Used
Car Buying Tips
Buying a used car is a real trade-off since you don't
know how the car was treated by the previous owner,
but you do get the benefit of the drive-off depreciation
being taken by the original owner. Drive-off
depreciation is when a brand new car is purchased
and driven off of the lot. The value lost just
from driving the car off the lot can be as high as
20% and makes buying a low mileage used car a tempting
proposition. With a few careful steps you can
reduce your risk in buying a used car and maximize
your savings.
Let's take a look at buying a used car from a private
seller first. While you do not typically get
the same protection when buying a car from a private
seller, you can generally get a better deal and if
the car is relatively new and the factory warranty
will still provide protection from major car troubles.
Most used car dealers offer financing at the point
of sale, private sellers can not, so dealing with
your own bank or an online source will be needed if
you plan to finance your used car purchase.
If you are looking to finance a used car purchase,
check out DriverLoans.com 
for competitive rates and top-notch service.
Advantages Of Buying
A Used Car From A Private Seller:
* You can get a good feel for how
the seller treated the car. Look for maintenance records
and receipts for major repairs. Has the owner
changed the oil regularly, what kind of problems has
the vehicle had? If you are not sure you can
trust the seller, get a vehicle history report online
from Experian
Automotive
The report will show any major warranty work, accidents
or other major events in the cars life.
* No high pressure sales tactics. Unless the
person selling the car is a car salesman at his day
job, you are fairly sure to avoid the high pressure
sales tactics. A word of warning, some dealerships
will advertise their vehicles as a private sale in
newspapers and magazines. This is illegal in
most states and you should steer clear of these sellers.
* You can get a better deal most of the time.
Since the person selling the car would get less if
they were to trade in the vehicle at a dealership,
they are more likely to take a lower price selling
it privately. You are looking to pay between
Trade-In price and retail price for a used car from
a private seller. If the car is very clean,
has full maintenance records, and has low miles, I
would be willing to pay closer to retail price for
the vehicle.
Disadvantages Of Buying A Used
Car From A Private Seller:
* Sellers can be dishonest and hide
major flaws with little liability after the sale since
most used cars sold privately are AS-IS. You
can combat this by getting a Vehicle
History Check
and/or having a mechanic inspect the car.
* Most sellers will not let you take an extend test
drive overnight like dealers do. When test driving
the vehicle make sure you drive it at various speeds
and on different types of roads. Choose a route
that takes you on city streets, country roads and
some highway driving so you can get an accurate impression
of the ride quality and handling. I always try
to find an open uncrowded road to do a brake check
where I take my hands off the wheel and apply the
brakes. The car should stop without veering
to one side or the other. Is the car pulls to
one side, there may be brake or suspension issues
which need to be addressed.
* No warranty is provided unless there is an existing
warranty and it can be transferred. Manufacturers
are offering longer warranties on their cars these
days, which is good for used car buyers as long as
the warranty is transferrable. If you are buying
a car without a warranty check out Extended
Auto Warranties
online. An aftermarket warranty is not always
as good as the Manufacturers warranty, but if you
go with a reputable company like Extended
Auto Warranties
you can get close to the factory warranty.
A few tips on finding a used car from
a private seller.
* Look to local papers, auto locator
publications, thrift papers, local bulletin boards,
and friends who might know someone selling.
* Be courteous of the hour when you call. Many people
are in bed by 10:00pm. If the ad states a time to
call...... follow it. If not, I would not call before
10:00am or after 9:00pm.
* Have pen and paper handy when you call the seller.
Write down key facts like mileage, asking price, directions,
how long have they owned the car and why they are
selling.
* Research the car online before you go to see it.
Having the "Blue Book" value in your head
can give you a starting point for negotiating.
See the left hand column of this page for more information
on determining used car prices.
* Have a mechanic look at the vehicle. Most local
mechanics will be happy to put the car on a lift and
do an inspection for you. Expect to pay for this service,
but if you have a good relationship with your mechanic
he may do this for free.
* Take a long test drive. Make
sure you do some highway driving and also some back
road driving to get a feel for the car. Some suspension
problems will not show up on the highway but as soon
as you hit a bumpy road they will appear.
Buying From
a Dealer
As discussed above, buying from a dealer offers you
a little more protection in the deal, but most times
will cost you more on purchase price. If you
do not prefer to get a loan from your own bank or
online financial providers, a dealer purchase may
be the best option. You can buy the car and
get financing all at the same time. Be aware
that most dealers get a Kick Back for charging you
a higher interest rate, so do your home work with
a credit check and rate check of other lending institutions.
See our financing section
for more information. The following information
is from the Federal Trade Commission's Used Car Buying
Guide located at http://www.ftc.gov/bcp/conline/pubs/autos/usedcar.htm
The information is solid and useful, so I decided
to include it here for your benefit.
Before
you start shopping for a car, you’ll need to do some
homework. Spending time now may save you serious money
later. Think about your driving habits, your needs,
and your budget. You can learn about car models, options,
and prices by reading newspaper ads, both display
and classified. There is a wealth of information about
used cars on the Internet: Libraries and book stores
also have publications that compare car models, options,
and costs, and offer information about frequency-of-repair
records, safety tests, and mileage. Many of these
publications have details on the do’s and don’ts of
buying a used car.
Once you’ve narrowed your car choices,
research the frequency of repair and maintenance costs
on the models in auto-related consumer magazines.
The U.S. Department of Transportation’s Auto Safety
Hotline (1-800-424-9393) gives information on recalls.
You have two choices: pay in full
or finance over time. If you finance, the total cost
of the car increases. That’s because you’re also paying
for the cost of credit, which includes interest and
other loan costs. You’ll also have to consider how
much you can put down, your monthly payment, the length
of the loan, and the annual percentage rate (APR).
Keep in mind that annual percentage rates usually
are higher and loan periods generally are shorter
on used cars than on new ones.
Dealers and lenders offer a variety
of loan terms and payment schedules. Shop around,
compare offers, and negotiate the best deal you can.
Be cautious about advertisements offering financing
to first-time buyers or people with bad credit. These
offers often require a big down payment and a high
APR. If you agree to financing that carries a high
APR, you may be taking a big risk. If you decide to
sell the car before the loan expires, the amount you
receive from the sale may be far less than the amount
you need to pay off the loan. If the car is repossessed
or declared a total loss because of an accident, you
may be obligated to pay a considerable amount to repay
the loan even after the proceeds from the sale of
the car or the insurance payment have been deducted.
If your budget is tight, you may want to consider
paying cash for a less expensive car than you first
had in mind. The internet has opened up a host of
financing options to today's car buyer.
If you decide to finance, make sure
you understand the following aspects of the loan agreement
before you sign any documents:
* the exact price you’re paying for the vehicle the
amount you’re financing
* the finance charge (the dollar amount the credit
will cost you)
* the APR (a measure of the cost of credit, expressed
as a yearly rate)
* the number and amount of payments
* the total sales price (the sum of the monthly payments
plus the down payment)
Used cars
are sold through a variety of outlets: franchise and
independent dealers, rental car companies, leasing
companies, and used car superstores. You can even
buy a used car on the Internet. Ask friends, relatives
and co-workers for recommendations. You may want to
call your local consumer protection agency, state
Attorney General (AG), and the Better Business Bureau
(BBB) to find out if any unresolved complaints are
on file about a particular dealer.
Some dealers are
attracting customers with "no-haggle prices,"
"factory certified" used cars, and better
warranties. Consider the dealer’s reputation when
you evaluate these ads.
Dealers are
not required by law to give used car buyers a three-day
right to cancel. The right to return the car in a
few days for a refund exists only if the dealer grants
this privilege to buyers. Dealers may describe the
right to cancel as a "cooling-off" period,
a money-back guarantee, or a "no questions asked"
return policy. Before you purchase from a dealer,
ask about the dealer’s return policy, get it in writing
and read it carefully.
The Federal Trade
Commission’s Used Car Rule requires dealers to post
a Buyers Guide in every used car they offer for sale.
This includes light-duty vans, light-duty trucks,
demonstrators, and program cars. Demonstrators are
new cars that have not been owned, leased, or used
as rentals, but have been driven by dealer staff.
Program cars are low-mileage, current-model-year vehicles
returned from short-term leases or rentals. Buyers
Guides do not have to be posted on motorcycles and
most recreational vehicles. Anyone who sells less
than six cars a year doesn’t have to post a Buyers
Guide.
The Buyers Guide must tell you:
* whether the vehicle is being sold
"as is" or with a warranty
* what percentage of the repair costs a dealer will
pay under the warranty
* that spoken promises are difficult to enforce
* to get all promises in writing
* to keep the Buyers Guide for reference after the
sale
* the major mechanical and electrical systems on the
car, including some of the major problems you should
look out for.
* to ask to have the car inspected by an independent
mechanic before you buy.
When you
buy a used car from a dealer, get the original Buyers
Guide that was posted in the vehicle, or a copy. The
Guide must reflect any negotiated changes in warranty
coverage. It also becomes part of your sales contract
and overrides any contrary provisions. For example,
if the Buyers Guide says the car comes with a warranty
and the contract says the car is sold "as is,"
the dealer must give you the warranty described in
the Guide. When the dealer offers a vehicle "as
is," the box next to the "As Is - No Warranty"
disclosure on the Buyers Guide must be checked. If
the box is checked but the dealer promises to repair
the vehicle or cancel the sale if you’re not satisfied,
make sure the promise is written on the Buyers Guide.
Otherwise, you may have a hard time getting the dealer
to make good on his word. Some states, including Connecticut,
Kansas, Maine, Maryland, Massachusetts, Minnesota,
Mississippi, New Jersey, New York, Rhode Island, Vermont,
West Virginia and the District of Columbia, don’t
allow "as is" sales for many used vehicles.
Three states—Louisiana,
New Hampshire, and Washington—require different disclosures
than those on the Buyers Guide. If the dealer fails
to provide proper state disclosures, the sale is not
"as is." To find out what disclosures are
required for "as is" sales in your state,
contact your state Attorney General.
State laws
hold dealers responsible if cars they sell don’t meet
reasonable quality standards. These obligations are
called implied warranties—unspoken, unwritten promises
from the seller to the buyer. However, dealers in
most states can use the words "as is" or
"with all faults" in a written notice to
buyers to eliminate implied warranties. There is no
specified time period for implied warranties.
Warranty of Merchantability
The most common type
of implied warranty is the warranty of merchantability:
The seller promises that the product offered for sale
will do what it’s supposed to. That a car will run
is an example of a warranty of merchantability. This
promise applies to the basic functions of a car. It
does not cover everything that could go wrong.
Breakdowns
and other problems after the sale don’t prove the
seller breached the warranty of merchantability. A
breach occurs only if the buyer can prove that a defect
existed at the time of sale. A problem that occurs
after the sale may be the result of a defect that
existed at the time of sale or not. As a result, a
dealer’s liability is judged case-by-case.
Warranty of Fitness for a
Particular Purpose
A warranty of fitness
for a particular purpose applies when you buy a vehicle
based on the dealer’s advice that it is suitable for
a particular use. For example, a dealer who suggests
you buy a specific vehicle for hauling a trailer in
effect is promising that the vehicle will be suitable
for that purpose.
If you have
a written warranty that doesn’t cover your problems,
you still may have coverage through implied warranties.
That’s because when a dealer sells a vehicle with
a written warranty or service contract, implied warranties
are included automatically. The dealer can’t delete
this protection. Any limit on an implied warranty’s
time must be included on the written warranty.
In states
that don’t allow "as is" sales, an "Implied
Warranties Only" disclosure is printed on the
Buyers Guide in place of the "As Is" disclosure.
The box beside this disclosure will be checked if
the dealer decides to sell the car with no written
warranty.
In states
that do allow "as is" sales, the "Implied
Warranties Only" disclosure should appear on
the Buyers Guide if the dealer decides to sell a vehicle
with implied warranties and no written warranty. A
copy of the Buyers Guide with the "Implied Warranties
Only" disclosure is available here.
Dealers who
offer a written warranty must complete the warranty
section of the Buyers Guide. Because terms and conditions
vary, it may be useful to compare and negotiate coverage.
Dealers may
offer a full or limited warranty on all or some of
a vehicle’s systems or components. Most used car warranties
are limited and their coverage varies. A full warranty
includes the following terms and conditions.
* Anyone who owns the vehicle during
the warranty period is entitled to warranty service.
* Warranty service will be provided free of charge,
including such costs as removing and reinstalling
a covered system.
* You have the choice of a replacement or a full refund
if, after a reasonable number of tries, the dealer
cannot repair the vehicle or a covered system.
* You only have to tell the dealer that warranty service
is needed in order to get it, unless the dealer can
prove that it is reasonable to require you to do more.
* Implied warranties have no time limits.
If any of these statements doesn’t
apply, the warranty is limited.
A full or
limited warranty doesn’t have to cover the entire
vehicle. The dealer may specify that only certain
systems are covered. Some parts or systems may be
covered by a full warranty; others by a limited warranty.
The dealer
must check the appropriate box on the Buyers Guide
to indicate whether the warranty is full or limited
and the dealer must include the following information
in the "Warranty" section:
* the percentage of the repair cost
that the dealer will pay. For example, "the dealer
will pay 100 percent of the labor and 100 percent
of the parts . . .";
* the specific parts and systems—such as the frame,
body, or brake system—that are covered by the warranty.
The back of the Buyers Guide lists the major systems
where problems may occur;
* the warranty term for each covered system. For example,
"30 days or 1,000 miles, whichever comes first";
and
* whether there’s a deductible and, if so, how much.
You have
the right to see a copy of the dealer’s warranty before
you buy. Review it carefully to determine what is
covered. The warranty gives detailed information,
such as how to get repairs for a covered system or
part. It also tells who is legally responsible for
fulfilling the terms of the warranty. If it’s a third
party, investigate their reputation and whether they’re
insured. Find out the name of the insurer, and call
to verify the information. Then check out the third-party
company with your local Better Business Bureau. That’s
not foolproof, but it is prudent. Make sure you receive
a copy of the dealer’s warranty document if you buy
a car that is offered with a warranty.
If the manufacturer’s
warranty still is in effect, the dealer may include
it in the "systems covered/duration" section
of the Buyers Guide. To make sure you can take advantage
of the coverage, ask the dealer for the car’s warranty
documents. Verify the information (what’s covered,
expiration date/miles, necessary paperwork) by calling
the manufacturer’s zone office. Make sure you have
the Vehicle Identification Number (VIN) when you call.
Like a warranty,
a service contract provides repair and/or maintenance
for a specific period. But warranties are included
in the price of a product, while service contracts
cost extra and are sold separately. To decide if you
need a service contract, consider whether:
* the service contract duplicates
warranty coverage or offers protection that begins
after the warranty runs out. Does the service contract
extend beyond the time you expect to own the car?
If so, is the service contract transferable or is
a shorter contract available?
* the vehicle is likely to need repairs and their
potential costs. You can determine the value of a
service contract by figuring whether the cost of repairs
is likely to exceed the price of the contract.
* the service contract covers all parts and systems.
Check out all claims carefully. For example, "bumper
to bumper" coverage may not mean what you think.
* a deductible is required and, if so, the amount
and terms.
* the contract covers incidental expenses, such as
towing and rental car charges while your car is being
serviced.
* repairs and routine maintenance, such as oil changes,
have to be done at the dealer.
* there’s a cancellation and refund policy for the
service contract and, whether there are cancellation
fees.
* the dealer or company offering the service contract
is reputable. Read the contract carefully to determine
who is legally responsible for fulfilling the terms
of the contract. Some dealers sell third-party service
contracts.
The dealer
must check the appropriate box on the Buyers Guide
if a service contract is offered, except in states
where service contracts are regulated by insurance
laws. If the Guide doesn’t include a service contract
reference and you’re interested in buying one, ask
the salesperson for more information.
If you buy
a service contract from the dealer within 90 days
of buying a used vehicle, federal law prohibits the
dealer from eliminating implied warranties on the
systems covered in the contract. For example, if you
buy a car "as is," the car normally is not
covered by implied warranties. But if you buy a service
contract covering the engine, you automatically get
implied warranties on the engine. These may give you
protection beyond the scope of the service contract.
Make sure you get written confirmation that your service
contract is in effect.
The Buyers Guide
cautions you not to rely on spoken promises. They
are difficult to enforce because there may not be
any way for a court to determine with any confidence
what was said. Get all promises written into the Guide.
Pre-Purchase Independent Inspection
It’s best to have any
used car inspected by an independent mechanic before
you buy it. For about $100 or less, you’ll get a general
indication of the mechanical condition of the vehicle.
An inspection is a good idea even if the car has been
"certified" and inspected by the dealer
and is being sold with a warranty or service contract.
A mechanical inspection is different from a safety
inspection. Safety inspections usually focus on conditions
that make a car unsafe to drive. They are not designed
to determine the overall reliability or mechanical
condition of a vehicle.
To find a
pre-purchase inspection facility, check your Yellow
Pages under "Automotive Diagnostic Service"
or ask friends, relatives and co-workers for referrals.
Look for facilities that display certifications like
an Automotive Service Excellence (ASE) seal. Certification
indicates that some or all of the technicians meet
basic standards of knowledge and competence in specific
technical areas. Make sure the certifications are
current, but remember that certification alone is
no guarantee of good or honest work. Also ask to see
current licenses if state or local law requires such
facilities to be licensed or registered. Check with
your state Attorney General’s office or local consumer
protection agency to find out whether there’s a record
of complaints about particular facilities.
There are
no standard operating procedures for pre-purchase
inspections. Ask what the inspection includes, how
long it takes, and the price. Get this information
in writing.
If the dealer
won’t let you take the car off the lot, perhaps because
of insurance restrictions, you may be able to find
a mobile inspection service that will go to the dealer.
If that’s not an option, ask the dealer to have the
car inspected at a facility you designate. You will
have to pay the inspection fee.
Once the
vehicle has been inspected, ask the mechanic for a
written report with a cost estimate for all necessary
repairs. Be sure the report includes the vehicle’s
make, model and VIN. Make sure you understand every
item. If you decide to make a purchase offer to the
dealer after considering the inspection’s results,
you can use the estimated repair costs to negotiate
the price of the vehicle.
The Buyers
Guide lists an auto’s 14 major systems and some serious
problems that may occur in each. This list may help
you and your mechanic evaluate the mechanical condition
of the vehicle. The list also may help you compare
warranties offered on different cars or by different
dealers.
The back
of the Buyers Guide lists the name and address of
the dealership. It also gives the name and telephone
number of the person you should contact at the dealership
if you have problems or complaints after the sale.
The dealer
may include a buyer’s signature line at the bottom
of the Buyers Guide. If the line is included, the
following statement must be written or printed close
to it: "I hereby acknowledge receipt of the Buyers
Guide at the closing of this sale." Your signature
means you received the Buyers Guide at closing. It
does not mean that the dealer complied with the Rule’s
other requirements, such as posting a Buyers Guide
in all the vehicles offered for sale.
If you buy
a used car and the sales discussion is conducted in
Spanish, you are entitled to see and keep a Spanish-language
version of the Buyers Guide.
If you have
a problem that you think is covered by a warranty
or service contract, follow the instructions to get
service. If a dispute arises, there are several steps
you can take:
* Try to work it out with the dealer.
Talk with the salesperson or, if necessary, the owner
of the dealership. Many problems can be resolved at
this level. However, if you believe you’re entitled
to service, but the dealer disagrees, you can take
other steps.
* If your warranty is backed by a car manufacturer,
contact the local representative of the manufacturer.
The local or zone representative is authorized to
adjust and decide about warranty service and repairs
to satisfy customers. Some manufacturers also are
willing to repair certain problems in specific models
for free, even if the manufacturer’s warranty does
not cover the problem. Ask the manufacturer’s zone
representative or the service department of a franchised
dealership that sells your car model whether there
is such a policy.
* Contact your local Better Business Bureau, state
Attorney General, or the Department of Motor Vehicles.
You also might consider using a dispute resolution
organization to arbitrate your disagreement if you
and the dealer are willing. Under the terms of many
warranties, this may be a required first step before
you can sue the dealer or manufacturer. Check your
warranty to see if this is the case. If you bought
your car from a franchised dealer, you may be able
to seek mediation through the Automotive Consumer
Action Program (AUTOCAP), a dispute resolution program
coordinated nationally by the National Automobile
Dealers Association and sponsored through state and
local dealer associations in many cities. Check with
the dealer association in your area to see if they
operate a mediation program.
* If none of these steps is successful, small claims
court is an option. Here, you can resolve disputes
involving small amounts of money, often without an
attorney. The clerk of your local small claims court
can tell you how to file a suit and what the dollar
limit is in your state.
* The Magnuson-Moss Warranty Act also may be helpful.
Under this federal law, you can sue based on breach
of express warranties, implied warranties, or a service
contract. If successful, consumers can recover reasonable
attorneys’ fees and other court costs. A lawyer can
advise you if this law applies.
