MAKING A WISE USED CAR PURCHASE

This guide offers suggestions and tips to assist you in the used car buying process. Its aim is to help buyers maximize the advantages of buying a used car while at the same time minimizing the risks.

You can request copies of the printed version of this booklet free of charge by calling the Department of Consumer Affairs' toll-free telephone number, (800) 952-5210
(Local Number: (916) 445-1254).

*This booklet contains copyright material reprinted with permission from the Council of Better Business Bureaus, Inc., Arlington, VA

Buying a Used Car

With most of today's new cars costing in excess of $10,000, consumers continue to look to used cars as affordable alternatives. The buyer's goal is to find a car at the right price that is also safe and reliable.

What car should you buy?

Before you begin your search for a good deal on a used car, spend time considering many of the same factors that would apply to a new car purchase: how will you use the vehicle; how long do you plan to keep it; and your budget for the purchase, including insurance, operation, maintenance and repair costs.

• Ask friends, co-workers and others about their experiences and satisfaction with their cars--would they buy the car again?

• Check auto and consumer magazines and books at your local library for information on the reliability records of various models. The annual Consumer Reports Guide to Used Cars can be particularly helpful in pointing out potential repair problems and trouble spots.

• Find out if a particular vehicle has ever been recalled for safety defects by calling the National Highway Traffic Safety Administration's (NHTSA) toll-free hotline (800-424-9393).

• Check insurance rates with your agent when selecting a car; some cars cost more to insure than others.

How much is it going to cost?

To help you investigate and compare prices, the Kelley Blue Book is available from your library, bookstore, bank, or insurance agent. This publication provides approximate wholesale and retail prices for most car models.

Also, check local newspaper classified ads for an idea of what used car prices are in your area.

Used car sources

Consider the following sources when looking for a used car:

• New car dealers acquire most of their used cars through trade-in-deals. These cars are also likely to come with a limited warranty under which the dealer is obligated to fix problems with the vehicles covered by the warranty.

• Used car dealers generally sell vehicles that have seen a bit more use and abuse than those on the new car dealer's lot. You may pay less, but the car is less likely to have received needed repairs. Used car dealers also may offer limited warranties.

If you are considering buying from a dealer, check out the dealer's reputation and reliability first. Ask the dealer for the names and numbers of several previous customers, and contact them to find out how they were treated after the sale, and whether the car was as reliable as the dealer represented it to be. Also, call the Better Business Bureau in your locale for any complaints filed against the dealer.

• Car rental agencies may sell used rental cars, generally 9 to 12 months old, and driven less than 25,000 miles. The company usually can provide the car's maintenance and repair records, and may offer a limited warranty. But mileage on rental cars is often high on a per year basis, and the cars may suffer from the wear and tear that comes from use by a variety of drivers.

• Bank and loan companies sometimes sell repossessed cars to pay off defaulted loans. Quality varies from car to car. But since the vehicle is being sold to recover the amount due on a loan, it may be possible to get a good deal on a reliable car.

• Private owners usually sell their used cars through newspaper classified ads. Although checking out used cars in newspaper ads may be time consuming, you may find a well-maintained car selling for less money than you would pay a dealer. One of the drawbacks of buying a car from a private owners is that warranty and repair services are not available.

If you buy a used car from a private owner, ask for the car's maintenance and repair records and, if the seller is the first owner, for records of the original purchase. Also, verify the identity of the person selling the car with the person listed on the car's title or registration.

About vehicles with salvage titles

Regardless of the source, ask to see the seller's title and registration for the vehicle before agreeing to buy it. These documents will disclose if the car has a "salvage" title. A vehicle with a salvage title has been previously declared a "total loss" by an insurer and should be purchased with extra caution because of the possibility of structural (frame) damage that could affect the safety of the vehicle. You may also obtain a printed history of the vehicle's ownership from your local Department of Motor Vehicles. You should also know that some lending institutions will not finance a salvage vehicle. For more information on salvage vehicles, call the California Department of Consumer Affairs toll-free telephone number (800) 952-5210 (Local Number: (916) 445-1254)and request a free copy of Auto Body ABC's.

On-the-Lot Checklist

• BODY-- look for rust, particularly at the bottoms of fenders, around lights and bumpers, on splash panels, under doors, in the wheel wells, and under trunk carpeting. Small "blisters" may indicate future rust sites. Check for paint that does not quite match, gritty surfaces, and paint over spray on chrome--all possible signs of a new paint job, masking body problems. Look for cracks, dents, and loose bumpers--warning signs of a past accident.

• TIRES--Uneven wear on the front tires usually indicates either bad alignment, or front suspension damage. Do not forget to check the condition of the spare tire.

• DOORS, WINDOWS, TRUNK LID--Look for a close fit and ease of opening and closing. A door that fits unevenly may indicate that the car was involved in a collision.

• WINDOW GLASS AND LIGHTS--Look for hairline cracks and tiny holes.

• TAILPIPE--Black, gummy soot in the tailpipe may mean worn rings, or bad valves, and expensive repairs.

• SHOCK ABSORBERS--Lean hard on a corner of the car and release; if the car keeps rocking up and down, the shocks may need replacing.

• FLUIDS--Oil that is a whitish color, or has white bubbles, can be a sign of major mechanical problems. Check the radiator fluid; it should not look rusty. With the engine idling, check the transmission fluid; it should not smell rancid, or look dark brown. Check for leaks and stains under the car, on the underside of the engine, and around hoses and valve covers.

• LIGHTS AND MECHANICAL PARTS--Make sure all headlights, taillights, brake lights, backup lights, and direction signals work properly. Test the radio, heater, air conditioner, and windshield wipers.

• INTERIOR--Check the upholstery for major wear and tear; do not forget to look under floor mats and seat covers. Check the steering wheel; unlocked, with the engine off, it should have no more than two inches of "play."

A car with low mileage, but with a lot of wear on the driver's seat or the brake and accelerator, may indicate tampering with the odometer. A musty smell inside the vehicle could mean that the car was damaged in a flood, or that rain leaks inside the car.

Road and Test Checklist

• The car should start easily and without excessive noise. Once the car has warmed up, listen for engine noise as you drive; unusual sounds may be signs of major trouble.

• Drive over rough road surfaces; watch for unusual vibrations, noises, or odors.

• Make several stops and starts, at varying, but safe, rates of speed on a clear, level road surface. The car should accelerate smoothly and should brake without grabbing, vibrating, or pulling to one side. When you step firmly on the brake pedal, it should feel firm, not spongy.

• Try turning at various speeds. Too much sway or stiffness can mean bad shocks and/or front end problems. Turn the wheel all the way from one side to the other; power steering should feel smooth, with little or no squealing.

• Check the wheels for "dog-tracking"--have someone stand behind the car as you slowly drive away--if the back wheels head slightly to one side, the car has major frame problems.

• Look for these signs of odometer tampering: white lines between the numbers that do not line up, or vibration of the 1/10-mile numbers while the car is moving.

Technician's Checklist

Take the car to a diagnostic center or repair facility for an overall inspection by a technician before you buy it. If the used car dealer refuses to let you take the car to your technician for an inspection, look in the yellow pages of your local telephone directory for a mobile diagnostic service so that the car can be inspected on the car lot. The cost for this service varies, but the money you invest up front may save you many more dollars later. Ask for a written estimate of the costs to repair any problems the technician finds, and use that estimate as a bargaining chip if you make an offer for the car.

If you are unable to make any such arrangement for an inspection, you may want to consider taking your business to another dealer.

The technician should:

• Perform an engine compression test

• Check spark plugs and ignition system

• Perform a contamination diagnosis of oil and fluids

• Check transmission fluid

• Check fan and belts, charging system, power steering and air conditioner

• Check cooling system: radiator, heater, by-pass hose

• Check braking system: lining, wheel and master cylinders, drums and front disks, hoses, bearings, grease seals

• Check suspension: ball joints, tie rod end, idler arm

• Remove differential plug and check lubricant

• Test drive the vehicle

Technician's cost estimate of needed repairs:

How negotiate with the seller

For most transactions, bargaining is still part of the process. Whether you like to bargain or not, you can control the situation by simply keeping the price of the "new" car totally separate from any discussion of what you will think your trade-in (if any) is worth and the warranty terms.

Bargaining can be an exhausting process, so feel free to take a break if you need to collect your thoughts or discuss the terms with someone you trust. Above all, do not let yourself be pressured into a deal with which you are not comfortable just because you are tired of haggling or do not understand exactly what is being offered.

Many sellers--especially dealers--will try to convince you that the car you are looking at is "the best one you can find at that price." While this may be true, you should be sure in your own mind that the car is worth the asking price based on a thorough inspection by an independent technician or diagnostic service and your own price research.

Your local library may have "how to" books and videos you can check out regarding getting the best deal when buying a car. Look under the subject " automobiles - purchasing."

• STEP 1: Getting the best price on the "new" car

Figure your top price ahead of time--but keep it to yourself. If the salesperson starts to talk about anything other than price (trade-in, financing, etc.), tell him or her that you will discuss that later, after you have agreed on the price of this particular car. It is very important not to reveal your plans for financing or for trading in your current car just yet. Work on a firm cash price for the "new" car first.

• STEP 2: Selling or trading in your current car

Whether you plan to trade your present car or sell it yourself, you should know what its wholesale and retail value is (refer to page one for sources).

Wholesale versus retail: The wholesale value of your current car is the lowest amount your car is worth. The retail value of your car is the wholesale value plus the profit someone will pay to buy your car. Typically, you will receive wholesale value for your trade-in at a new or used car dealer, and you will get the retail value if you sell it yourself.

Trading in your present car: If you decide to trade-in your present car to a dealership, discuss its value only after you have settled on a price for the "new" vehicle. Make sure you keep your trade-in negotiation separate from the firm price already established for the "new" car. Otherwise, the good deal you get for your new car could be spoiled by the low price you get for your old car.

Selling your car yourself: You can get an idea for the wording of a newspaper advertisement in the classified section of your local newspaper. The ads can also give you a guide for an asking price of your present car. Before you place an ad, you will need to make sure your car is clean and in good, safe mechanical condition.

• STEP 3- New and used car warranties, buying a car "as is," and implied warranties

The Federal Trade Commission's (FTC) Buyers Guide: Whenever you shop for a used car at a dealer's lot, be sure to read the Buyers Guide that by law must be displayed on a side window of the vehicle. The Buyers Guide will tell you if the dealer is offering a written warranty on the car.

The FTC Used Car Rule specifies that it is deceptive for a used car dealer to:

• Misrepresent the mechanical condition of a used vehicle.

• Misrepresent the terms of any warranty offered in connection with the sale of a used vehicle.

• Represent that a used vehicle is being sold with a warranty when the vehicle is being sold without a warranty.

Where warranties are given, they often differ, depending on the seller. Whatever the warranty, make sure it is understandable and in writing before buying the car. The warranty should spell out the parts and labor guaranteed, the length of coverage ( in miles and/ or days)., and a deductible charge for warranty service (if any). If the used car is a recent model, the original manufacturer's warranty may still be in effect.

Many used cars come without any warranties at all. These cars may be sold "as is" or "with faults," as long as this is fully disclosed in the FTC Buyers Guide.

Used car or dealer warranties: The best time to negotiate for a used car warranty is after you have agreed on a price for the car. If you try to get a salesperson to come up with a warranty before a price for the car is set, you will pay a higher price for the car.

Buying a car "as is ": If no written warranty is offered, the Buyers Guide tells you that the dealer assumes no responsibility for repairs and that you will pay all costs for any needed repairs. Usually, the dealer has no further responsibility for a car sold "as is" once the sale is complete and you drive off the lot.

If, during negotiations, the seller or dealer makes any promises about repairing problems with the vehicle, add each of these promises to the written contract. If the contract is silent about these items or describes the sale "as is," you will have a very difficult time enforcing the seller's oral promises later.

Implied Warranties: An implied warranty is a general, unwritten warranty of fitness. The principle of "implied" warranties is that any car you buy can be safely purchased on the assumption that it is roadworthy and will perform for a reasonable amount of time without undue expense or trouble on your part. The implied warranty may be disclaimed by the seller, however, when you buy a car "as is. "

Tips to keep in mind before buying a used car

• Before you go to the first dealer, try to arrange financing with your bank, credit union, or other financial institution. Compare finance charges to find the best deal.

• Know beforehand what the total cost will be, including price, down payments, the interest rate and monthly payments.

• When you are ready to actually go look at cars, take someone with you whose experience and judgment you trust.

• Do not sign any documents until you have read and understand them. Make sure there are no blank spaces, all of the salesperson's verbal promises are included, and the type of warranty that comes with the car is spelled out.

• If you are required to make a deposit, ask whether it is refundable and under what circumstances, and make sure the information is also included in the contract (the contract may be your only receipt).

• Before buying a used car, have your own technician inspect it. A used car may have major mechanical or structural problems; replacement parts may be hard to find; the seller may misrepresent the car's mileage or condition; and warranty coverage may not be available.

• The "three-day cooling off period" for canceling a contract does NOT apply to new or used car purchases. Many consumers think that it does apply, but it does not.

• For used cars, a dealer is required to make sure the car is in safe working order before it leaves the lot. This means the car must have brakes, lights, etc.

• Verify that the vehicle's California registration is current. If not, you may be subject to late fees and penalties imposed by the Department of Motor Vehicles. Also, the registration will disclose if the manufacturer repurchased the vehicle under California's warranty (Lemon) law.

• When a used vehicle is sold in California, the seller is legally responsible for providing a smog certificate. The seller is obligated to ensure the vehicle's emission (smog) control equipment complies with the state's emission control equipment requirements. Even when a smog certificate is supplied, however, beware that you may be purchasing a vehicle that is not in compliance. It is advisable to pay for an inspection at a station of your choice as a precaution. Also, check for the underhood label showing whether the vehicle was manufactured to meet either California or U.S. emissions standards. For more information on smog requirements, call the California Department of Consumer Affairs toll-free telephone number, (800) 952-5210 (Local Number: (916) 445-1254), and request a free copy of Smog Equipment Requirements for Used Vehicles. Note: waiver or hardship extensions are not granted when a smog certificate is required for change of ownership.

• If the registration fee is paid to the dealer, the dealer has 30 days to forward it to the Department of Motor Vehicles.

• California's Lemon Law only applies to new cars still covered by the manufacturer's original warranty; most used car buyers are not protected so beware!

Where to find help if you have vehicle problems