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Used Car Buying Guide

To successfully buy a used car involves taking the proper steps and precautions to insure that you avoid mistakes and get a car you will be happy with.

Select your car
The first step in buying a used car is to decide on a specific make, model, and year you want. Or at least narrow down your list to a small number of top candidates.

It would also be useful to decide on the major options that are most important to you: automatic transmission versus manual, 4-cylinder versus V6 or V8, power seats versus manual, etc.

Preplanning and narrowing your selections will allow you to focus your research, pricing, and shopping efforts. It will make the process less confusing and will use your time more efficiently.

One of the best sources of used cars online is eBay Motors. There are literally thousands of cars being sold at any one time. You can search by make and model, by price, and by area of the country. It's a great way to shop for a used car. eBay also provides inspection services and buyer protection services to make it as safe and risk-free as possible for buyers.

It's personal
Vehicle buying is a very personal experience. As such, it is almost impossible for anyone else to tell you which vehicle you should buy.

What are your priorities and preferences? Make a list of the things that are important to you, ranking them from most important to least important. Your list might include some of the following:

  • Reliability / Dependability
  • Safety Rating / Features
  • Price
  • Styling / Appearance
  • Comfort / Luxury Features
  • Performance
  • Operating Costs
  • Insurance Costs

Also consider how you intend to use your vehicle. Will it be a family vehicle, or a personal vehicle? Will it be driven by multiple family members for different purposes? Will it need to carry cargo or more than four people? Will it be used to commute to work? Long distances or short distances? Highways or city streets? Severe weather conditions or not?

Do you want your vehicle to reflect your social, professional, or financial status? Do you view your vehicles as recreational and fun to drive? Or do you view them simply as being necessary to get you from Point A to Point B? How much time will you spend in your vehicle?

The answers to these questions will help you in prioritizing the characteristics of the vehicle that will best fit your needs. If you are new to buying cars, the First Car Guide web site may help you.

Research your car
Once you have your list of requirements, the next step is to identify the vehicles that match those requirements.

Fortunately, there are many resources available to help you — both in printed form and online on the Internet.

One of the best print publications for used car buyers is Consumer Reports magazine. Each year in April, CR publishes its Annual Auto Issue which contains not only ratings on new cars, but on used cars as well. CR also publishes a Used Car Yearbook which comes out in the Fall each year and contains more extensive evaluations and data.

Consumer Reports also has an excellent web site with the same used-car and new-car information online at ConsumerReports.org. There's a fee charged to access most of the data, but it's well worth it.

The highlight of CR's used car data is its "The Best and Worst Used Cars" feature. In it they tell you which vehicle makes/models/years have the best and worst reliability, based on their research.

They even rank manufacturers according to the number of problems reported on each maker's vehicles.

Another feature breaks down reliability history, prices, and crash-test results for each vehicle make and model.

Online sources
On the Internet there are a number of web sites that offer information helpful to potential used car buyers. We recommend the following:

Edmunds is tops in the list. Particularly useful are the detailed data and specifications on each vehicle, and their True Market Value (TMV) prices.

ConsumerGuide is another excellent site with valuable information for used car buyers. This site provides specifications, year model differences, pricing data, parts replacements costs, crash-test data, road-test ratings, and more.

UsedCars.com is another good source of research information on used cars. This site is also an easy way to find used cars online. You simply plug in your ZIP code and the kind of car you're interested in, and you get a detailed list of available cars in your area, with prices.

Consider insurance cost
Get insurance rates before you buy your used car. Rates can vary widely depending on specific vehicle makes and models. Call your own insurance company and ask them to give you a quote on the vehicle or vehicles you're interested in.

However, we recommend that you compare rates from different companies every time you change cars. Your own company may not have the best rates. Online, we suggest the following insurance companies for free, no-obligation rate quotes:

21st Century Insurance Company is a well respected auto insurance company serving California, Arizona, Illinois, Indiana, Nevada, Ohio, Oregon and Washington.They insure over 1.4 million automobiles and have an annual renewal rate of over 93%, which says something about how satisfied their customers are with the company.

InsureMe is an established and popular company, having been around since 1993. They have a network of thousands of participating insurance agents and companies across the United States, including in your neighborhood. Once you complete their online form, they match your profile to as many as five companies, who will provide you free rate quotes that you can compare and choose from. Remember, you are not obligated to accept any of the offers.

eInsurance is an insurance rate pricing service that allows you to compare rates from multiple auto insurance companies such as Progressive, SafeCo, Hartford, and more by simply filling out one online form. It's totally free and you are not obligated to accept any quote that you receive.

Consider an extended warranty
Depending on the age of the car you buy, you might have some time remaining on the original new-car warranty. However, when that time expires, you may want to consider an extended warranty to cover you against the cost of major repairs. Here are some recommended sources that provide free, no-obligation quotes:

WarrantyDirect.com

For more details see our article: Car Warranty Advisor

Safety data
Vehicle safety ratings, crash-test results, recalls, customer complaint data, other important safety-related information can be found at the government's National Highway Traffic Safety Administration (NHTSA) web site.

Price your car
Pricing used cars is more of a hocus-pocus art than a precise science. Therefore, any source of pricing data must be taken with a proverbial grain of salt.

The price of any used car is determined by what buyers are willing to pay - period. And that can change quickly and often. Used car prices can be affected by the current state of the economy, the supply of used cars in dealer inventories, current prices of similar new cars, good or bad news, rumors, and even the weather.

For more details, see our article, Used Car Price Guides.

Just remember that if you go to multiple sources for your pricing information, you'll always get multiple, differing answers. Which one is right? It's up to you to decide.

One way to cross-check the prices you find online is to look in your local newspaper classified ads and "auto trader" magazines for cars similar to the model you want to buy. Although these are "asking" prices, not selling prices, this should give you a better notion as to what prices make sense for your area.

Also be aware that many of the ads you'll find in newspapers and magazines are dealer ads. This is usually specified in the ad, but not always. This means that the prices are higher than you might expect to pay for the same car being sold by an individual — and you pay sales tax on a dealer purchase while, in some states, there is no sales tax on private-party purchases.

Shop for your car
You should now know all about the car you want and the general price range that you might expect to pay. So where to find the car?

Here are some of the places you might find the car you're looking for:

  • Used car dealer lots
  • New car dealers with used car lots
  • Local "auto trader" magazines
  • Newspaper classified ads
  • Newspaper dealer ads
  • Consignment sales lots
  • Online used car sales sites (UsedCar.com)
  • Online used car auction sites
  • Online car enthusiast web sites
  • Online car related discussion groups
  • Online dealer web sites
  • Supermarket or community bulletin boards
  • Friends, neighbors, and work associates
  • Government car auctions
  • Police impound auctions
  • Salvage and insurance auctions

Dealer versus private party purchases
Expect to pay higher prices at a dealer than if you buy from an individual. Many dealers inspect their cars and provide an inspection report with each car. However, don't let this be a substitute for your own inspection.

Some dealers provide limited warranties, and most sell extended warranties. Watch out for dealer warranties that are "powertrain" warranties only, and not "bumper-to-bumper" full-coverage warranties. It's best to compare warranties that are available from other sources (see "Consider an Extended Warranty" above).

Some dealers provide "certified" cars. This generally means that the cars have had a more thorough inspection and come with a limited warranty. Prices for certified cars are generally higher. Be sure to get a list of what was inspected and what is covered under the warranty.

Following are typical characteristics of a certified vehicle:

  • Has under 75,000 miles at the time of posting
  • Has undergone a complete diagnostic mechanical inspection and repaired as necessary
  • Is less than 7 years old (current model year plus 6)
  • No salvage title history
  • No evidence of current or past frame damage
  • No evidence of current or past flood or water damage
  • No inoperative or replaced odometer
  • No odometer roll backs
  • Is not a Lemon Law resale vehicle
  • Is emission certified as required by applicable state and federal laws
  • Is in safe operating condition as defined by applicable state and federal laws

Federal laws help protect you
Used car dealers are required by the Federal Trade Commission (FTC) to post a Buyers Guide in the window of each used car on their lot. The Buyers Guide protects consumers from problems associated with purchasing used cars from dealers. FTC rules do not apply to private-party sales. Go here to see a sample Buyers Guide.

Check your car
Once you've located the used car you want, it's very important that you inspect and investigate the car to reveal any existing or potential problems.

Remember, unless you buy from a dealer who specifically provides some kind of warranty, your car purchase will be "as-is." This means that if the engine falls out on your way home from the purchase, the car and the separated engine belong to you.

The seller has no responsibility after the sale, even though you may feel that a problem was known to him and he didn't disclose it to you. It's your responsibility to find problems before the sale is finalized. State laws vary on this matter and you should check the laws in your state.

Protect yourself
You may know that records are kept on specific vehicles that have had title changes, been involved in accidents, have been in floods or totaled and reborn as "salvage" vehicles, or that have other hidden problems.

The unique Vehicle Identification Number (VIN) on each vehicle is the key to finding a vehicle's story. CARFAX Vehicle History Reports are the best source of vehicle histories. You can run a single report for a single vehicle, or if you're shopping and checking multiple vehicles, get the unlimited multi-report package and save money. There are no free VIN reports but the small cost is a good investment, considering the cost of making a costly mistake without it.

Checking the past history of any used car that you intend to buy is essential to help avoid surprise problems down the road.

Watch out
When buying a used car, make sure the model year is correct. It's not uncommon for dishonest dealers and individual sellers to promote their car as being of a later model year. This allows them to boost the price of the car and if you don't know better, they may succeed.

You can check the car's VIN to determine the model year. It's the 10th position from the left. Here's how to decode it:

    • 1988 - J
    • 1989 - K
    • 1990 - L
    • 1991 - M
    • 1992 - N
    • 1993 - P
    • 1994 - R
    • 1995 - S
    • 1996 - T
    • 1997 - V
    • 1998 - W
    • 1999 - X
    • 2000 - Y
    • 2001 - 1
    • 2002 - 2
    • 2003 - 3
    • 2004 - 4
    • 2005 - 5
    • 2006 - 6
    • 2007 - 7
    • 2008 - 8

For example, if your VIN is SCCFE33C9VHF65358, the 10th post ion is V, which indicates the car is a 1997 model.

Get maintenance records
You should ask for maintenance records if they exist. They tell you whether or not the previous owner took proper care of the vehicle, and what problems have been repaired.

Get a mechanic
You should have a qualified mechanic check your car. If you don't have a mechanic, there may be an inspection service in your town, or a garage that performs this type of service. Pep Boys, for example, provides an "all-points" inspection for a reasonable fee.

If you want to find a good mechanic to do your inspection and repairs, try this ebook: Honest Mechanic by insider Austin Davis.

Do your own inspection
If you prefer to do your own inspection, here's a nice online ebook: Inspect Before You Buy.

What are the easy things to look for?

  • Worn tires - uneven wear patterns
  • Worn or frayed belts
  • Low or dirty fluids
  • Leaks - spots under car
  • Rust damage
  • Flood damage (soiled carpets, rust in door frames, musty smell)
  • Accident damage (signs of being repainted)
  • Non-working equipment (radio, A/C, lights, heater, instruments, power windows)
  • Missing equipment (spare tire, jack, lug wench)
  • Paint damage
  • Chipped windshield
  • Recent emissions inspection sticker

Do your own diagnostics
With a PC and some special software you can do a complete analysis of a vehicle's engine and emission system. You simply plug into the vehicle's on-board diagnostic (OBD) computer and the software analyze your car's health. AutoTap is a product that performs this kind of analysis and shows the results in an easy-to-understand graphical format on your computer screen.

Drive the car
Test drive the car in as many ways as you can. On city streets at low speed and on highway at high speed. Drive on smooth streets and bumpy roads. Drive uphill and down. Jack-rabbit starts and sudden stops.

For more details on how to do a proper test drive, see our article, The All-Important Test Drive.

Close the deal
You'll need a Bill of Sale to complete the deal. A Bill of Sale protects both you and the seller, and provides a proper record of the sales transaction.

A Bill of Sale is always smart — even if it's not required by law in your state. It protects both buyer and seller. It contains a description of the vehicle, VIN, date of sale, purchase price, dates, signatures, and other important information.

To the buyer, a Bill of Sale is legal proof of purchase. It serves as a kind of temporary title/registration that can be important if pulled over by police for any reason, for purchasing insurance, and to secure a purchase loan.

To the seller, a Bill of Sale is protection from disputes that might arise later from the buyer.

Rather than attempt to write up your own Bill of Sale, we recommend that you use CarContracts.net. You can create and print a proper legal Bill of Sale form in a couple of minutes, for a small fee.

Check the law
Be aware that most states have laws and regulations that relate to used car sales. Check with your state Department of Motor Vehicles (DMV) or visit their web site for additional information.

Get a loan
One of the best sources of online used car loans is DriverLoans.com . They approve fast and you'll have your money quickly.

Pay the seller
Pay the seller with cash, a cashier's check, or a check from your loan company. Some sellers may not accept cashier's checks — because they can be faked. In that case, you'll have to conduct business at your bank and give the seller cash.

If the seller has to pay off a loan before he can get his title, this can be a touchy situation. You'll have to decide whether to trust him to send you the title later. If you are uneasy about it, you can go together to his bank to conduct this final part of the transaction. If the seller is from out of town, he could get a short-term personal "bridge loan" to pay off his car loan and get the title before you pay him.

Remember, a seller without a title may be selling a stolen car.

One last thing
Before the old owner departs, make sure you get the vehicle owners manual, any maintenance records, extra keys, remote openers, jacks, lug wrench, and warranty documentation. In some states, license plates go with the car; in others, the plates are retained by the old owner.

Be sure to contact your insurance company right away to have the new car added to your policy. You can do it on the telephone. Have your vehicle's VIN handy and a list of it's safety features and anti-theft equipment. In many cases, the insurance company may want to see the vehicle.

Most states require that you register your vehicle and change the title within 30 days after the sale. You may also have to pay sales tax, get an emissions/safety inspection, or get new license plates, depending on regulations in your state.

Buying a used car takes time and care in order to avoid making costly and unpleasant mistakes.

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