With the average price of a new car idling at over $31,000, you might be thinking about buying used. After all, the average price for a used car from a dealership is about $18,000.
You can buy used cars through a variety of commercial outlets: franchise and independent dealers, rental car companies, leasing companies, used car superstores, and online. Of course, you can buy directly from an individual, too, but that route comes with limited consumer protections. Here are a few tips from the Federal Trade Commission, the nation’s consumer protection agency.
- Know your rights. Generally, the FTC Used Car Rule requires dealers (including the commercial outlets above) to display a Buyers Guide on used cars they offer for sale. 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 to look out for
- to ask the dealer if you may have the vehicle inspected by a mechanic you hire, either on or off the lot
Dealers are not required by federal law to give used car buyers a right to cancel. In some states, dealers are required to offer or honor 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 their own 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.
- Ask friends, relatives, and co-workers for recommendations about dealers. Search online for complaints by entering the name of the seller and the word “review” or “complaint” into a search engine. You also can contact your local consumer protection agency and state Attorney General to find out if any unresolved complaints are on file about a particular dealer.
- Go online to research the frequency of repair, maintenance costs, and recalls on the models you’re interested in. The U.S. Department of Transportation's Vehicle Safety Hotline (1-888-327-4236) and website have information on recalls. Ask the dealer for information showing the vehicle was repaired, and corrected, for the recall issues.
- Test drive the car under varied road conditions — on hills, highways, and in stop-and-go traffic.
- Hire a mechanic to inspect the car. It’s best to have any used car inspected by an independent mechanic before you buy it, 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.
- Determine the value of the vehicle before you negotiate the purchase. Check the National Automobile Dealers Association's (NADA) Guides, Edmunds, and Kelley Blue Book.
- For an independent review of a vehicle’s history, check a 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 nominal 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 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 free links to reports.
To learn more about negotiating the best deal, financing, getting the most out of warranties and service contracts, using gas efficiently, and avoiding repossession, visit Buying & Owning a Car.
