In Part One, we stressed the importance of deciding on your price range and arranging financing before you shop. We also told you how to identify good used cars that could be bought at bargain prices.
In this section, we'll show you how to locate several likely candidates and learn how to effectively test-drive and evaluate the mechanical condition of these "target cars."
Step 3: Locate Your Target Cars
Your goal is to locate three cars that fit your criteria. This will put you in a stronger bargaining position and will give you a fallback position if your top choice doesn't pan out.
Use a number of different sources to conduct your search:
During your search, you'll come across cars from dealerships, private parties and possibly even used rental cars or cars with a colorful past. We'll examine each of these options and then show you how to qualify your target cars before test-driving them.
Private Party vs. Dealership
Many people are intimidated by the dealership experience, fearing pushy salesmen and professional negotiators. But there are several advantages to shopping for a used car at a new car dealership:
There are advantages to buying a used car from a private party as well, including:
Certified Pre-Owned Cars
Don't rule out buying a certified pre-owned car. You will find these cars at dealerships, and if something goes wrong with one of them within the period of the certified warranty, it will be fixed for free. It's important, though, to shop for a "factory certified" pre-owned car rather than one on an independently owned used car lot that simply slaps a "certified" sticker on the window. Always know who is certifying the car's condition and providing the warranty.
If a factory-certified vehicle appears to be in good condition, you don't have to do a complete mechanical inspection to make sure it will be reliable. Do keep in mind that warranties don't cover everything. Parts that wear out, such as brake pads, tires and windshield wipers, typically aren't covered.
Take Volkswagen, for example. Its certified used cars have to pass a 112-point inspection. VW then adds a two-year/24,000-mile limited warranty that includes roadside assistance. At Edmunds, we once bought a certified used 1999 VW Passat GLS that overheated only four months later. The repairs (not extensive) were covered by the warranty.
You'll pay more for this peace of mind, though. According to Edmunds data, the average 3-year-old CPO vehicle is 5.8 percent more expensive than a comparable non-certified car. So while CPO vehicles are not necessarily as much of a bargain when you buy them, they can provide peace of mind and be a better value over the long term.
Used Cars Still Under Factory Warranty
Late-model used cars can be great bargains, because someone else has already taken the biggest depreciation hit. New cars are sold with warranties of varying years and mileage limits, with the minimum being a three-year/36,000-mile bumper-to-bumper warranty. So if you buy a car that is a year old with only 15,000 miles on it, you'll still have, at minimum, two years and 21,000 miles remaining on the warranty. And if anything covered by the warranty breaks down, the problem will be fixed for free.
The vast majority of bumper-to-bumper warranties are transferrable to subsequent owners. But the long-term powertrain warranties from some automakers only apply to the original registered owner, so the coverage is invalid if the car is resold. In addition to Edmunds' list shown above, most automakers' Web sites list the details of their warranties, so check those for more information.
Cars With a Colorful Past: Rentals, Demos, Auction and Salvage Titles
Conventional wisdom says that buyers should avoid used rental cars because they've been abused during their lives in the fleet. However, prices at rental car lots are competitive, the warranties are still in effect and anecdotal evidence in Edmunds Forums reports few problems with such purchases. Furthermore, some rental car agencies offer "no-haggle" pricing, making for a relaxed buying process. It's worth keeping in mind that cars you'll find at rental agencies might be base models. So if you have a must-have list of amenities for your target cars, rental-car agencies might not be your top hunting grounds.
Dealer demo cars and vehicles sold at auction can sometimes be bargains, but they require careful buyer scrutiny. You can read more here about demo cars, cars offered at auctions and cars with salvage titles.
Prequalify Your Target Cars
There are a number of questions you should ask about each car before you take the time to test-drive it. Use our Used Car Question Sheet for each car you investigate. Verify the facts from the ads via phone or e-mail. Modify the question sheet as needed, but be sure to take careful notes, because different cars easily blur together after a few days of shopping.
Once you have found three cars that seem to match your needs, it's almost time to test-drive them. If you're not paying cash for the car, now is a good time to use our loan payment calculator to refine the various terms of the loan and figure out your monthly payment.
When you plug in the specific cars you now have in mind, you'll have a clear idea of what financing details should look like before you go to the dealer. Keep in mind that taxes and fees vary from state to state, and some dealers might try to build in hidden fees. For more on this, see What Fees Should You Pay?.
Step 4: Test-Driving a Used Car
Car salespeople like to say, "The feel of the wheel will seal the deal." In other words, if you drive the car, you'll fall in love with it and buy it. But you shouldn't become emotionally attached to the vehicle you're test-driving. Instead, focus on objectively evaluating it.
Evaluating cars breaks into two main considerations. First, do you like the car? It could be a good car, but maybe you don't like the styling, the interior or the performance. It might not have enough legroom or headroom. Once you've decided you like the car, you then need to ask if the car is in mechanically sound condition.
What To
Vehicle History Reports
Let's say you've found a few cars you really liked during the test-drive phase. Before you take the next step, it's important to know a given car's history. A valuable resource is a vehicle history report, such as those supplied by AutoCheck, Carfax or the federal National Motor Vehicle Title Information System. If you enter a car's vehicle identification number (VIN) you can obtain a report of the car's history. Most significantly, you will find if it has a salvage title. Depending on the report, you may also learn if there were any recalls and how many owners the car has had: the fewer, the better.
Companies that sell vehicle history reports offer different pricing models, such as one price for reports on several cars or unlimited reports for a certain period of time. Our recommendation is that you read up on these companies at the beginning of your car-buying process and then check every car that you're seriously considering before you buy it.
For more details on this, read "Which Vehicle History Report Is Right for You?"
Take the Car to a Mechanic
Even if the car you're interested in has a clean history, if you are serious about buying it and have any doubts about its condition, take it to a mechanic you trust. A private party will probably allow you to take the car to a mechanic without much resistance, whereas a dealership might give you some pushback on taking the car to a mechanic. You can also hire a mechanic to come along with you to inspect the car on the lot.
What can a mechanic find that you can't spot on your own? For one thing, the mechanic will put the car up on a lift, making oil or fluid leaks easier to spot. The mechanic will know where to look for suspension problems or brake wear. And finally, a mechanic's expert eye (and ear) might spot a problem you overlooked.
Preview of Part Three: Negotiating for a Used Car and Closing the Deal
In the final part of this series, we'll look at the most difficult step for many people: negotiating. Then you'll learn how to cover all the bases before you sign on the dotted line.
Part One: Identifying Your Target Cars and Arranging Financing
Part Three: Negotiating and Closing the Deal
