The Best Used Car Buying Guide for Consumers

(Here's what you need to know)

Follow these simple steps to make sure you get a fair deal on your used car.

Buying a used car often makes more fiscal sense than buying a brand new car. Cars as little as a year old are as much as 30 percent cheaper than they were when they first arrived at the dealership. We've all seen the stereotypes play out in movies and on television about the used car salesperson. 

Not all used car sellers are out to rip you off, but being prepared for it will ensure you get a fair deal. By following these simple steps when you're buying a used car, you can avoid driving home a real lemon. Just make sure you're covered with an affordable car insurance policy.

1. Choose a Used Car That's Right for You

Before you visit the dealer or private seller, do your research. Which makes and models hold up better over time? Which are prone to costly repairs? Many manufacturers sell certified used vehicles that come with warranties. Are you looking for something with a little more protection? 

If you have your heart set on a particular model, check out the other manufacturers' similar vehicles. You may be surprised to discover that you're a Ford person after all when you compare similar models by different carmakers side by side.

Find out what you can afford and stick to it. Do you plan on buying a used car outright with cash, or do you plan on financing the vehicle? If you decide to finance the car, be sure to run a credit check on yourself so you are prepared when the dealer conducts one. 

This will also ensure that a less-than-scrupulous dealer will not convince you that your credit is lower than it actually is. Check with your personal bank or lender to find out what they offer in terms of auto loans. It may be better than the options the dealer offers.

2. Test Drive the Car

It's important to test the car in a variety of situations. Take it for a few spins around the block, taking left-hand and right-hand turns to see if there are any problems in the steering or wheels. Also, be sure to drive the car at highway speeds. If you can, see how the car performs at different elevations and over hills.

3. Learn the Car's History

Ask the dealer for the car's maintenance records, if available. Private sellers may not have kept detailed records, so if you're buying a used car from a neighbor or off an ad you found, be sure to ask them about any significant repairs they have made. If you are car shopping at a dealer, the Federal Trade Commission requires dealers to sell all used cars with a used car buying guide, which must tell you these things:

  • 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 used car buying 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

The National Insurance Crime Bureau has developed a free database that includes flood damage and other information so you can learn a car's history by its Vehicle Identification Number. You also can search online for companies that sell vehicle history reports using the VIN. If the report is old or you suspect that it has missing or fabricated information, verify it with the service.

4. Have the Car Inspected Thoroughly

Whenever shopping for a used vehicle, you should always examine the car carefully with a checklist. Your state's Department of Motor Vehicles should have a used car checklist that can alert you to significant problems. This will weed out the real losers, but you should also have your mechanic inspect the car as well. 

Even if the car is certified and the dealer tells you it has been "inspected" and all checked out, this is vital. Most dealer inspections look only for dangerous damage such as faulty brakes and do not identify areas in need of costly repairs.

Mechanic Nate Benoit said he has stopped many of his customers from buying lemons. He charges new customers around $100 for these inspections, but he offers many of his loyal clients this service free of charge.

"If you have a mechanic you trust and they're willing to work with you, it's a no-brainer," Benoit said.

Benoit also cautions against thinking that the limited warranty on the car will cover any repairs needed to a certified used vehicle sold by dealers.

"Half the time, those limited warranties have so many loopholes, the repairs aren't covered," he said, adding that it's important to review any of the dealer's warranties before purchasing the vehicle.

Used cars purchased from private sellers are usually sold "as is" and are not covered by any previous warranties.

5. Negotiate a Fair Offer

Always check the Kelley Blue Book for the value of the car you wish to buy given its age and mileage. Some private sellers may come down considerably from the Blue Book value if they're in a hurry to unload their unwanted car or truck. You may have a more difficult time negotiating with a dealer, but most are willing to come down in price as well.

If you choose to finance the purchase of your used vehicle, be sure to stay focused on the sales price rather than the monthly payments. Some dealers will encourage you to pay attention only to the low monthly payments while glossing over the fact you'll be making those payments for much longer than you would at a lower purchase price. 

In addition, make sure you understand what the lender will require of you from an insurance perspective. Many will require you to carry comprehensive and collision coverage for the life of the loan. You'll also have liability insurance requirements from the state government where you live. You can check with an independent agent to get the right price for the car coverage you need.

A fair offer leaves neither party feeling they received the short end of the stick. The dealer or private seller will believe they received a fair offer, and you will have paid a good price for a decent car.

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