Buying a Used Car – Tips and Things to Consider

Before you start shopping for a used car, do some homework. It may save you serious money. Consider your driving habits, what the car will be used for, and your budget. Research models, options, costs, repair records, safety tests, and mileage — online and through libraries and bookstores.

When you first contact the seller get as much information about the used car as possible. Here’s a list of recommended questions to ask the seller during your search:

  • Why is the car being sold?
  • How many previous owners have there been?
  • Can you describe the condition of the car?
  • What is the mileage on the odometer?
  • Was the car involved in any collisions?
  • Has the car had any electrical damage?

Remember, the sales price is only one of the cost considerations when purchasing a vehicle. You need to factor into your budget sales tax, titling and registration fees, insurance, yearly personal property tax, license renewal fees, gas, maintenance and repairs. 


Before You Buy a Used Car

Getting the facts about a used car before you buy can help avoid trouble down the road. Whether you buy a used car from a dealer or an individual, Here’s what you need to know:

  • Test drive the car under varied road conditions — on hills, highways, and in stop-and-go traffic.
  • Ask for the car's maintenance record from the owner, dealer, or repair shop.
  • Determine the value of the vehicle before you negotiate the purchase. Check the National Automobile Dealers Association's (NADA) Guides, Edmunds, Kelley Blue Book, CarFax, and Consumer Reports. Some of these organizations charge for this information.
  • Research the upkeep costs for models you’re interested in, including the frequency of repairs and maintenance costs.
  • Examine the car using an inspection checklist. You can find checklists in magazines, books, and on websites that deal with used cars, for example: Popular Mechanics, ChrisFix, .
  • Check whether there are any unrepaired recalls on a vehicle. Start by asking the dealer if the vehicle you’re considering has a recall. Every vehicle comes with a unique 17-digit Vehicle Identification Number (VIN)  You also can check yourself by entering the VIN at safercar.gov, or by calling the National Highway Traffic Safety Administration's (NHTSA) Vehicle Safety Hotline at 1-888-327-4236. If there is a recall, ask the dealer to fix it, or to give you information showing it was fixed. Keep in mind that federal law doesn’t require dealers to fix recalls on used cars, so you might need to get the repair done yourself. But don’t wait — according to NHTSA, all safety recalls pose safety risks and, left unrepaired, might lead to accidents.
  • Get an independent review of a vehicle's history. Check a trusted database service that gathers information from state and local authorities, salvage yards, and insurance companies. For example, the Department of Justice’s National Motor Vehicle Title Information System (NMVTIS) offers information about a vehicle’s title, odometer data, and certain damage history. Expect to pay a small fee for each report. The National Insurance Crime Bureau (NICB) maintains a free database that includes flood damage and other information. You can investigate a car's history by its Vehicle Identification Number (VIN). You also can search online for companies that sell vehicle history reports. If the report isn't recent or you suspect that it has missing or fabricated information, verify it with the reporting company. The information in the reports may not be complete, so you may want to get a second report from a different reporting company. Some dealer websites have links to free reports.
  • Consider hiring a mechanic to inspect the car.

Where to Find Used Cars

Let your family, friends, co-workers, church members and other contacts know you're in the market for a used car. Someone in your network of contacts might have a used car they are about to trade-in for a new car or sale and might be willing to offer you an acceptional price because of their connection to you. However, if they don't know you're in the market, you might miss out on a great opportunity. Classified ads in local and community newspapers can also be good sources.

There are a plenty of websites that list used cars, below are some of the best and most popular sites: 

  • Craigslist – A general classifieds website where used cars and other items are listed locally. Originally ads could be posted for free and contained both legitimate and scam ads. Craigslist now charges about five dollars per ad now. It’s best for low-end cars in your area, but be careful about scammers. Includes ads from car dealers and private owners.
  • OfferUp – Another classifieds website where all users must have a profile to interact with each other and ratings are maintained thereby increasing trustability. You can search locally or nationwide.
  • AutoTrader – Probably the best known site to search for cars. Here, sellers pay to list their cars. Paid sites are better at keeping out scammers and usually provide a list of mid- and high-end cars. AutoTrader has an advanced search tool that allows you to easily filter by year, make, model, price and a range of other features. 
  • CarsDirect – Simple and straightforward. Search results include offerings from both dealers and owners. 
  • CarGurus – The used car search menu provides three initial search options make/model, body style or price.
  • CarFax –  CarFax list used cars offered by car dealers and all the cars listed on their site includes a CarFax vehicle history report.
  • AutoList – This site is an aggregator — it pulls together information from many different areas into one searchable site.
  • Cars.com – A site that allows auto sellers to list cars for free. Includes ads from car dealers and private owners.
  • CarSoup – Used cars for sale, car reviews, tips for buyers and sellers, local dealers, loan options.
  • KBB (Kelly Blue Book) – Provides used car listings and information about what the car is really worth.
  • FaceBook MarketPlace – Requires a FaceBook account.
  • TrueCar – allows users to see what others paid for any new or used vehicle in their local area and receive upfront prices from a network of over 15,000 TrueCar Certified Dealers.
  • CarMax – This online used car superstore is a good place to look because it has a large inventory and no-haggle pricing. Each car must pass a 125+ point inspection. Prices are clearly posted on the cars and negotiating is not allowed. CarMax says they never sell cars with flood damage, frame damage, or salvage history. Carmax also offers an included warranty and provides financing.
  • Consumer Reports Used Car Marketplace – Used car ads that provided additional information about the particular vehicle such as recalls, reliability and owner satisfaction ratings and links to the full Consumer Reports review.

Payment in Full or Finance

You have two choices: pay in full or finance over time. Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest and other costs. Consider how much you can put down, the monthly payment, the financing term (such as 48 months), and the annual percentage rate (APR). Rates usually are higher and financing periods shorter on used cars than on new ones.

A rule of thumb: If you're taking out a loan to pay for your car, your car payment shouldn't be more than 20% of your take-home pay. Remember, you need money for insurance, maintenace and repairs.

Dealers and other finance sources (like finance companies, credit unions, and banks) offer a variety of financing terms. Shop around, compare offers, and negotiate the best deal you can. If you're a first-time buyer — or if your credit isn't great — be cautious about special financing offers. They can 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 end of the financing period, the amount you get from the sale may be less than the amount you need to pay off the financing agreement.
  • If the car is repossessed or declared a total loss because of an accident, you may have 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 money is tight, you might consider paying cash for a less expensive car. The last three cars I purchased actually cost less than what I would have paid for the sales tax on a new vehicle. 

When you’re shopping for an auto loan, it’s important to know the right questions to ask. Preparing can help you save money, reduce stress, and get the auto loan that’s right for you. If you decide to finance, make sure you understand the financing agreement before you sign any documents.

  • What is the exact price you're paying for the vehicle?
  • How much are you financing?
  • What is the finance charge (the dollar amount the credit will cost you)?
  • What is the APR (a measure of the cost of credit, expressed as a yearly rate)?
  • How many payments will you make — and how much is each one?
  • What is the total sales price — the sum of the monthly payments plus the down payment?

Bank lenders can “preapprove” you for a loan.  If they are willing to make an auto loan to you, the lender will quote you  an interest rate, loan term (number of months), and maximum loan amount based on factors such as your credit score(s), the terms of the transaction, and the type of vehicle. This lender will then give you a quote or a conditional commitment letter before you go to the dealership. The bank, credit union or other lender offers certain terms, and those terms are negotiable.

With dealer-arranged financing, the dealer collects information from you and forwards that information to one or more prospective auto lenders. If the lender(s) chooses to finance your loan, they may authorize or quote an interest rate to the dealer to finance the loan, referred to as the “buy rate.” The interest rate that you negotiate with the dealer may be higher than the “buy rate” because it may include an amount that compensates the dealer for handling the financing.  Dealers may have discretion to charge you more than the buy rate they receive from a lender, so you may be able to negotiate the interest rate the dealer quotes to you. Ask or negotiate for a loan with better terms. Be sure to compare the financing offered through the dealership with the rate and terms of any pre-approval you received from a bank, credit union, or other lender. Choose the option that best fits your budget. After the auto purchase is finalized, the dealer-arranged loan may then be sold to the lender, who has already indicated a willingness to extend the credit.  That lender may own your loan and collect the monthly payments, or transfer those responsibilities and rights to other companies.

Some types of dealerships finance auto loans “in-house” to borrowers with no credit or poor credit. At “Buy Here Pay Here” dealerships, you might see signs with messages like “No Credit, No Problem!” The interest rate on loans from these dealerships can be much higher than loans from a bank, credit union, or other type of lender. You may want to consider whether the cost of the loan outweighs the benefit of buying the vehicle. Even if you have poor or no credit, it may be worth it to see if there is a bank, credit union, or another dealer that is willing to make a loan to you. Another feature of this type of dealership is that your monthly payment is to the dealership. Some Buy Here Pay Here Dealerships, and some other lenders that lend to people with no credit or poor credit put devices in their vehicles that help them repossess or disable the vehicle if you miss a payment.

If you owe more on your current vehicle than it is worth – referred to as being “upside down” – then you have negative equity. If you roll the balance of your existing auto loan into your new auto loan, this could make the new auto loan much more expensive. Your total loan cost may be much higher because you will be borrowing more than just the price of your new vehicle. Being upside down can also reduce your options if you later decide you want to refinance your auto loan.

GAP insurance covers the difference (or gap) between the amount you owe on your auto loan and what your insurance pays if your vehicle is stolen, damaged, or totaled. You don’t have to buy this insurance, but if you decide you want it, shop around. Lenders may set varying prices for this product.

Dealer Documentation Fees

Dealer documentation fees (also known as doc fees), cover a dealer's administrative costs related to title, registration, and other paperwork involved with the car purchase. You cannot negotiate a dealer's doc fee because they are required by law to charge the same amount to every customer. You can, however, ask them to reduce the price of the vehicle to compensate for a high doc fee. Some states limit the maximum amount a dealer can charge for this fee, $199.99 in Missouri (RSMO 301.558) and $300 in Illinois, but most have no limits.

Ask about fees before saying yes to a deal. Some dealers include bogus fees to take back profit they lose in negotiating. Ask for a breakdown of additional fees before you agree to any deal.

Dealer Sales and the Buyers Guide

Used cars are sold through a variety of outlets: franchised and independent dealers, rental car companies, leasing companies, used car superstores, and online. Ask friends, relatives, and co-workers for recommendations. Contact your local consumer protection agency and state Attorney General to find out if any unresolved complaints are on file about a particular dealer. You also can search online for reviews or complaints. Enter the name of the seller and the word “review” or “complaint” into a search engine.

Some dealers attract customers with "no-haggle prices," "factory certified" used cars, and better warranties. Consider the dealer’s reputation when you evaluate its ads.

Dealers are not required by federal law to give used car buyers a three-day right to cancel. In some states, dealers are required to give a right to cancel. In other states, the right to return the car in a few days for a refund exists only if the dealer chooses to offer this privilege. 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 buy 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 display a Buyers Guide in every used car they offer for sale, and to give it to buyers after the sale. This includes light-duty vans, light-duty trucks, demonstrators, and program cars. Demonstrators are new cars that haven’t 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, or offers for sale, fewer than six cars in a year doesn't have to post a Buyers Guide.

The Buyers Guide tells you:

  • the major mechanical and electrical systems on the car, including some of the major problems you should look out for;
  • 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;
  • to get all promises in writing;
  • to ask to have the car inspected by an independent mechanic before you buy;
  • to get a vehicle history report and to visit ftc.gov/usedcars for information on how to get a vehicle history report, how to check for safety recalls, and other topics;
  • to ask for a Spanish Buyers Guide if the sale is conducted in Spanish;
  • the dealer’s contact information, including the contact for complaints; and
  • to remember: spoken promises are difficult to enforce.

Keep the Buyers Guide for reference after the sale.

Maine and Wisconsin are exempt from the FTC’s Used Car Rule. Those states require dealers to display a different version of the Buyers Guide.

The Missouri Dealer Operating Manual contains information about the laws and regulations that car dealers must follow and although it is targeted to dealers, the information can also be valuable for buyers.

Warranties

Written or oral statements made by the seller about the car's quality, or promises to repair the car if necessary, constitute an express warranty. To prove that you were given such an express warranty, it helps to produce a witness to the seller's statements and/or copies of advertisements or other documents. Since oral promises are much harder to prove, get promises in writing. Statements made in advertisements about the condition of the vehicle might be upheld as promises in court.

When you buy a used car from a dealer, the Guide must reflect any negotiated changes in warranty coverage. It 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 Dealer Warranty

When the dealer offers a vehicle "as is," the box next to the "As Is – No Dealer 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 — Connecticut, Hawaii, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New Mexico, New York, Rhode Island, Vermont, West Virginia, and the District of Columbia — don't allow "as is" sales for many used vehicles.

Louisiana, New Hampshire, and Washington require different disclosures from those on the Buyers Guide to create a valid “as is” sale. 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.

Implied Warranties

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.

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. Dealers can't delete this protection if they provide a written warranty. Any limit on an implied warranty's time must be included on the written warranty.

Implied 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.

Implied 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 is promising that the vehicle will be suitable for that purpose.

Full and Limited Warranties

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 removing and reinstalling a covered system.
  • You have the choice of a replacement or a full refund if the dealer can't repair the vehicle or covered system after a reasonable number of tries.
  • You only have to tell the dealer that warranty service is needed 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 doesn'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.

Warranty Documents

Make sure you get a copy of the dealer's warranty document if you buy a car that is offered with a warranty. 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. Look up reviews online.

Unexpired Manufacturer's Warranties

If the manufacturer's warranty still is in effect, the dealer may note that 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 VIN when you call.

Service Contracts

A service contract is a promise to perform (or pay for) certain repairs or services. Although a service contract is sometimes called an extended warranty, it is not a warranty as defined by federal law. A service contract may be arranged any time and always costs extra; a warranty comes with a new car and is included in the original price. Used cars also may come with some type of warranty coverage included in the sales price. The separate and additional cost distinguishes a service contract from a warranty.

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?
  • whether the vehicle is likely to need repairs and how much they're going to cost. 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.
  • whether 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.
  • whether a deductible is required and, if so, the amount and terms.
  • whether the contract covers incidental expenses, like towing and rental car charges while your car is being serviced.
  • whether repairs and routine maintenance have to be done at the dealer.
  • whether there's a cancellation and refund policy for the service contract, and if it has cancellation fees.
  • whether the dealer or company offering the service contract is reputable. Some dealers sell third-party service contracts.

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.

An Independent Inspection Before You Buy

It's best to have any used car inspected by an independent mechanic before you buy it. For about $100, 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 the phone book under "Automotive Diagnostic Service," go online, or ask friends, relatives, and co-workers for referrals. Look for facilities that display certifications like an Automotive Service Excellence (ASE) seal, and search online for comments.

Ask what the inspection includes, how long it takes, and how much it costs.

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. If a dealer won’t allow an independent inspection, you might want to consider doing business elsewhere.

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. 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.

Private Sales

Buying a car from a private individual is different from buying 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 automobile's major systems as a shopping tool, and you can ask the seller if you can have the vehicle inspected by a 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 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. You can ask your state Attorney General's office or local consumer protection agency about the requirements in your state.

In Missouri a private seller ​must provide the following to the vehicle buyer:

  1. Properly assigned Certificate of Title (see instructions);
  2. Safety inspection certificate, less than 60 days old;
  3. An emissions inspection not more than 60 days old, if you reside in St. Louis City or the following counties: Franklin, Jefferson, St. Charles, or St. Louis; and
  4. Lien Release (Form 4809), notarized, if applicable.

It's been my experience that many Missouri private sellers are not aware that they are supposed to provide safety and emission inspections. Also be on the lookout for Curbstoners, car dealers posing as private sellers, to avoid national and state regulations related to buying and selling cars. Often, these dealers will post advertisements on Craigslist and other sites selling vehicles as if they are the owners themselves. Before you buy a car from a private seller, check to make sure the seller's driver's license matches the name on the car title.

If You Have Problems

If you have a problem that you think is covered by a warranty or service contract, follow the instructions to get service. If a dispute arises, try to work it out with the dealer. Talk with the salesperson or, if necessary, the owner of the dealership. Many problems can be resolved at this level. However, if you believe you're entitled to service, but the dealer disagrees, you have some options:

  • If your warranty is backed by a car manufacturer, contact the local representative of the manufacturer. The local or zone representative is authorized to decide issues of warranty service and repairs to satisfy customers. Some manufacturers are willing to repair certain problems in specific models for free, even if the manufacturer's warranty does not cover the problem. Ask the manufacturer's zone representative or the service department of a franchised dealership that sells your car model whether there is such a policy.
  • Contact your state Attorney General or the American Association of Motor Vehicle Administrators.
  • You might consider using a dispute resolution organization if you and the dealer are willing. Under the terms of many warranties, this may be a required first step before you can sue the dealer or manufacturer. If you bought your car from a franchised dealer, you may be able to seek mediation through the Automotive Consumer Action Program (AUTOCAP), a dispute resolution program coordinated nationally by the National Automobile Dealers Association and sponsored through state and local dealer associations in many cities. Check with the dealer association in your area to see if they operate a mediation program.

If none of these steps is successful, small claims court is an option. Here, you can resolve disputes involving small amounts of money, often without an attorney. The clerk of your local small claims court can tell you how to file a suit and the dollar limit in your state.

The Magnuson-Moss Warranty Act also may be helpful. Under this federal law, you can sue based on breach of express warranties, implied warranties, or service contracts. If successful, consumers can recover reasonable attorneys' fees and other court costs. A lawyer can advise you if this law applies.

Flood Damaged Vehicles

Vehicles damaged by floods during storms can be cleaned up and taken out of state for sale. You might not know a vehicle is damaged until you take a closer look or have a mechanic check it out.

Here’s what to do:

  • Look for water stains, mildew, sand or silt under the carpet, floor mats, and dashboard, and in the wheel well where the spare is stored. Look for fogging inside the headlights and taillights.
  • Do a smell test. A heavy aroma of cleaners and disinfectants is a sign that someone's trying to mask a mold or odor problem.
  • Get a vehicle history report. Check a trusted database service. There are reliable services that charge a small fee. The National Insurance Crime Bureau’s (NICB) free database includes flood damage and other information.
  • Understand the difference between a “salvage title” and a “flood title.” A “salvage title” means the car was declared a total loss by an insurance company because of a serious accident or some other problems. A “flood title” means the car has damage from sitting in water deep enough to fill the engine compartment. The title status is part of a vehicle history report.
  • Have your mechanic inspect the car’s mechanical and electrical components, and systems that contain fluids, for water contamination.
  • Report fraud. If you suspect a dealer is knowingly selling a storm-damaged car or a salvaged vehicle as a good-condition used car, contact your auto insurance company, local law enforcement agency, or the NICB at (800) TEL-NICB (835-6422). You’ll help someone else avoid a rip-off.

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