(Some material taken from "Used Cars -- How to Buy One")

Used car dealers are the slickest of the slick -- the best salespeople on the lot. At a dealership, the real profits are made in the used car section. That's because some sucker has traded in their cream puff at a below-blue book price. Now it's up to the used car guys to convert that cream puff into cash.

This doesn't mean you can't get a good deal in a used car. You just have to know what you're doing. Many of the principles covered in the New Car Tips apply here. Apply the three phases of research, shopping and buying. However, since the car is used, you also need to have a mechanic look it over. This is a $80 investment that can save you thousands. Don't leave it to chance, get a trusted mechanic to put it up on a rack and check everything. Then you'll be sure you're getting a car that will give you faithful service. There are companies such as Auto Exam and Auto Spec that can determine if the used car is in sound mechanical condition.

The first question to ask is what type of vehicle and price range you are looking for. You can use the Auto Almanac to select the vehicle types you prefer (see note below for cars to avoid). Contact your Credit Union to check which vehicles fall into your price range by reviewing used car value guides. Don't forget to call your insurance company to check on insurance rates for the vehicles you are considering.

Once you have completed a list of desirable vehicles - the search begins. Remember, as you start on this quest, the more restrictive your list of vehicles, the more time it will take to find what you want. Build a list of at least three target cars, write their names and prices on 3 x 5 index cards and carry them with you as you shop.

If your budget allows, shop for a car which is only 2-3 years old. This means the previous owner has incurred the steepest drop in the car's value. You can own it for another three years before the value begins dropping again. If you're smart, you'll unload it before then.

Where to Look for Used cars.

Rental cars or program cars: Usually these cars are kept less than six months, are well-maintained and accompanied by "legitimate" warranties from the manufacturer and the rental companies. The downside of this route is that the vehicles tend to be priced on the high side and selection is limited.

New Car Dealers: The used car section of a new car dealership can have some real bargains. This is because the previous owner traded the car in for a below-blue book figure. If you negotiate wisely, you can give the dealership a profit, but still get it for a great price. Set your opening offer very low. Be prepared to stage a walk out when negotiations slow down. But walk out slowly, they'll probably call you back.

Ignore any stories you hear regarding car histories from the salespeople. Instead, make sure any vehicle you find on a used car lot has not been crashed or otherwise abused. The first step in this process is to have Auto Exam or Auto Spec check out the vehicle. The second step is to use the Vehicle Identification Number (VIN) to trace the original purchase location of the vehicle. Have your insurance agent help you with this part of the process. If the vehicle was originally sold in a different state you should probably walk away from it.

Private Parties: This has the highest risk but also represents the best opportunity for a great deal. Private party deals allow you to buy at nearly wholesale prices but without any warranty. Check the newspapers or look for cars with FOR SALE signs. When you go to look at private party vehicles you can expect more than half will be misrepresented or have serious problems--this is not a game for those who lack time, patience, and savvy. When you do find a vehicle which is to your liking have it checked out by Auto Exam or Auto Spec. If it checks out - negotiate with the seller. Typically, you can offer well below the retail price (listed in the used car guide) to a private party seller. Don't be afraid of insulting anyone with your offer; the seller is free to reject the offer, or will counter offer if he doesn't feel your offer is adequate.

When shopping for a car from a private party consider these simple precautions:

  • Always have a friend accompany you when you are shopping
  • Never look at used cars at night
  • Be careful of cash transactions when purchasing a used car
  • Ask to see the seller's drivers license as part of the deal
  • Get a written Bill of Sale stipulating all terms of the sale
  • When paying for a used car hand your check directly to the owner
  • Check the VIN on the title to make sure it matches the VIN on the vehicle
  • Check the name on title matches the name of the seller

Cars to Avoid: Some cars require much more expertise to determine if they are good values.  The following used car types should probably be avoided:

  • Vehicles more than ten years old 
  • Any non-US or non-Japanese car which is more than 5 years old
  • Car models which were on the market for less than two years
  • Four wheel drive vehicles Cars made by companies which are no longer in business
  • Cars subject to high levels of recalls
  • Any cars with signs of exterior rust
  • Vehicles which have been totally repainted
  • Customized or non-stock vehicles