The modern used car market offers unprecedented opportunities for savvy buyers, thanks to a surge in available vehicles and the rise of internet marketing. Take Olga Humblias, for example. Behind the wheel of her silver BMW 740iL, she holds secrets that belie its sleek appearance. First, it’s a pre-owned ’97 model, initially leased for two years and 26,000 miles. Second, her monthly payment for this luxurious vehicle is a mere $240.
Driving around Upper Saddle River, N.J., the powerful 4.4-liter V-8 engine performs flawlessly, almost reminiscent of a Le Mans race car. “The car rides and handles so well that you constantly monitor the speedometer,” she says. Her husband, Charles, a fellow BMW enthusiast, eagerly seizes any opportunity to drive it.
The couple’s satisfaction exemplifies the current golden age for used-car buyers. A primary driver is the booming leasing industry. Approximately 33% of 1999 vehicles were leased, resulting in a steady flow of well-maintained, relatively new models returning to the market. These cars often boast prices lower than their actual condition suggests.
Manufacturers often offer certified pre-owned (CPO) programs, providing added assurance. To earn this designation and the accompanying warranty, vehicles undergo rigorous inspections and reconditioning. According to Moody of Swope Honda, this process adds around $500 to the vehicle’s price, covering mechanical repairs and cosmetic enhancements. These CPO cars are typically in excellent condition and come with limited warranties extending up to 6 years or 72,000 miles. Honda dealers, for instance, charge $329 for the company’s CPO certification.
Luxury brands like BMW and Lexus often include 24-hour roadside assistance with their certified used cars.
If a desired vehicle isn’t certified, consider an extended warranty, especially if the original warranty has expired or is nearing expiration. George Weber, marketing manager for Ford’s extended-service division, recommends a service contract for vehicles five to six years old with 70,000 to 85,000 miles. A comprehensive warranty should cover major components like the engine, transmission, axles, brakes (excluding pads), air conditioning, heating, blower motors, compressors, evaporator, suspension, and steering components.
Coverage should also extend to the electronic system, crucial in today’s advanced vehicles, including emission controls. Expect to pay between $700 and $1,200 for extended coverage up to 75,000 or 100,000 miles, but remember that prices are negotiable. Many plans offer deductibles up to $200.