Buying a used car can be a great investment….but it sure can be a headache! Here are a few tips for buying a used car without getting swindled.

A few months ago, we bought a new-to-us car. It was a 2006 Ford Escape, but it was the perfect car for our current situation. However, buying that car definitely took a lot of time and effort. I’ve seen my dad buy and sell used cars several times throughout my life, so combined with our recent experience, I feel like I’ve learned a decent amount about buying a used car.

Why buy used? Well, for one, new cars lose a ton of value the moment you drive them off the lot. The prices for used cars are cheaper, as well as the taxes and insurance. While any car is a financial investment, new cars are unnecessarily expensive. So, as long as you go about it the right way, a used car is the way to go. However, making the decision to buy a used vehicle is only the first step!

Dealer versus Private Seller

So, dealer versus private seller – there’s pros and cons to both. How do you choose?

Private sellers are generally cheaper. You can probably get a better deal, and there’s not as much negotiation involved. Dealers are more of a one-stop shop, but they come at a price.  The prices are typically much more inflated, the process usually takes forever, many car salespeople are dishonest, and they try and sell you unneeded products.

Where to Find Cars?

There are many ways to find used vehicles for sale. For us, we scoured Craigslist and KSL classifieds (a Utah-based website) on a daily basis. One thing I found is that you really have to look regularly – the best cars get picked up fast! On websites like Craigslist, you can see vehicles from dealers and private sellers, which I thought was nice.

If you are looking to buy from a specific dealer, you should be able to browse their inventory online. CarMax allows you to browse their inventory online as well, and they make it easy to find exactly what you are looking for.

Other ways to find cars are by going to auctions (which is how my dad got one of the cars I drove in high school and college), Facebook garage sale groups, and just word of mouth. Also, many people still put “For Sale” signs on their back of their vehicles, so just keep your eyes peeled.

Do Research

When you first start your car search, do your research. Just driving over to a used car dealership and walking in is usually a recipe for disaster. You might walk out with a car you didn’t really want and for a price that’s more than it’s worth.

There are a lot of great ways to do research on cars. You can start by researching the make, model, and year of the car on a website like KBB.org and Edmunds.com. Here you can find the safety ratings, average MPG, common issues, as well as customer reviews on different vehicles.

Find the History

Once you have a car you are interested in, you absolutely need to check out the history of the vehicle itself. Don’t just take someone’s word on the history (especially if they aren’t the first owner.) CARFAX vehicle reports are the best way to do this. It gives you a detailed history of the car, how many owners it’s hard, maintenance reports, any accidents it has been in, etc. Most dealerships provide this for free, and I’ve found that a lot of private sellers are willing to provide it as well. If not, it’s worth the money to get one for a car you are looking into. You don’t want to accidentally buy a lemon or a car that’s stolen.

Check the Forums

I found forums to be very helpful when we were looking for cars. For instance, while many reviews of the Mazda van we were looking at said it was a great car, the forums told a different story – basically, the transmission almost always went out at about the point the car we were looking at was at. We paid special attention to this as we were looking at the car, and, sure enough, it had a bunch of issues with the transmissions. Reviews may be paid off or skewed, but people in forums usually don’t hold back.

Check out the Seller

If you are buying from a private seller, it’s also good to ask for all the maintenance records, just to make sure it’s been kept up and regularly serviced. It’s also good to make sure you feel good about the seller. It’s good to know their history, why they are selling it, and if they kept it up. It’s also good to know if they are a thief or a drug dealer (but that might be a little harder to figure out!)

Don’t Go to Dealer without Researching Beforehand

One thing I highly recommend NOT doing is just walking into a dealership without looking online beforehand. Most dealerships list all of their vehicles for sale online with all the details. I would spend a good amount of time searching for the kind of car you want and then seeing if it’s for sale near you.

AutoTrader.com allows you to do this. By finding a few cars you want to look at before you can into a dealer, you avoid being shown vehicles you don’t want to see and you can look up the value online beforehand…which brings me to my next point!

Know your Budget and Requirements

If you go into car buying without a budget, you’ll probably spend more. That’s how it is with a lot of things. It’s important to know how much you are willing to spend before you get into the negotiation or buying process with anyone. Your bank account will thank you for it (and probably your retirement fund.)

It’s also important to know what things your new car has to have – make a list of “must haves” and “nice to haves.” If you would like a DVD player, it’s an added bonus if you find one that includes it within your budget. However, if you find the perfect car…but it will cost $2,000 more over your budget to include it, it’s better if you aren’t attached to the idea – and just think, you can always find a portable DVD player online!

Know the Value

This is absolutely essential when buying a car, whether from a dealer or a private seller. While you may want to assume the best in people, unfortunately, when it comes to selling cars…they are often overpriced – especially at dealerships. You can easily check how much you should buy for a certain car online at websites like KBB.com and Edmunds.com. This way, you know how much you should try and negotiate the car for and you can get the best deal. In my experience, most private sellers will

Know Why It’s Priced The Way It Is

Unfortunately, when it comes to cars, if a price seems too good to be true, it probably is. Even more unfortunately, some owners and car dealerships might try and hide the reason why it’s priced lower than it may be worth. If you see a car for a great deal, make sure to ask why it’s being sold for the price it is. For instance, when we bought our car, it was priced a decent amount under KBB, but we couldn’t see any reason why. When we talked to the guy selling it, he said that everyone was looking for a V6 version of the vehicle, and he just wanted to sell it. Even then, it’s important to make sure the car is in good working condition and will pass safety and emissions (unless, of course, you are looking to fix a car!)

Make Sure it Checks Out

When we were first looking at cars, we went over to a dealership after we saw, what looked like, an awesome deal on a minivan. We got in the car and drove around, listening to the salesman try and tell us what an amazing deal it was and how we should get it right away. Well, after we drove around for a bit, the check engine light went on. So we had some tests run on it, and it put out about 10 error codes, most of which were related to the transmission. The salesman really tried hard to convince us that we’d run into that problem with ANY used vehicle, and he tried his hardest to send us out the door with a vehicle that probably would stop working in a few months.

What I’ve learned is this – don’t just take someone’s word for it, even if they are honest. When you are buying a used vehicle, no one should object to you taking it to a third party mechanic (though make sure the mechanic is honest) and having them check it out. I know that many mechanics offer a free service just for this purpose. Even if you have to a little bit of money, the peace of mind is worth it. You don’t want to drive away with a car that has tons of issues that will cost more to fix than the vehicle is worth!

Beware of Scams

We spent a lot of time searching on Craigslist and KSL for used cars. Sadly, I ran into a lot of scams. I’d say that, at least once a week, I ran into a scam. How did I know? Well, here are a typical signs of a scam:

• Almost brand new car with low mileage priced at an insanely low price
• Email responses that sound like a form email or a fill-in-the-blank email. Sometimes you may even run into an email where the person forgot to take out something like “insert city name here.” I’ve copied emails from scams before into a search engine and found almost the exact same email posted somewhere online.
• They want to ship the car to you or want you to send them a cashier check before you can see it. Whenever someone talks about you sending them money before you get anything, run!
• They are very ambiguous about where they are located.
• Broken English. I hesitate to put this one, because there are very honest people out there selling cars who don’t speak the best English. However, in my experience, the emails I get back that are scams always have horrible grammar, spelling, and punctuation.
• Really, really long emails that usually have some sob story attached to them, or the person talks about how they moved out of the country and need to sell the car fast.

Test Drive It

This might seem kind of dumb to mention but don’t buy a car without test driving it! All cars drive differently. You want to make sure you like how it runs, see how comfortable you are in it, and that it just feels right. No one should object to you taking a drive in a car you are thinking about buying. Be prepared to leave some kind of collateral though. No one wants to risk someone stealing their car!

One of the best parts about CarMax is that they have a nationwide database of 35,000+ cars nationwide, and they will transfer any car to Denver for you try out, with no obligation to buy. You can test drive the car in their lot as soon as it arrives, and if you don’t love it, then they’ll work hard to find another one that you do.

Negotiate

I really don’t love negotiating, and we didn’t negotiate at all for the vehicle we just bought (since it was very fairly priced – about $1,000 under Blue Book estimates.) However, in many cases, you want to negotiate, especially at a dealership.

When should you negotiate? Well, if you did your research, you’ll know how much you should pay for the car. Try and get as close to that price as possible. Bring numbers with you in mind, and while you can be a little flexible, know which price you absolutely won’t go over.

Sometimes, when you look like you are about to walk away, the other party may budge. And if you hate negotiating? Places like CarMax are probably the best option, since they offer low, no-haggle prices.

Have payment arranged

When we first were looking for a car, there was a car that came up on Craigslist that was about an hour away. For some reason, we just hopped right into our car and drove up there. After we got there, the car wasn’t really what we were looking for, but as we walked away, Forrest and I started talking about how dumb that was of us – had we wanted to buy the car, we didn’t have any payment arranged! The bank was closed so we couldn’t go withdraw any money, and, had the car been more expensive, we didn’t have any financing arranged.

Next time around, we were much more prepared. Before we started looking again, we went to the bank to discuss financing and we got pre-approved for an auto loan. We felt our credit union offered the most competitive rate for a car loan. When we had gone to a dealership, the person we were working with told us that no bank would give us a loan under $7,000 because we hadn’t bought a home or car before. Our bank laughed when we told them that and said that was nowhere near true. So be sure to look around at different rates and programs – chances are, the dealer doesn’t offer the best options on financing.

Go to dealerships at the end of the month

This is a tip I learned from my brother-in-law who used to work at a car dealership. Some salesmen will deny it, but they have quotas they need to meet each month. If you go at the very beginning of the month, they don’t feel as much pressure to give a good deal, throw in extras, etc. However, if you go in on one of the last days of the month (especially during a slow time of year), you will probably get a better deal.

Avoid “extras”

I’d say the best part of buying a used car from a private seller is that it’s pretty straight forward. You pay them, there’s no “dealer” fees, and you just have to pay sales tax and registration fees. At a dealer, they try and swindle you for all you are worth. When we were looking at a car at a dealer, the salesman told us our “out of door price” was about $1,000 higher than the listed price of the car, due to all these random fees (he claimed that the “commission” fee of $200 was all the dealer would make on the car. I had my doubts about that.)

Not only do they tack on lots of fees, but they try and sell you on all of these extended warranties and other random services that you probably don’t need/aren’t worth the cost. Our bank offered extended warranties on use vehicles that were much more reasonably priced and covered a lot more.

Miscellaneous Dealer Tips

Although we inevitably bought from a private seller, we spent a good amount of time researching dealers and going into dealerships. I feel like we got a good hang of what to do, and what not to do. Here are a few things to keep in mind.

• Don’t act too eager. I think the more eager/willing to buy a vehicle that day you are, the less likely the salesperson will be to budget on the price. Always act as if you are on the verge of leaving, until you actually have it at the price you want.
• Carry around a notebook and take notes as you are talking. I’d put stats about the vehicles you are interested in (such as the KBB value) in the book as well, so you can pull them out at a moments notice. I tried this a few times, and the salesperson always seemed a bit more nervous when I was constantly jotting things down.
• Leave if you have to. They may offer a better price, or they may not. But always remember – there will always be another car. And even when they start to tell you they are sure it will be gone in a few hours if you don’t buy it then…it probably won’t be. Whenever we leave a dealership, they ALWAYS call the next day, telling us they “worked out” another deal.
• Try and get them to throw in extras for free – they sometimes will! My sister-in-law got the dealership they worked with to throw in brand new tires on their recent used car purchase.
• Don’t be afraid to haggle. While some dealers, such as CarMax, have no haggle prices that are reasonable, most dealerships overcharge. Don’t let them get the best of you!
• Know that if you are trading your vehicle in, they probably won’t give you the best deal. Consider selling it yourself!
• Research dealers and check out their ratings online. Most dealerships have a bunch of reviews from customers. While some of these should be taken with a grain of salt (people love to leave bad reviews), if there are 3,000 bad reviews…you might want to stay away!