Cheap Comparison Quotes Free and Customized

Best Used Cars To Buy At Tax Season

By Aaron Crowe

Get a new or used car with your tax refund

The average federal tax refund last year was $2,755, according to the IRS, which is a pretty good chunk for a down payment on a used car.

Buying a good used car can make more sense than buying a new car if you want to save money. More people are borrowing record amounts to buy cars, with the average amount borrowed by new car buyers climbing above $27,000 for the first time ever. The average used car loan is $17,974, according to Experian Automotive.

As taxpayers decide what to do with their rebates, the good news is that some used car prices are expected to fall this year by 13.5%, according to Black Book, which provides vehicle pricing information. However, “tax buying season” in March and April can pause that drop as more people use their tax rebates to buy used cars.

Knowing which used cars are best, and where to buy them, can save you money over time by owning a reliable car that has a history of running well.

For our purposes, we defined the best used cars as being five years old or less, having up to 100,000 miles, and a pricetag of up to $10,000.

Shop in Michigan

Prices for some used cars are lower in some states, giving a potential buyer extra savings if they live in a nearby state.

The automotive research site called “The Car Connection” in February came out with data on used cars that showed, among other things, states with the highest and lowest average mileage by drivers. Buying a used car in Alaska — with the lowest average mileage at 46,950 for a used car — could be a better deal than buying a used car with high mileage, such as South Dakota at the top of the list with 79,995 miles.

It found the average list price of a used car is $19,741. The best bargains are in Michigan, where the average price is the lowest at $16,489.

The youngest used cars come from West Virginia and Arkansas, at 3.9 years old. The oldest are in the District of Columbia, where the average used car is 8 years old.

Used Ford F-150 most popular

The Car Connection research also found the most popular brands of used cars. The Ford F-150 is the best-selling used vehicle in 22 states, it found, which shouldn’t come as a surprise because it has also been the best-selling vehicle in America for the past 33 years.

The Chevy Silverado is the best seller in 10 other states, followed by the Honda Accord as the most used car sold in seven states.

Those are great used vehicles, though you may have difficulty finding one to buy because they’re so popular.

Buy rentals

Despite the conventional wisdom that rental cars are driven into the ground and shouldn’t be bought as used cars, buyers can find some of the best deals from rental car sellers. Rental cars are serviced regularly and have records to prove it.

Brands that are sold to car rental companies can be bought at a discount because there’s an abundance of them that are sold after they reach 20,000 miles, says Joe Parker, a car broker who helps people negotiate car prices.

A lot of Ford Mustangs, for example, are coming on the used car market from rental companies, Parker says. A V-6 Mustang that’s five years old should cost about $5,000, he says.

Along with shopping at rental companies, Parker recommends shopping at used car dealerships, which may have a lot of base model cars from rental companies. And remember, that’s what you’re likely to get when buying a rental car — a base model without the extra bells and whistles you may desire.

Other quality used cars

People are keeping their cars longer, so finding a good used car with low mileage may be more difficult than it was a few years ago, says Larry Braccio, manager at Airpark Motor Cars in Scottsdale, Ariz. A rental car that used to be sold with 20,000 to 25,000 miles on it may now have 40,000 to 45,000 miles, Braccio says.

Here are some good used cars worth considering for $10,000 or less, provided they have less than 100,000 miles and are no more than five years old:

Entry-levels cars: If similar patterns follow last year’s trends, Black Book expects prices for entry-level cars such as the Chevrolet Aveo, Kia Rio, Nissan Versa and Toyota Yaris to drop.

Compact cars: While prices increased 1% last year between March 1 and May 1 for these cars, an increased supply this year could prevent such an increase this tax season, according to Black Book. Popular compact cars include the Chevrolet Cobalt, Honda Civic, Toyota Corolla, Chevrolet Cruze and Ford Focus.

Ford, GM and other domestics: Braccio recommends buying domestic cars because the quality has improved and you’ll get more for your money than you would with an import. Examples include the Ford Fusion and 2009 Chevrolet Malibu. He doesn’t recommend buying a Dodge.

Subaru: These cars are generally taken care of better by their owners, and a 2007 Subaru Impreza should cost about $8,500, Braccio says.

“Certain types of people buy Subarus,” he says. They’re “more conscientious and want their cars to last,” he says.

Discontinued cars: Pontiacs and Saturns are no longer being built — which carries its own stigma — but they’re fine used cars that General Motors is still building parts for because there are so many of them still on the road, Parker says.

Hyundai: While the company stopped allowing its excellent 100,000-mile, 10-year warranty to be passed on to the second owner and beyond, it’s still a good used car worth having, Parker says. “They’re built to be throwaway cars,” he says.

Other imports: The Saturn Ion, Nissan Altima and Honda Civic are some of the best imports for used cars, Parker says, with some being found for as low as $5,000. The Nissan Altima, however, will run closer to $15,000 for a 3-year-old one, he says.

If you can hold on to your tax rebate and wait until after tax buying season to buy a used car, you might find a better deal in May. That’s when there’s less competition from buyers who were eager to spend their tax refund as soon as they could.

Aaron Crowe is a journalist who covers the auto industry for CheapCarInsurance.net.