Monday, March 3, 2008

Guide to Buying a Used Car

Pre-owned or New?

Budgetary considerations top the list of reasons why people decide to purchase a used car rather than new, but there are other reasons. Today's vehicles are designed to run for many more miles than the models of years past. Because of that, car shoppers can buy a quality vehicle, even a luxury car, with lots of extras that might not be affordable to them brand new.

Many people by nature or philosophical bent simply don't believe in buying new cars. Some of the people in this camp balk at the amount of money lost through the depreciation of a new vehicle the minute they are driven off the lot. Others think that buying a new car is simply a waste of money?their focus is purely on the function of an automobile (to take you from Point A to Point B) and hold the status element of driving a new car in disdain. Collectors of vintage cars turn their noses up at the latest models and opt instead for purchasing a classic that can be both transportation and a favored hobby.

Only you can decide if a new or used car is the best choice for you and your family. Spend some time considering your options, discuss the idea with your family and friends, and do some window shopping before you make you decision.

When you determine that you are in the market for a used car, it is time to move on to the next step:

Assess Your Needs

As you begin to contemplate purchasing a used car, you'll need to consider the purpose of the vehicle. If your family has outgrown the sedan, you may want to consider a minivan. If your job or choice of recreation dictates off road capabilities, you may want to consider a 4-wheel truck or SUV. And, if your last child has moved away to college, you may just want to consider that sports car you have always yearned for.

In addition to deciding which type of vehicle you want, you should also write up a list of car options you simply can't live without. Such items may include features such as an automatic transmission; power steering and brakes; air bags or adjustable seats. It may also be helpful to write up a second list of options that would be nice to have if you happen to run into a vehicle that comes equipped with those features, but that would not be a deal breaker should they not be included. Some of those features could include: body style, color preference; air conditioning; cruise control; and sound systems.

Once you have narrowed down the type of vehicle you are in the market for, it is time to move along to the next step:

Check the Bank Account

Some people purchase a used car outright; others plan to finance. If you are planning to buy a used car outright, you'll need to determine how much you can afford out of pocket.

If buying from a private party, it is unlikely that they will consider financing. After you have saved up enough money to cover the price range of the used car you have in mind, be sure to factor in the expenses that you may not have considered yet such as title transfer and registration fees, and in some states, smog or emissions certification. In addition, your insurance rates may be affected; check with your current agent or online to get a quote. If you plan to buy an older car, or are willing to buy a car that may need maintenance or repairs right away, set up a special fund for those probable expenses.

However, if you plan to shop for a used car through a dealer, you may not have to have the entire purchase price in your account. Most dealers of pre-owned cars offer car financing (their own or through other lending institutions), or you can pre-arrange your own financing through your bank or credit union before ever talking to a dealer.

Once you determine how much money you can spend on purchasing a used vehicle, it is time to start the next step to car ownership:

Preliminary Research

Preliminary research is simply that―simply a place to get started. Now is the time to poll family and friends to see which vehicles they have been happy with in the past. While their experiences (good and bad) are purely anecdotal, they may help you decide which make or model might work best for you.

As your mind opens up to the process of buying a used car, you'll begin to notice cars on the street that you have overlooked before. Make some mental notes on which makes, models and years of the cars particularly catch your eye. By this time, you should have a pretty good idea of the style of car you are shopping for. As you go through your day, identify some models that would appeal to you so will recognize the model name as you continue your search.

You'll also want to open up the local newspaper or auto trade magazines to see what the market is like out there, and your computer can be a useful tool as well. Typing in "used car" into a search engine will bring up reams of sites that will show cars for sale, or articles on a wide variety of techniques to help you buy a car. Take a look at the general types of vehicles currently for sale, what features are available on what makes and models, and what kinds of vehicles you can afford. Spending some serious time at this stage of the process is important to making an informed decision on what type of car you'll be narrowing your search for, so don't skimp on the time you dedicate toward your future vehicle.

As soon as you have a short list of cars you are interested in buying, it is time to continue on with:

Dedicated Research

Now that you have three or four models of used cars in mind, it is time to do some serious research. Whether at your local library or through your computer, the information available to you is astounding. Great resources by year, make and model on such things as safety records, frequency of car repair, maintenance costs, comparison reports, and mileage figures are easily accessed.

It is also the time to find out how much some of the "hidden" costs of buying another car will impact your wallet. Many people only think about the price of a car and don't factor in the registration fees, state taxes, and increase (or decrease) in your car insurance rates. A quick search online will provide you the cost of fees, and a quick phone call to your insurance provider will eliminate any last-minute surprises.

If you already have found one car for sale that you are specifically interested in, be sure to hone in on information regarding that make and model. You can easily find a myriad of consumer articles and reports on any type of car. In addition, request that the seller provide you with the Vehicle Registration Number (VIN) for that car. Each car manufactured is issued its unique VIN and the records of that vehicle follow it throughout its lifetime. For a minimal fee, online services can locate the records for that particular car and send that information to you. The type of information you will receive is: if the car has a clear title; if the car has been salvaged; if the car has been involved in a serious accident; how many times the car has been sold; the original sale date; and if there have been any recalls for that car. Investing in a VIN search can save you a lot of headaches (and money) down the road.

When you have completed your in-depth research, you can move along to another critical juncture, deciding where to shop:

Private Party or Dealer?

A major difference between buying a used car from a dealer and a private party is the degree of warranty available. Few, if any, individual sellers offer any type of after sale warranty, while dealers cars range from "as is" to limited warranties to certified vehicles that come with extended warranties.

Conventional wisdom says that used car buyers will get a better deal if they shop for a car through a private party. There is certainly no shortage of used cars being offered by individuals, especially in larger cities and through the car selling websites and auctions online.

The advantages of buying a car through a private party are: They are usually highly motivated to sell their extra vehicle, they generally charge less than a dealer will, and many owners can tell you a lot about the car, including all the work that has been done to the car.

On the other hand, the vast majority of used cars sold by individuals will be sold "as is" with no warranty and no recourse should a major problem arise with the car. However, if you take some reasonable precautions by having a used car checked out by a qualified mechanic, and you are willing to take somewhat of a chance on a car, buying a car through a private party may be the best choice for you.

But, if you decide to buy a used car at a dealership, there are many advantages to that method as well. Going to a car lot provides you with many more cars to look at all in one place; saves you time, money and gasoline chasing down addresses all over the city; allows you the option of financing; some dealers offer a limited return policy; and most offer a range of warranties. While you may pay a bit more for the car to cover these services, shopping at a reputable car dealer does have its benefits.

A caveat about shopping for cars through a dealer: Be sure you go into the dealership having done your research and with a firm price range in mind. Dealers are in the business of selling cars; the more they sell, the better their bottom line looks every month. Many salespeople will make a serious pitch to get you into more of a car (money, newer year, and options) than you went in looking for; be sure that you know what you can truly afford without breaking the bank before you go car shopping.

Despite their reputation for attempting to get you to trade up to a newer or more expensive car, the vast majority of car dealers are honest businesspeople who want to make a sale―and find the best vehicle based on your needs and your budget. Dealers offer a degree of security that is not usually available when purchasing a car through an individual. They have had the cars checked out by their service staff, they are likely to offer a level of warranty on the mechanical soundness of the vehicle, and they even offer extended warranty coverage on a variety of vehicles.

If you have decided to plan a trip to your local used car dealer, you are ready to read about the next step:

Certified Vehicles, Warranties, & Other Safeguards

Individuals selling cars as a private party don't face many, if any, regulations by the state. The vast majority of cars sold by individuals will be sold "as is" and the buyer will have little or no financial recourse should the car require repairs. Dealers are required by law (Federal Trade Commission) to post a Buyers Guide on each vehicle on its lot. This document outlines what type, if any, warranty is offered. Some of the most common types of warranties and service programs include:

"As is": This designation means that the dealer cannot be held accountable for any necessary repairs after the sale. While some dealers may offer additional verbal warranties, those promises are not legally binding.

Warranty of Merchantability: This type of implied warranty states only that the dealer guarantees that the vehicle will do as it is expected?in other words, run. It does not cover anything that could go wrong with the car.

Warranties―Limited and Unlimited: Neither limited nor unlimited warranties necessarily cover the entire vehicle and all parts of the vehicle. The only warranty coverage that can be enforced is what is written on the car's Buyers Guide sticker and included in the contracts. An unlimited warranty means that any owner of the vehicle can call upon the coverage of the warranty within a certain time period and that the full price of repair is covered by the warranty. Limited warranties may restrict the percentage of repair paid for by the dealer, limit the type or systems eligible for coverage, restrict coverage by either time or mileage, and in some cases, whether the car owner is required to pay a deductible.

Unexpired Manufacturer's Warranties: This type of warranty is mostly available on later model cars where the original warranty is still in effect. Verify the coverage and extent of the existing warranty by calling the car manufacturer.

Extended warranties: Technically, extended warranties don't exist because by definition, warranties are included in the selling price of a vehicle. The confusion comes in when a dealer uses that phrase when actually what they are selling are service contracts. Like warranties, these contracts (car repair insurance) pay for repairs on the covered mechanical systems, but the level of service varies greatly depending on the terms of the contract and the honesty of the service provider. Be sure to do a lot of research on both the company offering the service contract and the terms of coverage before you sign up.

Certified Vehicles: A relatively new phenomenon in the car-selling arena is the concept of "certified" vehicles. Dealers offer these cars with its assurance that the car is mechanically sound because the mechanics in the dealer's service department have verified that major systems are in good shape. Cars sold as certified are covered for the expense of repairs much like an original warranty does on a new car. At least one of the reasons why dealers can now offer certified vehicles is that the improvements in technology, materials, and workmanship has extended the longevity of cars in general. While cars in years past might begin to have mechanical problems with fewer than 100,000 miles, today's cars are built to remain on the road for many years longer than ever before.

Once you understand what type of warranty or other service program is offered for the car you are interested in, it is time to take the next step:

Take a Road Test

Whether you shop for a used car through a dealer or a private party, you will at some time want to get behind the wheel and take the car for a spin. Individual owners may be reluctant to allow you to drive the car by yourself. If that is the case, agree to have them accompany you in the passenger seat but don't allow them to have a running conversation with you as you drive along. This is perhaps your only opportunity to really check the car out before you make a decision to buy or not.

Dealers are accustomed to having people test drive their vehicles; they will have their own requirements for letting you behind the wheel. In either case, be sure to bring along your valid driver's license, another form of photo identification, and information on your insurance provider for good measure. Be sure to allow 20-30 minutes with you behind the wheel in order to get a full picture of the car's performance.

Before you even get into the vehicle, do a little preliminary check:

  • Are the tires in safe condition―no cracks, splits or excessive wear?

As you slide into the driver's seat, there are a number of things to consider even before you turn on the ignition:

  • Is the car in overall good condition?
  • Are the seats, carpets, switches, mirrors and headliners all in acceptable shape?
  • Is the seat comfortable, evenly padded, in good repair, and adjustable?
  • Does the car provide the primary driver with an unobstructed 360-degree view?
  • Do the safety features work―horn, headlights, emergency brake, seatbelts, and windshield wipers?

Once you have settled in, adjusted the seat and mirrors, and fastened your seatbelt, you can begin your actual road test:

  • Is the car easy to start?
  • Does it turn over on the first try?
  • Are the gears (manual transmission) easy to shift?
  • Is the clutch easy to engage with no abnormal sounds or hesitation?
  • In an automatic transmission, does the car move smoothly from gear to gear?
  • Is there any unusual noise or hesitation while changing gears?
  • Are the brakes strong?
  • Is there a pull to either side as you step on the brakes?
  • On the freeway, does the car have good acceleration?
  • Can it easily reach speeds in order to merge with the flow of traffic?
  • Do the turn signals work?
  • Is the car easy to maneuver during lane changes?
  • Are their any blind spots?
  • Does the cruise control work?
  • Around town, does the car handle well and idle steadily during stops?
  • Is the acceleration strong starting off on a green light?
  • Is the car easy to park in a number of types of parking spots?
  • Do the air conditioning and heating systems function properly?

During a quiet moment, listen for any strange sounds:

  • Does the wind whistle through windows that can't quite close all the way?
  • If there is a moon or sunroof, is air coming through even when closed?

Check the sound system, if that is an important feature to you:

  • Is the radio reception unclear?
  • Is the CD or DVD player functional? (You may want to bring one along just for a test.)

Back at the dealer lot or the seller's home, you should take a few minutes to walk around, crawl under, and pop the hood of the car. Check to see if there is any dripping fluid, smoke billowing from the exhaust system, or any build up of dirt and grime on and around the engine.

If you are testing a car for sale by an individual, it is also good practice to ask to see their file of maintenance records and any receipts of auto parts and repairs. Most people keep many of these records, and if the seller claims not to have any at all, you may want to view the car with a degree of skepticism. Ask how long they have owned the vehicle―if they haven't owned it very long, request the previous owner's name and phone number and give them a call. There may be real reasons why the latest owner is disappointed with the car and wanting to sell it right away.

Regardless of whether you are shopping through an individual or a dealer, it is wise to jot down the Vehicle Registration Number (VIN) and run a vehicle history report through DMV.ORG. For a nominal fee these reports will provide you with a wealth of information on this unique vehicle. The report will show you if the car has a valid title, if the car has been involved in a serious accident (or flood or fire), how many times the vehicle has changed hands, and when and where the car was built. Knowing this information may not necessarily change your mind about buying the car, but at least you will have the facts from which to base your decision.

It is important to have any car you consider purchasing checked out by an independent mechanic. A reasonably priced diagnostic report can save you from buying a car that will cost you a lot of money down the road. Private owners won't usually balk at the idea of you taking the car to your local mechanic, but if they do, there are mobile units that will come to where the car is located. Sometimes car dealers will discourage you from taking the car to an independent mechanic; they may say that it is unnecessary because it has already been cleared by its own service department. If you trust the dealer, it may be enough to request a copy of the service department's findings, but now is the time to make a written list of any problems you have identified. Negotiating who will be responsible for the correction of these problems now becomes a bargaining chip when it comes to closing the deal.

If you are convinced that you have found your perfect used car, it is time to continue with the next step:

Complete Your Paperwork

While shopping for a car, always remember to carry your identification with you just in case you run into the deal of the century. Dealers will be required to take copies of you personal identification for their records, and individuals may request to see your identification just for their own protection.

When purchasing a used vehicle through a dealer, chances are the sales manager or the accounting staff will lead you through all the necessary paperwork to seal the deal. They are accustomed to filling out all the forms; your job is to review all the documents to make sure that there are no last-minute alterations to your agreed upon terms, and to take the time you need to fully understand your terms and obligations. Some car experts suggest that buyers let no signature lines on a contract remain blank. They suggest placing your initials on any blank space so that no additional terms can be added after the fact. If your car comes with a warranty, make sure you have copies of all applicable paperwork and take a business card of the service department manager for future reference.

If you are buying a used car through a private party, the paperwork involved will vary greatly depending upon the state in which you live. Be sure to check the requirements for your specific state prior to paying for your vehicle. Some states require that the seller show proof of a recent valid smog or emissions certificate. In other states, a simple bill of sale will be enough to file the proper paperwork at the DMV. Always get the seller's personal information such as name, phone number and address, and actually see and write down their driver's license number―just in case you have to contact them for any missing documents or forms once you go to the DMV to change title on the vehicle.

This is also the time to call your insurance provider and add the car to your policy. Statistics show that the majority of car accidents occur within a few miles of home―don't run the risk of getting into an accident on the way home from purchasing your used car.

All states have laws that dictate how soon after purchasing a vehicle you need to transfer title and file for new registration. Find out the time frame required and go to your local DMV to take care of the paperwork as soon as possible. Our site can help you find your state's requirements in just minutes.

Once all the "i's" are dotted and the "t's" are crossed, it is time to continue on to the final step:

Final Thoughts

Shopping for a used car can take quite a bit of time and energy, but if you are committed to the process and follow these simple guidelines, it is a pretty good bet that you will walk away with a deal that you can be proud of.

Pre-owned cars can be great bargains. Cars that have been manufactured within the last five years or so offer the newer technology, recent upgraded features, contemporary styling, good gas mileage, and safety equipment―all at vastly reduced expense when compared to buying a new car.

As long as you have done adequate research, and you take proper care of your car through regular maintenance, your vehicle should serve you well for many miles and years to come. Enjoy!

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