Buy a Used Car

Purchasing a used car doesn't have to be like walking through a mine field. However, there are many issues to look out for.Here are a few helpful ideas to think about.

Steps

Sample Forms and Payment Calculator

Doc:Used Car Sale Contract,Bill of Sale Disclosure Addendum,Monthly Car Cost Calculator

Buying a Used Car

  1. Decide on the right car for you. You should always try to get what you want, but have a backup plan. There are many sources such as Consumer Reports Car Buying Guide, car complaints.com, J.D. Power, US News and World Report, and a host of others. Try using a variety of sources when researching a particular vehicle or vehicles. Remember that highly rated cars command premium prices. A lower rated car can be a gold mine if you can put up with a design flaw or two.
    • Consider a car with fewer options or an alternate make and model. For instance, Lincoln is a luxury version of Mercury. The Lincoln model will have more features and luxury items included. Various models may have deluxe trim packages such as leather seats, enhanced stereo systems, etc. If you are trying to save money, stay away from features that promote a higher price tag.
  2. Research the make and model you are considering. Study consumer reviews, compare Kelley Blue Book values, Edmunds Book values, NADA Guides, etc. Research resale values and conduct vehicle history reports with VIN numbers (you can use vindecoder.com to determine if the car you are looking at is in fact the car you are looking at). Keep in mind, most sites like carfax.com are not free sites. Most good legitimate sellers will have a Carfax or some other form of report listed with the car. If they don't, or they refuse to furnish a copy of a vehicle history report, stay away! If there are any particular issues or recalls with the model you're looking at, you may avoid serious issues by doing your research ahead of time (carcomplaints.com is an excellent unbiased source of information).
  3. Use an online calculator to figure out payments. Don't dwell on price just yet; consider how long you will keep the car, what an affordable payment is for your budget, and how much you can put down. Consider a brand new car instead of a used car, if it has subvention financing (a manufacturer's reduced financing rate).
    • Stay away from dealer financing! The most lucrative department at any car dealership is the finance division! The way they make their money is like this: your credit score is run. The credit score determines what kind of APR they can give you. That APR is "adjusted" so that the dealership makes their money off the spread. They can do this because they do not have to tell you what you are pre-approved for!
  4. Strongly consider, if possible, buying outright. The absence of monthly payments can have a wonderful effect on your finances.
  5. Determine what you can pay. When you attempt to buy a used car, you need to consider what (if any) down payment you can make, how much you can afford for monthly payments, and how much insurance premiums are going to cost you on your used car purchase. If your insurance is likely to double, you need to budget this in so you're not extending yourself by agreeing to a monthly payment that is too high. Take into account fuel economy and maintenance costs. These expenses can vary greatly depending on the vehicle.
  6. Establish financing options. Banks are typically willing to offer financing on a used car. However, some banks refuse to finance a used car that is six years old or older. If your bank will work with you on financing, this may be the wisest decision. Banks or credit unions typically offer lower interest rates than dealerships. But, don't rule out the dealership just because your bank is willing to finance your used car purchase. By letting the dealership know the interest rate you have negotiated with the bank, you may get a lower offer from the dealership.
  7. Look for a used car for sale at dealerships, independent car lots, in the classified ads and online. CarGurus, Autotrader, cars.com, Craigslist and Kijiji (Canada) are excellent places to find used vehicles.
  8. Ask a lot of questions. Get as much history as possible of the vehicle. Try to get the previous owners name and call them. Run your own CarFax and Autocheck reports; dealers have been known to "lose" the last sheet. Make sure to obtain the vehicle identification number ("VIN") off of the car you are inclined to check out with CarFax, Autocheck, or any other third-party car history company; the VIN is usually found on the lower level end of the windshield, right above the dashboard on the driver's side. Watch for flood damage, frame damage, unknown mileage or salvage history, and excessive wear and tear.
  9. Test Drive the car. Always. Try the car on different roads, and drive for at least 15 minutes. Remember you will be driving this car for a while.
    • Drive it to listen for engine noise, test acceleration levels and check the brakes. Listen for rattles or squeaks.
    • Notice if the suspension seems even and provides an easy, comfortable ride. Look at the tires.
    • Take a look at the engine underneath the hood. If it looks like it hasn't been taken care of or lots of extraneous wiring exists, ask for detailed service records.
    • See if it pulls to one side or the other. It's an alignment issue (or bad tires) if it pulls all the time; it's a brake problem if it pulls when stopping. #*Check for brake shudder when stopping; (that's front rotors and probably pads). It should not wander; (tires or steering components).
    • If you have time, sit in the car for an hour... seats often feel comfortable until you've sat in them a while.
  10. Get a professional check. Get the car checked professionally. If the dealer won't let you have it checked by your own mechanic, run, don't walk from that store. Pay the mechanic to check it. He should put it up in the air and check for frame/under-body damage.
  11. Research pricing - Use an independent source to determine the wholesale and retail values of your target vehicle. The most frequently used sources for this are, DriverSide, Edmunds, Latest Cars and Kelly Blue Book Is the seller's price very similar, or is there an unexplained difference in price?
  12. Negotiate. Always know what you want to pay for the vehicle before you start. Using resources like NADA guides will allow you to figure out EXACTLY what you should pay. You can try to outsmart the seller/dealer, but remember, he/she does this every day for a living! Try to compromise at the point that is good for you. Remember a "win win" situation is always required for a sale to occur. Never negotiate if you are not ready to walk away. You might lose the upper hand over the dealer if you buckle.
  13. Always get all the paperwork. V5, MOT, and service history. Insist on 2 sets of keys minimum.
  14. Go in with a vehicle history report. You don't want to end up with a car that has been flooded. Since Hurricane Katrina, many used cars have been brought on the lot with just that problem. Ordering a CARFAX Vehicle History Report is worth your time and money and empowers consumers in knowing exactly what they are purchasing. Autocheck, a similar product, reports far more accidents than CARFAX due to the data collection methods used. It is wise to use both.
  15. Know the financial vehicle history of the used car. To make sure a car is not stolen, police agencies have records of stolen vehicles reported to them. Consult with the police if you are not satisfied with the amount of detail you are getting from the vehicle history....it can save you time and worry down the line.
  16. Mechanically inspect the car. Not every person has the technical knowledge of a mechanic. However, there is absolutely no reason the average consumer can't learn enough about cars to be able to perform an initial inspection on the approximate condition of the car. It is highly recommended to have the car you are seriously considering inspected by a mechanic: it would be costly and impractical to have every car you like inspected. Some used cars are in poor condition and can be overpriced since people tend to place emotional and sentimental value on them. By learning how to inspect the basic mechanical components of a used car you can drastically reduce the amount of time and money you spend pursuing "lemon" vehicles.
  17. Major vehicle components. As part of any used car inspection you must be able to accurately inspect the engine, transmission, drivetrain, brakes & tires, electrical system, exhaust & emissions, glass & mirrors as well as being able to spot potential problems with the car.



Tips

  • If you are buying a vehicle from a private seller, check to be sure any associated lien on the vehicle has been paid off by the seller.
  • Never buy a car that is being advertised as having a new coat of paint. It may have been in an accident.
  • When negotiating, remember it is not always about price. Try for road tax, warranties, and full tank of fuel or set of carpet mats.
  • If you do not feel comfortable negotiating prices or checking used cars for mechanical issues, consider using a car buying service.
  • If you are trading, do some research on prices, but remember you will not get what it is on the forecourt for. There has to be a mark up, and you are not liable like a dealer is for mechanical problems. Use Kelly Blue Book, remember that it's a guide, not a bible.

Warnings

  • Ask many questions to the owner regarding the car.
  • Test the car.
  • Check if anything is leaking.
  • Check the warranty offered. The vehicles carry written guarantee will depend on the professional buying and selling dealer or the duration thereof.
  • Dealers posing as private sellers (Curbstoners). Check the title to see that it's not recently issued. Look on the title to ascertain the miles at issue date. Check the title for previous states. That doesn't mean it's a washed title, it just means it came from somewhere else. Dealers buy cars out of state all the time.

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Sources and Citations

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