How to choose the 'right' car? What mileage is too high for a used car? What to look for when buying a used car? There are many questions when it comes to buying a used car. Over the years, I have helped many people with their car purchases. In this article, I will answer to some of these questions and hopefully make a used car buying process easier for you.
• What monthly payments can you afford
• What kind of car to look for
• What type of a used car will fit into my price range?
• Car value and price
• Choosing the right car
• Cost of insurance
• What mileage is too high for a used car
• How old is not "too old"
• Buying 1-2 year old used cars
• Is it worth to buy a car 'as is' or in need of some repairs?
• Who sells used cars
• Buying a used car from a rental car company
• Making a list
• Questions to ask a private seller
• Questions to ask a dealer
• Checking the used car history
• At the dealership
• Having the vehicle inspected
• Negotiating the deal
• Legal aspects and paperwork
• Buying an extended warranty
• Do's and Don'ts when buying a used car
Decide on your budget
The first step when buying a car is setting your budget. A car buying process can be overwhelming; there is a good chance the dealership sales people will try to sell you something more expensive than you had in mind. You just don't want to be distracted by cars that you cannot afford.
When shopping for a car, always consider the total price. Often it could be hidden behind low monthly payments stretched over the long time: "Only $189 a month!" sounds great, but if you calculate the total price, it could be way too high. Often, car buyers just don't have enough time to think their decision through; that's why thousands of people search the internet for 'How to get out of a car loan'. But if you know your budget ahead of time, you will be able to focus on what you need and won't be distracted by more expensive cars. If you can buy a car or truck for $12,000 instead of $27,000, I'm sure you can find better ways to use the $15,000 you saved, be it for kids' education or something else your family needs.
Avoid long-term contracts. The economy is still shaky. Look a couple of years ahead: If your company is solid and your job is secure is one thing; but when you don't know if you will have a stable income next year, buying a car that you can pay off sooner is a wiser choice. The basic rule is, if you cannot pay off a car in full within three years without straining your family budget, it is too expensive.
Consider fuel, repair, maintenance and insurance costs. For example, you can buy a used Audi or BMW in good condition for only $15,000, but it will cost you a lot in maintenance, repairs and insurance. Similarly, for the same price, you can buy a nice used V8 truck, but it will cost you around $4,000 a year for gas alone.
When shopping for a car, always consider the total price. Often it could be hidden behind low monthly payments stretched over the long time: "Only $189 a month!" sounds great, but if you calculate the total price, it could be way too high. Often, car buyers just don't have enough time to think their decision through; that's why thousands of people search the internet for 'How to get out of a car loan'. But if you know your budget ahead of time, you will be able to focus on what you need and won't be distracted by more expensive cars. If you can buy a car or truck for $12,000 instead of $27,000, I'm sure you can find better ways to use the $15,000 you saved, be it for kids' education or something else your family needs.
Avoid long-term contracts. The economy is still shaky. Look a couple of years ahead: If your company is solid and your job is secure is one thing; but when you don't know if you will have a stable income next year, buying a car that you can pay off sooner is a wiser choice. The basic rule is, if you cannot pay off a car in full within three years without straining your family budget, it is too expensive.
Consider fuel, repair, maintenance and insurance costs. For example, you can buy a used Audi or BMW in good condition for only $15,000, but it will cost you a lot in maintenance, repairs and insurance. Similarly, for the same price, you can buy a nice used V8 truck, but it will cost you around $4,000 a year for gas alone.
What monthly payments can you afford
Financial experts recommend that your total debt payments should not exceed 36 percent of your gross income (total income before taxes and other deductions). This means that if you are making $50,000 a year, your total debt payments should not exceed $18,000 a year, or divided by twelve, $1,500 a month. If you are already paying $1,300 a month for all your debts, including mortgage or rent, credit cards, loans and other installments, all you can afford for a car is $200 a month.
Here is a good article from the FTC: Understanding Vehicle Financing, it explains many aspects of vehicle financing, including determining how much you can afford.
Here is a good article from the FTC: Understanding Vehicle Financing, it explains many aspects of vehicle financing, including determining how much you can afford.
What kind of car to look for
When buying a used car, look for a model that has good reputation for reliability and won't lose its value too quickly. Check the gas mileage and safety ratings. Avoid used luxury cars, as they could be very expensive to maintain. Read more what to research here: choosing the right car. Your best bet is a 3-5 year old used car, as a new car loses most of its value during the first two years. Your goal is to find a well-maintained car that didn't have major mechanical problems or accidents in the past. A one-owner car is even better. It's great if the seller or a dealer can show you the service records to verify that the oil changes were done regularly. The lower the mileage the better, but don't put too much value on the mileage alone; the mechanical condition of the vehicle is more important. Don't be put off by minor cosmetic issues, like dents or scratches, unless it really matters for you. It's more important for a car to be in a good mechanical shape, and if it has some minor blemishes, you can use them to negotiate the price down.
The condition of the interior usually says a lot, so watch out for excessive wear of the driver's seat, steering wheel, driver's door, controls and switches. Avoid cars with engine or transmission problems, even if it seems like something minor; often, this type of problems could require expensive repairs. Avoid badly rusted cars even if the major corrosion spots have been repaired; once the corrosion process starts, nothing will stop it. Turbocharged cars often have more problems when used; not all turbocharged cars are bad, but in general, an average car without a turbocharger will be more reliable in a long run. Avoid overly-modified cars; if you like modifications, buy a regular car and modify it yourself. Read more:how to check a used car before buying it.
The condition of the interior usually says a lot, so watch out for excessive wear of the driver's seat, steering wheel, driver's door, controls and switches. Avoid cars with engine or transmission problems, even if it seems like something minor; often, this type of problems could require expensive repairs. Avoid badly rusted cars even if the major corrosion spots have been repaired; once the corrosion process starts, nothing will stop it. Turbocharged cars often have more problems when used; not all turbocharged cars are bad, but in general, an average car without a turbocharger will be more reliable in a long run. Avoid overly-modified cars; if you like modifications, buy a regular car and modify it yourself. Read more:how to check a used car before buying it.
What your money can buy?
For $10,000-20,000 you can buy a nice 3-4 year old vehicle in good condition that can last for another 4-5 years without major problems. SUVs, pickup trucks and luxury cars are usually priced in the top portion of this range; family sedans are in the middle; small cars are at the lower end. Often you can find this type of vehicle under Certified Pre-owned program at a new car dealership, possible with some warranty. Often a dealer may have service records, so you can verify that the car was maintained regularly. This would be your safe bet.
For $5,000-10,000 you still can find a used car in decent condition, although it will be an older vehicle with higher mileage. It also takes more time to find a good car for this price, although there are still plenty of choices. More likely, you can find a vehicle in this price range sold by an independent used car dealership or a private owner; some new car dealers also may have a few cars within this price range on their lots.
Even if your budget is limited by $5,000, you still can find a decent car, although be prepared to spend more time. For this price range, it might be a good idea to look for a small or mid-size car, as a pickup truck or SUV with average driving of 15,000 miles per year will cost you more than $4,000 a year in gas alone. For comparison, an average fuel cost for a small car is about $2,200 per year with 15K miles per year. Be prepared that a car for under $5,000 will need some repairs to keep it on the road. A car in this price range is typically sold privately or by independent used car dealers.
For $5,000-10,000 you still can find a used car in decent condition, although it will be an older vehicle with higher mileage. It also takes more time to find a good car for this price, although there are still plenty of choices. More likely, you can find a vehicle in this price range sold by an independent used car dealership or a private owner; some new car dealers also may have a few cars within this price range on their lots.
Even if your budget is limited by $5,000, you still can find a decent car, although be prepared to spend more time. For this price range, it might be a good idea to look for a small or mid-size car, as a pickup truck or SUV with average driving of 15,000 miles per year will cost you more than $4,000 a year in gas alone. For comparison, an average fuel cost for a small car is about $2,200 per year with 15K miles per year. Be prepared that a car for under $5,000 will need some repairs to keep it on the road. A car in this price range is typically sold privately or by independent used car dealers.
Used car value and price
When it comes to used cars, the "best deal" doesn't mean the cheapest one. Your goal is to find a well-maintained used car in good condition for a reasonable price. You will simply save on repairs and enjoy driving it. The rule is, if a car is priced too low, there is probably something wrong with it. How to know the 'right' price for a certain vehicle? You can check the black or blue book value as a reference, but they just give you an average price. The actual value of any used vehicle depends on its condition, options and other factors. Two cars of the same model may only look the same. One might have been maintained poorly, with noisy engine that consumes oil, cheap tires and corrosion underneath. The owner of another vehicle might have been religious about maintenance, was using only synthetic oil, has done the rustproof and so on. In this case, you would be right to pay more for the second car.
To see how much you will have to pay for a certain model you just need to see what is available on the market in your area. For example, if you want to buy a three-four years old Toyota Camry, search the Autotrader website for a used Toyota Camry in your area limiting the search within your year range. The search result may give you a few hundred cars priced from $10,000 to $20,000. Ignore those that are too expensive and those that are too cheap. To do that, you can do a new search selecting the price range, for example, from $12,000 to $17,000. Now, try narrowing your search further. For example, you only want a 4-cylinder model with the mileage under 60K. Modify your search selecting only 4-cylinder models and your desired mileage. Your search result could return for example, around 70 cars with the average price of around $15,000. If you know how to bargain (read further) you can probably negotiate that price down to around $13,500-14,000. So this is roughly what you will have to pay for the 3-4 year old 4-cylinder Camry in your area, of course, plus registration, taxes, etc.
To see how much you will have to pay for a certain model you just need to see what is available on the market in your area. For example, if you want to buy a three-four years old Toyota Camry, search the Autotrader website for a used Toyota Camry in your area limiting the search within your year range. The search result may give you a few hundred cars priced from $10,000 to $20,000. Ignore those that are too expensive and those that are too cheap. To do that, you can do a new search selecting the price range, for example, from $12,000 to $17,000. Now, try narrowing your search further. For example, you only want a 4-cylinder model with the mileage under 60K. Modify your search selecting only 4-cylinder models and your desired mileage. Your search result could return for example, around 70 cars with the average price of around $15,000. If you know how to bargain (read further) you can probably negotiate that price down to around $13,500-14,000. So this is roughly what you will have to pay for the 3-4 year old 4-cylinder Camry in your area, of course, plus registration, taxes, etc.
Choosing the right car
You won't get a good deal if you just browse from a dealer to dealer without knowing what kind of car you are looking for. Once you know your budget, the next step is to narrow your choice down to a few makes and models. Consider your daily driving needs and decide what is important to you, what features you need in a car. Do you commute long distances to work? Then you probably want your car to be cheap on gas. Are snowy roads common where you live? You might want your car to have the anti-lock brakes (ABS). Do you like long weekend trips? You probably need your car to have a cruise control. However, be realistic; don't limit yourself with one particular feature. For instance, If you are looking for only a 4WD wagon for occasional outdoor trips and your budget is under $5,000, your choice might be very limited, but you might be able to find quite a few small or mid-size sedans for this price that also can suit your purpose.
Once you have an idea what kind of car you want, search the Autotrader and see what is available for sale within your price range. Try to avoid first-year models, as they usually have more glitches. Write down your possible choices and compare their gas mileage, reliability, safety ratings and other features; read reviews, research common problems and complaints. Read more: what to research when deciding on a used car. This will allow you to narrow your search to just a few makes and models.
Once you have an idea what kind of car you want, search the Autotrader and see what is available for sale within your price range. Try to avoid first-year models, as they usually have more glitches. Write down your possible choices and compare their gas mileage, reliability, safety ratings and other features; read reviews, research common problems and complaints. Read more: what to research when deciding on a used car. This will allow you to narrow your search to just a few makes and models.
Cost of insurance
The cost of insurance varies a lot depending on the make, year and model of the car, driver's experience and many other factors. Even the color of the vehicle makes a difference. We recommend getting a few insurance quotes to compare before buying a car.
What mileage is OK for a used car
In general, I would not recommend buying a car with a very high mileage. To put it into numbers, more than 155,000 miles or 250,000 km is probably too much; however, a "low mileage" does not mean "a good car." Of course, the less miles, the better, but don't put too much value on the mileage alone without considering other factors like mechanical condition, options, reliability, how well the car was maintained, etc. I've seen many 'bad' low-mileage cars: some restored after accidents, others poorly cared for and some even with their odometer rolled back, which is still happening, even though it's illegal. Again, checking the used car history records can help you avoid this kind of lemons.
When considering between cars of different brands, again the one with 50,000 miles but with proven reliability could be a better choice than the other one with 40,000 miles, but with poor reliability records.
Ideally, look for something under 80,000 miles or 130,000 km, but it all depends on your budget. If you cannot afford a low-mileage car, pay more attention to the mechanical condition.
When considering between cars of different brands, again the one with 50,000 miles but with proven reliability could be a better choice than the other one with 40,000 miles, but with poor reliability records.
Ideally, look for something under 80,000 miles or 130,000 km, but it all depends on your budget. If you cannot afford a low-mileage car, pay more attention to the mechanical condition.
How old is not "too old"?
I would not recommend buying an old car even at a "bargain" price, especially if you live in the Rust Belt where rust is a big problem. No matter how many new parts you put into an old car, it will still be an old car that will need more and more repairs later. I'd say, avoid anything older than twelve-fifteen years, or older than ten years If you live in the Rust Belt. A perfect choice will be a three to five year old car because the price is greatly reduced and you will still have a few trouble-free years of driving.
One important detail: what is listed in the ad is a model year, not the production year. A car produced in July 2007 could be listed as a 2008 model, but the car produced in June 2008 can also be a 2008 model that is almost a year difference. Check the date when the car was manufactured. You can check for the first registration date in the used car history report or check the manufacturer's label. Read more how to check it in our illustrated used car checklist.
One important detail: what is listed in the ad is a model year, not the production year. A car produced in July 2007 could be listed as a 2008 model, but the car produced in June 2008 can also be a 2008 model that is almost a year difference. Check the date when the car was manufactured. You can check for the first registration date in the used car history report or check the manufacturer's label. Read more how to check it in our illustrated used car checklist.
Buying 1-2 year old used cars
Sometimes you may come across a one- or two-year-old used car. On one hand, it might be a good deal, since a new car depreciates the most in the first year and there is still some warranty coverage left. On the other hand, the main question is how this car ended up on a dealer's lot, because usually people tend to keep their cars for at least three-four years. Most of lease or finance contracts are also have three to five years terms. One common source for one-two year old cars is the car rental companies, as they typically lease their cars for one or two years, after which the ex-rental cars find their way to the dealer lots. Another possibility is that the car was either bought back or traded in because there was some problem with it that the previous owner couldn't live with. It also could be an insurance write-off after an accident. Either way, if you want to buy a one or two year old car, try to find out where it came from and have it thoroughly inspected. Running the car history report can help. By the way, if you are looking for a one-year old car, you might be able to buy directly from a car rental company; read below.
Is it worth to buy a car 'as is' or in need of some repairs?
I would advice against buying a car that needs some repairs, even if the price is low.
Very often, used cars like this need a lot more repairs than it may initially seem.
A friend of mine has bought a twelve-year old Honda 'as is'. It was drivable, but "minor body repair" was needed. It was very cheap though, only $1200. During the safety inspection, more problems were discovered and my friend had to spend another $600 for the new brakes and suspension repairs. To pass an emission test has cost him $350 more for a new catalytic converter and tune-up. A body repair added another $500. Then, after a week of driving, another problem came up and the test showed no compression in one of the cylinder. Another $700 has gone. In the end, this car has cost him just over $4000 (after adding new audio system, battery, etc.). For this money, he could buy a much better car in good condition. Again, the point is, no matter how much you spend on an old clunker, it still will be an old car that will need more and more repairs.
Very often, used cars like this need a lot more repairs than it may initially seem.
A friend of mine has bought a twelve-year old Honda 'as is'. It was drivable, but "minor body repair" was needed. It was very cheap though, only $1200. During the safety inspection, more problems were discovered and my friend had to spend another $600 for the new brakes and suspension repairs. To pass an emission test has cost him $350 more for a new catalytic converter and tune-up. A body repair added another $500. Then, after a week of driving, another problem came up and the test showed no compression in one of the cylinder. Another $700 has gone. In the end, this car has cost him just over $4000 (after adding new audio system, battery, etc.). For this money, he could buy a much better car in good condition. Again, the point is, no matter how much you spend on an old clunker, it still will be an old car that will need more and more repairs.
Who sells used cars?
1. New car dealerships.
New car dealers usually price their cars a bit higher than you'd see at independent used car lots, but you more likely to find a good used car in a new car dealer's lot. They often have one-owner trade-ins or lease returns, sometimes even with all maintenance records. Of course, buying a used car from a new car dealer does not give you a hundred percent guarantee that the car will have no hidden problems. Even a 'Certified' used car, although less likely, could have some issues. Of course, new car dealers are more responsible and if something goes wrong, it's easier to deal with them. Overall, a new car dealership is the best place to shop for a good used car.
2. Independent used car dealers.
Independent used car dealers usually sell their cars a bit cheaper, but there is more chances to get ripped off or get a lemon hidden under "this week special."
3. Private owners.
Private owners usually sell used cars cheaper and they are more flexible on price. The best scenario would be if it's a first owner of the car and all the service and maintenance records are available. Be aware, if you're buying a used car "as is," it means there is no warranty and in most cases if the car breaks down even on the very next day, you can do nothing about it. When buying from a private owner you should make sure that the person is the real owner of the car, and the car has no liens or any other legal obligations. If you want to know about how to transfer the ownership, how to register the vehicle, or how to check it for liens, contact your Vehicle Registration Office (Department of Motor Vehicle). A word of advice: try to avoid dealing with curbsiders. Here's what happened to someone who contacted me. The person bought a car from a curbsider and in an effort to save on taxes, arranged the deal as a private sale. Later the buyer checked the history and found the car was written off in a different State in the US due to an accident and the mileage was noted to be a lot higher than the curbsider stated to him. After repeated attempts, this person could not even locate this "dealer."
New car dealers usually price their cars a bit higher than you'd see at independent used car lots, but you more likely to find a good used car in a new car dealer's lot. They often have one-owner trade-ins or lease returns, sometimes even with all maintenance records. Of course, buying a used car from a new car dealer does not give you a hundred percent guarantee that the car will have no hidden problems. Even a 'Certified' used car, although less likely, could have some issues. Of course, new car dealers are more responsible and if something goes wrong, it's easier to deal with them. Overall, a new car dealership is the best place to shop for a good used car.
2. Independent used car dealers.
Independent used car dealers usually sell their cars a bit cheaper, but there is more chances to get ripped off or get a lemon hidden under "this week special."
3. Private owners.
Private owners usually sell used cars cheaper and they are more flexible on price. The best scenario would be if it's a first owner of the car and all the service and maintenance records are available. Be aware, if you're buying a used car "as is," it means there is no warranty and in most cases if the car breaks down even on the very next day, you can do nothing about it. When buying from a private owner you should make sure that the person is the real owner of the car, and the car has no liens or any other legal obligations. If you want to know about how to transfer the ownership, how to register the vehicle, or how to check it for liens, contact your Vehicle Registration Office (Department of Motor Vehicle). A word of advice: try to avoid dealing with curbsiders. Here's what happened to someone who contacted me. The person bought a car from a curbsider and in an effort to save on taxes, arranged the deal as a private sale. Later the buyer checked the history and found the car was written off in a different State in the US due to an accident and the mileage was noted to be a lot higher than the curbsider stated to him. After repeated attempts, this person could not even locate this "dealer."
Buying a used car from a rental car company
If you are looking for a one- or two-year-old vehicle, one of the possibilities is to buy directly from a car rental company. Often it could be a lot cheaper than buying from used car dealers. Of course, there are some risks involved: some of the rental cars could have been poorly maintained; others could have been involved in accidents.
On the plus side, a one- or two-year-old vehicle is still covered by a factory warranty. Once a friend of mine wanted to buy a one-year old Toyota. We checked new car dealers, but what they had was too expensive. By chance, we found a one-year old Toyota at a local car rental business. It was a lot cheaper than from the dealers, so after inspecting it thoroughly my friend bought it and it worked out well - he was very happy with the vehicle.
If you want to buy a used rental car, look for reputable brands like Hertz, Avis, Enterprise, etc. Once you find a car, check vehicle's maintenance records and definitely have the vehicle thoroughly inspected by your mechanic. In addition, check with the car manufacturer on the warranty coverage.
On the plus side, a one- or two-year-old vehicle is still covered by a factory warranty. Once a friend of mine wanted to buy a one-year old Toyota. We checked new car dealers, but what they had was too expensive. By chance, we found a one-year old Toyota at a local car rental business. It was a lot cheaper than from the dealers, so after inspecting it thoroughly my friend bought it and it worked out well - he was very happy with the vehicle.
If you want to buy a used rental car, look for reputable brands like Hertz, Avis, Enterprise, etc. Once you find a car, check vehicle's maintenance records and definitely have the vehicle thoroughly inspected by your mechanic. In addition, check with the car manufacturer on the warranty coverage.
Making a list
Check the car sales websites, such as Autotrader.com or Autotrader.ca for Canada. Make a list of suitable cars with the options you need. The Autotrader.com offers you to save cars you like into "My Cars" section if you sign in. You can even download an iPhone or Android Autotrader.com app that you can use to search for new, used and certified cars near you, including dealership and private seller listings.
Questions to ask a private seller
- When did you buy the car? How many previous owners? Current mileage? Who is the Owner? Any liens? Answers like 'This is a friend of mine's car', or 'I bought this car a couple of months ago' should put you on guard. You need to deal with the actual vehicle owner and he/she has to sign the bill of sale. If a car is sold just a few months since its purchase, this may indicate that this car has a problem or the seller is in the 'curbsider' business.
- Any previous accidents? Major repairs? Any repairs needed now?
- What's the mechanical condition? Any concerns? Any smoke when the engine is started? Is the transmission shifts without issues? General condition? Interior? Exterior? Any rust? Scratches? Dents? Chips on the windshield? Any other damages? Where and how regularly the car has been serviced? Are the service records available? What is the reason for selling? When was the last emission test done?
Don't expect the seller to provide you with all the information. He/she may be unaware about previous accidents or other problems. Refer to the vehicle history report and the result of mechanical inspection. I wouldn't recommend buying a car after an accident or after a major repair, e.g., with a re-built engine or transmission.
- Is the car drivable now? The car may not have valid license plates or insurance or have some mechanical problem, so you won't be able to test-drive it.
- Any previous accidents? Major repairs? Any repairs needed now?
- What's the mechanical condition? Any concerns? Any smoke when the engine is started? Is the transmission shifts without issues? General condition? Interior? Exterior? Any rust? Scratches? Dents? Chips on the windshield? Any other damages? Where and how regularly the car has been serviced? Are the service records available? What is the reason for selling? When was the last emission test done?
Don't expect the seller to provide you with all the information. He/she may be unaware about previous accidents or other problems. Refer to the vehicle history report and the result of mechanical inspection. I wouldn't recommend buying a car after an accident or after a major repair, e.g., with a re-built engine or transmission.
- Is the car drivable now? The car may not have valid license plates or insurance or have some mechanical problem, so you won't be able to test-drive it.
Questions to ask a dealer
- Is the car still available for sale? A few times, I have witnessed the situation, when over the phone a sales person tells you that a car is available, but when you come, he/she would tell you that the car is sold and he/she wasn't aware of this. So ask to confirm.
- Ask to confirm the mileage, price, color and that it has the options that you are looking for: air conditioner, automatic or manual, ABS, cruise control, etc.
- Ask about any additional fees. Some dealers may set the advertised price fairly low to lure more buyers, but add some additional 'administration' or some other fees later.
- Ask when the car was placed in service and is it still covered by any type of warranty. For example, a car that is advertised as a 2009 model might have been originally sold and placed in service in August 2008, so the original warranty will be counted from that date.
- Ask if the car had any accidents or major repairs.
- Ask if any service records available. A car might have been originally sold from the same dealer and they may have its service records. It's nice to know if the car has been maintained regularly.
- Ask if the price is negotiable. For example, if the car is advertized for $14,000, ask if it's worth to come if you only want to pay $13,000. Usually, dealers are more willing to discuss the price when they feel that you are the real buyer.
- Ask if the dealer can arrange the car be brought for an inspection to your mechanic.
- If it looks like this is the car you want, ask for the VIN number, so you can check the history records.
- Ask to confirm the mileage, price, color and that it has the options that you are looking for: air conditioner, automatic or manual, ABS, cruise control, etc.
- Ask about any additional fees. Some dealers may set the advertised price fairly low to lure more buyers, but add some additional 'administration' or some other fees later.
- Ask when the car was placed in service and is it still covered by any type of warranty. For example, a car that is advertised as a 2009 model might have been originally sold and placed in service in August 2008, so the original warranty will be counted from that date.
- Ask if the car had any accidents or major repairs.
- Ask if any service records available. A car might have been originally sold from the same dealer and they may have its service records. It's nice to know if the car has been maintained regularly.
- Ask if the price is negotiable. For example, if the car is advertized for $14,000, ask if it's worth to come if you only want to pay $13,000. Usually, dealers are more willing to discuss the price when they feel that you are the real buyer.
- Ask if the dealer can arrange the car be brought for an inspection to your mechanic.
- If it looks like this is the car you want, ask for the VIN number, so you can check the history records.
Checking used car history records
In the next step, check used car history records. This will help you eliminate some of the vehicles with potential problems. A car or truck that you are interested in might have been restored after an accident. It could have been a rental vehicle or its odometer has been altered. A history report contains a lot of other useful information. To check a history report you need the vehicle's VIN number. Read more: How to check a car history by the VIN number.
At the dealership
Before visiting a dealer, be prepared, read how the process works. Edmunds.com has a very interesting article called Confessions of a Car Salesman that explains how the dealership sales department works. If you don't want to read the whole article, the most useful section is at the page 10.
When dealing with a dealer, the simple rule is that you came here to make a business transaction, exchange your money for a car; you want a car, dealer wants your money. You don't have to become friends with a salesperson, neither do you have to get angry or argue. Leave unnecessary emotions or empty talks aside and look at it as a pure business transaction; concentrate on facts and details. Just because a salesperson is nice to you, doesn't mean you should let your guards down when discussing the details; in the end, if you can reach a fair deal, both sides will be happy. Dealers know how to use different sales strategies, and if you visit a few dealers, you might even hear the same sales pitches and stories. Emotion is a big part of the sales process. You just test drove a clean shiny car and you are excited thinking about driving it home today. This is when important details and numbers can get overlooked. Take a break to weigh pros and cons, discuss the deal with your friend or even better come back tomorrow with a clear mind; the car will still be there and if not there are plenty of others.
When dealing with a dealer, the simple rule is that you came here to make a business transaction, exchange your money for a car; you want a car, dealer wants your money. You don't have to become friends with a salesperson, neither do you have to get angry or argue. Leave unnecessary emotions or empty talks aside and look at it as a pure business transaction; concentrate on facts and details. Just because a salesperson is nice to you, doesn't mean you should let your guards down when discussing the details; in the end, if you can reach a fair deal, both sides will be happy. Dealers know how to use different sales strategies, and if you visit a few dealers, you might even hear the same sales pitches and stories. Emotion is a big part of the sales process. You just test drove a clean shiny car and you are excited thinking about driving it home today. This is when important details and numbers can get overlooked. Take a break to weigh pros and cons, discuss the deal with your friend or even better come back tomorrow with a clear mind; the car will still be there and if not there are plenty of others.
Having the vehicle inspected
Inspect a vehicle carefully, take your time. It's a good idea to bring a friend who is more familiar with cars. Here is a little trick that may help you: If possible, come earlier than your appointment and check the vehicle when it's started cold. Many problems are easier to detect when the vehicle is first started: a car may smoke when it's cold or the engine may be noisy or the transmission may engage with a delay. Some of these types of problems might be less noticeable once the car is warmed up. Test-drive for as long as possible to get the good feel. During a test drive, pay attention to the vehicle performance. Watch out for noises, see if the car drives straight and holds the road well. Read our Illustrated used car checklist to learn what to look for in a used car. As a final step, bring the car to the mechanic of your choice for an inspection. Sometimes you can find a mechanic who can come with you to the dealer and inspect the vehicle on-site. Another choice is to arrange with the dealer to bring the vehicle to an auto repair shop or another dealer of your choice for an inspection. When you get a used car inspected, if possible, try to speak personally to the mechanic who did the inspection; don't rely on the inspection report alone. Ask a mechanic if he (she) would buy this vehicle or not and why. Ask if it looks like the car has been well maintained or not and what kind of problems to expect. A word of caution, NEVER give a deposit or sign a contract before the car is inspected. If you bought a car and later found out there is something wrong with it, it won't be easy to return it back.
It's also a good idea to check for outstanding recalls and safety campaigns. You can call an authorized dealer's service department and ask to check if there are any recalls that need to be done on the vehicle. They will need the VIN number to check their database. If there are recalls that need to be performed, you can even ask a dealer selling the vehicle to arrange any recalls done by the authorized dealer before you pick up the vehicle. You can check for recalls here: Safety Recalls - NHTSA or Transport Canada - Road Safety Recalls Database.
It's also a good idea to check for outstanding recalls and safety campaigns. You can call an authorized dealer's service department and ask to check if there are any recalls that need to be done on the vehicle. They will need the VIN number to check their database. If there are recalls that need to be performed, you can even ask a dealer selling the vehicle to arrange any recalls done by the authorized dealer before you pick up the vehicle. You can check for recalls here: Safety Recalls - NHTSA or Transport Canada - Road Safety Recalls Database.
Negotiating the deal
Often when you use a proper negotiation strategy, you can get a reasonable discount. Here are a few proven tips:
1. Start negotiating from the beginning. See if you can get a discount from the very first time you phone about the car. If a car is advertised for $15,000, ask if it's worth to come if the $14,000 is your bottom line, considering that you are the real buyer. Usually they won't say no, which means that when you come, you can start negotiating down from $14,000, not from $15,000
2. Negotiate the total price. Dealers always like to add some additional fees on the top of the sticker price. Ask to calculate a total price "on the road" and use it for a negotiation.
3. Don't be afraid to make a lower offer. If they are asking $15,000, offer $13,000. If the salesperson believes you will really buy a car, he/she will go down in price and maybe you will then get the car for $13,800 or thereabouts.
4. Be ready to leave if you feel any pressure or if you have any reservations about the car or the deal, there are so many other cars available. You don't have to decide immediately. Do not give a deposit or sign anything until you are absolutely satisfied with the car and the conditions of the deal. Take a break to think the deal through.
5. Nothing works better than competition. Let's say you have two cars on your list that you're interested in. Show it to the salesperson and say you will buy a car from whoever gives you the better price. For example, if one of the salespersons offers you a $500 discount, phone to another dealer on your list and ask them if they can match it.
6. Whatever is promised by a dealer, ask to confirm in writing. Negotiate all the details of the deal. If the dealer promises to install new tires, make sure you agree on what kind of tires - cheapest available or of a reputable brand like Michelin or Goodyear. If there is some kind of warranty that comes with the car, make sure you understand all terms and condition. If the dealer promises to show you all service records, make sure you check them before paying for a car.
1. Start negotiating from the beginning. See if you can get a discount from the very first time you phone about the car. If a car is advertised for $15,000, ask if it's worth to come if the $14,000 is your bottom line, considering that you are the real buyer. Usually they won't say no, which means that when you come, you can start negotiating down from $14,000, not from $15,000
2. Negotiate the total price. Dealers always like to add some additional fees on the top of the sticker price. Ask to calculate a total price "on the road" and use it for a negotiation.
3. Don't be afraid to make a lower offer. If they are asking $15,000, offer $13,000. If the salesperson believes you will really buy a car, he/she will go down in price and maybe you will then get the car for $13,800 or thereabouts.
4. Be ready to leave if you feel any pressure or if you have any reservations about the car or the deal, there are so many other cars available. You don't have to decide immediately. Do not give a deposit or sign anything until you are absolutely satisfied with the car and the conditions of the deal. Take a break to think the deal through.
5. Nothing works better than competition. Let's say you have two cars on your list that you're interested in. Show it to the salesperson and say you will buy a car from whoever gives you the better price. For example, if one of the salespersons offers you a $500 discount, phone to another dealer on your list and ask them if they can match it.
6. Whatever is promised by a dealer, ask to confirm in writing. Negotiate all the details of the deal. If the dealer promises to install new tires, make sure you agree on what kind of tires - cheapest available or of a reputable brand like Michelin or Goodyear. If there is some kind of warranty that comes with the car, make sure you understand all terms and condition. If the dealer promises to show you all service records, make sure you check them before paying for a car.
Legal aspects of buying a car
Many questions may come up when buying a used car such as how to transfer the ownership, how to register the car from another state or province, what papers are required to register the vehicle, the owner's and buyer's responsibilities, etc. Because each province or state may have different laws and requirements for the sales transaction of the car, it is best to call your local vehicle registration office or Department of Motor Vehicles, or legal authorities.
Be careful when doing the paperwork. For example, if you buy from a private owner, make sure there are no registered liens against the vehicle and that the person who signs the Bill of Sale is the actual owner of the car. Check with the Vehicle Registration Authorities to make sure the car has not been stolen. If buying from a dealer, read the warranty policy and all the papers including the fine print very carefully. Do not rely on verbal promises. Whatever is promised by the salesperson, get it in details in writing. Find out if the remaining original warranty will be transferred into your name. Different manufacturers have different warranty policies about this.
Be careful when doing the paperwork. For example, if you buy from a private owner, make sure there are no registered liens against the vehicle and that the person who signs the Bill of Sale is the actual owner of the car. Check with the Vehicle Registration Authorities to make sure the car has not been stolen. If buying from a dealer, read the warranty policy and all the papers including the fine print very carefully. Do not rely on verbal promises. Whatever is promised by the salesperson, get it in details in writing. Find out if the remaining original warranty will be transferred into your name. Different manufacturers have different warranty policies about this.
Buying an extended warranty
All new cars come with original warranty provided by a car manufacturer. This original warranty covers most of the vehicle components for a certain period - most commonly, three years or 36,000 miles. After the original warranty expires, you will have to pay for all repairs out of your pocket. This is when an extended warranty may be helpful. An extended warranty is essentially a service contract between the car owner and the warranty company. According to this contract, the warranty company will pay for the repairs covered by the contract for a specific period of time. It's something like a health insurance for your car. With an extended warranty, you are protecting yourself from unexpected repair costs.
For instance, you bought a used car that is out of original warranty and the transmission fails. If you don't have an extended warranty you will have to pay out of from your pocket, transmission repair may cost you more than a couple thousand dollars. If you have a good extended warranty, it would cover most of the repair costs; in some cases, you would only have to pay a diagnostic fee, or a deductible, depending on the type of warranty you have.
However, not all cars are qualified for an extended warranty and not everything is covered. Items like belts, brakes, tires and other wearable parts are usually not covered. In addition, you still have to maintain your car properly and keep all the receipts.
For instance, you bought a used car that is out of original warranty and the transmission fails. If you don't have an extended warranty you will have to pay out of from your pocket, transmission repair may cost you more than a couple thousand dollars. If you have a good extended warranty, it would cover most of the repair costs; in some cases, you would only have to pay a diagnostic fee, or a deductible, depending on the type of warranty you have.
However, not all cars are qualified for an extended warranty and not everything is covered. Items like belts, brakes, tires and other wearable parts are usually not covered. In addition, you still have to maintain your car properly and keep all the receipts.
Do's and Don'ts when buying a Used Car
Do look at your finances and set yourself a limit what you can afford before shopping.
Don't buy a used car without doing some research on reliability and common problems - some cars are prone to expensive problems and should be avoided when used.
Don't buy gas guzzlers; days of cheap gasoline are in the past.
Don't look for a lowest price.
Do look for a well maintained car in good condition for a reasonable price.
Do check the used car history report to find out about previously reported issues with a car.
Don't buy cars with engine or transmission problems, badly rusted cars, cars that have been flooded or restored after an accident.
Do take what you have been told about the car with a grain of salt; rely on facts.
Don't be rude to sales people; they are just doing their job and trying to earn a living for their families.
Do test drive a car for as long as it takes you to get the good feel before making a final decision.
Don't buy a car if something doesn't feel right.
Do test drive another car of the same model to compare condition.
Don't buy a car unless properly inspected by your mechanic or a used car inspector.
Don't base your decision on monthly payments.
Do ask to calculate the total price including taxes and interest.
Do walk away if you feel too much pressure.
Do negotiate and shop around; use competition to your advantage.
Do negotiate closer to the end of the month to get a better deal.
Don't buy a car without taking a break and thinking the deal through.
Do check all the paperwork carefully.
Don't forget that a car needs to be maintained well to last.
Don't buy a used car without doing some research on reliability and common problems - some cars are prone to expensive problems and should be avoided when used.
Don't buy gas guzzlers; days of cheap gasoline are in the past.
Don't look for a lowest price.
Do look for a well maintained car in good condition for a reasonable price.
Do check the used car history report to find out about previously reported issues with a car.
Don't buy cars with engine or transmission problems, badly rusted cars, cars that have been flooded or restored after an accident.
Do take what you have been told about the car with a grain of salt; rely on facts.
Don't be rude to sales people; they are just doing their job and trying to earn a living for their families.
Do test drive a car for as long as it takes you to get the good feel before making a final decision.
Don't buy a car if something doesn't feel right.
Do test drive another car of the same model to compare condition.
Don't buy a car unless properly inspected by your mechanic or a used car inspector.
Don't base your decision on monthly payments.
Do ask to calculate the total price including taxes and interest.
Do walk away if you feel too much pressure.
Do negotiate and shop around; use competition to your advantage.
Do negotiate closer to the end of the month to get a better deal.
Don't buy a car without taking a break and thinking the deal through.
Do check all the paperwork carefully.
Don't forget that a car needs to be maintained well to last.
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