Buying a Used Car
Getting a good deal on a used car involves both negotiating a good price and taking steps to make sure the car is reliable.
Although buying a used car is often a smart financial decision, it's also a transaction ripe with potential disaster. We all know someone who paid too much for a used car that fell apart on the way home.
Getting the Best Deal
Getting a good deal means both a quality car and a good price. When negotiating price, aim to pay close to the wholesale value of the car. Of course, the seller will be pushing for the retail value. In most cases, you'll probably settle somewhere in between, depending on the condition of the car, your negotiating skills and the seller's negotiating skills.
To make sure the car is reliable, take the following steps:
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Have the car checked out by a mechanic you trust, or have the car inspected by a diagnostic center.
Get copies of the maintenance records. (A dealer usually won't have these, but a private owner may. You are looking for evidence of regular oil changes, scheduled services and unusual repairs.)
From your state motor vehicle department, get the following information: how many prior owners there were, the mileage each time the car has been sold and all other states where the car has been registered.
Do your own visual inspection and look for oddities that might indicate damage or repairs (such as scratches, rust or new paint, which always fades faster than factory paint).
Check the vehicle identification number (VIN) on the lower left hand side of the front windshield. If it shows any signs of tampering, the car may be stolen.
Review the "Buyer's Guide." Federal law requires dealers (but not most private sellers) to post a Buyer's Guide in every used car for sale. If the sale is negotiated in Spanish, the Buyer's Guide must also be provided in Spanish. The Buyer's Guide gives you a great deal of information including whether the car is being sold "as is" or comes with a warranty , what percentage of the repair costs a dealer will pay under the warranty, and what the major mechanical and electrical systems on the car are.
Don't discuss the possiblity of trading in your old car before you agree to a price for the car you want.
Be absolutely sure you are getting the car you want at the price you want before you sign any papers. In most cases, if you change your mind later (even ten minutes later), the seller doesn't have to give you a refund.
Look Out for Used Car Scams
Unscrupulous used car dealers and sellers have come up with countless ways to rip you off. Some common scams to look out for include:
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Odometer rollbacks. The most common type of odometer fraud involves tampering with an odometer so that its reading is less than the car's actual mileage.
Salvage fraud. A car is "salvaged" if an insurance company declares it a total loss because of a car collision, flooding, fire or other serious physical accident. Many unscrupulous dealers buy these cars cheap at auction, patch up these cars and sell them to unsuspecting customers. If the car's salvage history is disclosed and you are still interested, you should certainly have it professionally inspected.
Lemon laundering. This occurs when a manufacturer buys back a lemon from a consumer, then passes that car to another consumer without disclosing its lemon history.
The seller doesn't own the car. If you're buying a car from a private party (as opposed to a car dealer), make sure the person selling the car actually holds title. Ask to see the seller's driver's license (or other photo ID) and the title certificate for the car. (But sometimes even honest people lose the title document and have to order another.)
Financing scams. Many used car scams occur in the financing phase. Take all finance and loan documents home before you sign them. Read them there, without pushy salespeople breathing down your neck. Better yet, get someone else to look at them too. Also, you may be able to avoid some, but not all, of these scams by reviewing the title history of the car you want to buy. You should get copies of the car title from each state's motor vehicle registry where the car is registered.