Find the right car with the right history.
by Larry Gamache
The price of new cars has steadily climbed over the past few years, making used vehicles more attractive than ever. Because new vehicles lose so much of their value as soon as they're purchased, car shoppers are increasingly turning to used cars and used trucks for sale as a smart financial alternative. Today, thanks to manufacturing and maintenance advances, used vehicles are better than ever and still a great value.
The first step in finding the right used cars to buy is a detailed assessment of your transportation needs. It's a good idea to answer the following questions:
After you narrow your search to a few makes and models, analyze the pros and cons for each. There are many excellent resources available to help you do your research, including web sites, dealerships, and your local library. Read Consumer Reports magazine -- online or hard copy -- for reliability and repair ratings as well as general advice. Check out the sources on the web that offer pricing information and comprehensive advice on buying a used car, such as Edmunds and Kelley Blue Book. In addition, refer to the list of web sites included in this publication.
Look at individual used trucks and cars. Gather as much information as you can on the different makes and models. Check out the retail value, available options, performance, and track record for repairs.
For information about car safety features, recalls, crash tests, and other auto safety topics, go to the National Highway Safety Administration's (NHTSA) website. You can also call NHTSA's toll-free Auto Safety Hotline at 888-DASH-2-DOT (888-327-4236) and have information sent to you.
You can purchase your new, previously owned car from an independent used car lot, a new-car dealership, an auction, a used car superstore, or a private seller. Wherever you decide to buy your car, there are some important things you need to know.
Take a look. Make sure the body parts line up, the paint matches, the doors open and close easily, and the tires show even wear.
Lift the hood. Check under the hood for leaky hoses, worn belts, and dirty oil. Automatic transmission fluid should be clear and reddish, and not smell burned. Radiator water should have a light yellow or green color.
Take a seat. Turn the ignition key to "accessory" and make sure all of the warning lights and gauges work. Start the car and check all lights and accessories and make sure no warning lights remain lit on the dashboard.
Have the airbag checked. Pay close attention to the airbag indicator lights. If these lights fail to illuminate as you start the car, or stay lit after the car is running, it is a warning that the car's airbags are not functioning correctly. Since this is a problem that you may not be able to detect yourself, have a mechanic inspect the airbags for you.
Poke around. Look for signs of water damage. For example, waterlines in the trunk or engine compartment; mud or dirt under the carpet; water or rust in the spare tire well; and frayed, loose, or brittle wires. Turn on the fan for the heater and air conditioning and see if the air smells musty or mildewy.
Perform a safety check. Try on the seat belt and take a test drive to ensure that you are comfortable while driving the vehicle. Make sure head restraints, roof structures, and windshield designs do not interfere with your ability to see clearly. Test the vehicle at dusk or in the early evening to determine your comfort with the visibility provided by the headlamps. If you already have a child safety seat, install it to check for compatibility.
Hit the road. Take the vehicle up to 35 to 40 mph. Make sure the shifting is smooth and the steering is straight. When braking, a pull to the left or the right could indicate a brake problem. The steering wheel should not shimmy at high speeds and cornering should be smooth.
Check the sources. Buying through the classifieds? Check the name on the title and match it to the name on the seller's drivers license. Many individuals disguised as private sellers are actually unlicensed, unregulated curbstoners, who may pass problem cars on to unsuspecting buyers.
Get a thorough inspection. It is a good idea to have a trusted mechanic inspect the car for problems that may not be easily identified. Specifically ask for the car to be put on a lift. This may cost a few bucks, but it could save you a lot of money by avoiding a car with hidden problems.
Find out about the car's past. You can obtain a CARFAX Vehicle History Report to find out the number of owners of the car you are looking at has had any problems in its past, such as flood damage, odometer problems, or a salvage titles. This, in conjunction with a mechanical inspection can help you make a more informed buying decision and save you money in the long run by helping you avoid problem cars.
The most sought after used cars are probably less than five years old and have less than 50,000 miles on the odometer. When you're looking for a used car, you'll probably want to find one that has been driven no more than 15,000 miles per year. But you can't assume that a low-mileage car is necessarily in great shape.
One major concern is odometer tampering. The National Highway Traffic Safety Administration (NHTSA) estimates that consumers lose billions of dollars a year to odometer fraud. Odometer readings may be rolled back or documents may be forged. Making miles disappear helps increase the car's value to the seller, but can mean increased maintenance and repair costs to the buyer. In addition to odometer fraud there are other significant events in a car's past that unscrupulous sellers may try to hide. Every state has laws designed to protect consumers from buying used cars that may not be road worthy. Consumers should be direct when asking sellers about a vehicle's past and they should get a detailedvehicle history report. If the seller cannot provide a detailed vehicle history report, you can use the 17-digit vehicle identification number (VIN) to secure a car's history from CARFAX.
Many major manufacturers offer certified preowned programs, which require thorough inspections and strict qualifications for all vehicles. To qualify under some programs, a vehicle must have no more than 36,000 miles on its odometer. Extended warranties vary, but are typically 12-36 months. Some manufactures also offer special low-interest financing.
Damage Disclosure, Salvage and Rebuilt Titles
These titles are issued by states when a vehicle has sustained damage as a result of one or more incidents. States may issue a salvage title when an insurance company takes possession of a vehicle as a result of a claim. This generally occurs after a vehicle has been declared a total loss. A state may issue a rebuilt title if a vehicle sustained damage and was rebuilt or reconstructed, then placed back on the road. States issue junk titles to indicate that a vehicle is not road worthy and cannot be titled again in that state.
Lemon Laws (Manufacturer Buyback Titles)
"Lemons" are sometimes resold to consumers as used cars. The lemon laws were enacted to protect consumers from having to keep new cars that have recurring problems. If someone buys a new car with major problems, and the manufacturer fails to repair the defects in a specified amount of time, the manufacturer may be required to refund the consumer's money by buying the vehicle back. Some of the vehicles that are bought back are subsequently resold as used cars.
Flood Damage Title
States issue flood titles when a vehicle has been in a flood or has received extensive water damage.
Grey Market Vehicles
"Grey market vehicles" are those that are manufactured outside of the United States and do not meet state and federal regulations regarding emissions and safety standards. Federal law requires that each imported car that is not in compliance with regulations be prohibited from being operated on public highways or resold.
It's a good idea to have all your questions about paying for your car resolved before you start to shop. The most difficult part about buying your used car will probably be figuring out what you can afford. So how do you determine what you can afford?
A good rule of thumb: Your monthly auto loan payment should not be more than 20 percent of the money you have available each month after you pay for your usual living expenses - rent or mortgage, utilities, food, transportation, credit card payments, etc. When reviewing your budget, you should also take into consideration other associated costs, including fuel, license, registration, personal property taxes, and insurance. Call your insurance company before you purchase your car to determine what the monthly insurance cost will be.
If you're taking out a car loan, figure on a down payment of at least 10 percent. Lenders might be skeptical otherwise. If you have enough cash available to boost that percentage, do so. Cutting the principal of your loan will do more to slash your payments than will getting a lower interest rate.
Be sure to check out alternate sources for loans such as the credit union at your workplace, your bank, or other organizations you are affiliated with. As a last resort, dealers may offer special financing packages for those with credit problems. However, you might pay as much as four percentage points more for a loan.
If you have ailing credit, which can result from a pattern of late payments, you may find yourself in the "sub-prime" financing arena.
If you have credit problems, you should first try to work with a consumer credit counselor or other advisor. It may be possible to consolidate debts or come up with a workable repayment plan. If you show a loan officer that you are taking action to overcome your credit problems, he or she may be more willing to grant a loan at a reasonable rate.
Buying a used car involves some uncertainties, but the market has improved over the past few years. Cars are better made, have much improved safety systems, and, with proper maintenance, can last for many years . You can avoid many of the common pitfalls of purchasing a used vehicle by taking a few steps early in the process and answering certain questions before you start to shop. More important, new technologies being used by manufacturers and mechanics, combined with the availability of easy-to-access vehicle history information, go a long way toward leveling the playing field for today's used car shopper.