Used-car market is revving up -- Page 2

Used cars are a good bet if you don't have your heart set on a particular make or model. "You may be forced to buy new if you want some of the newer models styles that haven't reached the used market yet," Snider says.

You should also think "used" if you want a make or model that's fallen out of favor. Think sport utility vehicles. With rising gas prices, SUV sales have softened. "If you're willing to buy a vehicle that's not in vogue, that's less fuel-efficient or otherwise isn't as popular, now's a great time," says Bell.

Not all used-car forecasts rosy
Before you go racing to the used-car lot, Perleberg sees two flies in the ointment of used-car buying.

First, new-car prices are so low and there's such a glut, you may be better off buying a new car. Yes, you'll almost always spend less money on a used car versus a new car, but with the employee pricing incentives, the gap between new- and used-car prices has actually narrowed, Perleberg says.

Second, there's a shortage of late-model used cars in good condition. The decline of leasing programs over the last few years, spurred in part because of low interest rates, has meant the pool of quality used cars has shrunk. That means prices won't drop as much in the used-car arena as some analysts believe, Perleberg argues.

He also believes that buyers of new cars will be less likely to trade in their older models, particularly those with outstanding car loans. Why should that make a difference? If the car has a book value less than the amount of the outstanding loan, the owner won't want to sell it.

That said, if you want to spend less money, are currently in the market for a car, and you don't have your heart set on a new model or one that's rare or impossible to find used, chances are you should at least explore the used-car market. "When you're looking strictly on price, a used car is the way to go and will always be the cheapest option," Perleberg says.

You can take several steps to make sure you don't wind up with a lemon.

Get a used car that is "certified pre-owned." This is particularly important if you are buying a high-end car such as a BMW or Mercedes that is expensive to maintain. Also consider buying a car with an extended warranty or asking the dealership, in exchange for a fee, to include a used car as part of its "certified pre-owned" program. Generally a "certified pre-owned" car is your best option, since this means the vehicle has passed an inspection. Cars with extended warranties do not normally get a thorough going-over. Also keep in mind that the details of a certified pre-owned program vary by manufacturer, and some programs are better than others. Like anything else, be sure to read the fine print.

Have a mechanic inspect the car. If you don't have a mechanic capable or willing to do this, AAA's Web site has a list of the association's approved mechanics that inspect used cars for buyers. Also seek the advice of friends and family for leads on local mechanics.

Check out the car's history. Carfax sells reports for $19.99 that document a car's maintenance record as well as whether it has been in an accident.

Spend time checking out car candidates. Take it on a test drive. Drive it where you normally drive. If you commute in stop-and-go traffic, take it on the highway during rush hour. If you live in a mountainous area, see how it climbs hills. See how it handles. Also inspect the body for damage or scratches. See if the vehicle identification number on the chassis matches the same number listed on the doors. If the numbers are inconsistent, this could mean the car has been in an accident.

To determine whether the sticker price is a good one, research prices on the Web at such sites as Kelley Blue Book or Edmunds. Keep in mind that the prices now listed do not reflect the impact of a flood of car returns brought about by the sales going on currently for new cars.

Whether you're buying new or used, "pick the car that you really want," says Perleberg. "You'll be satisfied much longer."