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Used car with a shady past

I need a used car and have what may be a good deal, or a lemon, but I’m not sure. A mechanic is selling (for “commission”) a 2002 Subaru Legacy station wagon, so far so good. They claim to know the owners, and are selling the vehicle for them.

The situation is this: They say something broke loose and put a hole in the engine. They replaced it with a salvaged engine from “a large, reliable junkyard in Texas.” I live in Colorado…the car has 132,000 on it, and the engine has under 90K.

The mechanics, coincidentally, have replaced the following just recently: timing belt, tires, (heated) front windshield, belts, hoses, the clutch, a radiator which they claim to have damaged themselves so had to replace, not sure what else if anything. I will have an independent mechanic look at it if I get that far, and they have welcomed that idea. I think they got it at an auction for a great price, fixed it up, and are trying to sell it for blue book value range, which is $5500 asking price.

The reasons I’m even still considering this car are: It runs great (I test drove it), it looks great inside and out, has a lot of bells and whistles (alarm system, keyless entry, leather heated seats, nice sound system). And it does, in fact, have a lot of new stuff on it, is a Limited Edition, and seems on the surface like a potentially good deal. They said the new stuff all comes with a warranty, and would even warranty the engine for 6 months. I know this vehicle had at least 4 major issues because I had a 1997 Legacy which I painstakingly had to fix most of these issues (mine just got totaled), and don’t want to have to go through replacing the head gaskets again, or worry about a bad catalytic converter, or other major stuff which I forget and am too lazy to look up. I don’t picture the typical Suby driver to not take care of the vehicle, and this one was owned by people here who had custom “Adopt a Greyhound” plates and went to DU as evidenced by the sticker on the back. They might be trustworthy.

Here are my questions: 1) What is the true value of a car with a salvaged engine? 2) Once I buy the car, I presume it will be something like a refurbished car title, even if the one I inherit does not say that. I presume it will greatly lessen the value of the vehicle?

If I am willing to gamble on this, and buy their story which may or may not be true, how do I determine if KBB value is accurate for this car, or should I offer them significantly less because, at the very least, the engine came from a junk yard in Texas that isn’t required to be up and up about the stuff they sell, and it puts me at risk of something that could soon go kaput? I know all used cars come with a risk, but I don’t want to overpay, nor do I want to walk away from what might be an okay deal, whether the mechanic’s shop is telling the truth to cover up the fact they stand to make a huge profit. We all buy low and sell high, that’s not the point.

This mechanic has been in business 50 years, and has a couple of shops, and swear up and down they are honest and ethical. But I am female, did not bring a male or a mechanic with me, and may be looking like a chump right about now to them. Or not. Help! :0)

There are more things that can fail besides the engine that cost big bucks. The transmission is one of the big buck items. What is really important is the type of driving that you will be doing. Are you an over-the-road sales person or commute long distances to work or do you do mostly in-town and suburban drivng? How many miles do you drive per year?
I, personally, am not impressed with heated seats, sound systems, and other bells and whistles. i would suggest you keep looking and try to find a car for which you know more of the history.

Replacing the engine would not necessitate a “salvage” title. Salvage titles are for cars that had significant body damage and were essentially total losses. This means an insurance claim was paid to the insured and then the car was sold with the salvage title. Some are refurbished some are crushed after useable parts are stripped off. You should ask the seller to show you the title so you can examine it to determine if it is standard title or a salvage title.

You say the car came from a local owner, but you also say the car might have come to the mechanic via auction. This is not the same thing at all, so what is this about?

If the engine was replaced with a good engine and the work was done well the car should run fine, and it might last a long time too. Issues with head gaskets can’t be ruled out someday, but you know it has a new timing belt.

Regardless of the miles on the motor, the car is a 132K car as far as determining its value. Go to Edmunds.com and other sites to see how the car is valued with all the options. A car of this age and miles isn’t a perfect car, as you describe it an “average” rating is applicable and at best a “clean” rating might be in the ballpark.

A 6 month warranty is good so any issues with the installation of the used motor can be covered. 6 months isn’t very long however and lots of stuff can go wrong beyond that warranty period. Another mechanic checking the car over is a very good plan.

$5500 Is Too Much For A 10 Or 11 Year-Old Car, Especially One With This History.
Get One That Hasn’t Been Cobbled Together And That You Don’t Doubt To The Point That You Have To Come On Here And Ask Questions Pertaining To The Weird Integrity Of The Car, The Seller, Salvaged Engines, Windshield And Radiator Replacements, Head Gaskets . . .

CSA

Sounds like you’re being seduced by all the ‘neat features’ into buying a potentially troublesome car. I’d buy the best condition car I could find, and avoid those options and extras that tend to cause problems in 10 year old cars. I’d actually skip a Subaru (even though I own one) in that price range, too many expensive postential issues.

Something broke loose in an engine usually means a connecting rod came loose and knocked a hole in the engine block.
The reason for this is lack of oil changes, running the engine out of oil, and/or generally abusive driving habits and maintenance.
If they neglected the engine then it should be assumed the rest of the car has been neglected also.

“Large, reliable junkyard” may mean nothing. I’ve installed and bought a number of junkyard engines, transmissions, and rear axles from “large reliable” yards which turned out to be scrap iron.
Salvage yards routinely state that an engine they’ve never heard run or know nothing about is fine.

If an oil pressure test and compression test was not done then no one really knows what’s going on with that motor and my opinion is with others that you should pass on it at that price.

Without looking up in a price guide, this does feel a bit rich for a car this old, with this mileage and a complicated history (although not with a salvage title as UncleTurbo points out). I (think I) know used car prices have gone up a lot since 2008, but here’s my personal experience, for what it’s worth, as it seems oddly related.
In 2005 I bought a 99 Subaru Legacy SUS Sedan 30th anniversary special edition from a random/craigslist/street corner dealer that essentially bought stuff at auction and tried to flip them. It had about 120K miles, CarFax said all the standard maintenance had been done back on the east coast at the dealership, and I want to say I paid around $5300 or $5500 inclusive of sales tax. It was within the 1st 6-12 months and probably 10K miles that the engine overheated to the point of – I forget which, blowing the head gasket and/or at minimum putting me in the position of looking for a new engine, spending substantial money to assess and potentially repair the old engine, or pressing the do-over button. As to why the engine failed, it was likely some version of my fault, although I’ve had my doubts about the somewhat unique model engine that is in this special edition version (ie whether they worked all the bugs out in designing it). But I had loaned the car to someone who had made a several hundred mile trip the week before, I was working most all the time, and wasn’t being rigorous about checking fluids and suspect the engine was burning oil, especially at high speeds, leading me down a road to ruin.
So I spent around another $2000 or so at my local shop. They found a 90K engine from some junk yard, and took the opportunity to replace other relevant things (timing belt, water pump) while everything was apart. Knock wood, I’m still driving that car today and recently passed 190K miles. It’s had some hiccups and more maintenance done as cars will need (struts come to mind as being pricey), but I feel the price-value has averaged out OK for me even though the short-term was a bit bumpy.
And frankly I do like some of the bells and whistles of what was originally a $30K Subaru (sun roof no longer works though…), especially compared to the $18K MSRP 1998 Subaru that my wife still drives (of which I’m the original owner and the engine still doesn’t burn oil at 125K miles, hence my criticism of my '99).
Obviously the more you can push back on the price, the more you’re self-insured/self-funded for the inevitable need to spend additional $. I know quality offerings in the used market can really vary nationwide. Try to use craigslist and other online resources to gauge your area and factor that into your thinking. Good luck!

With Subarus (new, used, and salvage parts) being thicker than fleas on a mongrel dog in CO I wonder why a CO shop had to resort to getting an engine out of TX.

I just sold a 1996 Subaru Legacy with >317k miles on it for $1,300 yesterday, so Subies have great resale value. (Mine was in excellent condition, so despite the high miles, the guy got a very good buy.) That said, the KBB value was quoted at between about $1,800 and $2,300, which is unrealistically high. If I were you, I’d take their numbers with a grain of salt and continue the hunt for another Subaru.

Incidentally, I replaced my '96 with a new '12 Outback. Paid $22,900 for it, which was $1,500 under the dealer’s invoice. Lots more than your $5,500, I know, but it shows that deals are out there.