Tips on Buying a Used Car
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UPDATED: Nov 21, 2011
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When it comes to purchasing a used car there is no greater tool than education. While many car dealers and independent sellers are honest businessmen, the ones who aren’t make it necessary for all buyers to know their rights and to know what to expect out of a used car purchase.
How Will You Pay for Your Car?
When you agree to purchase a car, you do it in one of two ways: in full or by financing. Unless prospective car owners have adequate savings and cash on hand, most go the route of using a car loan. When financing a car (or anything for that matter), borrowers wind up paying more than the price that’s posted on the car window. That’s because there’s interest charged to cover the cost of borrowing money.
If you decide to take out an auto loan, make sure to read everything. Learn about the amount of interest, the time you have to pay off the loan, and the dollar amount you’ll owe each month. Take all of this information and compare it to other financing offers.
Remember, you’re not just shopping around for the best priced car—you’re also shopping around for the best priced car loan.
The wisest approach is contacting several lenders before setting foot in a car dealership. If you get pre-approved for a set amount then you know exactly what you can afford. You don’t need to rely on the dealership’s financing option, and you have a bargaining tool to obtain a certain price for a car. If the salesman doesn’t grant that price then you know it’s time to find another car or another dealership.
Use the Buyers Guide
The Federal Trade Commission (FTC) requires all dealers to post a Buyers Guide in used cars they have for sale. This guide, available in both English and Spanish, provides crucial information to consider before making a purchase.
The Buyers Guide for each vehicle contains:
- Information on if the vehicle has a warranty or is being sold “as is.” While “as is” sales tend to be cheaper, they’re inherently more risky. If you go with an “as is” car, have a mechanic check the car out before you purchase it. If you want more protection then pick a car with a warranty and read it thoroughly.
- A list of the 14 most common major problems to look out for in used vehicles. This list can help you identify any serious problems with the vehicle. It can also help you ask the right questions when you take the used vehicle to a mechanic for an inspection before you buy the car.
- The percentage of repair costs the dealer will cover under the vehicle’s warranty.
The Buyers Guide also advises you to get all promises in writing. This cannot be stressed enough—Oral promises are difficult to prove, and if a court can’t decide who said what, then only that in writing will be honored.
Not all dealers offer a return or cancellation period. While it’s common practice to give buyers a three-day right to cancel, there’s no law forcing dealers to provide such a service. Before you finalize a purchase, ask your dealer about their return policy. Read your warranty thoroughly, and make sure any promise about cancellation periods or returns is in writing.
Who Protects You?
If you encounter a problem with a car dealership, there are some agencies that have been established to help you. The Better Business Bureau, the Department of motor Vehicles, and the Attorney General are all government entities designed to protect the public.
Depending on vehicles’ warranties, the Automotive Consumer Action Program (AUTOCAP) provides mediation to solve disputes between dealers and consumers.
Finally, the Magnuson-Moss Warranty Act, a law established in 1975 to enforce warrantors’ obligations, allows consumers to sue over any breach of contract or warranty.