Buying a Used Car
Before you start shopping for a car, you’ll need to do some homework. Spending time now may save you serious money later. Think about your driving habits, your needs, and your budget. You can learn about car models, options, and prices by reading newspaper ads, both display and classified. There is a wealth of information about used cars on the Internet: enter “used car” as the key words and you’ll find additional information on how to buy a used car, detailed instructions for conducting a pre-purchase inspection, and ads for cars available for sale, among other information. Libraries and book stores also have publications that compare car models, options, and costs, and offer information about frequency-of-repair records, safety tests, and mileage. Many of these publications have details on the do’s and don’ts of buying a used car.
You have two choices: pay in full or finance over time. If you finance, the total cost of the car increases. That’s because you’re also paying for the cost of credit, which includes interest and other loan costs. You’ll also have to consider how much you can put down, your monthly payment, the length of the loan, and the annual percentage rate (APR). Keep in mind that annual percentage rates usually are higher and loan periods generally are shorter on used cars than on new ones.
Dealers and lenders offer a variety of loan terms and payment schedules. Shop around, compare offers, and negotiate the best deal you can. Be cautious about advertisements offering financing to first-time buyers or people with bad credit. These offers often require a big down payment and a high APR. If you agree to financing that carries a high APR, you may be taking a big risk. If you decide to sell the car before the loan expires, the amount you receive from the sale may be far less than the amount you need to pay off the loan. If the car is repossessed or declared a total loss because of an accident, you may be obligated to pay a considerable amount to repay the loan even after the proceeds from the sale of the car or the insurance payment have been deducted. If your budget is tight, you may want to consider paying cash for a less expensive car than you first had in mind.
If you decide to finance, make sure you understand the following aspects of the loan agreement before you sign any documents:
- the exact price you’re paying for the vehicle;
- the amount you’re financing;
- the finance charge (the dollar amount the credit will cost you);
- the APR (a measure of the cost of credit, expressed as a yearly rate);
- the number and amount of payments; and
- the total sales price (the sum of the monthly payments plus the down payment).
Used cars are sold through a variety of outlets: franchise and independent dealers, rental car companies, leasing companies, and used car superstores. You can even buy a used car on the Internet. Ask friends, relatives, and co-workers for recommendations. You may want to call your local consumer protection agency, state Attorney General (AG), and the Better Business Bureau (BBB) to find out if any unresolved complaints are on file about a particular dealer.
Some dealers are attracting customers with “no-haggle prices,” “factory certified” used cars, and better warranties. Consider the dealer’s reputation when you evaluate these ads.
Dealers are not required by law to give used car buyers a three-day right to cancel. The right to return the car in a few days for a refund exists only if the dealer grants this privilege to buyers. Dealers may describe the right to cancel as a “cooling-off” period, a money-back guarantee, or a “no questions asked” return policy. Before you purchase from a dealer, ask about the dealer’s return policy, get it in writing and read it carefully.
The Federal Trade Commission’s (FTC) Used Car Rule requires dealers to post a Buyers Guide in every used car they offer for sale. This includes light-duty vans, light-duty trucks, demonstrators, and program cars. Demonstrators are new cars that have not been owned, leased, or used as rentals, but have been driven by dealer staff. Program cars are low-mileage, current-model-year vehicles returned from short-term leases or rentals. Buyers Guides do not have to be posted on motorcycles and most recreational vehicles. Anyone who sells less than six cars a year doesn’t have to post a Buyers Guide.
The Buyers Guide must tell you:
- whether the vehicle is being sold “as is” or with a warranty;
- what percentage of the repair costs a dealer will pay under the warranty;
- that spoken promises are difficult to enforce;
- to get all promises in writing;
- to keep the Buyers Guide for reference after the sale;
- the major mechanical and electrical systems on the car, including some of the major problems you should look out for; and
- to ask to have the car inspected by an independent mechanic before you buy.
When you buy a used car from a dealer, get the original Buyers Guide that was posted in the vehicle, or a copy. The Guide must reflect any negotiated changes in warranty coverage. It also becomes part of your sales contract and overrides any contrary provisions. For example, if the Buyers Guide says the car comes with a warranty and the contract says the car is sold “as is,” the dealer must give you the warranty described in the Guide.
As Is – No Warranty
When the dealer offers a vehicle “as is,” the box next to the “As Is – No Warranty” disclosure on the Buyers Guide must be checked. If the box is checked but the dealer promises to repair the vehicle or cancel the sale if you’re not satisfied, make sure the promise is written on the Buyers Guide. Otherwise, you may have a hard time getting the dealer to make good on his word. Some states, including Connecticut, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New York, Rhode Island, Vermont, West Virginia, and the District of Columbia, don’t allow “as is” sales for many used vehicles.
Three states – Louisiana, New Hampshire, and Washington – require different disclosures than those on the Buyers Guide. If the dealer fails to provide proper state disclosures, the sale is not “as is.” To find out what disclosures are required for “as is” sales in your state, contact your state Attorney General.
State laws hold dealers responsible if cars they sell don’t meet reasonable quality standards. These obligations are called implied warranties – unspoken, unwritten promises from the seller to the buyer. However, dealers in most states can use the words “as is” or “with all faults” in a written notice to buyers to eliminate implied warranties. There is no specified time period for implied warranties.
Warranty of Merchantability
The most common type of implied warranty is the warranty of merchantability: The seller promises that the product offered for sale will do what it’s supposed to. That a car will run is an example of a warranty of merchantability. This promise applies to the basic functions of a car. It does not cover everything that could go wrong.
Breakdowns and other problems after the sale don’t prove the seller breached the warranty of merchantability. A breach occurs only if the buyer can prove that a defect existed at the time of sale. A problem that occurs after the sale may be the result of a defect that existed at the time of sale or not. As a result, a dealer’s liability is judged case by case.
Warranty of Fitness for a Particular Purpose
A warranty of fitness for a particular purpose applies when you buy a vehicle based on the dealer’s advice that it is suitable for a particular use. For example, a dealer who suggests you buy a specific vehicle for hauling a trailer in effect is promising that the vehicle will be suitable for that purpose.
If you have a written warranty that doesn’t cover your problems, you still may have coverage through implied warranties. That’s because when a dealer sells a vehicle with a written warranty or service contract, implied warranties are included automatically. The dealer can’t delete this protection. Any limit on an implied warranty’s time must be included on the written warranty.
In states that don’t allow “as is” sales, an “Implied Warranties Only” disclosure is printed on the Buyers Guide in place of the “As Is” disclosure. The box beside this disclosure will be checked if the dealer decides to sell the car with no written warranty.
In states that do allow “as is” sales, the “Implied Warranties Only” disclosure should appear on the Buyers Guide if the dealer decides to sell a vehicle with implied warranties and no written warranty. A copy of the Buyers Guide with the “Implied Warranties Only” disclosure is available athttp://www.ftc.gov/bcp/edu/resources/forms/buyers.pdf.
Dealers who offer a written warranty must complete the warranty section of the Buyers Guide. Because terms and conditions vary, it may be useful to compare and negotiate coverage.
Dealers may offer a full or limited warranty on all or some of a vehicle’s systems or components. Most used car warranties are limited and their coverage varies. A full warranty includes the following terms and conditions:
- Anyone who owns the vehicle during the warranty period is entitled to warranty service.
- Warranty service will be provided free of charge, including such costs as removing and reinstalling a covered system.
- You have the choice of a replacement or a full refund if, after a reasonable number of tries, the dealer cannot repair the vehicle or a covered system.
- You only have to tell the dealer that warranty service is needed in order to get it, unless the dealer can prove that it is reasonable to require you to do more.
- Implied warranties have no time limits.
If any of these statements don’t apply, the warranty is limited.
A full or limited warranty doesn’t have to cover the entire vehicle. The dealer may specify that only certain systems are covered. Some parts or systems may be covered by a full warranty; others by a limited warranty.
The dealer must check the appropriate box on the Buyers Guide to indicate whether the warranty is full or limited and the dealer must include the following information in the “Warranty” section:
- the percentage of the repair cost that the dealer will pay. For example, “the dealer will pay 100 percent of the labor and 100 percent of the parts . . .”;
- the specific parts and systems – such as the frame, body, or brake system – that are covered by the warranty. The back of the Buyers Guide lists the major systems where problems may occur;
- the warranty term for each covered system. For example, “30 days or 1,000 miles, whichever comes first”; and
- whether there’s a deductible and, if so, how much.
You have the right to see a copy of the dealer’s warranty before you buy. Review it carefully to determine what is covered. The warranty gives detailed information, such as how to get repairs for a covered system or part. It also tells who is legally responsible for fulfilling the terms of the warranty. If it’s a third party, investigate their reputation and whether they’re insured. Find out the name of the insurer, and call to verify the information. Then check out the third-party company with your local Better Business Bureau. That’s not foolproof, but it is prudent. Make sure you receive a copy of the dealer’s warranty document if you buy a car that is offered with a warranty.
Unexpired Manufacturer’s Warranties
If the manufacturer’s warranty still is in effect, the dealer may include it in the “systems covered/duration” section of the Buyers Guide. To make sure you can take advantage of the coverage, ask the dealer for the car’s warranty documents. Verify the information (what’s covered, expiration date/miles, and necessary paperwork) by calling the manufacturer’s zone office. Make sure you have the Vehicle Identification Number (VIN) when you call.
Like a warranty, a service contract provides repair and/or maintenance for a specific period. But warranties are included in the price of a product, while service contracts cost extra and are sold separately. To decide if you need a service contract, consider whether:
- the service contract duplicates warranty coverage or offers protection that begins after the warranty runs out. Does the service contract extend beyond the time you expect to own the car? If so, is the service contract transferable or is a shorter contract available?
- the vehicle is likely to need repairs and their potential costs. You can determine the value of a service contract by figuring whether the cost of repairs is likely to exceed the price of the contract.
- the service contract covers all parts and systems. Check out all claims carefully. For example, “bumper to bumper” coverage may not mean what you think.
- a deductible is required and, if so, the amount and terms.
- the contract covers incidental expenses, such as towing and rental car charges while your car is being serviced.
- repairs and routine maintenance, such as oil changes, have to be done at the dealer.
- there’s a cancellation and refund policy for the service contract and, whether there are cancellation fees.
- the dealer or company offering the service contract is reputable. Read the contract carefully to determine who is legally responsible for fulfilling the terms of the contract. Some dealers sell third-party service contracts.
The dealer must check the appropriate box on the Buyers Guide if a service contract is offered, except in states where service contracts are regulated by insurance laws. If the Guide doesn’t include a service contract reference and you’re interested in buying one, ask the salesperson for more information.
If you buy a service contract from the dealer within 90 days of buying a used vehicle, federal law prohibits the dealer from eliminating implied warranties on the systems covered in the contract. For example, if you buy a car “as is,” the car normally is not covered by implied warranties. But if you buy a service contract covering the engine, you automatically get implied warranties on the engine. These may give you protection beyond the scope of the service contract. Make sure you get written confirmation that your service contract is in effect.
The Buyers Guide cautions you not to rely on spoken promises. They are difficult to enforce because there may not be any way for a court to determine with any confidence what was said. Get all promises written into the Guide.
Pre-Purchase Independent Inspection
It’s best to have any used car inspected by an independent mechanic before you buy it. For about $100 or less, you’ll get a general indication of the mechanical condition of the vehicle. An inspection is a good idea even if the car has been “certified” and inspected by the dealer and is being sold with a warranty or service contract. A mechanical inspection is different from a safety inspection. Safety inspections usually focus on conditions that make a car unsafe to drive. They are not designed to determine the overall reliability or mechanical condition of a vehicle.
To find a pre-purchase inspection facility, check your Yellow Pages under “Automotive Diagnostic Service” or ask friends, relatives, and co-workers for referrals. Look for facilities that display certifications like an Automotive Service Excellence (ASE) seal. Certification indicates that some or all of the technicians meet basic standards of knowledge and competence in specific technical areas. Make sure the certifications are current, but remember that certification alone is no guarantee of good or honest work. Also ask to see current licenses if state or local law requires such facilities to be licensed or registered. Check with your state Attorney General’s office or local consumer protection agency to find out whether there’s a record of complaints about particular facilities.
There are no standard operating procedures for pre-purchase inspections. Ask what the inspection includes, how long it takes, and how much it costs. Get this information in writing.
If the dealer won’t let you take the car off the lot, perhaps because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If that’s not an option, ask the dealer to have the car inspected at a facility you designate. You will have to pay the inspection fee.
Once the vehicle has been inspected, ask the mechanic for a written report with a cost estimate for all necessary repairs. Be sure the report includes the vehicle’s make, model, and VIN. Make sure you understand every item. If you decide to make a purchase offer to the dealer after considering the inspection’s results, you can use the estimated repair costs to negotiate the price of the vehicle.
The Buyers Guide lists an auto’s 14 major systems and some serious problems that may occur in each. This list may help you and your mechanic evaluate the mechanical condition of the vehicle. The list also may help you compare warranties offered on different cars or by different dealers.
Dealer Identification and Consumer Complaint Information
The back of the Buyers Guide lists the name and address of the dealership. It also gives the name and telephone number of the person you should contact at the dealership if you have problems or complaints after the sale.
Optional Signature Line
The dealer may include a buyer’s signature line at the bottom of the Buyers Guide. If the line is included, the following statement must be written or printed close to it: “I hereby acknowledge receipt of the Buyers Guide at the closing of this sale.” Your signature means you received the Buyers Guide at closing. It does not mean that the dealer complied with the Rule’s other requirements, such as posting a Buyers Guide in all the vehicles offered for sale.
Spanish Language Sales
If you buy a used car and the sales discussion is conducted in Spanish, you are entitled to see and keep a Spanish-language version of the Buyers Guide.
An alternative to buying from a dealer is buying from an individual. You may see ads in newspapers, on bulletin boards, or on a car. Buying a car from a private party is very different from buying a car from a dealer.
- Private sellers generally are not covered by the Used Car Rule and don’t have to use the Buyers Guide. However, you can use the Guide’s list of an auto’s major systems as a shopping tool. You also can ask the seller if you can have the vehicle inspected by your mechanic.
- Private sales usually are not covered by the “implied warranties” of state law. That means a private sale probably will be on an “as is” basis, unless your purchase agreement with the seller specifically states otherwise. If you have a written contract, the seller must live up to the promises stated in the contract. The car also may be covered by a manufacturer’s warranty or a separately purchased service contract. However, warranties and service contracts may not be transferable, and other limits or costs may apply. Before you buy the car, ask to review its warranty or service contract. Many states do not require individuals to ensure that their vehicles will pass state inspection or carry a minimum warranty before they offer them for sale. Ask your state Attorney General’s office or local consumer protection agency about the requirements in your state.
Before You Buy a Used Car
Whether you buy a used car from a dealer, a co-worker, or a neighbor, follow these tips to learn as much as you can about the car:
- Examine the car yourself using an inspection checklist. You can find a checklist in many of the magazine articles, books, and Internet sites that deal with buying a used car.
- Test drive the car under varied road conditions – on hills, highways, and in stop-and-go traffic.
- Ask for the car’s maintenance record. If the owner doesn’t have copies, contact the dealership or repair shop where most of the work was done. They may share their files with you.
- Talk to the previous owner, especially if the present owner is unfamiliar with the car’s history.
- Have the car inspected by a mechanic you hire.
- Research the frequency of repair and maintenance costs on the models in auto-related consumer magazines. The U.S. Department of Transportation’s Vehicle Safety Hotline (1-888-327-4236) and websitewww-odi.nhtsa.dot.govgives information on recalls.
- Check a trusted database service that gathers information from state and local authorities, salvage yards, and insurance companies for an independent and efficient review of a vehicle’s history. For example, the Department of Justice’s National Motor Vehicle Title Information System (NMVTIS) atwww.nmvtis.govis an online system that offers accurate information about a vehicle’s title, odometer data, and certain damage history. Expect to pay up to $4 per report. The National Insurance Crime Bureau (NICB) atwww.nicb.orgmaintains a free database that includes flood damage and other information so people can investigate a car’s history by its vehicle identification number (VIN).
What should a consumer look for when buying a used car? ›
- Check the Car's History. Reports from Carfax or another reputable agency can reveal a car's accident history and whether it has been serviced regularly. ...
- Walk Around the Car. ...
- Take a Test Drive. ...
- Get a Mechanical Inspection.
Dealers are not required by law to give used car buyers a three-day right to cancel. The right to return the car in a few days for a refund exists only if the dealer grants this privilege to buyers.When purchasing a used vehicle What are 3 important things you need to know? ›
- Find Out the Vehicle History. ...
- Inspect the Frame. ...
- Pop the Hood. ...
- Take Note of Mileage. ...
- Look for Uneven Tires. ...
- Take in the Aesthetics. ...
- Take it for a Spin. ...
- Bring a List of Things to Check When Buying a Used Car.
- 'I love this car! '
- 'I've got to have a monthly payment of $350. '
- 'My lease is up next week. '
- 'I want $10,000 for my trade-in, and I won't take a penny less. '
- 'I've been looking all over for this color. '
- Information is power.
The Consumer Rights Act came into force on 1 October 2015 and covers the purchase of goods, digital content and services including new and used cars from official dealers (it doesn't apply to private sales) as well as servicing, repairs and maintenance work.Can you return a used car if it has problems? ›
You do not need to allow the supplier to repair or replace the goods, you can demand a refund as soon as you become aware of the defects. The Motor Industry Ombud does not share our view and will recommend that the vehicle be repaired if possible, even if it is contrary to the wording of the CPA.What is the lemon law for used cars in Louisiana? ›
State Lemon Laws
While some lemon laws in other states don't cover used cars, Louisiana's may, depending on your warranty. If your car has been under repair for 45 days or more, or subject to repair 4 or more times for the same defect, you may be entitled to a refund or a replacement vehicle.
Option to Cancel
If you purchase the option, you have the right to cancel the sale within two days for any reason. If you decide to return the used car, you must return it to the dealer within two business days by closing time (unless the contract gives you more time).
If you've purchased a new or used car and have second thoughts about it, you usually won't be able to return the car. The dealer who sold you the car is typically not legally obligated to take the car back and issue you a refund or exchange after you've signed the sales contract.What are 5 things you should think about or do when you buy a used car? ›
- Use VINCheck. ...
- Check Car History. ...
- Research Buying from a Dealer vs. ...
- Inspect for Signs of Damage. ...
- Get Insurance Quotes and Compare Rates.
What you should do before buying a car? ›
- Get Your Credit Report. ...
- Review Your Loan Options. ...
- Discover Your Car's Trade-In Value. ...
- Determine Your Desired Payment. ...
- Decide Whether to Buy a New or Used Car. ...
- Learn About the Car's History.
What is considered high mileage on a car? Often, 100,000 miles is considered a cut-off point for used cars because older vehicles often start requiring more expensive and frequent maintenance when mileage exceeds 100,000.What should you not say to a dealership? ›
- “I'm ready to buy now.” ...
- “I can afford this much per month.” ...
- “Yes, I have a trade-in.” ...
- “I'm only buying the car with cash.” ...
- “I'm not sure…which model do you think I need?” ...
- “Oh, I've wanted one of these all my life.” ...
- “I'll take whatever the popular options are.”
Instead, politely say you would like to discuss the price of the car, including all fees and taxes. You want to know the "drive-away" or "out-the-door" cost of the vehicle they're willing to give you, not the MSRP, or sticker price.Why do car salesmen talk to manager? ›
They are actually going to talk to the manager. The main reason being that the sales manager controls all the pricing of the cars in order to ensure that the dealership is making a profit.What are your rights when buying a second hand car privately? ›
The only legal terms that cover a private sale contract are: The seller must have the right to sell the car. The vehicle should match the description given by the seller. The car must be roadworthy – it is a criminal offence to sell an unroadworthy car.How many rights does a consumer have under the car? ›
The Consumer Protection Act passed in 1986 guarantees 8 rights to consumers. These include the Right to safety, Right to be informed, Right to choose, Right to consumer education, Right to be heard, Right to seek redressal, Right to basic needs, and the Right to healthy environment.What is the Consumer Rights Act and how does it affect my vehicle purchase? ›
The Consumer Rights Act stipulates that dealers will only get one chance to repair or replace the product, so dealers can't make multiple attempts to fix a problem unless otherwise agreed. If they fail to remedy the fault in one attempt or within a reasonable time period, you'll be entitled to a full or partial refund.What does a 30 day warranty cover on a used car? ›
The warranty must cover essential components, such as the engine, transmission, brakes, steering and most electronics. If the dealer is unable to repair problems that arise in the first 1,000 miles or 30 days, it must offer the customer a refund on their purchase.What is the warranty on a second hand car? ›
Used car warranty
A used-car warranty typically lasts for three, six or 12 months, with older cars often supplied with shorter policies. Cars sold by franchised dealers are often marketed under an 'approved used' scheme and are generally covered by a 12-month warranty.
How many days do I have to return a car? ›
Your rights when buying a used car from a dealership
If you've bought a used motor from a dealership, you have the right to return the car within the first 30 days of purchase.
To determine whether a car has reasonable mileage, you can simply multiply 12,000 by its age. That means good mileage for a car that's 5 years old is 60,000. Significantly more or fewer miles could indicate a problem or trouble in the future.What should you look for in a car? ›
- Vehicle history. Get as much information as you can from the current owner and then do your own research. ...
- Rust or paint damage. ...
- Frame issues. ...
- Under the hood. ...
- Tire condition. ...
- Mileage. ...
- Interior electronics. ...
As a general rule, it's best to stay away from cars that are above five years of age as chances are high that they may need repairs. Also, steer clear from brands which have been discontinued in the market as spares can be elusive and expensive.When I buy a car from a private seller can I drive it home? ›
When you buy a used car from a private seller, things can be a little trickier than when you purchase from a dealer. But just like with a dealership, you need to have car insurance before you can drive your new purchase home.How many miles should a 10 year old car have? ›
A wary buyer should use as a general rule of thumb that most cars are driven 12,000-15,000 miles per year. If a vehicle is 10 years of age, it should have between 120,000 miles and 150,000 miles on the odometer.Is a 10 year old car too old? ›
When buying a used car that's 10-years-old or older, your primary concerns are purchase price and reliability. Don't pay more than that 10-year-old car is worth. And, pick a car with a solid reputation for dependability. No car is really too old if you follow those rules.At what mileage should a car be replaced? ›
With proper maintenance, cars can have a life expectancy of about 200,000 miles.What is the safest color car to drive? ›
We've referenced the safest color car on the road. That color is white. White cars are 12 percent less likely to be involved in an accident than black cars at any time of the day under any conditions. This is because there is often a lot of contrast between white cars and its surroundings.What are hidden costs that come with purchasing a vehicle? ›
- 1) Car Insurance. One thing you can be sure of is that you should insure your vehicle. ...
- 2) Gas Mileage. ...
- 3) Maintenance. ...
- 4) Depreciation. ...
- 5) Financing.
What is the best month of the year to buy a used car? ›
January is the best month to buy a used car, according to a study from car search engine and automotive research firm iSeeCars. For those hunting for a good deal, late fall and early winter are the best times to buy a used car, while late spring and early summer are the worst times.Is a car's age or mileage more important? ›
Even when mileage is low, the older a car gets, the less reliable it becomes. Modern cars are much more reliable, even as they age. Five-year-old cars record what is considered a major problem every three years, while 10-year-old cars are more likely to face a problem every 18 to 20 months.What is considered an old car? ›
For insurance and registration purposes, the age of a classic car, in most cases, is at least 20 years old but not more than 40 years old. If you are going to register it (and insure it) as a classic, it should have been kept to its original design and specifications.What do I need to know when buying a used car from a private seller? ›
- Check the car's details with the DVLA. Ask the seller for the car's: ...
- Check the MOT and history. Vehicles need regular MOT tests to make sure they're safe for the road. ...
- Get a private history check.
Price. Low price is the most important advantage to buying from a private seller. In fact, if your first concern is budget, but you have some cash on hand and don't need to finance, it's almost always the way to go. Private sellers typically won't try to sell you extra warranties.Can police seize a car for no tax? ›
An untaxed car could be impounded by the police – leading to an expensive and inconvenient procedure to release your vehicle. If this happens to you, you'll also need impounded car insurance to help regain access to your car.