huge profit center for dealers. They will wholesale older cars that they can't sell on their lots, but for a good late-model used car, they can easily make a few thousand dollars profit.

I don't know if anything is a huge profit center for dealers these days.

I mean, they will certainly have big revenue centers, but their business model is like a snake's eating habits- big meals occasionally.

Sorry, but bleeding out $7,000 a year instead of $3,500 a year is still an extra $3,500 a year, regardless of how much you paid for the damn thing.

Are you arguing that dollar value of depreciation is more important than rate?

When comparing two alternatives? Absolutely.

Let me ask you: would you rather have owned one share of ENE (Enron) before the collapse, or ten thousand shares of MSFT in 1999?

"It's a bad idea to sell cars to dealers. Their entire profession revolves around capturing the spread between car buyers and sellers."

Well a few things. It depends on the car and the value of the trade and how much time you have.. They do provide a service (they find a buyer) which can be quite helpful if you don't want to have to deal with strangers coming to your home or office to test drive the vehicle as well as other things that need to be done to facilitate the transaction.

There is also the issue of state sales tax. If you trade a car in of $20,000 trade in value you are saving sales tax in a state that charges that. So in NJ for example by trading the car to the dealer you save 7% of 20,000 or $1400 right there. Now of course you can also do what is known as a courtesy trade running the paperwork through the dealer if you have a buyer all lined up ready to go. That's not easy to do though. A dealer can smell when you need to complete a sale. I've done this exactly once in the past. The other times it wasn't possible to coordinate the two sales.

Of course a dealer makes money and can plays games with your trade. But you provide a service and charge for what you do as well.

You say that like it's a necessarily bad thing. Remember the post recently about the guy who was doing exploiting exactly that spread on Craigslist?

It's a "bad" thing if your desired outcome is to get the highest price for your car at the cost of some convenience.

a 3 series may cost twice a camry

2/3rds as much.

Re point 3: Also don't forget that while the value of these cars may depreciate to daily driver levels, the maintenance costs don't. Speaking from semi-painful experience as the owner of a '96 Lexus with 160k on the clock.

I recently asked a seasoned friend about buying cars off Craigslist after being frustrated with all the SEO spam I found on Google. This was his response:

Well, all states are slightly different with how they deal with car registration and ownership titles. The way it works in most places is that every car has a piece of paper that goes with it called the title. The title has all of the current owner's info on it, as well as the Vehicle Identification Number (VIN), and when you're selling a car, there's an area on the back you fill with the new owner's info, car mileage, and seller's signature. This area on the back counts as a "bill of sale". It used to have to be a separate document that was kinda written up in legalese; "I, ______, sell this 1997 toyota corolla (VIN #SDFSLJDKLSJGD52345234) to ______ on this day, may 18th, 2008 for 42 dollars. Signed, Seller: ______ buyer: ______" But in Colorado they've integrated this into the bill of sale, so you don't need to do this anymore here. The most basic way to determine if a car is stolen is if the seller has the title that matches the VIN stamped onto the car. If you have a signed title/BOS and the car it belongs to, its kinda like a endorsed check, anyone who wants to own the car just now needs to write their info in on the title and take it to the DMV. If they don't have a title, don't buy the car. It might not necessarily be stolen, but it might be, and its a HUGE pain in the ass to get a 'replacement' title made for a car, especially if you don't own it. In California, titles may be called pink slips, which I'm sure you've heard of if you've seen any of the 3 Fast 3 Theerious series. I believe they function the same as CO titles, from what I'm reading. Here's a list of everything you need to transfer the car to your name after you have the car and title in hand: http://dmv.ca.gov/vr/vr_info.htm#BM2522

Sounds like you need the endorsed title, probably with your info on it, and a smog certification (which you'll either get this from the seller (in CO the seller is legally required to have the emissions tested before selling vehicles, but this RARELY happens), or have to find an emissions testing place and go there yourself with the car). With these, you can go to a DMV and get the title put in your name, and they'll give you plates. View this video: http://apps.dmv.ca.gov/vr/vrvideos/title_transfer/title_tran... - Shows you where to sign and everything. This is very important; if the seller fucks up his/her name on the title when signing it or something like that, it MAY void the title, and you have to get all this other shit signed and come back to the DMV and wait in line forever again and again. Bring a checkbook to the DMV, sometimes they don't accept credit cards. I think that about covers the legal parts of buying a car/registration.

As far as buying a car from CL in particular, you'll probably end up bringing cash, but leave it in your locked car til you decide you want to purchase said vehicle and see the title. Ask them if they have a smog certification or any of the previous records, if it can't pass emissions, you can't get it registered, which is coincidentally a great time for a car to be sold. Granted, most cars ought to pass emissions fine until like 200Kk miles. If the engine visibly smokes, you're probably fucked. Ideally, the car won't have been run before you see it, so it'll have a cold engine, this is the best time to see how the engine behaves; does it smoke? does it start up easily? Other major things to consider are leaks of any kind - BRING A FLASHLIGHT. An engine with no leaks is best, but a leaky engine isn't always bad; leaks coming from the top of the engine/where the headers are are bad, might be a head gasket blown. Leaks from around the oil pan area are common, and all that means is that you'll have oil stains on your driveway and have to remember to top off the oil every now and again. Check the oil level of the engine to make sure the owner isn't a jackass. Transmission leaks are the same, not too dangerous if you keep the oil level good, but generally, most people are too lazy to keep up with this shit so it gets broken. Just buy a car with no leaks. Drive the car, make sure it tracks straight down the road; if it doesn't, it might mean that it was crashed and the frame is bent, or maybe the alignment is off because they curbed one of the wheels bad. If you're feeling paranoid that its been wrecked or something, you can call ahead to get the VIN # and get a Carfax report on the car, which shows its whole history of reported accidents. Anything large enough to warrant not buying the car will be on this report, minor fender benders may not be. Make sure the transmission shifts into ALL gears, I got screwed on this once, transmisson had 6 gears, but I didn't take it to a highway or even try to put it in 6th while testing it out, and low and behold, the 6th gear is out. Listen to the engine for any abnormally loud "click" type noises - every engine's valves click a bit, but they shouldn't be too distractingly loud. Make sure all the lights/signals work. People who are too lazy to replace a blinker bulb might be too lazy to change the oil on time... I can't think of much else, and I've been typing for like 30 mins... The only piece of advice my dad gave me before buying my first motorcycle was, "if it looks good, and sounds good, buy it." Basically, look out for any red flags, but by and large, most people are legit, most cars aren't lemons, and any serious issues with the car should be pretty obvious.

You'd think there'd be a good opportunity here for an auto shop to set up a Craigslist auto clearinghouse, where buyers and sellers can meet in a neutral location, give the car a once-over, have someone with experience make sure the paperwork is in order, and conduct the sale without (gak!) cash.

The idea is good with the exception of the auto shop doing the once-over. I think they would be leery of providing a statement regarding the condition unless they were sufficiently compensated. Or unless the idea was large enough to involve a network that provided the guarantee.

What you are suggesting is in a sense what used car dealers do. Even if there is no long term guarantee on the condition of the car (many times there are though) there is an implicit guarantee that the car isn't going to die once you drive it off the lot. The point is, they charge for that because they have to cover that as a contingency if something hidden turns up.

They'd just offer the same service mechanics already do for used cars, and using the clearinghouse function as a lead generation mechanism for it.

Aren't you just describing used auto fairs?

No? I bought a used CRV last year in February. I found the car on the Internet. There was no "auto fair" I could meet the owner at to conduct the transaction.

Hmm, not sure if we understand each other. To clarify, in Brazil we have "used auto fairs", a day-long event where a company provides a place where individuals can take their cars to sell. Individuals can go there and buy directly from the sellers (dealers can go there and buy too, but that sort of defeats the point for the sellers).

I tried googling the term in English and didn't get many hits, so I assume you call it by another name. And if for some odd reason you don't have such events in N. America, you should start a business and get rich easily :-).

Another interpretation is that you do have access to auto fairs but would still prefer to shop on the net, while still having the option to go through a third party. But I guess that scenario is not so attractive to the third party (unless that third party is a dealer which again defeats the point).

It would also alleviate a secondary concern where you have to give the seller your current address to complete the title transfer.

While not as common as simply holding up the potential buyer, it's much easier to steal a car to which you have a backup key and know where its parked.

>Granted, most cars ought to pass emissions fine until like 200Kk miles.

Depending upon the state, if it's a '96 model or later and the check engine light is not on, it will also likely pass.

Where I live (Missouri) the smog check consists of connecting to the OBD-II interface and seeing if it's reporting trouble codes. The logic here is if all the sensors are reading properly and showing the correct data, then things are performing to spec and there aren't any emissions problems to worry about.

Used to be that if your car was showing OBD errors or was not OBD-II compatible (i.e. pre-96 vehicle) they'd put it on a dyno and see what was coming out of the tailpipe, but now codes are an instant fail and pre-96 are not even required to be tested anymore.

I'm not sure that I agree with everything here.

Buy a used Benz - Luxury cars are great, until they aren't. Someone who doesn't realize what luxury car parts often cost will cry when they get a bill for a $750 spark plug wire kit.

Craiglist - Selling a car on Craiglist is great, except that people you'll subsequently dealing with are folks who buy cars on Craiglist. Have fun with that.

To truly "hack" the used car purchase, you need to buy the cars that nobody wants. "Honda" and "Toyota" shouldn't be in your vocabulary. If you want a Honda, get the certified used one with a better warranty than the brand new one.

> Craiglist - Selling a car on Craiglist is great, except that people you'll subsequently dealing with are folks who buy cars on Craiglist. Have fun with that.

This depends entirely on your asking price, and you're going to deal with the ramifications of that on Craigslist, or putting the car for sale at the front of your house.

If you're selling a car for 20k, you're going to get buyers who have 20k to spend on a car. These people are likely to be less aggravating than people who are looking to buy a 1.5k car, regardless of where the cars are being marketed.

I didn't get the idea from this post that the author was recommending buying a luxury car, only that you should look for steeper discounts on used luxury cars.

You're right, though: Euro import cars in particular cost significantly more to maintain; you can safely expect to spend 50% more per year on them (I say, ruefully).

If you're going to purchase an expensive import, be sure to look around for good independent mechanics.

I drive a Saab, and several months ago it experienced a fairly common failure related to the cabin blower motors. The dealership wanted to replace with all new dealer parts from Sweden, and provided a ~$1400 estimate.

My independent mechanic, who tells me he deals with this particular issue on a near weekly basis, told me that the part I needed was identical to a part found in earlier Cadillac Cateras. Just by using that part, he was able to fix my car for $680 -- over 50% savings.

Maintenance by the dealer can often be significantly more expensive, and there's almost always a competent independent shop nearby that specializes in your car.

I had this same issue last year. I bought a replacement fan for around $200-250 online and just did the job myself. It was kind of an awkward repair since you have to squeeze into the cabin and work on your back, but I did it with a ratcheting driver, torx bit, and extension in about 2 hours.

Online Saab communities are awesome and common problems usually have step-by-step instructions from others who have done the repairs, most even have pictures.

I've had pretty good luck with my Saab. It's on '04 with 140k miles and that blower fan has been my most expensive unexpected repair.

:fistbump: what up fellow Saaber :)

I acquired a copy of Saab's WIS. You should as well, especially if you do your own repairs & maintenance. It's insanely helpful. You can acquire it via the typical channels.

My '03 NG 9-3 has been a joy so far. I just need the parts freeze to thaw out a bit so I can get a replacement key made, because I've only got the one and am terrified of losing it.

I always like to pass on hard-learned lessons about cars. After I bought the $750 spark plug wire kit, I decided to save money by doing the job myself.

It turned out that spacing between the plug wires and the climate control blower motor was critical -- I'd didn't pack the wire tightly enough, and my $750 wires broke the $950 + $400 labor blower motor. :(

It was a great car though.

another thing is that German cars tend to be a bit more complicated, since they want to screw people on maintenance costs.

For example, I just bought a used Audi a month ago.

1-Bulbs - changing bulbs on regular cars, you just screw them out inside the engine bay and replace them with the new one. Not with Audi...you have to unbolt and remove the entire headlight assembly just to be able to change some bulbs. And the screws aren't normal, they use torx screws that you need a special adapter for(most tool kits don't come with these).

2-Wipers - for that generation, you are required to buy Audi wipers...since no aftermarket manufacturer sells that type of wiper. For that one, I ended up buying new wiper arms from a modern Audi and installing those, so that in the future I can buy aftermarket wiper blades.

3-Plastic bits, to access the engine there are a bunch of minor plastic bits that you need to take off. Sure it's not a big deal, but every minute a mechanic spends taking it off, and putting it on, is more money you are paying for the job at $100+/hr rates.

Because you are paying high maintenance costs, it helps to look for a perfect car, since even minor things will cost you. i.e. I bought my Audi from an ex-audi mechanic, who spent the equivalent of $4,000 worth of maintenance before selling it.

"German cars tend to be a bit more complicated, since they want to screw people on maintenance costs"

Where do you make the connection between German cars being more complicated and that they "want to screw people on maintenance"?

complicated = harder to work on = takes more time to do ecah tasks = if you go to dealer you pay more

that's how the german engineering joke goes.

they are just trying to make your bulbs more waterproof, but in the process, they make you use twelve tools to replace it ...but it never gets a short because of water.

Speaking as someone with 4 Audis in the family, and a lot of experience working on them, the bulb replacement difficulty really only exists on the HID headlamps anyways, which if you treat well should never actually burn out. The projectors for the standard halogens are in the engine a bit tight, but the whole assembly does not need to be removed.

i don't think someone who get a used benz at craigslist will take it to a dealership for service.

No, they'll probably take it to the local Pep-Boys or whatever. Which is even worse.

Far worse.

why is everything that involves thinking is now called "hacking"? Buy from Craigslist is really a hack? Seriously? Carfax report is a hack? That's pretty lazy. Car arbitrage is a hack - checking a car's title is minimal effort.

The real "hack" here is slyly congratulating readers on their cleverness so they keep coming back for more.

i had the same reaction.. after reading the title i was expecting some inventive tricks at automating search, or maybe even negotiation tactics..

instead i got "don't trade your car in" .. turns out the dealer is only taking my used car at a discount to turn a profit? thanks! /sarcasm

But what about the time investment needed in finding an acceptable car on Craigslist compared to finding one from a dealer?

If you're spending something like 100 bucks and 20 extra hours over three weeks checking out N more cars that don't pan out because {the guy lied about the condition of the car, the guy selling it is really sketchy, other random reasons}, then is it still worth it to save an extra 1-2k?

What I'm trying to ask basically is "but what kind of opportunity costs are involved in these hacks, and when does it stop being viable"?

I had the same exact reaction. I like cars. I like to a variety of drive cars, but I'm not wealthy enough to afford a car collection. Thus, I tend to change cars more than is "fiscally optimal" (every three years). I actually like leasing cars, because I get to negotiation the terms of the buy-back up front. This gives me A) peace of mind knowing exactly what I'll pay in depreciation, B) the opportunity to negotiate that amount up front and in clear terms (I understand the math involved in leasing), and C) a much, much shorter time investment in said negotiation.

Consider the rest of this post to be an anecdotal piece titled, "Hacking the car buying process means getting your hands dirty."

When I picked up a 2006 VW GTI, the dealer was offering 0% financing. I couldn't bring myself to pass up free money, so I bought the car with the intention of turning it around in three years, just like I normally would with a lease. My reasoning was that I'd be giving up the opportunity to negotiate the residual value up front in exchange for the free use of a few thousand dollars over three years. No brainer, right?

Yeah, not exactly. I ran in to a couple of issues.

Lease residuals are actually on the generous side

Leasing residuals are normally pretty generous on the types of cars I like. My GTI was 57%. I negotiated a 63% residual on my current car. Looking at the math from my GTI, with an MSRP of $24,750, the lease residual would have been ~$14,100. When I sold the car at the 3-year mark, it took me three months, and I only got $12,000 for it. So, in exchange for the zero percent financing over three years, I gave up $2,000 on the residual, plus the time and effort involved in selling. I took many phone calls, and drove out to meet about 5 people before executing a sale. Had I leased the car and negotiated decent terms, I would have paid the same, maybe less.

Selling a car over $10,000 is a pain in the ass

Words you really don't want to hear when selling a car: "I've got $3,000 saved up. Can you take payments on the rest."

Times I heard them during the sales process: 9 out of 10.

Selling private means dealing with all kinds of people who really can't afford the car you're selling, but are bold enough to offer you anything. I have no envy for car salesmen. Their job is tough. You're constantly assaulted by people who really don't care if the deal is any good for you. I wouldn't say I was offended, but I did begrudge the time I wasted.

I'm back to leasing now, and very happy with it. If you want a new car every few years, and are ok with the associated financial impact, it's worth your time to sit down and understand the math involved in leasing. You can probably do better (fiscally) than you think.

Well, if you used our awesome car search engine (carsabi.com), you wouldn't be spending 20hrs =P

In all seriousness though, if you spend 20hrs to save $2k, you're making $100/hr, which is better than most programmers make, even.

A great car search engine definitely helps but it's a very tiny part (may be 10%) of buying a used car (speaking as someone who bought a used car 8 months back).

The most time consuming part of buying a used car is to check the car in person (and it's difficult to schedule appointment with an individual person), getting it inspected by a mechanic (If you don't get it inspected by your own mechanic, you are an idiot. I know I was an idiot once.), negotiating the price, paying the agreed price (it's a BIG pain if the car's loan hasn't been paid off).

I recommend CarMax (http://www.carmax.com) (no affiliation what so ever) for used cars because they actually take away all the pain points which I described above.

[And if you are looking to buy a new car, I would definitely recommend carwoo.com. I helped my friend buy a new Infiniti EX at an unbelievable price.]

And that's after tax money which is worth even more per hour.

> is it still worth it to save an extra 1-2k?

You're not only saving an extra couple of grand, you're also avoiding settling for whatever the dealer has in his lot.

I've bought 'a' car from Craigslist. Took us about eight hours, from 'first car' to 'I'll take it'. Looked at ten cars in person. In one day.

Granted, we were motivated, needed a car that day (long story) but it doesn't have to take weeks, if you just need a car and your value of 'acceptable' is flexible.

is it still worth it to save an extra 1-2k

Yes. $2,000 dollars can buy a lot of hamburgers.

YMMV.

There is also the advantage that trading in a car to the same dealership you buy from will deduct this from the sale price of the to-be-purchased car so sales tax can be reduced to zero depending on the trade-in.

Exactly.

I sold a car on Craiglist once, and I will never do it again. You open yourself up to some potentially dangerous (life threatening) situations.

To me a "potential" loss of 2 grand that I would incur by trading my car in at a dealer is worth the time saved, and safety saved. Also all the paper work is done correctly. To me that is another potential "come back to bite you in the you know what" problem averted.

I also live in the East Bay CA, and there have been a huge increase in violence and theft associated with selling cars on Craigslist. It is also not just cars, I have had a few bad experiences on both Craigslist and Ebay in the last 12 months and as a result I have not used either in months.

To me, I am willing to pay a perceived premium from a retailer (like Amazon with free shipping and no hassle return policy) than deal with the BS I have had to deal with on Craiglsit and Ebay.

Be a little careful with some of your analysis. For example, you mention a Mercedes e320. There is no such thing anymore. So the last year or a previous generation vehicle is certain to depreciate more steeply than the first year of a new generation.

E320 is just an E-Class

The 320 just designates engine size. i.e. 3.2L V6

The new 350s, are still the E class, just with a 3.5 V6

I'm a Mercedes owner (CLS) and enthusiast. First, even if the distinction was only the engine displacement, the bigger engine is certainly more attractive to buyers.

But it's not. There was a redesign between those model years. Mercedes rarely updates engines mid-cycle. In this case, it was a dramatic redesign, an entirely new platform. The new E Class -- E350 or E550 -- is a very different car than the E320.

ah yes, didn't catch what you were saying in the original post...then yes, the redesigns should be accounted...but since they are only looking at E320s, the redesign hit should affect all years.

But it LOOKS like the right-most (highest) data-point must be the new car price? And it shows that steep drop off going to 2009.

And in the case of the E-Class, 2009 was the last year of the old generation (W211 IIRC). So yes, if you graph E-Class prices right now, there will be a huge drop there.

If the 2010 Data Point is something he's purporting to be a "2010 E320" then it must not be a US model. In the US MY2010 began the W212 E-Class.

I applaud this guy for putting together so much data. I just wanted to raise this question because the way the data is presented confuses me a bit.

As someone who has been buying cars for himself for 20 years or so, and never new, I would agree with the article in part, but with some important provisos:

1. While Craigslist is a valuable resource, make sure you follow Hack #4 and #5 - there are a lot of sleazy individuals who will pass salvage title or otherwise garbage vehicles. I would add one other note to that recommendation - search via the 'by owner' listings vs the 'by dealer' ones. That cuts down some (but not all) of the buy here/pay here trash-lot stuff. Searching for larger dealer vehicles can be done via something like autotempest (which also conducts Craigslist searches too)

2. While buying via Craigslist is generally easy and definitely recommended in many situations, selling can sometimes be a complete PITA. Dumping the car at CarMax can work as well in that case. You take a bit of a hit on the sale price, but its generally less in my experience than trading it in.

3. Sometimes there is a damn good reason why Luxury cars have taken an appreciation hit. Make sure you factor in scheduled and unscheduled maintenance with your purchase plans. Some luxury brands (Lexus, some Infiniti, Acura) are easier to maintain than others, but they inconveniently don't seem to depreciate quite as much. One thing I would add here too is - If you don't care about your image too much, look into 'old people's' cars. Things like the Cadillac DTS, Lincoln, Mercury Grand Marquis, etc... Because they are so unfashionable, the depreciation hit on them is HUGE, and you can really get decent, comfortable transportation for cheap. The gas mileage might not be as good as a Toyota, but $5k in savings can buy a lot of gas...

4. Carfax is important, but its not foolproof, and its no substitute for a good mechanic's inspection. What I look for is a gap-free history with no dramatic changes in mileage, and no record of fleet ownership. Why no fleet ownership? Have you ever abused a rental car, or known somebody who has? I would never buy an ex-rental, and would have a hard time looking at other ex-fleet sale cars - the incentive for responsible ownership is very often not there, even if scheduled maintenance may have been more rigorously followed.

5. In some cities there are 'Lemon Buster' services that can travel to the dealer/owner and inspect the car on-site. YMMV of course, but I have found them to be pretty useful and inexpensive. They also give you a nice inspection report that can be used as negotiation leverage.

Additional points to make:

Financing - unless you are a very savvy negotiator, I would NOT recommend dealer financing over bank/Credit Union financing (especially CU.) Financing/Dealer Fees are a huge source of income for dealers, and they typically have some real hard-asses stationed at the financing desk. Much easier to just pay with cash from the CU or your pocket. Paying ahead, by saving money for your next car instead of making payments for the current one is a very savvy move if you can get away with it.

Used car prices are highly localized. Where I live (Austin TX,) I have found that 2-5 yr old used cars are typically about $1k more expensive than cars in larger Texas cities like Houston and Dallas. Make sure your internet searching takes this sort of variance into account. If you save $1-2k on the price, a $150 one-way plane ticket is pretty cheap. For those in the rust belt, I would not even bother with buying used vehicles past a certain age locally - why take the chance on hidden rust issues?

Rule of thumb for used car purchases - there are always more cars! Don't EVER think that the car you are looking at is a special flower and that you will never find one that's the same. ALWAYS reserve the option to walk away. I personally walk-away from most cars I look at. Don't like the lot/seller? Walk away. Not getting a good feeling from the car? Walk away. There are always other options.

Finally, I recommend the book 'Don't Get Taken Every Time' by Remar Sutton. Tons of good info on how to avoid some obvious pitfalls for both used and new car purchasing.

>"...look into 'old people's' cars. Things like the Cadillac DTS, Lincoln, Mercury Grand Marquis, etc... Because they are so unfashionable, the depreciation hit on them is HUGE, and you can really get decent, comfortable transportation for cheap"

THIS is important.

After having a beautiful Audi A3 which I totaled, a Volvo XC90 which I put a lot into which went to my ex and a Mini that was stolen, I no longer care about what car I drive.

Recently, my in-laws gave us a Buick Regal - ugly as sin - but it drives great, is super comfortable and has heated seats etc...

In the 90's my grandmother had given my an Infinity J30 which everyone thought of as "an olds person's car" until they rode in it.

It had 20K miles when I got it - and was in pristine condition and was one of the most comfortable cars I have ever had.

Sounds like good advice, but I'm really curious about your use of the term "rust belt". It refers to a geographic region that once had strong industrial output, but has suffered economic decline as those industries have become less important/relocated off-shore. It doesn't have anything to do with the propensity for metal to rust in those areas. Unless there's some other usage that I've never heard before.

I would think GP refers to any city in the north of the US, where we get enough snow to justify salting the roads. That road salt takes a very harsh toll on vehicles, causing an enormous amount of rust on the undercarriage.

>Sometimes there is a damn good reason why Luxury cars have taken an appreciation hit.

...and it might not be for the reason you expect. For example, you will pay exactly $0 to maintain a new BMW for the first four years; that's part of their deal. So as that runs out, the value of the car plummets.

* While buying via Craigslist is generally easy ... selling can sometimes be a complete PITA.*

Tell me about it. The only vehicle I've sold on Craigslist was my motorbike, but I had about higher than 50% rate of people making appointments to check it out and then just not show up. I mean, how f...ing hard is it to say you changed your mind?

I purchased a used car last year. I would have to say part of buying a car is also the financing. If you can manage to get a good rate and put some cash down, thats a hack in and of itself.

As for not trading your car in... I understand you might get more $ selling it on cars.com or craigslist, but the truth of the matter is you can be stuck with your old car forever and all you wanted to do is get rid of it and on with the old one. For some people thats worth the moneyit will cost them by trading it in.

I had an experience with a honda civic. Lady said she loved the car. I was asking the lowest bluebook minus 500. It was in better condition than that, but we both found it fair. When she came to pick the car up, she saw I had dogs and panicked about her allergies and this and that. I reassured her I had the car detailed and the dog hadn't been near the car since. No deal. I was fed up and traded it in. Lost 1500, but I would have happily paid that to not deal with the lady.

Bigger hack: pay cash.

Not true. Dealer makes money on the financing. If they are making money on that they can afford to sell you the car for less. Usually a good idea to walk into the dealership and let them believe you are going to finance the car and at the last minute change your mind.

I wasn't inferring that you could get a better price from a dealer by paying cash. I was referring to not financing the purchase of something that will depreciate.

Even if it's cash you have sitting in your checking account, there's an opportunity cost associated with using it. Lots of people have no choice but to use financing in any case. And, if there's some special 0 percent financing or whatever deal, it may make sense to use dealer financing rather than pay cash even if you have it available. You just have to look at the numbers for the specific transaction.

better yet, take the loan, then pay it off the next day.

As a gearhead, nearly everything on that list is ingrained in my DNA, EXCEPT buy luxury(and performance) later. My reasoning is that technology is improving so rapidly that every new model of most cars have made gains that are ridiculously high compared to the previous generation. Cars are my passion and the one thing that gives me joy no matter what mood I'm in, so I'm willing to fork out the extra money for the newer, better performing models.

I found both of my cars on craigslist and one of them was a steal. It was listed for about $5k less than the market with some incredible upgrades AND it was through a dealership, so I just figured they were clueless. I went and checked it out, brought it to an Audi dealer for a PPI and everything checked out. I also added on a 3 year drivetrain warranty and I still ended up saving around $3.5k compared to what similar cars were going for.

it actually makes sense...take Audi for example.

You'll pay $40K for an A4 2.0T Quattro(once you get a few basic options)

Or you can go used, and buy a 2009 with 36K miles for $25K...a car that looks identical to the 2012 model. Pretty much identical car for $15K less.

Or you can buy one generation older(2005-2008) with 60K miles for $15K...a car that's still modern, and has pretty much identical features.

Both of these options will still be pretty much brand new, and you'll get to save a ton of money. i.e. for the cost of an entry level Civic, you get a $40K car.

I would love to do exactly this, because I love the A4. But the maintenance cost fears stop me. I was really hoping it was one of those "Macs cost more" type myths, but the more I read the more it appears to be true.

to be honest, I was in your boat. I always bought Hondas/Acuras since I was afraid of maintenance issues. So for the last car I decided to take a gamble and buy an Audi. An A4 quattro for winter driving. Figure, worst case scenario, I'll just drive the other car.

Maintenance isn't too bad, I mean yes, a lot of things need a few extra steps compared to other cars...but there are plenty of forums with step by step DIY instructions on how to do everything.

Basically a good rule of thumb is that a Toyota/Honda will cost you $500/yr to keep running. And an Audi will cost you $1,000/yr.

Reliability wise, the mechanical bits are pretty reliable. They had a major issue with the coilpacks, but they did a recall on those, and the new ones are supposed to be bulletproof. The electrical bits on the other hand have their fair share of gremlins...but those are an annoyance, not anything serious + Audi has an onboard computer that catches these things...so you'll know when your turn signal burns out.

It's tempting. Though "coil packs" sends a shiver down my spine. My 2000 Miata blew its coil packs at 50,000 miles and after that, every 2 years, right before emissions testing time, the check engine light comes on and I spend a lot of money on emissions repairs...

changing coilpacks isn't that hard...here is a DIY for the A4:

http://www.audizine.com/forum/showthread.php/364601-DIY-1-8T...

There was something quite excitingly German Engineering about those photographs.

My wife says if I ever have a successful web or iOS app, I can have my Porsche 911. Until then, perhaps a used A4 to tide me over...

I sold my 2006 Audi A4 S-line last year because I was tired of putting it in the shop every quarter. I purchased it used, owned it for about 27 months, and it was covered under the original warranty for the first 12k miles I put on it, then under a powertrain-only warranty offered by the dealership. Ultimately, I came out of pocket twice to get the automatic passenger window functioning again, and had to replace a fuel canister -- total out-of-pocket for me: ~$1000. I also had the coils replaced (under recall), and ultimately ended up in the shop with a major engine problem, totaling ~$2400. Fortunately, the 2nd powertrain warranty covered it.

All said, I was so tired of the "check engine" light coming on that I put it on Craigslist for a reasonable price, and sold it in a week. Incidentally, the day before I was to meet the new owner at her bank -- after all, it had been 3 months since the major engine problem -- the electronic display in the center console started to flicker and dim. The new owner was financing it, and was to hand over $500 in cash, but I told her about the problem and said she could keep the cash -- "You're likely going to need it" -- if she still wanted to proceed with the purchase. She did, and I am so happy to be rid of that car.

I've been driving my wife's '99 Honda Civic since, and while I've had a couple of minor problems with it, I wouldn't hesitate to drive that car anywhere today. So, if you can live without luxury, buy a reliable brand -- e.g., Toyota, Honda -- that is several years old, or if you have more to spend, most 2009 and newer vehicles will be reliable or perhaps still under warranty. If you desire used luxury, pay more for a Lexus or Acura, and stay away from a German car not made in the last couple of years or not under warranty with a dealership (read: repair shop) just down the street.

One last note: that Audi was the best car I've ever owned… when it was running. I'd buy German luxury all day long if I had the inclination to purchase a brand new vehicle.

Maintenance isn't "that" bad, but be aware if you're out of warranty and anything major breaks it will kill your wallet. I have an S4 so it's even pricier than the A models. If you know how to change your own oil, do it; you'll save $75+. As far as scheduled service goes, let Audi take care of it. It's expensive($600-ish), but they're extremely thorough. I have an aftermarket big brake kit and Audi quoted me $725 for new pads and installation. I did it myself for $250 (keep in mind, I have 6 piston calipers w/ 14.5" rotors so it's not cheap).

Fellow S4 owner here. It can be expensive to maintain, but worth every penny.

Anyways, I figure the price he was quoting is average yearly for an out-of-warranty vehicle. I spend about $300 on routine maintenance a year, then every once in a while something actually breaks and it can be expensive. I think when I needed new exhaust it was about $3k. I'd say it averages out to about $1K a year. More if you take into account that I have a seperate pair of winter wheels and tires.

well the cars have a pretty decent aftermarket, so if you needed a new exhaust you could have just gotten an aftermarket one...or bought a used one on the forums for a few hundred

Were the datapoints all from one market (SF Bay Area)? Or across multiple regions in the US?

Data was across the US. I tried looking for regional trends (price variation, etc), but at least at the state/major metropolitan area level price and availability distributions were surprisingly homogeneous. I'm hoping to deep dive later in more detail, but for saving money there didn't seem to be much on the regional front worth reporting. Thanks for reading!

TL;DR version: Buy and sell used cars on craigslist instead of dealers cuz you'll get a better deal. Don't forget to carfax it and take it to a mechanic for inspection.

You are using the sticker price for the basis of comparison, which is unrealistic. The appropriate comparison is final sale price.

Regarding trading in a car, I'm not sure if most people in the HN audience really think that they are getting a good deal on trade-ins. Also, trade-ins can be negotiated. You aren't going to get the market price, but you give up some money for the easy liquidity. It's going to take some extra work for you to get the market price.

Also, when you buy a used car from a dealer, you should look up the "Black Book" price, which is generally the price the car would go for at auction. This gives you information on the dealer's bottom line. The Black Book price is going to be a lot lower than Blue Book, meaning that it's well under the market price, and really well under the dealer's sticker price. But using this number, you know the dealer's position, and can adjust yours to drive value for both parties. I don't think it's totally inconceivable to get a used car from the dealer for close to what you'd get it from a private party, as long as you're willing to negotiate and the dealer is willing to negotiate.

Overall this is a helpful list. One of the biggest challenges with used cars is they are impossible to treat as a commodity. I spent several years working for a company that financed high-end classic and exotic autos. I learned a ton. One of the biggest tips is you really need to profile the owner if you want to get car that was well maintained.

I like luxury cars (BMW's, Lexus, etc) and over time came up with a system for purchasing used ones. Search CL and local want-ads in affluent suburbs. Eventually you will find 1 owner cars with low miles owned by people with the means to take proper care of them. Ask for the maintenance records, look at the condition of the interior and also look for clues on how the person takes care of other things like their personal appearance AND their home. It will tell you everything. I've gotten some killer deals on pristine cars following this method. Currently on the hunt for a late 70's air cooled 911 :)

Here's my hack, that may not be acceptable to everyone: pay cash for your car, settle for whatever you can afford, pay yourself car payments. Buy something ugly. I stared with an $800 POS and made it last for 3 years...I paid myself a modest $250/month "car payment" during that time, so I ended up with $9k in cash. Finally got tired of driving that thing and it just wouldn't die, so I kept an eye out for used cars in my new price range. It took a while because I was just searching off and on, but eventually I found an especially ugly Scion xB (bright yellow edition) that had been on the market for a few months with no interest, so they were already asking significantly less than KBB value, since I was paying cash I got them to take even less for it (after having my mechanic look at it of course). Of course if you mind having a goofy looking car, this strategy might not save quite as much money.

More like common sense car buying, not really "hacking". As others have mentioned, don't rely on Carfax. I sold a car that had to be almost a quarter re-built (and disclosed this to the buyer), and this was not on the Carfax report. But, it's still worth doing.

I take Hack #1 with a grain of salt. The more important thing is to know what the car is worth and what you're willing to pay. You might be able to find a deal on craigslist, but you can also negotiate with dealers, and they often inflate the sticker price. I bought a used car recently. One dealer was overcharging and rejected my offer so I walked. I ended up negotiating hard and got a better deal elsewhere. Also, do your homework. From the timestamp on the google cache of an online isting, I knew how long the car had been on the lot. This turned out to be a useful bit information during the negotiation.

Better Hack #5: Be your own mechanic. Cars really aren't that complicated - especially for smart hacker folk like us. I did maintenance on my parents vehicles when I was 12 years old (brakes + oil changes) and have been working on my own vehicles since I could drive. In the past 7 years, I have only spent money on alignments and tire mounting/balancing, to the tune of $300 probably. The kicker is that I'm no more mechanically inclined than anybody else. I learn every time I pick up a wrench, with a bit of help from the good ol' internet. The experience is unbelievably fun and rewarding :)

This is so true. I was really surprised not to find more posts like these, because working on your own car is very fun, gets you away from the computer for a bit, and definitely embodies the DIY mentality most of us on this site have.

That said, if you're in the market and inexperienced [or maybe even experienced], take a prospective car to a professional mechanic. Don't buy a junk car and expect to be able to fix everything yourself, unless you want a fun side project which will require a ton of man-hours [and more money than you'd expect] to complete. But on the overall, doing your own maintenance and fixing smaller problems you encounter [timing belt issues? no biggie!] is very very enjoyable.

It's interesting to see how close the KBB value mirrors the Craigslist price. I'm guessing the only negotiation points are the condition of the car.

Thanks for the helpful post, I'm about to sell my car.

Maybe it follows closely because people check their values on KBB and use KBB values to list?

There's an old adage in the car world: there's no such thing as a cheap luxury car.

You might save on the initial purchase, but there's a lot more stuff to break, and when it does it's really expensive.

Just to amplify this, common parts across several models and somehow be more expensive for the "luxury" version. Rear hatch gasket for an '96 Oldsmobile Silhouette mini-van was twice what the exact same part for the Chevy Lumina. Only difference in the two vans is a few more gadgets and more acoustic insulation in the Oldsmobile.

No mention of auctions. Among my friends it is common to buy at an auction. Only registered car dealers are allowed. I guess I am lucky to be able to go through some. They ask a flat fee of $500 and they will buy the car you want at the auction. I am not an expert at it, so I was wary and I actually bought a new car at what I thought was a good price. Next time I will have to go for the auction, especially since the 'hackers' here don't even mention it.

I said this the first time this site was posted. It is brilliant and helpful. It is actually the first helpful site I have found here on HN for my personal life.

I wrote a cool script to pull a lot of data down off of KBB. I've got a post on my blog about it:

http://www.undiscoveredfeatures.com/2011/09/kelly-blue-book....

What I found interesting was comparing the rate of depreciation per mile vs time.

Looks like you've discovered that KBB applies a linear mileage cost. Does that reflect reality? I doubt it -- at least, not after you reach a certain mileage.

I'm curious if you grabbed data to extend that chart out to, let's say, 200k miles. There should be a sigmoid somewhere out there.

I just learned about AutoGlance, which is a "Hipmunk for car buying": for example, http://autoglance.com/search/#Mercedes-Benz,eclass,50,29492

Excellent post. I think the most enlightening item was "Buy Luxury Later." I tested out the searches for cars that were suggested, and wow, there are some great deals on CL.

I'm curious how you approach #5 Find an OCD Mechanic to a Craigslist seller. How do you ask? Is it considered common courtesy to say "Hey, lets drive it to my mechanic?"

If I really want to sell my car, and I know it's in good shape, I would be more than happy to arrange an inspection. If the seller wants to avoid an inspection, it's probably because 1) the vehicle is in enough demand (or cheap enough) that it's not worth the hassle, or 2) something's wrong with the vehicle.

"Everything looks good, but I can't in good conscience buy this until a get a mechanic that I know to give it a once over. Can we arrange that?"

Don't buy anything from anyone that balks at this, regardless of reason.

Yes indeed. I got both my cars checked. The courteous thing to do is take it to a reputable mechanic (I took them to dealership service) coz if I am the seller; I would not like to take my car to a shady place even though I don't mind it being inspected.

Both times I've done this I just left my locked car at their place while I took their car to get checked out. It was no big deal. Set up an appointment with them and an appointment with the mechanic so everyone is ready to go!

I wonder what effect the "cash for clunkers" program had on cars below the rebate incentive for that. It had to have a substantial effect on market for older cars.

The effect was probably moderated by the 18 mpg cutoff for fuel efficiency. My midsize 1997 sedan does about 24 mpg, so it wasn't eligible, and at this point it is way down at the bottom of the used car market, not something that most buyers would spend much time looking at.

I bought a 2007 Honda Civic that had done 24K miles when I bought it (2009). I put down ~$10K for it. I did almost everything they mention here.

Thats not really hacks, thats common sense.

Want a hack ?

"Wash your car before you try to sell it"

Ah, car purchases: the land of endless advice. So let me share my method, requested by nobody:

1) I limit my purchases roughly around to one month's net salary. This keeps me aligned with the idea that I invest in the kind of transportation I enjoy rather than something that's newer and shinier than my neighbours'. My cars are never just boring transportation vehicles: the style and feel of the car is of most importance. However, I'm perfectly happy to drive cars that is ten years old.

2) I intend to keep a car for 5-7 years. I get to pay for routine maintenance and any worn parts for so many times for the $10,000-$20,000 that I could've put into a newer car (and still pay for maintenance and replace parts, just little less of it). I'm not afraid of big rehauls if the car is otherwise sound. There's one exception to the longevity rule two years ago: I changed makes.

3) When I'm changing, I don't particularly shop for cars. I'm rather in the constant "nah, I don't need a new car right now" mode and gradually spend some time browsing used car sites on the internet. When I get interested in one I get this feeling inside. I check a few facts, go check it out, and most of the time just buy it if my hunch keeps going. I think I've never test-driven more than one car, the one I bought. Some I've discarded without a test drive. Contrary to what you might think, I've always had good, reliable cars. And I certainly don't drive the boring Toyota/Honda kind.

4) Facts include such as the ownership records and tax/MOT records, and average mileage. For example, the previous owner of my current car kept it for a steady seven years with full maintenance == good. He kept it as an investment to his transportation needs instead of a cost sink that only gets half the minimum maintenance. Also, if there are several cars of that model that have clocked hundreds of thousands kilometres, I know the engine is capable of doing it without problems.

5) I buy my cars around at 200,000km. If the car is in proper order at that point I know it's not a lemon and has been maintained. Most regularly worn parts have been changed once, maybe twice by the time. The worst cars are those that are being sold around 100,000km or slightly below: you can probably make 100,000km without ever changing oils, not to mention anything else. If so, the car is bust and it won't make it to +200tkm. Anyone who spends the effort to make the car into those figures has had it for some useful purpose.

6) I'm fully aware that I might bump into a bad car eventually. This is where 1) comes into play. The amount of money I spend is over the lifetime of the vehicle instead of up front, so that I can afford to hit an occasional bad one. None encountered so far.

I still haven't spent as much in cars in total and in my whole lifetime than my dad just spent on his latest new car. I've been driving and owning for about 15 years now.

"I limit my purchases roughly around to one month's net salary"

Wow. Talk about differences. A car here in Uruguay is a YEAR's net salary (the difference is mostly that they're taxed to hell here and there's a ban on used car imports, so used cars don't depreciate).

Selling a vehicle on Craigslist has been among the greatest annoyances in my life. I will never make that mistake again. Instead, I sell vehicles on eBay. The eBay method has a few hassles (answering questions, coordinating pickup, eBay percentage), but it is still sooo much better than dealing with CL flakes.

That said, I buy all of my vehicles on Craigslist. I wait for the exact vehicle I want, show up with a cashier's check for the asking price minus ~25%, and bring the rest in cash for negotiation. Sellers are always relieved when they find out I came prepared, and they're happy to negotiate on price to be done with the process.

pretty obvious advices. really. but good to see the data points.

...now make a post on how to find a decent mechanic, and then i will droll over

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