1. Why used car?
2. Classic drawbacks of buying used cars.
3. Car value and price.
4. How solvent you are?
5. Available used cars within a certain price range.
6. Used car financing.
7. Where to buy a used car?
8. Make phone calls.
9. What to ask?
10. What mileage is OK?
11. How old is “too old”?
12. Don’t forget about a test drive.
13. Negotiation phase.
14. Buying an extended warranty
15. Do’s and Don’ts.
16. You’ve bought a good used car.

1. Why used car?

Lower price. Buying a new car is definitely more expensive than buying a used one. In fact, the price spread between new and used is widening. The latest figures available from CNW Marketing Research indicate that the average transaction price, before taxes and fees, on a new car in 2008 was $25,536. The average used car transaction was $8,244 during that same time period. Unless you decide to lease, your initial costs on a new car will be hefty. Typically financial institutions require down payments of about 10 percent on a new-car loan, but it helps to add more. If you pay less money up-front, your monthly payment will be higher.

Certification Programs. Another trend that makes buying used a better option is the proliferation of certified pre-owned programs. The idea started with such luxury brands as Lexus and Mercedes-Benz. Today, most manufacturers have instituted these programs.

General benefits of CPO cars include:

• Manufacturers as a rule consider only late-model, relatively low-mileage used cars and trucks with no history of major damage for their certification programs.
• CPO vehicles undergo a strict inspection process of mechanical and cosmetic items before they obtain certification.
• CPO vehicles are normally covered by a warranty that extends beyond the original factory warranty. The warranty usually includes the same features as a new-vehicle warranty, such as roadside assistance.
• A number of manufacturers suggest special financing on CPO vehicles, usually at lower rates than those on new-car loans or the typical, higher used-car loan rates.

Buyers should be aware that they pay more for a CPO car than for a regular used car, but the higher price may be worth it for the extra coverage and the peace of mind they receive.

Avoiding Depreciation. A major disadvantage to buying a new car is the rapid depreciation it undergoes. Once you drive your new car off the dealership lot, its value will drop immediately in your early years of ownership. Models typically lose about 45 percent of their value in the first three years, compared with 25 percent over the next three. But this varies greatly among models.

Depreciation is determined by several factors, including the model’s popularity, perceived quality, supply, and whether or not the vehicle is of the current design. The average depreciation on a $28,500 vehicle leaves little more than $16,000 after three years, a huge hit in residual value.

Insurance. You’ll typically pay less to insure a used vehicle than a new version of the same vehicle.

2. Classic drawbacks of buying used cars

There are some classic drawbacks of buying used cars. One of the main disadvantages is that often the most maintenance-free time of the cars life is during the first two years. Some used cars have serious hidden defects with limited or no warranty coverage. Sometimes it is difficult to determine whether the car was maintained properly by its previous owner. The used car may not have all the desirable safety or technical features of a new car. The selection of models, equipment, and colors may be limited.

3. Car value and price

Don’t look for cheapest car. When it comes to used cars, “best deal” doesn’t mean the cheapest one. Your goal is to look for a car in good condition for reasonable price. If choosing between relatively cheap car that might have an accident in the past or was poorly maintained, needs some repair, etc. and more expensive one that is in excellent condition, always choose the more expensive one. You will simply save on repairs and will have fewer troubles driving it. Don’t think they sell it cheap because they don’t know the price or they simply want to clear their inventory. If they sell it cheap, definitely there is something wrong with it. Remember, proper price for a certain used vehicle is not the one indicated in blue or black book – they give you just an average price. The actual vehicle value big time depends on a car condition. Two cars may only look the same. One may have been maintained so poorly and the engine won’t last long after you buy it. Previous owner of another vehicle may have been religious about maintenance; used only synthetic oil, has done the rustproof and so on.

4. How solvent you are?

Set yourself a firm limit of how much money you want and can afford to pay for a car. The process of buying a used car can be stressful and time-consuming and it might be difficult to resist the urge to buy more expensive vehicle, especially when higher total price is hidden under “low” monthly payments. Often dealers could try to push you into buying more expensive vehicle to increase their commission. In fact, this is very common situation when people rush into buying a car or a truck only to realize later that they cannot afford paying for it. Thousands of people are constantly searching the Internet for an answer to “How to get out of a car deal?” You want to buy something that you can afford, something that will not put excessive financial strain on your family budget, so you need to set yourself a firm limit.

5. Available used cars within a certain price range

Let’s take a look at some prices:
$10,000-$18,000 – This is the average minimum amount of money one would need to spend on a ‘decent’ car 3 to 4 years old. This would be a typical car (not a luxury car) sold from a new car dealership. They usually have traded in one-owner certified vehicles that were sold new and serviced at the same dealership. Sometimes you may find such a car from a private owner. Usually such a car may last for another few years relatively trouble-free if properly maintained.

For $5000-$9000 you may be able to find a 6 to 9 year old used car with relatively high mileage which still might be in good shape. However, it may take a lot more time to find a good condition used car in this price range. Normally, independent used car dealers sell cars within this price range.

For $1000-$2000 you may be able to buy something that can serve as simple transportation to get from point A to point B. More than likely it may be a car with high mileage sold by a private owner. Dealers usually do not spend time selling cars or trucks in this price range. However, be prepared to spend much more money to keep such vehicle running.

6. Used car financing

You have three ways to pay for your used car:

Cash. Need we say more? Money talks — you-know-what walks.

Financing through a bank, on-line lender or credit union. We highly recommend this route as it will usually save money and give the consumer the most control over the transaction.

Financing through the dealer. This works for some people and depends on their credit scores and the current interest rates offered. Also the dealer may sometimes offer to beat the rate with a low-interest loan by prearranging financing through an independent source.

Financing through an independent source (bank, on-line lender or credit union) offers several advantages:

* Keeps negotiations simple in the dealership
* Allows you to shop competitive interest rates ahead of time
* Removes dependency on dealership financing
* Encourages you to stick to your budgeted amount


7. Where to buy a used car?

The three most common places to buy a used car are:

* Private parties
* New car dealerships
* Used car lots

Of these sources, private parties usually have the most reasonable prices. It is also a more relaxed transaction to buy a used car from a private party rather than to face a salesman at a dealership.
Still, there are advantages to buying a used car from a new car dealership. Many used cars, on new car lots, are trade-ins. Dealerships usually get these cars at rock-bottom prices. If you make a low offer — but one that gives them some profit — you just might get a great deal. Furthermore, many dealerships offer certified used cars that have been thoroughly inspected and are backed by attractive warranties.
The Internet is also an effective tool you can use to find out what is on the market in terms of availability, production year and price. It will give you the latest information compared with automotive magazines.
While the Internet is an amazing resource, you should still try the conventional sources. Ask friends and relatives if they are selling a used car. Keep your eyes peeled for cars with “For Sale” signs in the window. Scan the bulletin boards at supermarkets or in local schools and colleges. Finally, don’t forget about old faithful newspaper classifieds, particularly on Saturday and Sunday.

8. Make phone calls

It may be a good idea to take the time to make phone calls and enquire to confirm all vehicle information that is important to you: mileage, color, transmission, air conditioning, ABS or for any other options that may be in your interest. You may find a car to suit your purpose but it may not have all the essentials you really need. For example, you may find a car without air conditioning (A/C) but it will meet your needs in all other aspects. Similarly, you may find a car that is a two-door but you have a family of four and it would be much more suitable if your purchase was a four-door.

9. What to ask?

• When did you buy the car? How many previous owners? Current mileage?
• Any previous accidents? Major repairs? Any repair needed now?
• What’s the mechanical condition? Any concerns?
• General condition of the car? Interior? Exterior?
• Any rust? Scratches? Any other damages?
• Where the car has been serviced? Are the service records available?
• What is the reason for selling the car?
• Any liens?

10. What mileage is OK?

In general, purchasing a car with a very high mileage is not recommended, for example, 250,000 km (155,000 miles) and higher would be considered very high. However, “low mileage” does not necessarily mean it’s going to be a “good car”. Be aware of cars that may have undergone restoration after a serious accident or cars that haven’t been property maintained, or cars that may have had their odometer rolled back – nowadays they can easily ‘fix’ even electronic odometers. Again, checking a car history records will certainly help to avoid those lemons with “fixed” odometer.
When considering the ‘mileage’ count, it simply means that when choosing a car whether it has 60,000 or 80,000, it is not as important as the fact that it was well maintained and accident-free.

11. How old is “too old”?

Buying an old car even at “bargain” price is not recommended; no matter how many new parts you put into it, it will be still an old car that will need more and more repair later. Simply scratch out from your list anything older than ten – twelve years. Perfect choice will be three – five years old car because the price is greatly reduced and you will still have few trouble-free years.
One important detail: 2000 is a model year, not the production year. The car produced in august 1999 may carry 2000 model year as well as the one produced in July of 2000. This is related to all cars and model years. To know exactly, look for the first registration date in the car history report.

12. Don’t forget about a test drive.

Used car shopping involves inspecting the vehicle to determine its condition. This process is simplified if you buy a certified used car that has passed a thorough inspection and is backed by a manufacturer’s warranty. But while buying a certified used car removes a lot of the guesswork about the vehicle’s mechanical condition, you pay for this service.

Most new cars are sold with a three-year/36,000-mile warranty. Therefore, if you buy a car that is from one to three years old, with less than 36,000 miles on the odometer, it will still be under the factory warranty. If anything goes wrong with the car you just bought, the problem will be fixed for free.

If you are serious about buying a used car but have doubts about its condition, take it to a mechanic you trust. A private party will probably allow you to do this without much resistance. But at a dealership, it might be more difficult. If it is a certified used car, there is no reason to take it to a mechanic.

Once you get behind the wheel, your first impression will be the way the car feels when you sit in it. Is it a good fit? Does it offer enough headroom? Legroom? Are the gauges and controls conveniently positioned?

Try to arrange your test drive so that you start the engine when it is completely cold. Some cars are harder to start when they are dead cold and, when doing so, will reveal chronic problems. Turn off the radio before you begin driving — you want to hear the engine and concentrate on the driving experience.

On the test drive, evaluate these additional points:

• Acceleration from a stop
• Visibility
• Engine noise
• Passing acceleration
• Hill-climbing power
• Braking
• Cornering
• Suspension
• Rattles and squeaks
• Cargo space

On the test drive, take your time and be sure to simulate the conditions of your normal driving patterns. If you do a lot of highway driving, be sure to go on the highway and take the car up to 65 mph. If you go into the mountains, test the car on a steep slope. You don’t want to find out — after you’ve bought the car — that it doesn’t perform as needed.

After the test drive, ask the owner if you can see the service records and if receipts are available. If so, note whether the car has had oil changes at regular intervals (at every 5,000 to 7,500 miles). Be cautious of buying a car that has had major repairs such as transmission rebuilds, valve jobs or engine overhauls.

13. Negotiation phase

Often when you use a proper negotiation technique you can get a reasonable discount. Here are a few proven tips:
1. Start negotiating from the beginning. Try to get a discount from the very first time you phone about the car. If they ask for $20,000, ask them if it’s worth to come if the $19,000 is your bottom line, considering that you are the real buyer. Usually they won’t say “No”, which means that when you come, you can start negotiating down from $19,000, not from $20,000
2. Negotiate the total price. Dealers always like to add some additional fees on the top of the sticker price. Ask to calculate a total price “on the road” and use it for a negotiation.
3. Make a lower offer. Don’t be afraid to make a lower offer. If they are asking $15,000, offer $13,000. If the salesperson believes you will really buy a car, he/she will go down in price, and maybe you will then get the car for $13,800 or thereabouts.
4. Be ready to leave if you feel any pressure or if you have any hesitations about the car – there are so many other cars available. You don’t have to decide immediately. Do not give a deposit or sign anything until you are absolutely satisfied with the car and conditions.
5. Nothing works better than competition. Let’s say you have two cars on your list that you’re interested in. Show it to the salesperson and say you will buy a car from whomever gives you the better price. For example, if one of the salespersons offers you a $500 discount, phone to another dealer on your list and ask them if they can match it.
6. Whatever is promised by a dealer, ask to confirm in writing. Negotiate all the details of the deal. If the dealer promises to install new tires, make sure you agree on what kind of tires – cheapest available or of a well known brand. If there is some kind of warranty that comes with the car, make sure you understand all terms and condition. If the dealer promises to show you all service records, make sure you check them before paying for a car.

14. Buying an extended warranty

All new cars come with original warranty provided by a car manufacturer. This original warranty covers most of the vehicle components for a certain period – most commonly, three years or 36,000 miles. After the original warranty expires, you will have to pay for all repairs out of your pocket. This is when an extended warranty may be helpful. An extended warranty is basically a service contract between the car owner and the warranty company. According to this contract, the warranty company will pay for the repairs covered by the contract for a specific period of time. It’s something like health insurance for your car. With an extended warranty you protect yourself from unexpected repair costs.
For instance, you bought a used car that is out of original warranty and the transmission fails. If you don’t have an extended warranty you will have to pay out of from your pocket, transmission repair may cost you more than a couple thousand dollars. If you have a good extended warranty, it would cover most of the repair costs – in some cases you would only have to pay a diagnostic fee, or a deductible, depending on the type of warranty you have.
However, not all cars are qualified for an extended warranty and not everything is covered. Items like tires, belts, brakes and other wearable parts are usually not covered. Also, you still have to maintain your car properly and keep all the receipts.


15. Do’s and Don’ts.

• Do Checka used car history report. This does not give you a 100% warranty that the car is OK, but may save you some money if it will show you some bad records, for example, if the car was written off after an accident or has had an odometer rolled back.
• Do ask someone competent to inspect the car for you; it may save you a lot of money.
• Don’t buy a car after a serious accident – especially following a frontal collision. You wouldn’t even believe how many possible problems may arise later as a result of an accident.
• Don’t buy a car as soon as you see it. Take your time, test drive the car as long as you can. For example, some problems may only be caught when the engine is cold while other problems may only be discovered when cruising at highway speeds, etc.
• Don’t base your decision on what you have been told. “One Owner, highway driven” in fact, may be an ex-rental, heavily abused vehicle.
• Don’t buy a car if you have reservations or hesitate for one reason or another. If the engine seems too noisy or works as if it is in rough shape and sounds heavy, the transmission shifts harshly, some works needs to be done, something seems to be wrong with the papers, etc. – move on.
• Don’t buy a car if it needs some “minor” repairs. Often this results in spending a lot of money for repairs that never seem to end.
• Don’t buy a flooded car; it may look good and still be drivable but later a flooded car may develop many expensive to fix problems: corrosion, electrical, electronics, wheel bearings, transmission, etc.
• Don’t be rude to a salesperson at the dealership. In spite of the many stereotypes we share, many salespersons are genuinely nice people. Be persistent but not rude and offensive; treat them well and they will be willing to help you…

16. You’ve bought a good used car

If you are at a dealership, you still have to go through the finance and insurance (F&I) process. If you are buying a car from a private party, you have to make sure that payment is made and the title and registration are properly transferred.

In both cases, you also need to make sure you have insurance for the car you just bought before you drive it away. Also, the F&I person will probably try to sell you a number of additional items: an extended warranty, alarms or anti-theft services, prepaid service plans, fabric protection, rust proofing and emergency roadside kits. However, the other items typically sold in the F&I room are expensive and hold little value for you.

The F&I person may seem like a financial advisor, but he or she is really an experienced salesperson. Some F&I people may become very persistent trying to sell these items. Be firm and tell them that you are not interested in any aftermarket extras.

Once the contract is ready, review it thoroughly. In most states, it will contain the cost of the vehicle, a documentation fee, a smog fee, a small charge for a smog certificate, sales tax and license fees. Finally, you should inspect the car before taking possession of it. If any repair work is required, and has been promised by the dealer, get it in writing in a “Due Bill.”

When you buy a car from a private party, you will probably be asked to pay with a cashier’s check or in cash. But before money changes hands, request the title (sometimes called the “pink slip”) and have it signed over to you. Rules that govern vehicle registration and licensing vary from state to state.
Once all of the paperwork is complete, it is finally time to relax and begin enjoying your new purchase: a good used car.