Buying a Used Car

Getting a good deal on a used car involves both negotiating a good price and taking steps to make sure the car is reliable.

Although buying a used car is often a smart financial decision, it's also a transaction full of potential for disaster. We all know someone who paid too much for a used car that fell apart on the way home. To better your chances of getting a reliable car at a good price, follow these pointers.

Decide on the Car and Price You Want

Before you hit the used car lots and classified ads, you should get an idea of the make, model, and year of car you want. There are many good sources to help you compare cars. Consumer Reports magazine publishes an annual car buying issue. Both Motor Trend magazine and Used Cars, by Darrell Parrish (Book Express), also provide useful information. The Internet also has lots of information. Try www.autosite.com, www.carwizard.com, www.edmunds.com, and www.carprices.com.

Next, check the wholesale and retail values of the cars that interest you. The Kelley Blue Book (www.kbb.com) lists wholesale and retail prices for used cars (also available at bookstores and libraries). Lenders and insurance companies can also give you the same information. For a small fee, Consumer Reports (www.consumerreports.org or 800-258-1169) will tell you how much a particular car is worth, taking into consideration the car's mileage, condition, and additional equipment.

Where to Look

Once you've made a preliminary decision as to what you want and what you can expect to pay, look at the listings in your local newspaper. Don't forget weekly advertising papers or local automobile publications as well. Call any mechanic that you trust and ask if they know of any available cars. Check with car dealers -- they often have used cars that people have traded in. Or, you could look on the Internet.

Getting the Best Deal

Getting a good deal means both a quality car and a good price. When negotiating price, aim to pay close to the wholesale value of the car. Of course, the seller will be pushing for the retail value. In most cases, you'll probably settle somewhere in between, depending on the condition of the car, your negotiating skills, and the seller's negotiating skills.

To make sure the car is reliable, take the following steps:

  • Get an inspection. Have the car checked out by a mechanic you trust, or have the car inspected by a diagnostic center.
  • Get copies of the maintenance records. (A dealer usually won't have these, but a private owner may. Look for evidence of regular oil changes, scheduled services, and unusual repairs.)
  • Get the vehicle's history. From your state motor vehicle department, get the following information: how many prior owners there were, the mileage each time the car has been sold, and all other states where the car has been registered.
  • Get copies of the title. You should get copies of the car title from each state's motor vehicle registry where the car has been registered. Or, for a small fee, you can use a computerized service that will do this for you. One to try: Carfax (www.carfax.com or 800-346-3846). As a general rule, if the title search reveals that the car has ever been declared a salvage vehicle, don’t buy it. (See "Look Out for Used Car Scams," below.)
  • Give it a once-over. Do your own visual inspection and look for oddities that might indicate damage or repairs (such as scratches, rust, or new paint, which always fades faster than factory paint).
  • Check the VIN plate. Check the vehicle identification number (VIN) on the lower left hand side of the front windshield. If it shows any signs of tampering, the car may be stolen.
  • Review the "Buyer's Guide." Federal law requires dealers (but not most private sellers) to post a Buyer's Guide in every used car for sale. If the sale is negotiated in Spanish, the Buyer's Guide must also be provided in Spanish. The Buyer's Guide gives you a great deal of information including whether the car is being sold "as is" or comes with a warranty , what percentage of the repair costs a dealer will pay under the warranty, and what major mechanical and electrical systems are on the car.
  • Stay calm. If you’re thinking about buying from a dealer, know what you want before you walk into the dealership, resist the urge to buy more car than you can afford, and don't buy in a hurry.
  • Hold back a trade-in. Don't discuss the possibility of trading in your old car before you agree to a price for the car you want.
  • Be certain before you sign. Be absolutely sure you are getting the car you want at the price you want before you sign any papers. In most cases, if you change your mind later (even ten minutes later), the seller doesn't have to give you a refund.

Look Out for Used Car Scams

Unscrupulous used car dealers and sellers have come up with countless ways to rip you off. Some common scams to look out for include:

  • Odometer rollbacks. The most common type of odometer fraud involves tampering with an odometer so that its reading is less than the car's actual mileage.
  • Salvage fraud. A car is "salvaged" if an insurance company declares it a total loss because of a collision, flood, fire, or other serious physical accident. Many unscrupulous dealers buy these cars cheap at auction, patch them up, and sell them to unsuspecting customers. If the car's salvage history is disclosed and you are still interested, you should certainly have it professionally inspected.
  • Repair fraud. Unscrupulous repair shops have been known to assemble the parts of several wrecked cars into one car. In one infamous California case, the driver’s seatbelt anchors were attached to different halves of two wrecked cars that had been welded together. In another, there was no floor under the rear carpet. If anything about the car doesn’t look right, have it checked out by an expert.
  • Lemon laundering. This occurs when a manufacturer buys back a lemon from a consumer, then passes that car to another consumer without disclosing its lemon history.
  • The seller doesn't own the car. If you're buying a car from a private party (as opposed to a car dealer), make sure the person selling the car actually holds title. Ask to see the seller's driver's license (or other photo ID) and the title certificate for the car. (But sometimes even honest people lose the title document and have to order another.)
  • Financing scams. Many used car scams occur in the financing phase. Take all finance and loan documents home before you sign them. Read them there, without pushy salespeople breathing down your neck. Better yet, get someone else to look at them too.

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