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Before launching your search for a good deal on a new or used car, spend some time considering many of the same factors that would apply to a new car purchase: how you will use the vehicle; how long you plan to keep it; the size, style, features, and appearance you need or prefer; and your budget or financing options for the purchase, as well as for operation, maintenance, and repair costs.
Terms for used auto loans at financial institutions change with the market and interest rates. You should spend some time researching the vehicles that you are interested in. Ask friends about their experiences and satisfaction with their older cars—would they buy the car again? Also, check auto and consumer books, such as Edmund's Used Cars Prices and Ratings, and magazines, such as Consumer Reports, for information on the reliability records of various models. In addition, the National Highway Traffic Safety Administration (NHTSA) operates a toll-free hotline 800.424.9393 and a page on the Internet (http://www.nhtsa.dot.gov/), through which you can find out if a particular vehicle has ever been recalled for safety defects.
To help you investigate and compare prices, several publications are available that give general guidance on value for many models. Your library, bookstore, bank or insurance agent should have a copy of the monthly National Automotive Dealers Association (NADA) Official Used Car Guide (http://www.nada.org/), monthly Kelley Blue Book (http://www.kbb.com/) or Edmund's (http://www.edmunds.com/) to estimate a car's resale value. Comparing prices of similar makes and models can give you an idea of which seller offers the best deals.
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Consider the following sources when looking for a used car:
- New and Used Car Dealers—Both new and used car dealers can be excellent sources for finding a quality used vehicle. These cars may be serviced by the dealer and sold with limited warranties.
Whether you are considering buying from a used or new car dealer, check out the dealer's reputation and reliability first. Call the Better Business Bureau for a reliability report (www.bbb.org/bureaus). Ask the dealer how you may contact the car’s previous owner.
- Superstores—Superstores offer a high-tech (via in-store computers and/or the Internet), no-price haggling way of buying used cars.
- Car Rental Agencies—These agencies may sell used rental cars, generally 9 to 12 months old and driven less than 25,000 miles. They often provide the car's maintenance and repair records and offer a limited warranty. Mileage on rental cars is often high on a per-year basis. The cars may suffer from the wear and tear that comes from use by a variety of drivers.
- Bank and Loan Companies—Bank and loan companies sometimes sell repossessed cars to pay off defaulted loans. Quality varies from car to car. But since the vehicle is being sold to recover the amount due on a loan, it may be possible to get a good price on a good car.
- Private Owners—Private owners usually sell their used cars through newspaper ads. You may find a well-maintained car selling for less money than you would pay a dealer. If you buy a used car from a private owner, ask for the car's maintenance and repair records and, if the seller is the first owner, for records of the original purchase. Also, check the title to make sure the person selling the car is the legal owner.
Note: Be wary of fraudulent, criminal dealers, commonly known as "curbstoners," who offer vehicles through newspaper ads and may disguise themselves as individual sellers. The cars offered may be stolen or damaged, and their odometers may be rolled back.
- Vehicle Auctions—Government, private, and online vehicle auctions, which can be attended by the general public, as well as new and used car dealers, are becoming increasingly popular. Some common things to remember about buying vehicles from auctions are:
- you will need funds for on-the-spot payment,
- getting a warranty is rare, and
- it is unlikely that you will be able to take a car to a mechanic for inspection before you purchase it.
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Under the Federal Trade Commission's Used Car Rule, all sellers of used cars (except private owners), are required to place a large sticker called a "Buyers Guide" in the window of their used cars, light-duty vans and light-duty trucks. The Buyers Guide (www.ftc.gov/bcp/conline/pubs/autos/buyers.pdf) tells you whether the vehicle comes with a warranty and, if so, which systems are covered, how long coverage applies, and what percent of repair costs the dealer will pay.
The Buyers Guide also alerts you when a car is being sold with implied warranties only, or with no warranty at all ("as is"). Once you complete a purchase of a car “as is” and drive it off the lot, the dealer has no further responsibility for the car. Be sure to sign the Buyers Guide and request a copy for your records.
Under most state laws, if the car does not come with a written warranty, and it is also not sold "as is," it is covered by an implied warranty. Implied warranties make dealers legally responsible if the cars they sell fail to meet reasonable quality standards at the time of sale. Depending on your state's particular laws, the implied warranty may guarantee that the car will run, or that it will live up to the seller's assurance that it is fit for a particular purpose, such as pulling a trailer. Your state consumer protection office can provide more information about the specifics of implied warranty coverage.
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Keep a sharp eye out for the following as you get your first look at a used car:
- Body—Look for rust, particularly at the bottoms of fenders, around lights and bumpers, on splash panels, under doors, in the wheel wells, and under trunk carpeting. Small blisters may indicate future rust sites. Check for paint that does not quite match, gritty surfaces, misaligned body panels and paint overspray on chrome -- all possible signs of a new paint job, masking body problems. Look for cracks, heat-discolored areas, and loose bumpers -- warning signs of a past accident. A welded seam may mean that the car is actually a body shop's "rebuilt" creation from salvaged parts. Look for welded seams in the trunk and on the floor; bumps under the paint around the windshield or rear window, or between doors, may indicate a rough welded seam beneath the paint. Also, look for hail damage. If the vehicle is dirty, have it washed for a better inspection.
- Tires—Uneven wear on the front tires usually indicates either bad alignment or front suspension damage. Uneven wear on late model cars with radial tires may signal improper tire rotation. Do not forget to check the condition of the spare tire and make sure the correct jack is in the trunk and in working order.
- Battery—Look on the sticker for the guarantee date. A battery generally needs to be replaced after 25,000 miles.
- Doors, Windows, Trunk Lid—Look for a close fit, ease of opening and closing, and secure latches. A door that fits unevenly may indicate that the car was involved in a collision.
- Window, Glass and Lights—Look for hairline cracks and tiny holes.
- Tailpipe—Black, gummy soot in the tailpipe may mean worn rings, or bad valves and possibly expensive repairs.
- Shock absorbers—Lean hard or "bounce" on a corner of the car and then release it. If the car keeps rocking up and down, the shocks may need replacing.
- Fluids—Oil that is whitish or has white bubbles may mean that water has been introduced into the system and this can be a sign of major mechanical problems. Check the radiator fluid; it should not look rusty. With the engine idling, check the transmission fluid; it should not smell rancid or look dark brown. Check for leaks and stains under the car, on the underside of the engine, and around hoses and valve covers.
- Mechanical Parts—Be sure all headlights, taillights, brake lights, backup lights, and directional signals work properly. Test the radio, heater, air conditioner, and windshield wipers.
- Interior—Check the upholstery for major wear and tear; look under floor mats and seat covers. Check the adjustability of seats and make sure all seat belts work. Check the locations and working order of airbags. Ask whether they have ever been deployed. Check the steering wheel; unlocked, with the engine off, it should have no more than two inches of play. Lots of wear on the driver's seat and/or heavy wear on the brake and accelerator pedals of a car with low mileage may indicate tampering with the odometer.
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- At Start up—The car should start easily and without excessive noise. Once the car has warmed up, listen for engine noise as you drive; unusual sounds may be signs of major trouble. It is important that you listen to the car's engine, transmission, brakes, etc. Since you are interested only in a mechanically sound car, any noise that sounds strange or unusual should be a warning signal.
- Test Drive—Drive on a variety of roads -- city street, freeway, two-lane highway and rough paved and unpaved surfaces. Does the car accelerate and decelerate well? Watch for unusual vibrations, noises or odors.
- Pick Up—Make several stops and starts, at varying but safe rates of speed on a clear, level road surface. The car should accelerate without hesitation and should brake without grabbing, vibrating or pulling to one side. When you step firmly on the brake pedal, it should feel firm, not spongy. Have a companion look at the exhaust while you let the car decelerate from 45 mph to about 15 mph, then step hard on the gas. Blue smoke may mean worn rings or valves; white smoke may be a cracked block.
- Steering—Try turning at various speeds. Too much sway or stiffness can mean bad shocks and/or front-end problems. Turn the wheel all the way from one side to the other; power steering should feel smooth with little or no squealing.
- Frame and Alignment—If you suspect a car’s structural condition, have the vehicle checked for frame damage from a local tire alignment dealer. A car with a bent frame can be dangerous and its value greatly reduced.
- Odometer Accuracy—Look for signs of odometer tampering: white lines between the numbers that do not line up or vibration of the 1/10 mile numbers while the car is moving.
- Get A Thorough Inspection—Have a mechanic inspect the car. Take the car to a reliable repair shop or auto diagnostic center and have the mechanic give it a once-over. You will have to pay for this service, but the money you invest up front may save you many more dollars down the road. Ask for a written estimate of the costs to repair any problems the mechanic finds, and use that estimate as a bargaining chip when you make your offer for the car. In some states an official state inspection may be legally required. Check with your Department of Motor Vehicles for specific laws in your locality. (A complete state-by-state listing of Departments of Motor Vehicles can be found online at www.usps.gov/moversnet/motor.html.)
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Before signing a contract or purchasing a used car, you should do the following:
- Take your time to read and understand the entire written agreement.
Ask questions. Don’t sign unless you are satisfied with the answers.
- Be sure that all blank spaces are filled in, that all of the salesperson's verbal promises are included, and that the type of warranty that comes with the car is spelled out.
- If you are required to make a deposit, ask whether it is refundable, and under what circumstances, and make sure the information is also included in the contract.
- Be sure to get a signed statement verifying the mileage at the time of sale. Most state laws require dealers of used cars to provide the buyer with this information in writing.
- Know your state's requirements concerning emissions inspections; certified state auto inspections; child safety, seat belt, and airbag requirements; and title transfers.
Buying a used vehicle can be a rewarding experience but always remember, “when in doubt, check it out!”
Beware of the following situations: (Reprinted with the permission of: Bottom Line Secrets Boardroom, Inc., 281 Tresser Boulevard, 8th Floor, Stamford, CT 06901, www.BottomLineSecrets.com .
THE YO-YO SCAM:
Typical scenario: The dealer asks the buyer of a new or used car for, say, a $1,500 or $2,000 down payment and mentions that interest will be 5%.
The salesperson spreads a handful of documents on a desk and asks the buyer to sign in several places. Among the papers is a document that says the buyer’s purchase isn’t final until financing is confirmed by the lending company with which the dealer does business.
Often, the buyer is so eager to close the deal that he/she doesn’t read each form carefully. Moreover, unscrupulous dealers try to rush customers and handle documents with what they call a “five finger fold” to cover up the contents.
The buyer drives off the lot with his purchase, but then a week or two later, the dealer telephones to say that the financing didn’t go through. The dealer asks for an additional $2,000 on the down payment and says the interest rate will now be 9%.
If the buyer objects, the dealer points out that he signed an agreement saying that the purchase wasn’t final until financing was confirmed. Dealers may also apply pressure by saying the buyer’s trade-in has already been sold (which is usually untrue). The buyer sees little choice and reluctantly agrees to the new terms.
Protection: After you tell a salesperson that you’ll buy a car at the offered price, refuse to sign an agreement that makes the sale contingent on financing, and insist that the dealer arrange the financing while you wait. Never sign over your title until financing is confirmed.
Most dealers will agree to these terms. Stay away from any that won’t. But even if a dealer agrees, study everything you sign to make sure that there is no language that makes the sale contingent on financing.
Yo-yo scams exist because auto dealers make a large part of their profit by selling loan agreements to large, nationwide finance companies.
Example: A dealer may get a 5% loan approved by a finance company but charge the customer 9%. The dealer then pockets the difference.
Such transactions themselves may be legal, but few customers are aware of the practice. Yo-yo scams, however, are illegal because they involve deceiving customers.
DISGUISED PROBLEMS:
Many unscrupulous dealers are experts at covering up evidence that a car has been in a wreck. A vehicle that was structurally damaged can be unsafe, and cars involved in collisions may not last as long as others. Similarly, unethical dealers often try to hide high mileage by rolling back the odometer. Or they conceal flood damage or a vehicle’s use as a delivery vehicle by sprucing up the car.
Protection: Ask the dealer to let you take a used car to a body shop, which can spot signs of a wreck, and to a mechanic who can check out the vehicle for other problems.
Many body shops and mechanics won’t charge for inspecting the car because they hope to get your business later. Even if they do charge, the fee is usually less than $50.
Don’t do business with an automobile dealer that won’t let you have a used car inspected. Insist on inspection even at large national chains or if the vehicle is still under the manufacturer’s warranty.
It’s been my experience that most auto information services, such as on-line search services, are often not reliable for checking on whether a car has been wrecked, which is why it’s especially important to have a car checked by a body shop and a mechanic before you buy it.
Reasons: You may be dealing with an honest salesperson at an unethical dealership, and evidence of a wreck can invalidate a manufacturer’s warranty. If you discover evidence that the car has suffered minor damage, negotiate the price down if the repair shop believes it’s safe to drive. Otherwise, take your business to another dealer.
When shopping for a late-model used car, it’s nearly always best to buy a vehicle with only one previous owner whom you can ask about any wrecks or problems that may have occurred. Unfortunately, less-than-straightforward dealers often conceal a car’s ownership history.
Protection: Refuse to buy a car unless the dealer lets you speak with the previous owner. That might seem like an excessive precaution, but it really isn’t. If the dealer refuses to let you contact the previous owner, there’s a good chance he’s trying to cover up a problem.Some dealers claim that privacy laws prevent them from disclosing owners’ names, but this is untrue. In fact, after you buy a car, you’ll see the previous owner’s name on the title.
OVERPRICED FINANCING:
While not engaging in anything illegal, many dealers charge high interest rates, often taking advantage of a buyer’s eagerness to drive off the lot with a newly acquired vehicle.
To find cheaper financing: Check with your bank or credit union for the going rate on automobile loans. If the auto dealer charges more, tell him that you’ll buy the car but only at whatever you discover to be the going rate. Most dealers will quickly agree for fear of losing the sale. Alternatively, tell the dealer that you’ll handle the financing through your bank or other lending institution.
Smart negotiation tactics: When you first speak with a salesperson, never say that you intend to pay cash or finance the vehicle yourself. If you do, the dealership may quote a high sticker price to make up for its lost profit on financing.
It’s also wise to stay away from any service contract that a dealer might offer. Evidence shows that the cost of these contracts is usually greater than the amount that will likely be paid out to the owners.
If you’re concerned about future repair bills, shop for a car that’s still under the manufacturer’s warranty.
PHONY ADS:
Today, a growing number of unethical dealers disguise their identities by placing classified ads in newspapers and local magazines.
The practice, known as “curbstoning,” is often used to sell cars that have been in accidents or that have other problems. Curbstoners rely on unwary buyers who are more trusting of individuals than of dealerships.
Protection: Insist on seeing the title, which will tell you whether an individual or dealership owns the car. Don’t do business with a dealership that disguises itself as an individual. The car may well have problems. Top of Page
When purchasing any used car, also be aware of the following:
- Inspect the car in daylight and good weather. Bring someone you trust along to help you make a thorough appraisal;
- Don’t expect perfection in a used car. Compromise on minor problems you can fix yourself, but don’t overlook serious defects;
- Make safety a major priority.
Older vehicles may not be equipped with airbags, child safety seats, seat belts, anti-lock brakes or security systems. Determine your locality's vehicle safety requirements for cars, mini-vans, recreational and sport-utility vehicles and other vehicles before you buy;
- Road test before you commit to buy. If you are not allowed to test drive the car, do not buy it.
- Have a Trusted Mechanic Thoroughly inspect the car before you purchase it.
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