I have virtually stopped taking used car cases, and I have stopped advertising for them. Why? It’s the 10-year-old vehicle problem. In short, a lot of people are buying 10 year old vehicles from used car lots, sometimes paying half what the vehicles cost new, and expecting them to be as problem-free as new cars. In short: they aren’t, and the law doesn’t expect them to be.
I think part of the problem is that 10 year old vehicles of today are in better shape than they were 10 years ago, and they look a LOT better. People tend to have bigger appitites than they have budgets. A lot of people want a fancy luxury vehicle or SUV. These vehicles cost $40,000 or more new, and people don’t make wages to pay that much. A salesman shows them a 10 year old SUV that looks spotless, but has 150,000 miles but costs less than half as much as a new model, and it’s an easy sale. The problem is that these vehicles have used up a lot of their of their problem-free life. They can be nursed to last quite a few more years, but only with maintenance and replacement of quite a few worn out parts, and the buyers of these vehicles haven’t budgeted for the ongoing maintenance cost.
These cars aren’t lemons. A lemon is a car that is bad from the beginning. A typical state lemon law labels a car a lemon if with 18 months or 18,000 miles after it is delivered to its FIRST buyer, the vehicle has the same problem subject to three or more repair attempts or is out of service 30 days or more within that first 18 months. That’s a lemon. A vehicle that has gone 150,000 miles but now has problems is just an old car. (By the way, in Indiana, the mileage adjustment on vehicles that you give back to the manufacturer under the lemon law is based on depreciating the entire vehicle price over 100,000 miles. Under lemon law standards all of these 10 year old vehicles have been fully depreciated.)
Buying a 10 year old vehicle is a form of gambling. Perhaps in the majority of cases, especially if you don’t put a lot of miles on the vehicle, driving a 10 year old car can be very inexpensive. You might go several years with just normal maintenance. On the other hand, You could have five or more things go wrong in a year that each costs $1,000 or more to fix. You could have engine or transmission problems that cost $5,000 to $10,000 to fix – and much more for a lot of foreign and luxury vehicles.
Guessing wrong on a 10 year old vehicle can ruin your financial life for years. A new engine for a Chevrolet Tahoe can cost $6,000 before installation. Somebody who put a 10 year old Tahoe on 4 year payment at 15% interest, not only doesn’t have $10,000 for a repair bill; he/she doesn’t have the credit to finance a 10,000 repair bill. The vehicle ends up being repo’d and sold at auction for $1000 The finance company adds finance charges, repossession charges, court costs and attorney fees and sues the buyer for over $20,000. In most states, if you are employed, you can get garnished for 25% of your wages. That’s bad, but that’s the price of the dice and taking the risk on an old car that you can’t afford to repair. (Warranties on these old cars arent’ that helpful. They cost more than the likely repairs. They exclude more than they cover, and they have deductibles that sometimes still renders the repairs unaffordable.) You are likely to be stuck in subprime credit for 7 years. In Indiana, judgments can be collected for 20 years, and more in some cases. For some people guessing wrong on a used car leads to a bankruptcy.
Sometimes car dealers engage in fraudulent or illegal conduct, but most of the time they don’t, or if they do the violations are minor and technical, and don’t justify undoing a car deal. I used to review all the documents for anyone who called me for a car case at no charge. I found that over 90% of the time there was nothing to sue on. Now I charge for case reviews and get a lot less of that business.
The bottom line is that you are considering buying a 8 to 12 year old vehicles that cost $15,000 or more, you ought to either have a financial reserve to cover repairs or you should rethink your plan and buy a new or nearly new (under manufactuer’s warranty) vehicle for the same money. Your vewhicle may be smaller and have less frills, but you will be the beneficiary of the problem-free period of the vehicle’s useful life.