How to Spot a Good Deal on a Used Luxury Car

Many people dream of owning a luxury car. The luxurious feel of the materials used, the advanced technology, and the high-performance capabilities are hard to resist! But the high price of a new luxury vehicle can present a significant barrier to owning one. This is where the used luxury car market comes into play, as it allows someone the opportunity to own a luxury vehicle for a fraction of the price of a new one. However, purchasing a used luxury car can be very difficult to do.

You may find a great vehicle at a good price, only to discover that it has a long history of problems. Conversely, you may find a vehicle that has been expertly cared for and has no historical problems, but someone may have overcharged for it. This guide will assist you in learning everything you need to feel confident about making a wise purchase in the used luxury car market.

You will learn how to effectively research a used luxury vehicle, what to look for when inspecting a vehicle, and how to negotiate like a professional. By the end of this guide, you will know how to determine whether you are being offered an outstanding deal on a used luxury vehicle or whether you should pass on that vehicle, so that you do not incur a financial headache. Now, let us help you get into the luxury car that you desire without spending your life savings!

Understanding the Used Luxury Car Market

To find a great deal on a used luxury vehicle in the used luxury car market, it is essential to understand the depreciation of a vehicle. Luxury cars depreciate much quicker than your average passenger car. A vehicle that has an original MSRP (manufacturer's suggested retail price) of $80,000 will likely sell for less than $40,000 a few short years later.

The sheer amount of depreciation on these vehicles gives a savvy buyer the opportunity to purchase an expensive vehicle at a substantially reduced price.

What causes this?

• Initial High Cost– Decreasing value of item will be on much bigger amounts.

• Ownership Costs– Buyers sometimes stay away from high priced vehicles due to their perception of high maintenance/repair.

• Technological Changeover– Luxury brands can quickly develop new features that end up dating previous versions more rapidly.

The depreciation associated with used luxury vehicles is the biggest opportunity you have to purchase a luxury vehicle for the cost of a brand new, standard-size passenger sedan.

Advantages and Disadvantages of Purchasing Used Luxury Vehicles

Before beginning your search for a used luxury vehicle, you must consider the benefits of purchasing a used luxury vehicle, as compared to the negatives associated with purchasing a used luxury vehicle.

Step 1: Do Your Research & Prepare Your Budget

Finding the best deal on a car starts way before you're out looking at cars in person. Thorough research can save you time, money, and future stress.

Choose the Best Model For You

Don't be fooled by name brand alone. Models from the same manufacturer can have a very wide range of reliability and ownership cost between them.

• Know What You Need: Are you looking for an SUV that will hold your family, a sporty coupe or a comfortable sedan to get you back and forth from work?

• Research the Reliability of the Car You Want: You can find out the reliability of a car from years of car ownership by doing a little research. Some of the best sites for detailed ratings of specific model years are J.D. Power and Consumer Reports. Additionally, there are many forums dedicated to specific brands (such as Bimmerpost for BMW or AudiWorld for Audi) that feature real-world owner experiences that can further inform your decision.

• Estimate The Cost of Ownership: Look for common problems associated with the models on your list. For example, many German luxury vehicles from the late 2000's have a bad reputation regarding their timing chains, which can be an extremely expensive repair.

Establishing a Realistic Budget

Your budget should encompass more than just the price of the car being purchased--you should also plan on saving at least 10% -15% of the vehicle's cost for possible first year expenditures.

Used Luxury Vehicle Budget Breakdown

Where to Find Your Vehicle

Although flat-marketplaces have many uses, they may not productively serve your needs. Try looking at sites dedicated to providing listings of quality used vehicles, such as Caragencia.com. You may also want to explore dealer inventories and certified pre-owned (CPO) programs directly through automotive brands such as Lexus, Audi, and Mercedes-Benz.

Step 2: Evaluating/Examining the Car's History

While a car may look great on the outside, it may have a bad history. Therefore, the first thing you need to do before purchasing any used car is to obtain a vehicle history report.

Vehicle History Information

The type of report you should obtain (by using the vehicle identification number (VIN)) is either CarFax or AutoCheck. Here is what you are looking for:

• Accident History: You should look for any accident history that has been reported. While a minor fender bender will not affect the ability to drive that car, if there was structural damage or airbag deployment, these are serious issues.

• Title Status: A clean title status means that there was never an instance of flooding or insurance payout (salvage) for that car. If a car has been given a salvage, rebuilt or flooded title (meaning that car was previously destroyed) then that car should be avoided.

• Service Records: If the previous owner of a car maintained a good record of service, this is a good sign that the previous owner did take care of the car (i.e. oil changes performed consistently, etc.) and followed the recommended service schedule of the manufacturer.

• Number of Previous Owners: Less owners is normal. If a car was sold often, then there may be something wrong with it that each owner found out and wanted to get out of that car quickly.

• Discrepancy of mileage records: The history report shows the mileage at different points in time (such as for inspection or service). If there are miles that have been removed or there are differences in mileage, it could indicate fraudulent activity.

  
  

Step 3: The All-Important Inspection

After the history check for the car, you will have to check it out physically. This is when you inspect for problems that are not in the records (upon which you base your decision). So do your inspections as two accomplices: do your own check and then have someone else check it for you as well.

Your Walkaround Inspection

You can do your own inspection and may be able to see some of the things that a mechanic would see through a report. When you perform your own inspection, bring an inspection checklist, a flashlight, and another person to provide a second opinion.

Exterior Inspection:

• Look at your vehicle in good lighting and search for any signs of repainting or trim that is different from the other parts of the car.

• Check for gaps that are not uniform between body panels (fenders, doors, etc.) as this may be an indication that the vehicle was involved in an accident.

• Also check all four tire wear patterns for unevenness, as this can indicate that the vehicle is improperly aligned. Examine the date on the sidewall of the tire; if they are greater than six years old, they will likely need to be replaced very soon.

Interior Inspection:

• Does the interior's wear and tear correspond to the car's mileage? A driver's and steering wheel that look worn out on a car that has low mileage raise red flags.

• Check electronics such as windows, seats, sunroofs, infotainment systems, and climate control. Electronics on luxury vehicles can be expensive to repair if they become inoperable.

• Use your sense of smell to detect any musty odours, which could mean that there was a water leak or flood damage in the vehicle. Look under the mats for any signs of wetness.

Inside:

• Examine all fluid levels. Check the oil; if it has a milky appearance, there is a chance that your car has a leaking head gasket.

• Inspect the engine block for any indication of a leak or drops of fluid on the ground beneath your vehicle.

• Inspect all belts and hoses for any breakage or fraying.

The Importance of a Professional Pre-Purchase Inspection (PPI)

This is the most important process you will go through when making sure you get a good deal on your vehicle. A qualified, independent mechanic can do a complete inspection of the vehicle after putting it on the lift for $150 to $300. They will find items that you will simply never spot including:

• Evidence of frame damage from prior accidents

• Rust on the underbody that is not visible

• Leaking gaskets or seals

• Worn components of the suspension

• Diagnostic codes stored in the computer that do not turn on a check engine light

Do not skip the PPI even if the vehicle is "certified." The cost of the inspection is minor compared to the cost incurred from purchasing a vehicle that requires thousands in repairs. If the seller refuses to allow a PPI to be performed, walk away; this is the biggest red flag possible.

Step 4: The Test Drive

The test drive is not just for determining how the car feels but to also provide you with another opportunity to identify potential problems.

• Begin Cold: Ask the seller not to warm up the vehicle prior to your arrival to check for issues resulting from a cold start such as smoke from the exhaust or rough idling.

• Listen for Noise: Turn off the stereo and listen for any clunking, whining, or rattling noise when accelerating, decelerating, and turning.

• Feel the Drive: Does the transmission shift easily? Does it pull to the left or right while driving? Do the brakes work well when pressed down, or do they squeak or have a lot of vibration?

• Mix It Up:Drive on a variety of different road types - city streets, bumpy roads, and the freeway – to test how the vehicle rides and handles in different conditions.

Step 5: Price Negotiation

Assuming that your car passed the PPI and test drive then it is time to negotiate. Great "deals" on engines are made and not found.

• Know The Market Value: Sources to know what the car would be worth include Kelley Blue Book (KBB) or Edmunds. Be sure to take into consideration the mileage and condition of the vehicle to determine your fair market value by location in the US.

• Use PPI For Negotiation Leverage: There may be minor repairs identified through the PPI. For example, it is likely that you will have to replace brake pads and/or tires. The estimated cost of those repairs can be used as a negotiating point to lower the price of the vehicle. Remember to state the evidence in a calm manner. Ex: “The mechanic identified that the car will need new rear tires in the near future, which I can replace for approximately $600. Are you willing to adjust the price down to account for this?”

• Be Prepared to Walk Away: Your greatest negotiating tool is your ability to say "no." When faced with an unreasonable price, kindly thank the seller for their cooperation and continue your search elsewhere. You will always be able to find another vehicle.

• Focus on the Out-the-Door Price: It doesn’t matter what an auto dealer has listed as their sticker price; you must negotiate the "out-the-door" price which includes all applicable taxes and fees (many times auto dealers will have a low sticker price and subsequently charge thousands of dollars in junk fees, i.e. “dealer prep” or “paint protection”).

With patience and persistence, you can easily find an excellent used luxury vehicle at a terrific price!With your research completed, the vehicle's inspection done and negotiated well, you can have the premium driving experience you have always wanted, at a price that fits your budget. For a great choice of existing vehicles, check out Caragencia.com.

Frequently Asked Questions (FAQ)

1. Is it worth the price difference for a certified pre-owned luxury car?

A certified pre-owned vehicle typically provides peace of mind since it has been inspected by a manufacturer, is covered by a factory-backed extended warranty, and will usually have a clean history. In general, certified pre-owned vehicles will be priced higher than similar non-certified vehicles, and you will want to have an independent vehicle pre-purchase inspection performed on the vehicle to confirm the dealer’s inspection.

2. When is a used luxury car considered to have high mileage?

High mileage varies according to brand and the maintenance history of the vehicle. A Lexus or Acura that is in very good condition at 120,000 miles may offer better reliability than a German luxury vehicle that has been run poorly but has only 70,000 miles. In most cases, if the vehicle has good credentials and service records, it is considered acceptable if it has less than 100,000 miles. Beyond this point, the vehicle's testing prior to sale (PPI) and service records take precedence.

3. Should I consider purchasing an extended warranty from a third-party company?

Extended warranties from third parties can often be very beneficial, while some may not provide you with the coverage you expect; therefore, take the time to check the reputation of the company who provides the extended warranty and to review the terms and conditions of the extended warranty contract to provide for coverage that will help you should a catastrophic repair need occur.

4. How much should I budget annually for maintaining a used luxury car?

Generally speaking, for a used luxury car between four and eight years old, the typical customer will spend between $1,500 and $2,500 annually on routine maintenance and minor repairs, such as oil changes (which tend to be more expensive for luxury vehicles), tires, brakes, and other routine wear and tear items. This estimate excludes the cost of major repairs that are unexpected.

5. Are used luxury hybrids or electric vehicles worth buying?

Yes, but you must pay close attention to the battery. The high-voltage battery is the most expensive component of the vehicle, and its performance diminishes over time. Therefore, it is extremely important to have the battery condition tested during a pre-purchase inspection of a used electric or hybrid vehicle to ensure that the battery still has sufficient capacity. It is also important to check the manufacturer's warranty policy, as the duration of many high-voltage battery warranties is often longer than bumper-to-bumper warranties.