Starting the new video series, Profit Cars, has given way to many thoughts about car buying. In the US alone, there are over 40 million cars used cars sold per year and a great majority of those sales are from private parties. The average length American’s hold onto their car got longer too, about 11.6 years as of last year. This is due to the fact that cars are built better today than they were even in 2000. So is a pre-2000 car worth it to invest in? Absolutely. I am a living testament to driving a 20+ year old car. In fact, my daily driver, is about to turn 20 in August.
Let’s rewind to a year and a half ago. I drove a 2012 Chevy Malibu that I bought brand new in April of 2012 for the whopping price of $26,240 out the door! I started getting serious about rebuilding my credit and paying off old debts and the car had to go. I was sick of making a $500 a month car payment for a car I wasn’t particularly enthusiastic about driving. It got me from point A to point B, but it wasn’t worth $500 a month. It wasn’t even worth $387 a month that I refinanced the payment to. I began shopping for my new daily driver. So with saving every bit of money, I did my research and ended up with my 1999 Subaru Outback. It wasn’t my first Subaru and surely won’t be my last, but I love this car to death. I ended up selling my Malibu to a co-worker for $9,000 and freeing me from a car payment. I have bought and sold many cars since then, many of them Subaru, and have come up with a few tips to follow for anyone looking to buy a used car. The good majority of the tips apply to private party sales, but some can be applied to dealer sales.
#1: Maintenance, maintenance, maintenance! I make it a huge point to make sure that every car I buy has some kind of maintenance history. If the seller says they did major work to the car, I want to know the details. I want proof you spent $1200 on a head gasket replacement. I want proof that XYZ Transmissions rebuilt your transmission. For me as a reseller, that adds a lot of value to the car. As a buyer, it gives me confidence that the work specified was done. This is the primary reason I document all of my cars. My 99 Legacy Outback was a one-owner vehicle from Colorado with a documented service history.
#2: If you want to ensure the vehicle you buy was taken car of, buy from an enthusiast. You like ABC Brand cars as much as the seller you’re buying the car from does? The seller better have more ABC Brand cars than just the one he is selling in his driveway. Every time I sell a Subaru, I have my other Subaru’s on display. It gives the buyer confidence that I know these cars and I am confident working on them.
#3: Don’t be afraid of high miles. You’re buying a 10/15/20 year old car. Refer to point #1. If it is all there, think of it as thoroughly stress tested. It also works out in your favor because the price may be a whole lot more affordable than something with lower miles. Average mileage per year on a car is 12,000-15,000. It is not uncommon for a 10 year old car to be in excess of 150,000 miles or a 15-20 year old car to have more than 200,000 miles. Low mileage does not always equal trouble-free. My wife bought a 2001 Chrysler Sebring last year with 94,000 miles on it. Within 2 months of the purchase, the car needed new tires, front bearings, CV boots, tie rod ends, front shocks, and an alignment. We ended up replacing every rubber part on the front end because in the hot weather, the rubber just sat there and dried out. If the car had been driven more, the issues most likely would have been taken care of. If a car you’re looking at was daily driven and recently replaced with a newer car, it’s probably a clear indication that the car will be mostly reliable. Our Forester is a 2002 with 205k miles and has no issues.
#4: SALVAGE. It sounds like a dirty word; and to most people, it is. Many people see a salvage title and automatically assume it’s junk. There is some magic algorithm that is unique to each insurance company that deems a vehicle as uneconomical to fix. Vehicles are deemed a total loss for a variety of reasons. Factors for a total loss depend heavily on age of the vehicle and mileage. Other reasons may include theft in the fact that too much time elapsed between the theft and recovery of the vehicle. Vehicles can also be a total loss due to hail damage. Not every salvage branded vehicle was in a major collision. My project Outback has a branded salvage title because the previous owner hit an animal and it tore the front bumper off of it. The cost to replace the bumper, fog light, and to repaint the bumper was $1,500 for a car worth $2,500. This is because most insurers quote for CAPA-certified parts which meet or exceed the manufacturers exact specifications for size and function. CAPA-certified parts aren’t cheap and insurance companies don’t want their insured assets fixed with sub par quality components. With any salvage vehicle, it’s always a good idea to have the car inspected by a body repair shop. There are three types of salvage vehicles you absolutely want to avoid: frame/rollover damaged cars, flood vehicles, and fire damaged vehicles. Those three types have undergone damage that significantly compromises the structural integrity of the car.
#5: Beware of auctions. Now you’re probably thinking: “You can buy great cars for really cheap at auction!” And you’re right; you most certainly can buy cars at auction for a fraction of what you can on the street, but with a few caveats. First off, you get no guarantee of anything. No test drive, no inspection, no records, no nothing. The only thing you’re guaranteed is the make and model of vehicle as shown in front of you with the limited conditions conveyed to you, if known at time of auction. You cannot take an auction vehicle to your mechanic to have it checked out beforehand, but you may be able to bring your mechanic to the auction. Even then, its a visual and limited mechanical inspection only. Second, auctions are cut throat, especially public auctions. At a public auction, many buyers bid with their hearts set on a particular make or model of vehicle. This leads to competitive bidding on high demand models and cars being sold for sometimes close to their retail value before reconditioning. Third, odometer fraud is a real thing at public auctions. Most dealer-only auctions provide the bidders with Carfax and odometer disclosures as part of their membership costs. In a recent example, I went to a public auction house. They had a 2008 Dodge Charger V6 with approximately 96,000 miles on it. Now for most dealers, this is a resale car. Why is it at auction? After pulling a quick CarFax report, I found the last service record from three months prior declared the vehicle had 196,000 with regular prior intervals showing that the last service record was not a typo or other mistake. Yet, low and behold, the odometer showed 96k miles. 100,000 miles made the difference between this car selling for $3,500 versus the $5,500 it actually sold for. I do not want to shy anyone away from auctions, just understand the risks involved and make sure that you’re 100% understanding of the risks, because if you buy at auction on a regular basis, you will eventually get burned.
#6: CarFax/Autocheck are not the vehicle history Bible they want you to think they are. KBB/Edmunds/Black Book/NADA etc, are not the vehicle value Bibles they want you to think they are. First, Vehicle history reports should be looked at with the full title disclosed. The industry should call them “Vehicle Known and Reported History Reports” because they rely on data that is known and reported. The validity of the data is not verified. In fact, there is a disclaimer on the bottom of every CarFax webpage that states “CARFAX Vehicle History products and services are based only on information supplied to CARFAX. CARFAX does not have the complete history of every vehicle. Use the CARFAX search as one important tool, along with a vehicle inspection and test drive, to make a better decision about your next used car.” The Malibu I sold was involved in 2 accidents, once in a Walgreens parking lot where someone backed into my driver’s side rear door and another when I hit a deer. Neither had a police report or accident report filed, both were reported to and covered by my insurance company, neither were reported to CarFax. I did disclose to the buyer those two accidents, complete with the documentation on the repairs. Second, vehicle valuation sites vary greatly. On one such valuation site, hidden deep in their terms and conditions page is the sentence: “Vehicle valuations are opinions and may vary from vehicle to vehicle. Actual valuations are based upon current available information and analysis of market conditions, and will vary depending on specifications, vehicle condition or other particular circumstances pertinent to a particular vehicle or the transaction or the parties to the transaction.” Basically, vehicle values are made up based on a complex algorithm of data points that may or may not apply to your particular market or vehicle. I recently sold my wife’s 2001 Outback with 202k miles on it for $2,900, which was $200 more than my original asking price. Based on the major valuation sites, the car was worth less than half what I sold it for, but looking at similar, and even identical, vehicles currently on the market, I had the lowest asking price. Ironically, I sold the car within 2 days after a major weather event in my area, so price can be affected by environmental factors too.
In conclusion, driving a car that you’re happy with is important. It is, after all, the second most expensive purchase that you will make in your life. In my case, my TV cost more than the last 3 cars I bought, and they’re all still on the road today. Make sure you check out my new series “Profit Cars”, live now for free on YouTube without advertisements. The series shows you how to buy, fix, and resell cars for profit. The first car in the series is the 1998 Subaru Outback Limited.