My oh my, the choices, the options, the decisions that come with buying a used car. In this article, I won’t even get into “HOW” to choose a car, but rather once you’ve limited your search down to a select few, I’ll put out a few questions you should ask yourself, the seller or a mechanic to get you through the purchase relatively unscathed.
Questions to ask before buying a car:
Does it have what you need?
There are “wants” and there are “needs”. You NEED a car that runs trouble-free, has had all the maintenance done on schedule, hasn’t been abused, etc. You may WANT a car with leather, sunroof, navigation, heated seats, convertible, etc. Decide what are WANTS vs NEEDS first to narrow your search down even further to make you decision easier moving onto the next several questions.
Now, I will say this first: mileage is not always an indicator of wear and tear on a vehicle. You can walk away with a low mileage lemon, or conversely, a high mileage gem. However, generally you’ll find that lower mileage vehicles have been either taken care of better or, at least, abused less. Anything above 15k per year is considered high mileage. However, I generally drive 20k per year on my vehicles but I treat them like gold!
How many prior owners?
Again, your experience may vary, but cars with multiple owners can mean several things such as the car was a lemon and kept getting dumped on people, it was passed around a family until it was on its last leg, or it could just mean that it was a lease, and then the dealer bought it and the DMV would show 2 owners (maybe even 3 depending on the original transfer before the lease). Single owner vehicles that are sold quickly could also mean trouble. It could have been a lemon, but then again, the owner might not have been able to afford it and traded down for a lesser model (and took a major hit on depreciation!).
Does the owner have the title?
If you’re buying from a third-party (not a dealer), you want to make sure the vehicle is owned outright. Otherwise, you have to wait for your check to clear, the owner to pay off the car, the bank to send the title and then the owner to hand over the title (without any problems). This could take a very long time and causes a lot of stress and risk.
You do have the option of putting down a deposit (get it in writing, preferably with a witness’ signature) on the car, then go to the bank directly with the owner to buy the car if possible so they can issue the paperwork immediately.
Is it a “clean” or salvaged/branded title?
A vehicle that has suffered damage that was too expensive compared to the vehicle’s value may be salvaged. This can happen through theft, car accident, and other reasons. Some salvaged vehicles are fixed to near perfect fashion and are perfectly safe to buy, but unless you have some knowledge of mechanics and bodywork I wouldn’t make this your first choice. In some states like Nevada, it’s even illegal for a private party to sell a salvaged vehicle.
Has it been in any accidents? If so, how was it repaired?
Accidents do happen. Sometimes they happen more than once. A car accident can range from a small fix to a complete t-bone. The small fix is generally repaired and the owner sent on their way, while the larger incident may result in the aforementioned salvage title.
A rule of thumb is replacement is better than repair. During repair,stuff called “bondo” can be used. This is where a (hopefully) excellent body worker fills in a crush or dent that can’t be pulled out. The vehicle is sanded, painted and sent out the door. Unfortunately, if you don’t have a great body shop, the bondo can warp and looks like putty. It is also a cheap fix and may be indicative of the state of other repairs.
Does it have service records available?
It’s best if you can get dealer-issued receipts, but in cases like mine, where I perform routine maintenance, I write down everything in the owner’s manual and hold onto all receipts. You’ll want this so you can later peruse through the car’s history and find out when maintenance and repairs were performed. It’s best to do it beforehand though, so you aren’t surprised later.
Why are they selling it?
You’ll want to ask why are they selling the vehicle. Most people will answer with 1) we need the money or 2) we want something new. Dig deeper and find out its history, but you’ll have to be prepared with well-worded questions that lead the seller rather than blatantly asking “what’s wrong with it?”. Rarely will people be totally honest with everything they know is wrong, unless they know you might hunt them down when something breaks as you drive away!
Can you have your mechanic look at it?
While the large franchise dealerships generally have reputable mechanics on site, you should be able to request a mechanic look at a vehicle any other time, whether small dealership or private party. If you like the car, tell the salesman: “At the end of our test drive, if I like the vehicle, I’d like to take it to my mechanic for an inspection. You are, of course, welcome to come with me.” A salesman working on commission is very unlikely to deny your request.
Buying the Car
You can buy a car from a dealer or from a private party. Buying a car from a dealer simply means you are buying from someone whose business is selling cars; a dealer can be a major operation with an automotive franchise, or a single individual who sells cars from his driveway. Buying from a private party means you are purchasing the vehicle from an owner.
If you are interested only in a brand new car, a large franchise dealership is where you’ll head. Since they order direct from the manufacturer, in some cases, you can even custom order the options you want. However, the depreciation when it rolls off the lot can be a hefty bill to foot. A dealer can always sell a used car for more than you can. Why? When you buy a used car from a large dealer, the assumption is made that the vehicle needs little or no “reconditioning.” All of the major systems are in good mechanical order, the interior has been detailed or replaced as necessary, and you shouldn’t have to take it to a mechanic any time soon. Some dealers go a step further with “Certified Pre-Owned” vehicles which must pass a specific set of inspections.
Used Car Lot
So where do the small dealerships get their cars from? Almost every town has a street lined with small scale dealerships, or that one guy who’s always selling cars. These are not connected to a manufacturer, and generally do not have a (legitimate) body shop or mechanic on site. When cars are traded into dealerships, the dealer will weigh what they paid for the vehicle against what they can sell it for and how much time and money it will take to recondition. Sometimes the decision to ship out a vehicle can be as simple as, “We’re a Chevy dealership, and don’t have a really good chance at selling a Ford Focus with our current lineup.”
These cars are sent to dealer or wholesale auctions. They are sold at a great price to other dealers who then sell them on their lots. The quality of the cars available on these smaller lots vary greatly based on the quality of the lot that is selling them. They are still bound by all of the laws that a franchise dealership is, but if after looking at the vehicle you wouldn’t buy it from a man on the street, don’t buy it from anyone else.
You can also buy a vehicle through a private party sale. That means an individual who owns a car is selling it for any number of reasons. Individually owned vehicles sell for much less than a similar one at a dealership due to the reconditioning that a dealer vehicle undergoes (theoretically). The real benefit of buying a vehicle from an owner is a chance to know the vehicle’s history. The service records and accident history can tell you a lot about what you are getting into. Even walking up to the owner’s house: if they’re lawn is littered with trash, how do you gauge the upkeep of your potential new ride?
No matter what you do: NEGOTIATE. I have never walked into a dealership that won’t “haggle” and I refuse to accept a price labeled “firm.” (except for my first car, which was a Saturn and had a no-haggle price. But they’re not around anymore, are they?…) My second vehicle was a dealer demo car with 2500 miles on it, but still sold as new. It was a hot model, just out for its first year, and I got it for $1000 under invoice.
Paying for a Used Car
It should go without saying, but you are always better to pay with cash in hand. If the vehicle you’re looking at is too expensive to buy with cash, take the time to assess if there is a vehicle that you can pay for with cash that will meet your needs. If not, your next step is financing.
All of my purchases were with financing, and up until the last few years, I would pay for years before having the car paid off (if I didn’t trade it in for something else). However, now, I might not have all the cash in hand because I’m selling a car outright while buying something new (to me, so it’s really used), but when I get the cash, I pay off the loan. My credit score takes a hit, but then it goes up because I have a closed account and more history on my record.
Ultimately, if there is any way you can avoid monthly payments, please do so. I have never taken on an auto loan that hasn’t gone underwater for a portion of the vehicle’s life span. If you’re heart is set on a vehicle that requires payments, take three months and pull the payment out of your monthly budget. Make sure it doesn’t throw your debt-to-assets ratio off, because that can hurt you in the future for qualifying for home refinancing, credit cards and other loans (you never know when there’s going to be an emergency). If it’s not bad, then go ahead with the comfort of knowing you already have three months of “emergency” payments set aside.
Websites to Help Your Search
When you go to buy a vehicle, remember that your buying power is directly related to the information you possess.
- Kelly Blue Book is a nationally recognized vehicle valuation tool. It will help you to gauge the trade-in value of your own vehicle, and how much you should pay for you next one through both dealerships and private parties.
- Carfax reports on what has happened to your vehicle. Where has it been titled? Does it have any accident reports? All of these answers and more are available.
- Autotrader.com has detailed specifications, reviews, safety information and classified ads to help you.
- Edmunds.com has similar information to Autotrader, along with a True Market Value tool to help better gauge the immediate local value of some vehicles. TMV takes into account how even the color of your car may affect it’s sale.