Used-car bargains in bloom this season
By Lucy Lazarony • Bankrate.com

Autumn 2000 is a great time to shop for a used car.

Used-car prices are down and experts expect them to stay that way. Plus, there's a huge supply of used vehicles to choose from. So there's a good chance you'll find a pre-owned car or truck that's right for you.

"You're going to be able to get what you want," says W. James Bragg, author of Car Buyer's and Leaser's Negotiating Bible.

And as much as you may miss that new-car smell, your wallet will thank you for buying used rather than new. It all has to do with a vehicle's depreciation or decline in value.

The steepest depreciation occurs in an auto's first two years, when its wholesale value plummets to 60 to 70 percent of its original sticker price. So it's not long before the value of a new $20,000 auto drops to $14,000 or even $12,000.

By buying used, you let a car's first driver deal with that big depreciation nosedive.

"You're saving money," Bragg says. "There are a lot of smart people in this country who let someone else take the first depreciation hit."

You may also be able to drive a nicer car for your money. For example, instead of spending $18,000 on a new compact car, you could drive away with a more upscale, albeit pre-owned, passenger car or sports utility vehicle.

"You'll get more for your money. You'll get a higher level vehicle with more features on it," says Tom Kontos, director of strategic planning and market analysis at ADT Automotive.

Domino effect delivers deals
The time is right to snap up a used-car bargain. Price deflation in the new-car market has pushed down used-car prices.

Lincoln Merrihew, director of corporate strategy for Automotive Information Center, which is part of Autoweb.com, says cars have gone the way of computers. Each new model has more features for less money.

"They're putting more stuff in every year," Merrihew says.

Dips in new-car prices bring dips in used-car prices. Some autos are experiencing individual price declines as well. This fall, the best used-vehicle deals may be found on minivans and SUVs.

The popularity of minivans is waning and that has pushed down new and used prices. A large supply of used SUVs, particularly mid-sized models such as the Jeep Cherokee and GMC Jimmy, has helped to ease prices. Many sports utes hitting the used-vehicle market are coming off two- or three-year leases.

"There's really an oversupply of those coming back into the market, which means prices are dropping," Kontos say.

There is also a big supply of domestic, mid-sized passenger cars in the used-car market. Remember, when it comes to shopping for a used car, more is more. The bigger the supply of the used model you're looking for, the better your chance of getting a deal on the price.

Puffed-up prices
Getting a good price on a used car takes some negotiating. Dealers build 20 percent to 25 percent of profit into a used vehicle's price.
Bragg recommends offering 85 percent of a dealer's asking price and never paying more than 90 percent of the listed price.

Remar Sutton, president of Consumer Task Force for Automotive Issues, takes a more aggressive stance. He recommends starting at a used car's wholesale value and working your way up.

"The asking price of a used car is a supreme work of fiction," Sutton says. "In their wildest dreams that's what they'd like to get for it."

Edmund's Automobile Buyers Guide, AutoSite, Kelley Blue Book and CarPrice.com are among the sites offering timely pricing information, as well as shopping and negotiating tips.

Consumer Reports' Web site includes a listing of used cars that have performed well in its reliability studies.

A little homework goes a long way
Some sites such as CarFax let you check a car's history by its vehicle identification number. You can find out if a car has had one owner as the seller claims, if the odometer has been rolled back, and if a car has been junked or salvaged.

Microsoft Carpoint, AutoTrader.com, Autobytel.com, Autoweb.com and cars.com are among the sites that list used cars for sale.

When shopping for a used car, it's also important to consider how much a new model costs.

"It's always worth it to find out what do I have to pay for it new and what will I save by buying used," Bragg says.

Some of the hefty rebates and incentives available on new cars may make some shoppers think twice about choosing a pre-owned model. Keep in mind the big rebate that makes a new model so appealing may knock down the price of a used model as well.

Consider this example from Kontos.

Let's say there's a $1,000 rebate on a new Ford Taurus. He estimates the price of a 1-year-old model would drop by $1,000; a 2-year-old model by $800; and a 3-year-old model by $500.

But you may have to speak up to get this discount. Tell the dealer you're well-aware of the discount on the new model and that you deserve a price break on a used one.

"Use it as a bargaining chip," Eisenstein says. "Use any chip you can."

-- Posted: Oct. 11, 2000