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Buying a Used VehicleBuying 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:
Disadvantages Of Buying A Used Car From A Private Seller:
A few tips on finding a used car from a private seller.
Buying From a DealerAs 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. 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. Back To Top 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:
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:
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 MerchantabilityThe 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. Back To Top Warranty of Fitness for a Particular PurposeA 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.
Pre-Purchase Independent InspectionIt’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. |
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