Buying A Used Car
Before you start shopping:
Reviewed August 2009
- It is a good idea to shop around before you buy a used car. Ask friends and family members about the reputation of various car dealers in your area.
- Figure out how much you are willing to spend on the car and only shop within that price range. There are many web sites, including ones for credit unions and banks that will assist you in calculating an estimated monthly payment for different purchase prices and interest rates. You can also get pre-approval from banks and credit unions up to a certain amount to help finance the purchase of the vehicle and to give you an idea of your price range.
- Ask your regular mechanic if he will inspect a car you are thinking about buying and give you an estimate on its value, noting any potential problems he might see and the estimated costs of fixing those problems.
- Look up the car you are interested in on the Internet at either www.nada.com or www.kbb.com. The information found on these web sites can also be found in the books N.A.D.A. Official Used Car Guide and the Kelley Blue Book. You can find the most recent versions of these books at your local public library. The web sites or books will ask you certain information about the used car including make, model, condition and mileage to determine the basic value of the vehicle. This will give you a ballpark figure of how much you should pay for the vehicle.
- Read the Buyers Guide (the window sticker) and get the warranty information from it. It may be covered by a warranty or be sold “as-is”. The sticker will say which one it is. If it is sold “as-is,” the dealer will not be responsible for any repairs to the vehicle.
- Don’t give up your keys to your old car until you are ready to trade it in. Remember that the amount you receive for your vehicle is negotiable separate and apart from the amount that you pay for the other vehicle. As a general rule, most people find that they get a better price for their vehicle if they clean it up and sell it themselves. You can still use the money as a down payment for the new vehicle.
- Ask for the selling price of the car you want to buy. Don’t let a salesperson tell you only the monthly payment because it may have hidden costs for things you don’t want in it. Ask for the price of just the car, without any add-ons.
- Ask the dealer about the car’s repair history. Make sure the car is not a rebuilt wreck, a flood damaged vehicle, or a “lemon” that has been returned by the previous owner. You can check these things by looking at the repair history, the title of the vehicle, and at the vehicle itself. Rebuilt cars are often repainted to cover up the repairs. A wrecked car may have glass embedded in the carpet. Flood damaged cars often have rust or dampness up high in the engine compartment and the trunk, or mud in the tailpipe. A “lemon” may have been sold back to the dealership or the manufacturer. For around $30 dollars you can use the VIN (Vehicle Identification Number) on your vehicle to order a report of the car's history at www.carfax.com.
- Inspect the papers you find in the glove box; they may give you some clues to the car’s history.
- Look to see if the mileage on the odometer matches the way the car looks. If the car is well-worn, but shows low mileage, the odometer may have been rolled back, which is a form of fraud.
- Take the car to your mechanic and have him look at it for you, telling you what is good and what is wrong with it. You can bargain with the dealer about the price once you have talked to your mechanic about the car. You might be able to get the price lowered.
- You may want to take a friend or trusted family member with you as a witness to the terms of the contract. Of course, the best practice is to make sure that the all the terms of the contract, including any statements as to quality and guarantees of repairs are put in writing before you sign an sales agreement.
- Don’t sign any agreements until you have read and understood them. If you have to, ask for a copy of the agreement to take home and study before you sign it.
- Ask about the financing. What interest rate are they charging? Is there a penalty for paying off the car early? What is the repossession policy? Demand an explanation on the calculation of the monthly payments. While you want to negotiate based upon the actually selling price of the vehicle, you do not want to get locked into a monthly payment you cannot afford. Even though you may really need the vehicle, if you cannot make the monthly payments, you will find yourself without a vehicle and facing possible court action to recover the cost of the vehicle. To make the monthly payment more affordable you may have to not take some of the add-ons like a service contract or extra warranty. You may also want to try financing through your regular bank to see if you can get a better interest rate.
- If the dealer offers a service contract, read it carefully. Often, service contracts do not really protect the buyer very well. If the dealer does sell a service contract, there is still an implied warranty that says the car is safe and reliable enough for the reason you are buying it.
- Make sure you are not being charged for something you did not want. Unless you want the add-ons and are willing to pay for them, ask the dealer to sell you the car only, not anything else.
- Save all of your papers, contracts, service agreements, or anything else you signed. Keep them in an envelope in a safe place.
- If the car needs repaired, keep a record of any repairs and costs. You will need this information if it turns out that there are problems with the car.
- If you fall behind in your payments, pay what you can and keep track of how much you have paid. If the dealer has to repossess your car, he may still demand to be paid the rest of what you owe, so keep up on your payments if at all possible.
Reviewed August 2009