 Thinking
About Buying a Used Car?
The price of new cars has steadily
climbed over the past few years making used
vehicles more attractive than ever.
Because
new vehicles lose so much of
their value as soon as they're purchased, car shoppers are
increasingly turning to previously owned
cars as a smart financial alternative. Today, thanks to
manufacturing and maintenance advances, used vehicles are better
than ever and still a great value.
WHICH USED CAR IS RIGHT FOR YOU?
The first step to buying a used car is a detailed assessment of
your transportation needs. It's a good idea to answer the
following questions.
How will the car be used? The first thing to do is to decide on a
class of vehicle that best fits your lifestyle.
Who will be driving the car? And where? If you're concerned about
taking your kids to soccer practice, you're probably going to need
a car with lots of seating and storage capacity. If you're
planning to use the car for commuting, gas mileage and comfort may
be your biggest considerations.
What features best suit your needs? If there are features you
simply must have--like air conditioning, lumbar supports or
adjustable controls --make a list.
What are some vehicle safety features you are looking for? Are you
interested in anti-lock brake systems, integrated seat belt
systems, head injury protection, or child protection equipment?
How much can I afford to spend? Think about how much you're
willing to spend, how much of a down payment you can make, and how
much you can afford per month, long before you start the process.
Refer to the section on "Paying for Your Car."
ONCE YOU’VE DECIDED ON TYPE
After you narrow your search to a few makes and models, analyze
the pros and cons for each. There are many excellent resources
available to help you do your research including websites,
dealerships, and your local library. Read Consumer Reports
magazine - online or hard copy - for reliability and repair
ratings as well as general advice. The website www.edmunds.com
offers pricing information and comprehensive advice on buying a
used car. In addition, refer to the list of websites included in
this publication.
Look at individual used vehicles. Gather as much information as
you can on the different makes and models. Check out the retail
value, available options, performance, and track record for
repairs.
FINDING THE USED CAR OF YOUR DREAMS
You can purchase your new previously owned car from an
independent used car lot, a new-car dealership, an auction, a
used car superstore or a private seller. Wherever you decide
to buy your car, there are some important things you need to
know.
While your heart will play a big role in your decision, don't
lose your head. Be willing to walk away from the car if the
deal doesn't meet the criteria you laid out earlier. Your
ability to negotiate a great deal will increase by magnitudes.
Always know the market value of any car you're considering and
make your first offer lower. It’s always easy to go up from
your initial offer, but you probably won't be able to
negotiate down from there. Several websites offer pricing
information to help you determine the value of the car.
You should always be concerned about buying "someone else's
problems." Make sure you get a detailed vehicle history report
and service records from the person selling the vehicle. A
vehicle history report can identify major problems including
past accidents, flood damage, and odometer discrepancies. When
you decide to buy a car, make sure you get it checked out by a
trusted mechanic before you give the seller any money.
TEST DRIVING YOUR CAR
Most of us know it's a good idea to insist on test driving any
car before buying. But what's the right way to test drive a
car and for what should you be looking? You should first plan
on spending as long as possible on your test drive. This will
give you a chance to thoroughly examine the car and even have
a mechanic check it out.
In addition to a mechanical inspection, you should:
Take a look. Make sure the body parts line up, the paint
matches, doors open and close easily, and the tires show even
wear.
Lift the Hood. Check under the hood for leaky hoses, worn
belts, and dirty oil. Automatic transmission fluid should be
clear and reddish, and not smell burned. Radiator water should
have a light yellow or green color.
Take a seat. Turn the ignition key to accessory and make sure
all of the warning lights and gauges work. Start the car and
check all lights and accessories and make sure no warning
lights remain lit on the dashboard. Pay close attention to the
airbag indicator lights. If these lights fail to illuminate as
you start the car, or stay lit after the car is running, it is
a warning that the car's airbags are not functioning
correctly.
Perform a Safety Check. Try on the seat belt and take a test
drive to ensure that you are comfortable while driving the
vehicle. Make sure head restraints, roof structures, and
windshield designs do not interfere with your ability to see
clearly. Test the vehicle at dusk or early evening to
determine your comfort with the visibility provided by the
headlamps. If you already have a child safety seat, install it
to check for compatibility.
Hit the Road. Take the vehicle up to 35-40 MPH. Make sure
shifting is smooth and steering is straight. When braking, a
pull to the left or the right could indicate a brake problem.
The steering wheel should not shimmy at high speeds and
cornering should be smooth.
Check the Sources. Buying through the classifieds? Check the
name on the title and match it to the name on the seller's
driver's license. Many individuals disguised as private
sellers are actually unlicensed, unregulated curbstoners, who
may pass problem cars on to unsuspecting buyers.
POTENTIAL PROBLEMS/WARNING SIGNS
The most sought after used cars are probably less than five
years old and have less than 50,000 miles on the odometer.
When you're looking for a used car, you'll probably want to
find one that has been driven no more than 15,000 miles per
year. But you can't assume that a low-mileage car is
necessarily in great shape.
One major concern is odometer tampering. The National Highway
Traffic Safety Administration (NHTSA) estimates that consumers
lose billions of dollars a year to odometer fraud. Odometer
readings may be rolled back or documents can be forged. Making
miles disappear helps increase the car's value to the seller,
but can mean increased maintenance and repair costs to the
buyer.
In addition to odometer fraud, there are other significant
events in a car's past that unscrupulous sellers may try to
hide. Every state has laws designed to protect consumers from
buying used cars that may not be road worthy. Consumers should
be direct when asking sellers about a vehicle's past, and they
should get a detailed vehicle history report. The person
selling you a used car should provide a detailed vehicle
history that answers questions to your satisfaction.
If the seller cannot provide a detailed vehicle history
report, you can use the 17-digit vehicle identification number
(VIN) to secure a history from either the state or a private
vehicle history company. These companies have compiled data
from multiple sources to help you get a better picture of the
car's past. You can search the web to find the companies
providing this service by looking under the topic of "vehicle
history."
OTHER PROBLEMS
Other problems you may want to avoid include:
Damage Disclosure, Salvage & Rebuilt Titles. These titles are
issued by states when the vehicle has sustained damage as a
result of one or more incidents. States issue salvage titles
when an insurance company takes possession of a vehicle as a
result of a claim. This generally occurs after a vehicle has
been declared a total loss. A state may issue a rebuilt title
if a vehicle sustained damage and was rebuilt or
reconstructed, then placed back on the road. States issue junk
titles to indicate that a vehicle is not road worthy and
cannot be titled again in that state.
Lemon Laws (Manufacturer Buyback Titles). "Lemons" are
sometimes resold to consumers as used cars. The lemon laws
were enacted to protect consumers from having to keep a new
car that has recurring problems. If someone buys a new car
with major problems, and the manufacturer fails to repair the
defect in a certain amount of time, the manufacturer may be
required to refund the consumer's money by buying the vehicle
back. Unfortunately, some of the vehicles which are bought
back are subsequently resold as used cars.
Flood Damage Title. States issue flood titles when a vehicle
has been in a flood or has received extensive water damage.
A NOTE ON CURBSTONERS
Most states limit the number of cars that an individual can
sell without a dealer's license or only allow the selling of
one's personal car. Curbstoners are people who ignore these
laws and sell multiple cars that frequently have hidden
problems in their pasts -- problems that can affect both the
safety and the value of these vehicles. Before buying any used
car, you should research both the vehicle and the seller. Be
wary of sales conducted from the side of the curb or a vacant
lot. Often these vehicles are sold by con men posing as
private individual sellers.
PAYING FOR YOUR CAR
It's a good idea to have all your questions about paying for
your car resolved before you start to shop. The most difficult
part about buying your used car will probably be figuring out
what you can afford. So how do you determine what you can
afford?
A good rule of thumb: your monthly auto loan payment should
not be more than 20% of the money you have available each
month after you pay for your usual living expenses -- rent or
mortgage, utilities, food and transportation, credit card
payments, etc. When reviewing your budget, you should also
take into consideration other associated costs including fuel,
license, registration, personal property taxes and insurance.
Call your insurance company before you purchase your car to
determine what the monthly insurance cost will be.
If you're taking out a car loan, figure on a down payment of
at least 10 percent. Lenders might be skeptical otherwise. If
you have enough cash available to boost that percentage, do
so. Cutting the principal of your loan will do more to slash
payments than getting a lower interest rate.
If you have ailing credit, which can result from a pattern of
late payments, you may find yourself in the "subprime"
financing arena. If you have credit problems, you should first
try to work with a consumer credit counselor or other advisor.
It may be possible to consolidate debts or come up with a
workable repayment plan. If you show a loan officer that you
are taking action to overcome the problems, they may be more
willing to grant a loan at a reasonable rate.
In addition, be sure to check out alternate sources for loans
such as the credit union at your workplace, your bank, or
other organization with which you are affiliated. As a last
resort, dealers may offer special financing packages for those
with credit problems. However, you might pay as much as four
percentage points more for a loan.
HAPPY DRIVING
Buying a used car involves some uncertainties, but the market
has improved over the past few years. Cars are better made,
have much improved safety systems, and, with proper
maintenance, can last for many years. You can avoid many of
the common pitfalls by taking a few steps early in the process
and answering certain questions before you start to shop. More
importantly, new technologies being used by manufacturers and
mechanics combined with the availability of easy to access
vehicle history information go a long way towards leveling the
playing field for today's used car shopper.
Used Car Buying Checklist
1. Be an educated consumer.
2. Determine your needs and wants first, make a list, and
prioritize.
3. Establish a budget and determine the class of vehicles that
fit it.
4. Narrow selection by makes and models and learn all you can
about them.
5. Research dealerships and sellers.
6. Know the fair market value and vehicle history of any
vehicle you’re considering.
7. Obtain Vehicle Identification Numbers (VINs) and research
cars online; obtain vehicle history reports.
8. Take test drives and have cars checked by a mechanic.
9. ASK QUESTIONS, and consider all loan options.
10. If you feel hesitant, walk away. There’s always another
deal.
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