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Tuesday, September 14, 2010

Used Car Deals: Program Cars, Rental Cars & Salvage Titles

Here at Edmunds.com, we get a lot of questions about buying cars from three sources:In our eternal quest for deals on wheels, we decided to take a closer look at these cars. Can you get a good deal from these sources? Will they make solid, dependable transportation?

For the inside scoop, we talked with two executives from Automobile Consumer Services Corp. (ACS), Larry Lovejoy, chief operating officer, and Tarry Shebesta, president. Together, these two gentlemen have several decades of experience buying and selling cars. For an additional perspective, we also talked with John Mallette, owner of Face Lift Inc., an auto body shop in Long Beach, Calif.

Program cars have been owned by the manufacturer and given to employees for a short time to use for company business. The idea is to have a Ford employee, for example, drive a late-model Ford to advertise the company's product. These cars are maintained by the factory and usually sent to auction before the odometer turns 10,000 miles. The cars are sold to Ford dealers at closed auctions and then put up for sale on the car lot advertised as "program cars."

"Dealers like these cars because they can get them at low prices and then sell them at a good profit," Lovejoy said. "Besides that, they always get the service they need because they can work on them in their own shops."

Lovejoy said these cars can be a great deal for the average buyer. They have been well-maintained, so in essence you are buying a nearly new car with no worries about mechanical problems. Furthermore, some dealers might extend the warranty for the full term or you can drive it under the balance of the warranty.

So how would the average consumer go about buying a program car? Just call used car dealers or check the ads. "Dealers are proud to advertise program cars."

However, knowing what to pay for the car is a problem because "You have no idea what the dealer paid for it," Lovejoy said. However, he added, you should never pay more than invoice for such a car. Or you could consider assigning a certain value per mile the car was driven and deducting that amount from the invoice price. For example, lease cars that are over mileage are charged 15 cents a mile.

"The deals are there," Shebesta said. He bought a finance car from a dealer he knew. It was a BMW with 3,740 miles on it, and got it for $1,400 below invoice.

Bob Sykes, a video producer who lives in the Los Angeles area, wanted to buy an Infiniti SUV, but didn't want to pay the $36,000 sticker price. Instead, he was shown an executive car, with 14,000 miles on it, by the salesman at the dealership. He was able to buy the one-year-old car for $25,000.

"I looked up the price on Edmunds.com to get an idea what they were going for," Sykes said. "I feel I got a great deal. But there were a few negatives: They had let the registration expire so I had to get it reregistered after only three months and that was a $700 hit. Also, it needed new brakes. But still, I'm going to look for a similar deal my next time buying a car."

Former rental cars sometimes turn up on used car lots advertised as "program cars." This will be revealed if you run a vehicle identification number check using a company called Carfax . For a modest monthly fee, you can run the VIN numbers of cars you are considering buying. The Carfax report will tell you who the previous owner was, whether the car has a salvage title and if there are any outstanding recalls on the vehicle.

Both Lovejoy and Shebesta see nothing wrong with buying used vehicles that have been used as rental cars.

The oft-cited criticism of former rental cars is that the drivers who rent them abuse them. That might be true in a few cases, Lovejoy said. But there are other benefits to offset that argument.

"Those (rental) companies take good care of the cars," Lovejoy said. "And the rental car agencies buy them right to begin with — at net, net, net numbers (invoice price minus the hold back, minus the advertising costs and the like). But for peace of mind, you would probably like to have a third-party inspection because not all rental cars are alike — there are some plums and some peaches."

In an Edmunds.com story, two editors went used car shopping. One of their stops was a rental agency used car lot. They found the prices to be competitive. Furthermore, the vehicles are only one year old, so the balance of the warranty is still in effect.

Mention to a prospective buyer that the car has a salvage title, and they run in terror. Still, others have owned these cars and driven them for years. What is a salvage title and can these cars ever be a smart buy?

When a car has been severely damaged (either in an accident, or because of a flood or theft) the insurance company estimates how much it will cost to fix. At some point, the cost of repairs is more than the car is worth. Therefore, the car is often sold to a salvage company and used for parts. To protect future buyers, the car is given a salvage title.

In some cases, the salvage company, or an enterprising body shop, might fix up the car and try to sell it. Naturally, the price of the car will be below similar models' because it has a salvage title. The danger is that the car was improperly repaired. The biggest problem is with the alignment of the wheels — if the frame has been bent, it is difficult and expensive to straighten. A bent frame will cause abnormal tire wear and improper handling characteristics.

"Some states require (totaled) vehicles to be branded as salvage cars," Lovejoy said. "But if it is sold in another state, and re-titled, it can be sold to Mrs. Jones as a straight-up used car. She doesn't know it has been cut together from pieces of different cars."

Both Lovejoy and Shebesta advised extreme caution when considering the purchase of a car with a salvage title.

"I know of some cars that have gone through body shops and been made into drivable cars," Lovejoy said. "But keep in mind that if you buy a salvage title car, the chances of selling it to someone else and recouping your money are very slim. If you buy a salvage title car, you might want to count on keeping it until the wheels fall off."

John Mallette, from Face Lift Inc., also advised buyers to be cautious. However, he added, "sometimes it works when you're dealing with a theft recovery where there was little damage. You might save $3,000, $4,000, $5,000. But you will lose that right off the top when you go to sell it."

If you are looking for savings, Lovejoy and Shebesta said buyers might save big-time by going to a repossession or donation auction. You can't test-drive a car there, but you can start it up and shift through the gears to make sure the transmission is working. If you go this route, Lovejoy advised that you bring a mechanically inclined friend to look it over.

Mallette said his best buys have come from spotting cars with "For Sale" signs in the window. "I like cars that people are trying to get out of," he said. "Like if a kid is going off to college, I might be able to get that car cheap. And chances are, it's a little Toyota Corolla or something. People are always looking for a car in that price range."

When buying an older used car, Mallette always takes the car to a mechanic for an inspection. "I still spend the $50 to take it to a mechanic. Not because this person might be trying to get over with me. He might say it's in great shape but he might not know that something's wrong with it."

Before taking it to a mechanic, Mallette pre-examines the car himself. He looks at the transmission fluid (does it smell burned and look brown rather than pink?) the engine oil (beware of a car whose oil has a metallic look) the color of the antifreeze (it should be green) and the fan and timing belt. Finally, he checks to see how much gunk is built up on the inside of the exhaust pipe — a heavy deposit might indicate worn valves or piston rings.

As a closing note, Shebesta steered prospective buyers back to the old favorite: buying from a private party. When you buy a very old car, the most important factor is how it has been serviced. Only the previous owner can tell you the car's recent history.

Saturday, September 11, 2010

Driving in Europe

What's right for you?
Tips on driving abroad.
What you can expect to pay.
Find a company and know what to ask before you rent.
Understanding the Collision Damage Waiver, Super CDW, and more.

While most European travel dreams come with a choo-choo soundtrack, and most first trips are best by rail, you should at least consider the convenience of driving. Behind the wheel you're totally free, going where you want, when you want.

Driving runs circles around trains on countryside-focused trips. The super mobility of a car saves you time in locating budget accommodations in small towns and away from the train lines. This savings helps to rationalize the "splurge" of a car rental. You can also play it riskier in peak season, arriving in a town late with no reservation. If the hotels are full, you simply drive to the next town. And driving is a godsend for those who don't believe in packing light...you can even rent a trailer.

Every year, as train prices go up, car rental becomes a better option for budget travelers in Europe. While solo car travel is expensive, three or four people sharing a rented car will usually travel cheaper than the same group using railpasses.

Renting a car in Europe tends to be more expensive and more complicated than in the US, thanks to byzantine insurance options and other additional fees. But once you're free and easy behind the wheel of a European car, it's worth the hassle.

European cars are rented for a 24-hour day, usually with a 59-minute grace period. Cars are most economical when rented by the week with unlimited mileage. Daily rates are generally quite high; typically, the longer you rent for, the less it'll cost per day. For the best deal on long-term rentals, book in advance from home (easy to do online, or through your travel agent). Various rail-and-drive passes, which allow you to rent a car one day at a time at one-seventh the reasonable weekly rate, can be a good option.

There's no way to chart the best car-rental deals. Rates vary from company to company, month to month, and country to country. The cheapest company for rental in one country might be the most expensive in the next. After shopping for half an hour via the websites or toll-free phone numbers listed below, you'll know who has the best deal for your travel plans.

You might start by searching on a travel-booking site such as Expedia.com or Travelocity.com, see who has the best deals, then book on that company's own site. Booking directly with big-name companies (like Avis, Alamo/National, Budget, Dollar/Thrifty, and Hertz) generally charge more than consolidators such as Auto Europe and Europe by Car . Consolidators compare rates among various companies (including the big-name firms), find the best deal, and - because they're wholesalers — pass the savings on to you. You pay the consolidator, and they issue you a voucher to pick up your car in Europe. However, if you use a consolidator, you're working with a middleman rather than communicating directly with the vendor. This can make it more challenging to modify your reservation or register a complaint.

Complicating your comparison-shopping are the many types of fees that can be tacked onto your base rental price. You'll have to ask questions of the rental agency to determine your total cost. Each year I receive emails from unsuspecting readers who were charged more than they were expecting.

Just as an "open-jaw" flight plan can save time and money, it can make sense to pick the car up in one city and drop it off in another. For maximum options, use a bigger company with offices in many cities. While dropping off in another country can incur an extra fee, there's typically no extra charge to do this within the same country — but always ask when you reserve, just in case.

When picking up your car, always check the entire vehicle for scratches, dings, and the gas level. If anything is not noted on the rental agreement, return to the counter to make adjustments. When you drop off the car, walk around the car again with the attendant to be sure there are no new problems. Otherwise, unexpected charges might show up on your credit-card statement. These are easier to dispute when the information is documented. On that same note, avoid dropping your car off after hours (at a drop box); it's best to finalize the rental and receive the paperwork in person.

Your American or Canadian driver’s license is all you need in most European countries, but it can help to also carry an International Driving Permit (IDP), which provides a translation of your license — making it easier for the cop to write out the ticket. You can get one at your local American Automobile Association or Canadian Automobile Association office ($15 plus the cost of two passport-type photos). The AAA is authorized by the US State Department to issue the permits; avoid scam artists peddling overpriced, fake international licenses.

Exactly where you need a permit depends on whom you talk to. People who sell them say you should have them almost everywhere. People who rent cars say you need them almost nowhere (except in Spain and Italy, where you may be required to show the permit to pick up your car). People who drive rental cars say the permit is overrated, but can come in handy as a substitute for a passport as a security deposit. Police can get mad — their concern is in finding the expiration date — and fine you if you don't have an international permit. Those driving in Spain, Italy, Portugal, Austria, Germany, Greece, and Eastern Europe are likely to be fined if found without a permit, and should get one. You must carry your American or Canadian driver's license as well as your international permit.

Minimum and maximum age limits for renting a car vary by country, type of car, and rental company. Younger and older renters can get stuck with extra costs, such as being required to buy extra insurance or pay a surcharge of $14–39/day (fortunately, there are usually maximum surcharge limits). Most companies will not rent a car to someone under 21, but those who are at least 25 years old should have no problem. Drivers over 70 may have trouble renting in the Czech Republic, Greece, Poland, Slovakia, and Turkey. The maximum age is 80 in Denmark, and some locations in the UK and Northern Ireland won't rent to anyone over 69. You can't rent a car in the Republic of Ireland if you're 75 or over, and you'll pay extra if you're 70–74. If you’re considered too young or too old, look into leasing (explained later in this section), which has less stringent age restrictions. STA Travel is a good option for young renters (tel. 800-781-4040).

As Europe's internal borders fade, your car comes with the paperwork you need to drive wherever you like in Western and most of Eastern Europe. But if you're heading to a country that still has closed borders (for example, deep in far-eastern or southeastern Europe), state your travel plans up front to the rental company when making your reservation. Some companies have limits on eastward excursions (for example, you can only take cheaper cars, and you may have to pay extra insurance fees). When you cross these borders, you may be asked to show proof of insurance (called a "green card"). Ask your car-rental company if you need any other documentation for crossing the borders on your itinerary.

Some rental companies allow you to take a rental car from Britain to the Continent or to Ireland, but be prepared to pay high surcharges and extra drop-off fees. If you want to drive in Britain, Ireland, and on the Continent, it's usually cheaper to rent three separate cars than one, thanks to the high cost of taking cars on ferries (between Ireland and Britain) and crossing under the English Channel via the pricey Eurotunnel .

Leasing (technically, buying the car and selling it back) gets around many tax and insurance costs and is a great deal for people needing a car for three weeks or more. For trips eight weeks and longer, leasing can even be more economical than railpasses. Leases are available for periods up to six months. Prices include all taxes, as well as zero-deductible theft and collision insurance (comparable to CDW) — and you get to use a new car. Leased cars can most easily be picked up and returned in France, but for an additional fee you can also lease cars in the Netherlands, Belgium, Germany, Spain, Portugal, Italy, and Great Britain.

Europe by Car , which invented leasing more than 50 years ago, still offers good deals (for example, you can lease a Peugeot 207 with air-conditioning in France for as few as 17 days for $949, about $56 a day; tel. 800-223-1516). Renault Eurodrive offers similar deals. The longer you lease the car, the lower the price (a 60-day lease can be as inexpensive as $34 per day).

Although Americans rarely consider this budget option, Aussies and New Zealanders routinely buy used cars for their trips and sell them when they're done. The most common places to buy cars are Amsterdam, Frankfurt, London, and US military bases. In London, check the used-car market on Market Road (Tube: Caledonian Road) and look in London periodicals such as TNT , Loot , and New Zealand News UK , which list used cars as well as jobs, flats, cheap flights, and travel partners.

Campers: Consider the advantage of a van or motor home, which gives you the flexibility to drive late and just pull over and camp for free. Fairly cheap to run, these vehicles use diesel — about two-thirds the cost of gasoline, but with much better mileage (24–30 mpg average). For more tips on camping, see Camping European Style .

Updated for 2009. For lots more tips, check out our best-selling Europe Through the Back Door travel skills guidebook.

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