I hope I’m not hijacking this thread by asking this question, but we’re in the market for a used car and the question has arisen about “certified” used cars and those not “certified.” Our local Honda dealer doesn’t offer “certified” vehicles, while two others within driving distance do. Should we only go for a “certified” vehicle, or doesn’t it really make a difference?
I emailed our local Honda dealer and asked if their vehicles are “certified,” and they didn’t answer. You’d think they would want to offer any available incentives to sell cars.
I’ve owned Hondas for a couple of decades and I think that it’s not necessary to buy “certified pre-owned” or even to buy a used one from a Honda dealer, as long as you get it inspected prior to purchase. They’re very reliable cars.
Oh boy, are they ever! We bought a Honda Civic in 1992 that I drove for 22 years and put 305,000 miles on it. Another Honda CR-V had 200,000 miles on it when we traded it. Now we have a Civic and a Fit, which are showing their age, so we’re looking at trading them both for a newer CR-V. (We’re retired. We don’t need two cars.) Since this will probably be the last car we will ever buy in our lifetime, we want to get the best car possible.
The problem of warranty repairs and dealer service bad behaviour has been noted over here in Oz. The problem is that dealers make little money on warranty repairs. They don’t get to sell you the part at the insane markups they usually charge, the part just comes from the distributor as part of the warranty. And they don’t get paid by the distributor (or manufacturer) anything like the hourly rate they would charge you for doing the repair work. So they have a clear incentive to deny warranty claims if they think they can get away with it, and a clear incentive to run you around the blocks at least once in order to shake you down before admitting that there is a warranty claim they can’t duck.
We live in a world where car dealers are running on very thin margins selling cars, and looking for other ways to make money. Service lock-in is the usual. But bad behaviour when things fail is very much a thing. A lot comes down to the attitudes of the manufacturers and distributors. The level of honest and ethical playing varies a lot between brands. And mostly doesn’t correlate with the market segment the brand lives in.
My old mechanic was adamant that the only three brands he would buy were BMW, Toyota/Lexus, and Porsche. Partly for the engineering, and partly because they stood behind their customers. The behaviour of the dealers of some of the brands missing from that list is remarkable for the appalling stories I hear. But it will depend on dealer as well. Some couldn’t lay straight in bed.
Honda Certification - depends on the model year.
If still in the new car warranty period, and 2019-2024 <80,000 miles looks like a fair deal - 7yr/100,000 mi. power train, extension of existing new warranty to 4 years, 48,000 mi. https://www.hondacertified.com/certified-preowned-benefits
Regarding buying a late-model used Honda from a dealer, my experience several decades ago was that the used-car discount was very slight, to the point that new cars of the same model cost almost the same.
I paid $22k for a new Civic EX in 2017. I sold it to CarMax in March (~7 years later) for $14.4k. I replaced it with a Tesla that probably lost close to the same percent value as soon as I took it home.
It must be a lot. We bought a car a few months back, did the negotiations etc etc…agreed on a price. They brought the financing dood out and I said “oh, no need, we’re paying cash”.
Supposedly, the dealers get kickbacks from the financing companies so the best price might be had by accepting the dealer financing and almost immediately paying off the loan. I’m usually not that much into it that I’m going to do that.
That is what I did when I bought my last car. The dealer really wanted me to finance with them, so I used it as a bargaining chip. I verified that there was no prepayment penalty on the loan, took it for the minimum amount, and paid off the whole thing at the first installment. It cost me nothing and I got a good deal on the car.
I don’t understand who is making money on these loans. The interest rate was much lower than even my credit union was offering. Do most buyers finance and then carry the payments for 3 - 5 years? Are there a lot of repos before the loans are paid off?
May I present an alternate scenario?
The dealer was able to figure out that you were trying to finagle a “finance and pay-off” deal, and actually gave you the same cash deal as everyone else. Most people think they are smarter than the dealer, but a professional dealer does this every day, several times a day and gets really damn good at reading faces and body language.
I was told that car finance is the safest loan. People will default on their utility bills and even their mortgages before they risk having their car repossessed.
It may be partly because a car can easily be snatched whereas other loans/debts are harder to enforce.
This reminds me of our last used car buying experience here in the UK, about 5 years ago. We found the car we wanted at a local dealer with £10,600 in the windscreen. I wasn’t too happy that one of the tyres was getting close to the legal limit, and they wouldn’t budge on the price nor replace it. Still, we were going to proceed as there weren’t many of this model around. Then when it came to signing the paperwork, they started mentioning all sorts of extra fees. I said no, I’m paying the price in the windscreen. But they wouldn’t budge, so we walked.
The following week we found the same model slightly cheaper, in a better colour, at another dealership, they sorted a worn seat cushion for us, and there were no extra fees. In fact when I mentioned our previous experience the salesman said that was borderline illegal.
While I’m not the world’s best negotiator by far, I don’t think that’s what happened in this case. I spent hours on line checking prices on everything from JD Powers to Costco and all the other dealers within 200 miles, and I knew what was a reasonable price for the car. I had already rejected the dealer’s “final” offer and sent the salesman away (this was just after the COVID lockdown started and the salesman was at my house). I didn’t even close the door – within 3 minutes he was back with a price that was lower than what I was asking for.
Now granted, these were exceptional circumstances (the dealers were staring at a total shutdown) so they might have been willing to take a hit just to get a car sold. But if they really want to make money on car loans, why not just write the terms so that the borrower is penalized if the loan is paid off within, say, six months?
So to respond to @Dewey_Finn , just make sure your final offer is what you want, and that there is no prepayment penalty on the loan if you decide to take it.
One thing I’d be worried about with car dealer financing is that they’ll have some scummy terms in the financing contract. I have more confidence with my bank that they will treat me fairly since they don’t want to lose my account. Car dealers aren’t necessarily looking out for customer interests. They might just be trying to get as much out of the buyer as they can in that one sale and not really concerned about any future business. If you are really going to follow the terms of the dealer’s financing, then it’s probably fine. The problems may come about with an early payoff or missed payment. I might think that the dealer would have more fees, penalities or be more draconian in how they handle the situation compared to your own bank.
That is illegal. What is legal is the finance company offering let’s say 5% interest and then the car salesman/financing agent getting you to accept 6%. The car lot gets that extra 1%.
I was looking at a used Dodge Durango ready to pay cash, but of course did not tell them that. It had one major flaw, there was a HUGE scratch on the side and I said I’ll take it if you pull the Durango into the shop and use the touch-up paint to take care of the scratch. It was a Dodge dealer so color matching should not have been a problem and I wasn’t asking for an entire repaint. Just touch it up with the right paint and do a better job than I could have. The salesman flat out refused and I walked.
But Saint Cad, why would you walk out on something that minor on a used car. Yes it was minor and for them to not want to close the deal for 70¢ of paint and $5 of labor then they would not treat me right when I came to the finance/closing office.