Don't you dare buy any USED CAR until you do and/or know these few critical things..."buying a used car from the inside out"

Hey, folks! Welcome back. It's Lenny Lawson, the CarGuru. I'm sure there are other CarGurus

out there, probably some, a whole lot smarter than me. But I'll bet you one thing, they don't

have as much experience as I do being a car dealer. A real live new car dealer. I've

been a used car dealer. I've been a finance company. I'm a tractor dealer, a lawn mower

dealer. I sell weed eaters and blowers. I sell vintage cars. Well, I buy and sell vintage

cars for myself and for others. I've sold, just in the last eight years or so, I have

sold over three and a half million dollars worth of vintage cars. And probably less

than, I'd say, 20% of those were mine. So I have a wide breadth of knowledge when it

comes to the automobile. Today, I'm drilling down, though, because I had a good friend of

mine. He called me. He said, Lenny, you need to talk about used cars. He said, I read

that more and more people are looking at used cars because they can't afford new

cars. You need to run mine folks. And this was his term or his phrase. He said, you need

to buy a used car from the inside out. I like that. I think that's an excellent way

to look at it. But I'm not just going to talk about the inside and the outside.

I'm going to talk about all the stuff. Really, I'm going to start off talking about types

of used cars. In other words, where they come from and why it's important. And we'll

get into that just here in just a minute. I was checking out the news this morning.

One thing that, well, a couple of things have me concerned. The shortage of rare

earth minerals. We are so dependent on technology that these shortages will

impact the availability of new cars. And right now, I don't have a problem with

that because my lot is loaded with new cars. So that's not an issue, but it

could be down the road. And I know what it was like when we were short because

when we're a shorter product, it's tough. It's tough on us and it's tough on

the consumer because consumers have to pay more. The law of supply and

demand has definitely kicked in because prices are way down. Rebates, incentives

are up. We have the availability of low rate financing. In many cases, 0%. Just

for example, on our Nissan Frontier pickup, you can get $3,500 cashback or

0% for 60 months. Which would you take? Well, that all depends on your

circumstance or your cash buyer. Obviously, you're not going to take

zero. If you take zero, how long would it take for you to save the difference at

normal interest rates for not taking the $3,500? What if you trade every two

years? Probably should have taken the 3,500. It's just a math problem. It's

something that you can figure out. Do you know what an amortization schedule

is? Well, if you don't, just go to your accountant or your accountant

friend or somebody who knows what an amortization schedule. I have

a hard time even saying it. But yeah, if you can do one at 0% for the purchase

price of the car and then do another one with $3,500 rebate at normal

interest rates, you can see where the lines intersect. Well, you'd have to

graph it first. You can see where it makes sense for you to either go one

way or the other. That is a pretty simple thing. The reason we have big

incentives like that right now is because car sales are slowing. Why are

they slowing? It's because the doggone things are expensive, and that's one

of the reasons why people are buying used cars right now. People that

wouldn't even consider buying used cars before are considering it now for a

lot of reasons. So what are the different types of used cars as far

as sources? Well, the obvious is to buy one from your neighbor, a

private party purchase. If they're your neighbor and you know them and you

love them, then that can be a safe purchase. If you don't know them, there

are a lot of potential pitfalls there. We're not going to get into that, but

we will. Well, we have. Somewhere in the past 500 episodes, I have covered

that. But yeah, private party is one source. Independent used car dealer is

another. This is the guy that just has a sign up front that says,

Billy Bob's used cars were something more creative than that. And so there are

a lot of people in the used car business. There's a lot of folks that they

said, well, I think I can sell cars. And so they get a dealer license, which

is easier said than done, especially in the state of Tennessee. You have to

jump through a lot of hoops to be an official used car dealer with the

sales license. There are people who are unofficial used car dealers

without a sales license and shame on them. But there's a lot of people do

that. They just flip cars. There are folks out there that rebuild totals and

then wash the titles. In other words, they get a clean title that doesn't

say salvage on it and they sell them to unsuspecting people or to people

who know that they're salvaged. Maybe they're friends or neighbors. They

don't mind driving a vehicle that has a salvage title. I guarantee if you

buy one and you finance it with the bank, they want to know whether it's a

salvage title or not. So you have those folks. Then you have new car dealers

like me that sell a lot of used cars. And then you have the public

companies like CarMax, Carvana. They have two totally different

philosophies, but they're basically the same thing. Where do they get their

cars, Lenny? Well, they buy them off the street from a lot of people.

They buy them from other dealers. Most of the cars that they sell come from

auctions. You know, they go to dealer only auctions or they don't go. They just

sit in front of a computer and they have buyers that sit there all day long

and just buy cars and outbid other people. If you buy a car from CarMax

or Carvana, you're probably, well, you're not probably, you're paying full

retail price. There are no discounts. It's the

worst place to buy a used car except for the fact that it's probably not

got a salvage title. Okay, so those are the places.

What are the vehicles? Well, they're either trade-ins

at new car dealers, which, you know, they'll have them for

60, 90 days and say, okay, this thing isn't selling, so they take it to the

auction and they sell it. So that's one reason.

Or trade-ins that the dealers just don't want to keep. They don't fit

their market, their model mix. Like for example, I don't like to trade for a

BMW. If I trade for a BMW, I'm taking

it to the auction or I'm getting what we call a buy-bed from a BMW dealer or

some type of dealer that specializes in German cars.

Of course, I don't like trading for Porsches either. Anything that's

outside of my wheelhouse, you know, I'm a Ford Nissan dealer and I do the

best with domestic and Japanese and Korean

imports as used cars. So that kind of fits my

model mix. Other places cars come from off-lease.

These are people that have had a car leased for

two, three, four years and they don't want to keep it. They don't want to

buy it out at the end of the lease, so they let it go back to the manufacturer.

The manufacturer takes them to the auction,

sells them to dealers. Dealers bring them back to their lots.

Well, I say dealers, but CarMax and Carvana and they buy a lot of off-lease

vehicles and it's a good way to stock your used car department.

Also, fleets and this would include rental car companies.

Rental car companies buy a lot of cars during the year and

they'll keep them in service for however long their

their process is and then they'll take them to the auctions and they're

selling. Or if it's an actual program car, the

manufacturer, like Chevrolet, may sell a bunch of cars to

National Car Rental, say you keep these in service for 90 days to six

months, we'll buy them back at a predetermined rate of depreciation.

They buy them back, they take them to a dealer auction and they only let

GM dealers buy their GM cars or Ford dealers buy the Ford cars.

So this is what they term program cars. Have you ever

heard that term? Well, that's what it means. It means that

it's a program that the manufacturers offer to rental car companies

to sell them cars and then agree to buy them back.

It's kind of a guaranteed business model for the rental car companies and

they like them and then you have fleets also where

you know let's say like a big company like I don't know DuPont

and they buy 500 vehicles for their sales staff or their engineers or

whatever when they get to a certain mileage they

they take them to the auction. They sell them to a dealer or to

a auto broker and that broker consolidates them, takes them to a

big auction maybe in Atlanta or Stateville, North Carolina or

Nashville and they roll them across the

the lane and they sell all the cars at whatever they bring.

It's an absolute auction. So that's where cars

come from and and where they end up or how they end up getting on dealer lots

and I'll take my first break I'll be back in just one minute.

Okay so now comes the hard part. You're ready to go shopping for a

used car. What do you do now? Well a lot of people just go

online and they find what they like and they show up at the dealership and they

negotiated a deal and then they drive off in it

and then they start having problems because they don't know

what they bought. They didn't do any research.

They didn't find out that certain model years of Hyundai's

have severe engine problems and they just happen to buy one

and then they're wondering why. Hmm we're having to add a quart of oil to this

like every other time we fill up with gas

or they bought a car from five, six, seven years ago that has a

CVT transmission or a dual clutch transmission like the old Ford Focuses

did and Ford Fiestas and you know they say this thing just

does not shift correctly. What's wrong with this

transmission? Well then they take it to a

independent repair shop and they say you're going to have to take this to the

dealer. We're sorry. So they go to the dealer and

it's going to cost between $3,500 and $6,000 to fix it.

Well they don't have that in their budget and they wouldn't have to worry

about it if they've done some of the things I'm getting ready to tell you

about. So you're ready to go? This is what you do before you buy a used car.

Numero uno or number one in English pull the history from car facts

or Experian auto check. One of those two places

will give you a history of that of the ownership of the vehicle

whether or not it's had any known accidents.

When I say known sometimes people will wreck cars and have them repaired and

not report it and so you know you buy a car

and the paint doesn't match and you're wondering what didn't show anything

on the car facts that's why. So it also shows you

basically how many owners the vehicle has had where it was registered.

You know if you're buying a four-wheel drive truck and you live in Alabama

do you want to buy a truck that's that spent the last six or seven years in

Michigan or New York? I wouldn't because I worry

about rust and that's a real big issue up there

and so that's why a lot of those people up there like to buy

used trucks from down here it just they don't rust

well they'll rust eventually but you know they don't rust as easily because we

don't use a lot of salt on the roads and we really

don't need it down here. So pull the history

and if you can't pull a full history just send me the VIN number of the

vehicle I'll pull it for you four two three five five two

twenty twenty just send me the VIN say would you pull the history on this

vehicle I'll do it and I'll tell you what it is I'll print it out and

I'll send you a copy of it okay what else oh numero dos

number two pull vehicle reliability reports

where do you get those Lenny well if you subscribe to consumer reports

the magazine you can get them from them but that does require a subscription

JDpower.com is another place they have a vehicle dependability study

that they have done that goes back a number of years to

tell folks or to basically enlighten people

as to the reliability of certain makes and models

you know you can have a company that has a great reputation

but they have one or two models that have some issues

and wouldn't you like to know which ones those are well this is one way to

find out. Another great website is called car

complaints.com that's a pretty good title

so you just go there you put in the make in the model

and it'll tell you gives you a really cool graph of

which years had the most problems and so if you see a

you know like 2013 Hyundai Santa Fe for example you're going to see

a lot of problems in that particular year but as the years

subsequent years to that they've done better they figured out what the problem

but you don't want to buy that year a vehicle

because that's when they were having all the the oil usage problems. I heard of

some real nightmares with people that had

Hyundai's and Kia's and could not get the manufacturer to

help them even if the vehicle was under warranty they would question

whether or not the customer had serviced the vehicle

properly that's just another great reason to keep service records

and it's really hard to get service records on a car that

that you buy from CarMax you know because it's come through an auction it's

probably passed through two or three hands or businesses

that's different from going to a new car dealer and buying

a trade-in you know that that they traded for

they can give you the the previous owner's name

you can call them up and what do you want to know

well what was their overall experience with the vehicle

did they ever have damage that you know they didn't turn into the

insurance company you know some people will

I don't know they might not like you calling but

what I always do is I call the dealership I said would you call this owner

and see if they would mind me calling them and asking them about this car

if the dealership doesn't want to do that for you

there might be a problem because that person may have traded that car

because it was a problem car you want to buy that car

no another thing you can do I've lost track of my numbers

is to ask the dealership that sells that particular brand

to pull the warranty history on that particular Venn number now there are

some dealers that don't want to do this for privacy reasons but just ask

them nicely say listen I don't need to know the owner's name

I just need to know if it was a problem car and I'm going to get it

serviced here surely you can do that for me

I've never been turned down but I'm a car dealer

and you know I always tell them that and I would call for a consumer you know if

you were trying to buy a used car for me and you wanted to know if it had

let's say it was a Honda I'm not a Honda dealer

and you wanted to know what the warranty history was on that car I'd make

that call for you I wouldn't rely on you to

do that you could sit there with me and make the call

I mean if they want to sell the car bad enough then they ought to be willing to

to do that sometimes they're afraid of what the answer is going to be

they don't want to give you a reason to not buy the car

that's sad but it happens I know some dealers that would just laugh at you

if you ask them to do something like that we can't do that you know it's

just they don't want to do that because it

complicates the deal and they don't want anything to

to make their deal go sideways so some of this you're just going to have to do

yourself okay so we're going to pull the history car

facts or experience auto check we're going to pull the vehicle

reliability reports we're going to call the previous owner

if we can now what if the previous owner was a rental car company

well you're out of luck is it bad to buy a previous rental car

no not if the vehicle's been checked out thoroughly sometimes rental car

companies take better care of cars than the average consumer does

I mean I'd almost be more concerned about buying it from an individual that I

don't know than I would from a rental car company on

like a program car because they actually maintain the vehicles they have

to or the manufacturer won't buy them back

under the program so okay so the next thing is a dealer inspection

sometimes dealers will will do something called a certified use car

and that does protect you a little bit more but you're going to pay more

money for that because you're paying for

additional work to be done to the vehicle and also for

an extended warranty to be applied to the vehicle

you can also well you can always you know buy an extended warranty contract or

service contract to protect you from unexpected repairs

but it would be so much better to find out if it's

a good car with a good history and you know you don't have to worry about

any specific problems that that particular vehicle is having

now if a car has a outstanding recall now that that could be an issue I mean

the last thing you want to do is have to take it to a dealership right after you

buy it to get a recall done that should have been done by the dealer

selling it to you or by the previous owner and what if it's a serious

recall that that will force you to park the vehicle

that's not good so you want to find out if it has any open recalls the

dealer that sells that particular brand can tell you that or you can look it up

on the National Traffic Highway Safety website

and find out if there is an open recall on the vehicle that you're thinking

about buying now there's another thing called a

TSB or technical service bulletin this is not a recall this is a

basically a recommended repair procedure for a known problem

that is provided only to new car dealers who sell that particular brand

so let's say i'm a Chevrolet dealer and certain Silverado trucks equipped with

a certain engine have this particular problem

here's how we recommend that you fix it that's a technical service bulletin

the problem with the TSB is that you have to pay for it if it's out of

warranty you have to pay for it it's not a

recall if it's a recall the manufacturer pays for it

so i would want to know when i go into the dealership

and i'm trying to find out the the warranty history

of this vehicle i'm also going to say and while you're checking

check for any TSBs on this and that service advisor

will look at you and say how'd you know that and you're going to say

well the car guru told me that you ought to listen

sometimes you might learn something okay i'll take my last break i'll be back in

just one minute

okay we're we're trying to avoid buying a problem used car

and uh i want to help you do that but you know you you need these notes this

most of this information is in the my car guru guidebook

and if you subscribe to that which what does it cost

free and how do you subscribe send me your email address

to my cell phone number 423-552-2020 and i will send you a pdf a digital copy of

the 32 long sorry 32 page long my car guru guidebook

that covers a lot of different cool things that will save you money

during your extensive car life oh yeah and i forgot to mention the walk around

and the test drive don't everybody use car without driving it first then don't

just drive around the block you know put 10 15 miles on it

make sure the tires are nice and smooth that there's no play in the steering

the brakes stop good no no lights are coming on

they shouldn't be coming on that's a pretty much

enough time for the vehicle to warm up really good and if a car is called

and you're driving down the road you know it's going to behave differently than if

if it's warmed up and that's just something that that you need to really do

and and if the salesperson wants to go with you fine

just tell him to be quiet because you want to listen for sounds

that don't sound normal you know if you start a cold car and you hear a

ticking noise underneath the hood that's not good

you know that means that oil is not getting to the top of the engine

why is that you know it could be because of age issues because the oil

is the wrong viscosity there could be a lot of different reasons

that it's doing that but that would be an indication that you don't want to buy

that car does it make noises when it's warm

because they can they can misbehave if you get back to the dealership after

driving at 15 miles open the hood make sure you don't smell

any antifreeze you shouldn't smell that sweet smell of

antifreeze after you've gotten the car hot if you do

there's antifreeze leaks and it could be anything minor it could be a blown

head gasket it could be a lot of different things

so these are just these things are on you and you do a walk around make sure

all the paint matches make sure there's no tape lines around the doors or

the edges of the the hood around the trunk lid

because that means that there's been paint work and these are things that

you need to to know this could indicate maybe a phone call needs to be made to

the previous owner if it's not in the vehicle history

so i know that's a lot of information but if you need more just

ask me you know you can send me the information on a vehicle you're thinking

about buying i'll be glad to coach you on it and tell you what to look for

and whether or not it's having a lot of serious problems or you can just do

the research yourself with the sources that i've provided to you well

thanks for listening and i'll see you next time

Don't you dare buy any USED CAR until you do and/or know these few critical things..."buying a used car from the inside out"

About this episode

used cars

rare earth minerals

rebates and incentives

0% financing

Nissan Frontier

salvage title

CarMax

Carvana

dealer only auctions

trade-ins

BMW

Porsche

off-lease

fleet

engine problems

Ford Fiesta

CVT transmission

Ford Focuses

Ford Fiestas

Experian AutoCheck

Fiat Uno

Carfax

rust

Consumer Reports

JD Power

vehicle dependability study

service records

certified used car

extended warranty

TSB

Chevrolet Silverado

head gasket

Request an Explanation

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