Tips for Buying a Used Car

New and used cars compete with each other, of course, and when relatively inexpensive new cars collide with a steady stream of high-quality used cars in the marketplace, the result is a cycle of falling prices. And that was the case even in the good years. Throw in the threatening recession and the economic kidney punch of September's terrorist attacks--when shoppers largely disappeared from auto showrooms--and you can fully understand why dealers have been going to extraordinary lengths to lure people back. The average interest rate on new-vehicle loans has plunged by nearly half since the terrorist attacks, which is sure to clip used-car prices even further. Already, you can buy a 1998 Lexus ES300 for less than the average base price of a new Camry SE ($21,140). And that's just the start, says J.D. Power's Chris Denovie: "Expect to see prices go down before the end of the year."


Thinking used. Buying almost any late-model used car in good condition is, to a certain extent, a smart move because autos lose a disproportionate percentage of their market value in their first couple of years on the road. Buy a high-quality two- or three-year-old car and you simply get a lot of driving at relatively little cost.


In contrast to buying, when you lease a used car, certification is a good idea. The manufacturer will be on the hook to take care of your vehicle, and your monthly payments will still be lower than if you bought the car. "The point is to not have to deal with it when you're done," says Spinella. "Just drop it off and walk away." (Keating, Money)