How to Buy a Used Car
Most people consider buying a used car an unpleasant experience. It can be difficult to find the vehicle you want and negotiating a price can be frustrating. There is always the concern that while you may be saving a lot of money versus buying a new car, you could be buying someone else's problems.
We will take you through the buying process, give you some pointers that will tilt the odds in your favor, and try to make the whole experience a little less confusing.
But remember an important fact. Ultimately, your instincts are your best guide. If something about the car or the deal just doesn't seem right, our advice is to listen to yourself and walk away, no matter what the car magazines, websites, or guidebooks say. You are the one looking at the car, you are the one talking to the owner or dealer and you will be the one that has to live with your decision.
First, we'll show you how to prepare for the purchasing process. We'll look at where to buy used cars, vans and trucks. Then, we'll give you some key suggestions on how to inspect and evaluate a used vehicle. Next, how to negotiate your price. Lastly, there is some information on your rights as a used car buyer.
Preparation is the single most important thing you can do to help ensure that you are successful in your used car or truck purchase. Sure, it can be a pain in the neck, but it may just save you years of regret.
When to Buy
The best time to buy a car is when you don't really have to! The benefits of planning ahead and taking your time cannot be emphasized enough. If your car or truck is due for some major work and you've decided not to put any more money into it, don't wait until the last minute to start looking for a new vehicle. You are far more likely to get a better deal on both sides of the equation (the vehicle you're buying and the one you're selling or trading in) when you have time to look around and have a vehicle that is still roadworthy to sell.
Drive a few different examples of the same model to give you a feel for what the vehicle should drive like. Driving only one or two examples may not give you a proper feel as to how the vehicle should drive. Time will also buy you negotiating power, enabling you to wait out a seller or simply walk away and find something better. Being without wheels can bring on enormous pressure to get them -- sometimes forcing bad decisions.
We fully understand that in the real world it's not easy to follow this advice, but it is the single most effective strategy you can employ. Below are some other important steps that will prove beneficial.
Determine Your Budget
How much do you want to spend? Before you embark upon the selection process, you need to establish your buying parameters. The amount of money you want to spend will greatly influence the type of vehicle you buy. Consult the used vehicle pricing data in this guide to set your buying parameters--and then stick to it! Buying a car often stirs up emotions that aren't particularly sensible. It's not always easy, but don't get caught up in the heat of the moment and make a decision you'll regret.
Narrow Your Choices
Consider your transportation needs and your lifestyle needs to help decide on the type of vehicle you should buy. Do you want a sedan or a coupe? A sport utility or a wagon? Make the decision! This will save you a lot of wasted time in your search. Don't just consider your immediate needs. Keep in mind that the same amount of money can get you into a late model cream puff compact or an older sport utility with a lot a miles, impending service bills and a lot of extra cash for gas. Determine your priorities.
Now that you've decided the type of vehicle, you're confronted with dozens of makes, models and trim variations. Again, try to narrow down your list to a few vehicles. A good place to start is the annual April auto issue of Consumer Reports, available in most libraries (remember those?). You can also visit their website. Check their frequency-of-repair data to determine if there may be one or more trouble areas in the particular model(s) you are considering. Focus on these areas when you go to look at the vehicle. Ask if they have been replaced.
Even if a vehicle seems to show good overall reliability you can still get stuck with a problem car. Do not rely soley on published data. Conversely, a model with relatively poor ratings may have received loving care
and prompt maintenance throughout its life and be perfectly acceptable. Check with friends, neighbors, relatives, etc. If any of them had owned a similar model find out what their experiences were. After all that, don't forget that you will still need to have any used vehicle inspected before you buy.
Other sources to check are Transport Canada and the US National Highway Traffic Safety Administration (NHTSA). They have complete recall records for all cars sold in North America. You can call 1-800-424-9393 for recall information or get the information directly from their databases on the web.
To see if a specific vehicle is subject to a recall and to check if all recall work has been completed, enter the vehicle's VIN here
Check with your local new car dealer about any Technical Service Bulletins (TSB's) that have been issued by the manufacturer for the model(s) you are looking at. Some of these may involve required repairs that are paid for by the manufacturer, either partially or in full. These reports are also available online on NHTSA's website.
This is also the time to check with your insurance agent or company about the cost to insure the vehicle. There can be substantial differences among models.
FINDING A USED VEHICLE
There are lots of places to buy used cars and trucks. Of the millions of used cars, vans and trucks that will be sold at the retail level in the US and Canada this year, about half will move through franchised and independent dealer lots and half by the owner's themselves, including rental companies. You will find pros and cons with each supply channel. We've highlighted the major ones below.
While it doesn't hurt to look at the many websites with dealer satisfaction indexes or consumer ratings, you have to be careful here, too. Fictional postings (good and bad) are not unheard of!
Franchised New Car Dealers
On the other hand, new car dealers have large selections, especially of the make they sell. Often, dealers get first shot at the best cars being auctioned by the manufacturers they represent. These may be one-owner "off-lease" vehicles or returns from rental firms or from other fleet sales.
Independent Used Car Dealers
Of course, there are downsides: First, one of the things low overhead means is that they usually do not have service or repair facilities or expertise in a particular make or model. You may be relying on a service department that does not know your vehicle particularly well. There are exceptions, of course.
Second, the quality of vehicle may be lower. Generally speaking, these dealers get auction leftovers or vehicles that have been wholesaled from another dealer. This doesn't mean the vehicle is bad, just that you'll have to keep your guard up. Lower quality examples are far more likely to end up on these lots. An inspection by an independent mechanic is essential.
You may want to consider the used car dealer that specializes in one or two specific makes. Since they limit their service to one or a few makes, often they have developed a thorough understanding and expertise of the models they sell. Indeed, most have a background at a franchised dealer.
We recommend buying from used car dealers who have been established in your community for at least a few years, preferably at the same location. Ask for references. Be extra careful of transient operators and "Buy Here, Pay Here" or "Tote-the-Note" lots that offer second-rate vehicles and onerous credit terms, usually to people with poor credit histories.
Private Party Sales
If you are considering this route, start at the least risky source: someone you know. Ask around and see if anyone is considering replacing their vehicle in the near future. You can offer a little more than a dealer would give in trade, so it's a win for all involved. This is an especially good strategy if you know that they had few problems with the car and took care of it properly.
There are downsides: First, it's a good idea to ensure that you are really dealing with a private individual and not a dealer. There are thousands of front-yard dealers or "curbsiders". One way of weeding out these dealers is to respond to their advertisement by asking about "the car" without actually saying the model name. If they have multiple cars for sale, they won't know which car you are calling about and will have to ask. Second, unless you are buying a vehicle still under its original warranty, you are not getting any guarantee. Third, in the absence of outright fraud, you have little recourse against a private party.
We don't want to paint all curbsiders with the same brush. Many are just trying to make a little extra income and do care about their reputation. Because of their extremely low overhead, they can offer good vehicles at prices most dealers can't meet. The problem for the consumer is that it's often difficult to weed out the bad ones.
Often these vehicles are rejects from wholesalers or other dealer auctions. A problem with any auction is that you may not get a good chance for a thorough inspection or test drive. Also, you may not have the chance to get out of a deal if the car is a lemon or is not what you thought it was. Be sure you understand what your rights are before you make an offer.
VMR does not recommend buying at these auctions unless you fully understand the risks, and know what you are doing when it comes to inspecting a vehicle. Bring a mechanic if you can.
INSPECTION OF THE VEHICLE
Now you are at the point of physically looking at and test driving vehicles. You should be looking for reasons NOT to buy the car! Do all you can to verify its history. Inquire about accidents, major repairs, previous owners and what the vehicle was used for. Was it used as a tow or plow vehicle? Those two activities accelerate wear on major components. Ask to see service records.
Although you should have any used vehicle inspected by a qualified mechanic before buying, there are some things you can check out on your own that may help you spot a clunker that isn't worth pursuing.
It is always a good idea to verify information with a a vehicle history report. We offer
reports on our website, and it's been proven over the years to be beneficial for millions of car buyers.
Check for rust along the body and under the car. Too much rust can eventually destroy a car. Once it starts it can progress very quickly. Determine if undercoating has been recently applied, as that could be masking a number of problems, including rust.
Take the cap off the radiator (CAUTION: Don't do this when the engine is hot - check the owner's manual for specific instructions). The coolant fluid itself should be clean and free of floating debris. Dirty fluid means the car has not been well maintained or has an internal cooling system problem.
If you want to get crazy, bring a small turkey baster or long eye dropper and extract some coolant. Squirt it into a clear glass and examine the contents. The fluid should have a viscosity greater than water, be free of debris and have a oddly translucent look to it.
With the engine running, put good sized piece of cardboard or poster board under it to check for leaks. If you see any within a few minutes, it could be a simple fix such as a gasket or something far more serious and expensive. Do not consider purchasing the vehicle until you find out what is the cause of any leak(s).
Turn the engine off. There should be no run-on, it should stop immediately.
After you have performed these tests, you can decide whether the vehicle is worth considering. If a number of problems appear, especially problems with the engine or transmission that can be expensive to repair, you probably want to walk away. If it seems to have few or no problems, record the VIN number on the vehicle for use in ordering a history report and for verification of the final paperwork. The next step is to negotiate a price.
As distasteful as it may be to some, negotiating is the key to getting the price you want. Dealers are masters at the game of negotiating; they do it every day. Your best weapon is information and preparation, but don't expect to outwit or outmaneuver the dealer - they've seen it all. Your best bet is to show the dealer you are serious about purchasing a vehicle and are sincere in your offer.
Grandstanding, losing your temper, or wasting the dealer's time benefits no one. Sometimes a simple "Thank you for your time, but I simply won't pay that price. Here's my number if you change your mind. Good day." works wonders if you follow up by walking out the door.
When buying from a dealer, we strongly recommend paying no more than the retail numbers in this guide. It may not be unusual to see asking prices hundreds or thousands over our retail level. Buying at that level would make any dealer very happy. It is not unusual for a dealer to mark up even moderately priced used cars three, four, or even five or more thousand dollars. Some of the upper end luxury cars may be marked up even more. Do not be afraid to haggle aggressively. Dealers may feign indignation but rest assured, they are experts at this game.
If you are buying from a private party, you should pay under retail and as close to wholesale as possible.
Finally, make sure the deal is subject to a professional inspection. In other words, make sure that if your mechanic or diagnostic service finds a problem, you can either deduct the cost of the repair from the agreed price or, if the seller is a dealer, have the problem fixed at no cost to you.
If you have a mechanic you trust, he (or she) is probably the best choice for inspecting the vehicle. He should not be affiliated with the dealer or seller because you want to be sure of objectivity.
Many repair shops have ASE (American Society of Engineers) certified mechanics whom have completed formal repair and diagnostic training. Usually they will display the ASE logo at their establishment. Make sure their certifications are current, and that the mechanics certified will actually inspect your vehicle.
Be sure to get a written estimate of repair costs from the mechanic or diagnostic center specifying the work that needs to be done. If repairs are needed, go back to the dealer or seller and use it to get a lower price or a free repair.
Extended warranties will most likely be offered by a dealer, but at a price. This is high marging product for the dealer, often carrying a 50-100% markup. You may be able to use an extended warranty as a bargaining chip. You may be able to get the warranty added to the deal at no additional cost as an incentive for you to buy the car.
Unfortunately, warranties not backed by auto manufacturers have at best, a dubious reputation. Find out who underwrites the warranty work, who authorizes work to be performed, how many years the company has been in business, and where they are located. Check with your Province for any complaints against them. While many warranty programs are legitimate, we have seen too many consumers burned by fly-by-night operations that stay in business only long enough to compensate their management with fat salaries and generous expense accounts. Finally, always check with your mechanic to make sure if he will accept work under a specific warranty program.
FINANCING A USED CAR
Just as with new cars, you can finance the purchase of a used car. First, you should shop around for the best deal from banks, credit unions or other finance companies as well as the dealer. Compare interest rates and terms.
In general, interest rates are higher for used cars than for new cars. Avoid high-interest rate "tote the note" or "buy here, pay here" used car lots that deal with buyers with bad credit. In addition to high interest rates, these operators frequently charge much more than the car is worth.
Used Car Leases
In general, we do not recommend leasing a used car. After all, a major benefit to leasing a new car is that the warranty period is as long as the lease term. That means any defects will be covered. With a used car, the warranty (even an extended warranty) may expire before the lease is completed. The last thing you want to do is put money into someone else's car. An exception would be manufacturer-sponsored leases on late model "certified" cars, particularly luxury models, that are backed by an original manufacturer's warranty for the term of the lease.
In all cases, be sure the vehicle is properly described with the correct vehicle identification number (VIN) that you wrote down during your inspection. Also, be sure the seller has clear title with no legal liens from banks or other parties.
INSURING, TITLING & INSPECTIONS
The rules for insuring a used car are the same as for a new vehicle. If you have any questions your province's website is a good place to start, or call your local insurance agent.
Titling and Registering the Vehicle
IF YOU FEEL YOU HAVE BEEN MISLED
You can file complaints against dealers if you feel you have been improperly treated or that a vehicle has been misrepresented. Your case is strongest if you can show written proof of misrepresentation by the dealer. Without written proof it may be difficult, although not impossible, to make your case.
Once again, your Province's website is the best place to start.