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11 Essential Things to Know Before Buying a Used Car

Do your research, know what questions to ask, and keep an eye out for red flags.
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Shopping for a used car can be stressful. Not only is it a big purchase, but you want a good deal on a safe and reliable vehicle that won't cost a lot of money in repairs. (And, of course, there's that mental picture of dealing with a slippery Saul Goodman type in a plaid suit.)

The good news is that by reading this guide, you've already begun the first step: doing your research! Below are 10 things you should know before buying a used car.

Research Used Cars and Prices

View local available cars in classifieds and through sites like Edmunds.com and Cars.com, according to Jeff Ostroff, consumer advocate and founder of CarBuyingTips.com.

Edmunds has a True Market Value (TMV) pricing tool that shows you what other people in your area have paid for a car, as well as an app with the TMV, price calculator, live help, and other useful tools. To help find a reputable dealership, read Edmunds.com reviews of area dealerships.

SEE ALSO: Here's Why You Should Think Twice Before Using Tire Sealant

Ostroff also recommends visiting eBay to lay the groundwork for later negotiations. "Knowing how much the car has sold for [in the] last 30 days on eBay gives you a great haggling advantage because many dealers sell on eBay, so showing them what other dealers have sold this car for this month means they can't use smoke screens to trick you into a higher price," he says.

Know What Questions to Ask

Before heading to the dealership or contacting someone who is selling a used car, be prepared to ask the right questions. Edmunds offers a helpful used car questionnaire.

Consider Financing

To help determine a price range, Edmunds has a handy How Much Car Can I Afford? calculator that takes into account the cash down payment, possible trade-in, and how much you may owe on your old car.

However, Ostroff says selling the car yourself can increase your profit and help you avoid potential scams. "They [dealerships] offer you $4,000 to $6,000 below market value for your trade-in," he says. "We suggest selling it yourself to maximize sales proceeds. Combining the two transactions of trade-in and purchase give them more tricks and smoke screens to pull on you."

If you're taking out a loan, keep in mind that banks typically won't give loans for cars that are older than four or five years and the APR for used car loans tends to be at least 2% higher, according to CarBuyingTips.com. However, some lenders specialize in used car loans, such as Auto Credit Express, which lends to those with bad credit, and Up2Drive.

Ask About Fees

Whether you're buying from a dealership or an individual, make sure to budget for all the necessary costs. "There are certain fees that everyone has to pay when buying a car — things like [sales] tax, registration, documentation fees," says Ron Montoya, senior consumer advice editor at Edmunds, which has a car-buying fees chart. "Always ask for a breakdown of the fees," Montoya says. "Don't be afraid to ask if you don't recognize a fee."

Don't Forget Car Insurance

Many dealerships require proof of insurance before selling you the car, notes Montoya. When buying a used car from an individual, remember that you'll need to be insured before you drive the car.

Run a Vehicle History Report

If a dealer or seller is reluctant to provide the VIN number, consider it a red flag.

Once you have the car's VIN number, you can run a vehicle history report with companies like Carfax or AutoCheck. If a dealer or seller is reluctant to provide the VIN number, consider it a red flag.

While there are some visual tip-offs that the car might not be in the best condition — for example, new carpeting might indicate that the car was in a flood — a vehicle history report will reveal the car's accident history and if it has a salvage title (meaning it's been declared a total loss by an insurance company). The report will also show if the odometer has been rolled back — something that occurs in one in 10 U.S. vehicles, according to the Consumer Federation of America.

Have the Car Inspected

Even if you ran a vehicle history report, it's still important to have the car inspected by a mechanic to find potential issues, such as leaks, and to determine if the car has been in an unreported accident.

Some companies do mobile checks, where an inspector looks at the car on-site. However, Ostroff recommends an inspection at a shop where the mechanic can put the car on a lift to look for damage underneath the car. "Seeing the car from underneath will show any damage that was not repaired," he says. "Body shops often don't fix the parts of the car that you cannot see."

Ostroff estimates an inspection costs between $50 to $100. While some shoppers skip this step to avoid the cost, it could save a lot of money in repairs in the long run.

Have a Test Drive Checklist

In addition to the things to consider when test driving a new car, such as legroom and visibility, your checklist for a used car test drive will have a few more items, from listening for problematic noises to checking for strange smells.

SEE ALSO: 8 Simple Auto Repairs That Save Big Bucks in the Long Haul

As with any test drive, look at the car in daylight hours and drive in conditions that mirror those of your day-to-day driving. (For example, consider whether you often drive in stop-and-go traffic, on the highway, through hilly areas, etc.) Some experts recommend bringing equipment you'll be traveling with often (like car seats) with you to the test drive to make sure your items fit — and to make sure the car fits your needs.

Be Prepared to Negotiate

When negotiating the price of a used car, the most powerful tool is knowledge, says Ostroff. This includes knowing the number of previous owners, accident history, failed inspections or emissions, and the current condition of the car, as well as the price for which the same make and model has sold in the past 30 days.

For those who are uncomfortable with negotiating, consider contacting the Internet sales manager first for a price quote — and, typically, less back-and-forth about the price. "The Internet manager is usually more upfront with pricing than a floor salesperson," says Montoya. As when buying a new car, contacting a dealership's Internet sales manager can save time and money, as the Internet department's incentives are typically based on volume of sales versus price-based commission.

Another option for buying a used car with less haggling is to consider buying a former rental car. According to CarBuyingTips.com, buying directly from the rental company typically involves a set price. "The way to get the best deal is see what the rental company is selling the car for, compare it to recent sales of that car on eBay Motors, and compare it to what the dealers are asking for that same car," Ostroff says.

Get the Car Title

If there's no loan or lien on the used car, then the individual or dealership should have the title. "If the dealer does not have the title, I'm suspicious, and the few times we have heard from users falling into this crack, it's weeks of waiting after empty promises from the dealer that the title is in transit," says Ostroff.

If you're buying a car from someone who still owes on the car, Ostroff says, "you can tip the odds in your favor by making the check out to their lender to pay off the car, that way the cash does not go to the seller." The lender will then send the title to the seller, who will give you the title.

If there's no loan or lien on the used car, then the individual or dealership should have the title.

In the case of electronic titles, CarBuyingTips.com recommends checking with the local DMV to verify ownership and transfer the title. (Also be sure to check the ID of the seller to make sure it matches the owner listed on the title.)

Know if the Car is Covered Under a Warranty

You'll often see the term "Certified Used Cars," which means that the car is covered by the manufacturer's warranty, according to Edmunds. However, some cars are advertised as certified when covered by a third-party warranty.

It's also important to know what the "as is" sign in the car window means. "Virtually all dealers sell the car 'as is,'" says Ostroff. "The law requires the paper to be on the window to let you know legally that they will not cover anything once the car is driven off the lot." Sometimes, a dealer will promise to make repairs on a car, but if you purchase the car with the 'as is' paperwork, then the dealer is not responsible for the repair work promised. "Bottom line is you should assume the deal is 'as is' so always thoroughly check out the car first to ensure it has no problems before you buy it," Ostroff says.

If a car is more than three or four years old, then the car is most likely no longer covered by the manufacturer's warranty, and you may want to consider an extended warranty, says Ostroff.

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"Getting an extended warranty is a personal decision," Montoya says. "Some people buy them for peace of mind and others take on repairs as they come. Ask yourself these questions to help with the decision: Have you used warranties in the past? Are you buying a reliable car? Will you stress out over it if you don't get the warranty?"

Navigating a used car sale can be tricky, but always trust your instincts, and don't be afraid to walk away if something doesn't feel right. "You might not get the same exact car if you're buying used, but ultimately there's always another car out there," Montoya says.

Readers, have you successfully bought a used car? Do you have any tips about navigating the process? Share your thoughts in the comments below!


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Contributing Writer

Josie Rubio is a Brooklyn, New York-based freelance editor and writer. She has visited five continents so far and loves to write about travel, food, nutrition, health... and pretty much everything. Follow her on Twitter at @JosieRubio.
DealNews may be compensated by companies mentioned in this article. Unless marked as a "Sponsored Deal," the opinions expressed here are those of the author and have not been reviewed or endorsed by the companies mentioned. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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7 comments
JohhnyApple
Do not forgot to ask Before making deal if you are provided the Owner's manuals and a 2nd set of keys. Many small dealers and auctions take these items out of the cars and sell them on E-Bay......just look on eBay and you will see. If you buy a used Lexus, expect to pay over $350 for that spare dealer programmed key remote.
computer parts guy
You may want to google the model and year of a car to see if there are systemic problems like costly engine or transmission failures. A good source for the car technical person is Alldata.
bkaupp
When rude people like Scroogius walk into my lot, they tend to get a worse deal and worse service than the folks who are polite and upfront. These days, I make about the same money on any given deal - the internet and competition mean everybody knows what I paid for a given car. So if someone is a jerk to me and wastes my time, then I have less incentive to help him. If someone is reasonable and polite and works with me, then they leave with a good deal and a happy experience in half the time it took the jerk to get the same deal (or worse).

Of course, maybe that's why my dealership does so much better than some of the old-school dealerships. I usually send Scroogius to the dealerships that are jerks so they can be rude to each other.
Greg the Gruesome
Speaking of flood-damaged cars:
http://www.consumerreports.org/...d-of-flood-cars/
That article also has useful tips even if you (foolishly) think you live somewhere where you'll never come across a car that's been in a flood.
richmosher
I bought a used car last year. Harrowing to say the least. Where I live there are miles of used-car lots along one boulevard. My wife leaned toward a mini-car like the Honda Fit, I wanted something bigger, having always thought that the Mazda5 hit the sweet spot, a maximized small car. After weeks of checking out cars, a beautiful 2007 Mazda5 w/60,000 miles appeared on the Mazda lot. I did everything wrong, let the dealer know I wanted it, paid almost what they posted on the sticker, didn't get it checked out by an independent mechanic. I didn't want anyone else to get a shot at it. I was terrified for the first few months that the car was going to exhibit some fatal flaw which hadn't been evident, but so far, so good. It's a beautiful car, it's the mid-level trim, which I wouldn't have sprung for had I bought it new, and the creature comforts rock. Since there's always a risk when you're buying used, let love determine your choice. carcomplaints.com and consumer reports help evaluate.
Scroogus Maximus
Extended warranties on used cars are a great way for dealers to make money. If you read the terms, most only extend warranties offered by manufacturers. Anything classed as "normal wear & tear" is excluded. Unless your car explodes, it isn't covered.
Fleet/internet sales are cons; neither saves $ because dealers KNOW you THINK these save $, & mark them up as a result. What you save in both of these is time, but at a price. As to rental cars: Consider how YOU treat them. Would you buy one after you used it?
Research & walk-away (take someone NOT involved in the purchase with you!) are 2 great weapons. I leave at least once even if I'm going to buy the car- this makes dealers crazy. Car inspections by your mechanic are a MUST, as is having your own financing. Online banks will compete- get offers. W/o financing in hand, don't set foot on a lot. Sell your own car- otherwise, dealers will gut you. Don't answer "What would you like your monthly payment to be?" Talk about price. Period.
trelony
No Consumer Reports nor Costco. Is it hidden advertisement?
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