To echo a previous poster, my partner and I found our car thru craigslist, and we got a great deal on a used Scion XB. Being lesbians, we were looking for a Suburu Forrester :), but the price was way too much even for a used one. Someone recommended Edmunds.com, and I did some research, and found the Scion, which is made by Toyota. Without Edmunds, I would not even have heard of the car. Which would have been a shame, because we love it.
Another car I would not even have considered without Edmunds is the post -2003(?) Hyundai Elantra. Believe it not, the Elantra is supposed to be a great buy now, both because of vast improvements in design, and because of the lingering effects of their past reputation. Who knew? Good luck with your search!

I try to use them for anything I can. That said, when we were buying the new car, USAA couldn’t compete. I got an approval from them (pretty much a blank check that I could use at the time, which helps negotiate). I also had a deal from the State Credit Union. We ended up going with Honda financing for the Civic since it got us the 2.9 APR. We’ll only pay like 1900 in financing! Now I see 1.9% deals too! Seems like a good time to buy.

I believe USAA will do 100% financing for used cars as well. Applying online and signing up for the auto payment option will get you the best deal.

I have a friend (really!) who drives an ancient minivan, into which he puts premium fuel, also on the advice of his mechanic. Apparently, with older cars, there’s some sort of build-up in the cylinders which changes the compression ratios, which means your old car has the compression ration of a high-performance vehicle without the high performance.

If you have a mortgage, and you’ve got a good equity cushion in your house, you might want to consider financing via a home equity line of credit (HELOC). With a low loan-to-value ratio and clean credit, you can get a HELOC now for about 5% APR (or less!) in some markets, which is less than the typical used car loan nowadays. Plus, the interest is usually tax deductible, unlike a car loan.

A HELOC rate is variable, unlike a typical car loan, but for a term of 3 years or less (which it sounds like you’re thinking of, and which I recommend) most of your payment will be principal anyway.

One nice thing about using a HELOC is it gives you flexibility with your payments. If you’ve got extra savings, you can pay it into the HELOC as you go, which can let you pay off the loan early or just lower your interest payments. (Or, to look at it another way, if you make extra payments, it’s like putting that money into a money market account that pays at the rate of the HELOC– and you can always pull the money back out later if you need it.) You can also “slow down” your payments, or take some back, if you hit a financial crisis, though I’d try to avoid that if possible.

To avoid piling up debt via a HELOC, it helps to treat it as a straight installment loan, with periodic level payments, till you’ve paid it off in your desired time window (3 years or whenever). You can use a spreadsheet to track your progress, and track any extra payments as withdrawable “savings” until the loan is retired. (Because of our extra diversions of savings, we’ve now paid off the HELOC balance with the bank a few months ahead of schedule; we’ll make a few more payments into our savings account, in place of making HELOC payments, before we “pay it off” on our own books.)

All your other advice (edmunds, carfax, etc.) makes great sense.

I’m very fortunate to have USAA as my insurer since 1985. In talking to the Toyota person yesterday (while dreams of a new Prius danced in my head… and then danced out), when I mentioned I could get a loan through USAA he said they would inevitably beat everyone else. I don’t know if that’s true for used cars, and I am going to shop around. We don’t have to buy a car this week. We can’t go indefinitely, but we have some wiggle room. I should probably use this week while I’m home to do what you say — subscribe to carfax, shop for loans, etc. — and then keep our eyes peeled for The car. I don’t know if we’ll find The car in Tallahassee, frankly. Carmax has at least that advantage that I’m not stuck with what’s available around here.

I was pleased to see if I put down a big chunk of changed on a gently-used car I’d have it paid off in 3 years on a reasonable loan plan. (I have a small student loan and we have a mortgage, plus Sandy is between jobs, or I’d try to just buy it outright.)

We got both of our cars through private sales, which I preferred for the lower prices and lower pressure. Craigslist is a good place to find lots of private sales in many areas; that’s where we found our current car. The sellers let us give the cars a good test drive, and take them to a mechanic to check them out carefully before we bought. (We also got a 30-day subscription to Carfax so we could pre-screen cars for data reported to the state, like accidents, ownership changes, salvage titles, or odometer anomalies.) We used edmunds.com to get a good idea of going prices in our area, so we knew what cars would be in our price range and what to bid for a car we liked.

We lined up financing before we bought. You pretty much have to on a private sale, but it’s a good idea if you’re buying from a dealer too, since you can often get a better deal with a bank or credit union, and you can concentrate on getting the best price instead of getting caught up by payment shell games a lot of dealers seem to like. If you get a price you like and *then* the dealer offers you something better for a loan than what you have lined up, you can consider it, but make sure you have the car you want at the price you want before considering dealer finance offers.

Meanwhile, I’m finding some very good deals on gently-used Civics, and pondering those as well. I have been treated well by my Civic, and it’s a chunk of change cheaper than the MINI or the Prius…