Buying a used car? Eleven things to do first.(Read article summary)
Follow these steps to get a good deal on a safe and reliable used car that won't cost a lot of money in repairs in the long run.
Melanie Stetson Freeman/Staff/File
Shopping for a used car can be stressful. Not only is it a big purchase, but you want a good deal on a safe and reliable vehicle that won't cost a lot of money in repairs in the long run. (And, of course, there's that mental picture of dealing with a slippery Saul Goodman type in a plaid suit, with slicked-backed hair.)
The good news is that by reading this, you've taken the first smart step in buying a used car: Doing your research. Below are 10 things you should know before buying a used car.
Research Used Cars and Prices
Edmunds has a True Market Value (TMV) pricing tool that shows you what other people in your area have paid for a car, as well as an app with the TMV, price calculator, live help, and other useful tools. To help find a reputable dealership, read Edmunds.com reviews of area dealerships.
Ostroff also recommends visiting eBay to lay the groundwork for later negotiations. "Knowing how much the car has sold [in the] last 30 days on eBay gives you a great haggling advantage because many dealers sell on eBay, so showing them what other dealers have sold this car for this month means they can't use smoke screens to trick you into a higher price," he says.
Know What Questions to Ask
Before heading to the dealership or contacting someone who is selling a used car, be prepared to ask the right questions. Edmunds offers a helpful used car questionnaire.
To help determine a price range, Edmunds has a handy How Much Car Can I Afford? calculator that takes into account the cash down payment, possible trade-in, and how much you may owe on your old car.
However, Ostroff says selling the car yourself can increase your profit and help you avoid potential scams. "They [dealerships] offer you $4,000 to $6,000 below market value for your trade-in," he says. "We suggest selling it yourself to maximize sales proceeds. Combining the two transactions of trade-in and purchase give them more tricks and smoke screens to pull on you."
If you're taking out a loan, keep in mind that banks typically won't give loans for cars that are older than four or five years and the APR for used car loans tends to be at least 2% higher, according to CarBuyingTips.com. However, some lenders specialize in used car loans, such as Auto Credit Express, which lends to those with bad credit, and Up2Drive.
Ask About Fees
Whether you're buying from a dealership or an individual, make sure to budget for all the necessary costs. "There are certain fees that everyone has to pay when buying a car — things like [sales] tax, registration, documentation fees," says Ron Montoya, senior consumer advice editor at Edmunds, which has a car-buying fees chart. "Always ask for a breakdown of the fees," Montoya says. "Don't be afraid to ask if you don't recognize a fee."
Don't Forget Car Insurance
Many dealerships require proof of insurance before selling you the car, notes Montoya. When buying a used car from an individual, remember that you'll need to be insured before you drive the car.
Run a Vehicle History Report
While there are some visual tip-offs that the car might not be in the best condition — for example, new carpeting might indicate that the car was in a flood — a vehicle history report will reveal the car's accident history and if it has a salvage title (meaning it's been declared a total loss by an insurance company). The report will also show if the odometer has been rolled back — something that occurs in one in 10 U.S. vehicles, according to the Consumer Federation of America.
Have the Car Inspected
Even if you ran a vehicle history report, it's still important to have the car inspected by a mechanic to find potential issues, such as leaks, and to determine if the car has been in an unreported accident.
Some companies do mobile checks, where an inspector looks at the car on-site. However, Ostroff recommends an inspection at a shop where the mechanic can put the car on a lift to look for damage underneath the car. "Seeing the car from underneath will show any damage that was not repaired," he says. "Body shops often don't fix the parts of the car that you cannot see."
Ostroff estimates an inspection costs between $50 to $100. While some shoppers skip this step to avoid the cost, it could save a lot of money in repairs in the long run.
Have a Test Drive Checklist
In addition to the things to consider when test driving a new car, such as legroom and visibility, your checklist for a used car test drive will have a few more items, from listening for problematic noises to checking for strange smells.
As with any test drive, look at the car in daylight hours and drive in conditions that mirror those of your day-to-day driving. (For example, consider whether you often drive in stop-and-go traffic, on the highway, through hilly areas, etc.) Some experts recommend bringing equipment you'll be traveling with often (like car seats) with you to the test drive to make sure your items fit — and to make sure the car fits your needs.
Be Prepared to Negotiate
When negotiating the price of a used car, the most powerful tool is knowledge, says Ostroff. This includes knowing the number of previous owners, accident history, failed inspections or emissions, and the current condition of the car, as well as the price for which the same make and model has sold in the past 30 days.
For those who are uncomfortable with negotiating, consider contacting the Internet sales manager first for a price quote — and, typically, less back-and-forth about the price. "The Internet manager is usually more upfront with pricing than a floor salesperson," says Montoya. As when buying a new car, contacting a dealership's Internet sales manager can save time and money, as the Internet department's incentives are typically based on volume of sales versus price-based commission.
Another option for buying a used car with less haggling is to consider buying a former rental car. According to CarBuyingTips.com, buying directly from the rental company typically involves a set price. "The way to get the best deal is see what the rental company is selling the car for, compare it to recent sales of that car on eBay Motors, and compare it to what the dealers are asking for that same car," Ostroff says.
Get the Car Title
If there's no loan or lien on the used car, then the individual or dealership should have the title. "If the dealer does not have the title, I'm suspicious, and the few times we have heard from users falling into this crack, it's weeks of waiting after empty promises from the dealer that the title is in transit," says Ostroff.
If you're buying a car from someone who still owes on the car, Ostroff says, "you can tip the odds in your favor by making the check out to their lender to pay off the car, that way the cash does not go to the seller." The lender will then send the title to the seller, who will give you the title.
In the case of electronic titles, CarBuyingTips.com recommends checking with the local DMV to verify ownership and transfer the title. (Also be sure to check the ID of the seller to make sure it matches the owner listed on the title.)
Know if the Car is Covered Under a Warranty
You'll often see the term "Certified Used Cars," which means that the car is covered by the manufacturer's warranty, according to Edmunds. However, some cars are advertised as certified when covered by a third-party warranty.
It's also important to know what the "as is" sign in the car window means. "Virtually all dealers sell the car 'as is,'" says Ostroff. "The law requires the paper to be on the window to let you know legally that they will not cover anything once the car is driven off the lot." Sometimes, a dealer will promise to make repairs on a car, but if you purchase the car with the 'as is' paperwork, then the dealer is not responsible for the repair work promised. "Bottom line is you should assume the deal is 'as is' so always thoroughly check out the car first to ensure it has no problems before you buy it," Ostroff says.
If a car is more than three or four years old, then the car is most likely no longer covered by the manufacturer's warranty, and you may want to consider an extended warranty, says Ostroff.
"Getting an extended warranty is a personal decision," Montoya says. "Some people buy them for peace of mind and others take on repairs as they come. Ask yourself these questions to help with the decision: Have you used warranties in the past? Are you buying a reliable car? Will you stress out over it if you don't get the warranty?"
Navigating a used car sale can be tricky, but always trust your instinct, and don't be afraid to walk away if something doesn't feel right. "You might not get the same exact car if you're buying used, but ultimately there's always another car out there," Montoya says.
Readers, have any of you successfully bought a used car? Do you have any tips about how to navigate the process? Share your thoughts in the comments below!
This article first appeared in DealNews.