Buying a Used Car in Troubled Times: Beware the Depreciation Monster

Be careful when shopping for used cars. (Photo: promich [CC BY-2.0]/Flickr)

Buy a supercar, from Ferrari, Koenigsegg or Lamborghini, and the money you lose the minute it’s off the dealer’s lot could buy a small house in much of America. That’s one reason I usually buy used (and never a supercar). But the biggest cause of depreciation is actually high mileage, according to a new online survey by Ipsos for CarMax, the biggest used-car retailer. It was cited by 33 percent of the 1,000 American adults surveyed.

Ironically, high mileage should not necessarily stop you from buying a used car. If the vehicle in question was used mostly for highway commuting and enjoyed rigorous maintenance — and passes every test with a clean bill of health — I say go for it.

The second-most cited cause of depreciation is accident or frame damage (cited by 24 percent), and — not wanting to drive sideways down the road — that would deter me more than high mileage. Keeping up with regular maintenance (22 percent) is definitely important, and — this is interesting — women are more likely to say the maintenance thing is an important factor in depreciation. Does this mean that men are more likely to neglect their cars (also their bodies, which is why women live longer)?

The current state of the market (12 percent) is obviously important: Nobody wants Hummers these days, no matter how creampuff they may be.

Flood damage (7 percent) would be a deal breaker for me — mold issues alone would deter me, and there’s a reason most of the cars caught up in Hurricane Katrina were junked. Finally, title issues were cited by 2 percent, and while that can be a pain (especially in cross-state purchases), it’s not necessarily the end of the road for me.

Other factors that would stop me from buying a used car are:

  • A really worn interior (sign of hard miles traveled, and often expensive to fix);
  • Rust (surprised that didn’t make the list), though admittedly it’s not the scourge it once was;
  • A smoking engine or other mechanical problems, including a bad transmission;
  • Vibrations and failure to track straight. This is often a sign of #2, accident or frame damage.

Don’t buy a used car at night (I know this from bitter experience) and be very careful about buying one online. If you do take that plunge, try to get as much documentation as possible, and demand photos from every angle. If you can get someone experienced to look at it on location (and it’s not too expensive), by all means take that precautionary step.

Although buying a new car, particularly an environmentally friendly hybrid, is the patriotic thing to do at this juncture in our history, I certainly understand the impulse — and the need to buy used. But depreciation matters, in cars and trucks as in houses.