Here's something I wrote up a while back, after helping several people purchase replacement cars.
Rules for buying a used car
1. The internet is your friend. Use it.
2. Figure out more or less what kind of car you want, then go to www.cars.com and look for vehicles like that in your area. I will leave it up to you as to what you can afford.
3. Hopefully you will find several of what you want at more than one dealership. Now go to the websites of those dealers and see if they have any other cars you might be interested in.
4. Kelly Blue Book. Now go to www.kbb.com and look up the value of the car(s) you are looking at. The site will give you three different values. They are from lowest to highest: the trade-in value, private party value, and [retail] value which is what you can expect to pay at a dealer.
5. When buying from a dealer, you can assume that the very most they have invested in the car is the trade-in value. Use that as your starting point in price negotiations.
6. Carfax. Always get a Carfax report on any car you are serious about buying. Good dealers will directly link the Carfax report to the listing for the car. Other dealers will simply print one out and give it to you when you ask. If a dealer ever refuses to give you a Carfax report leave that place and do not return.
7. If you have chosen to buy from a private party, you can sign up for a thirty day membership in Carfax. It will be money well spent. Do not buy a car without looking at the Carfax report.
8. When buying, say, a Honda from a Honda dealership, there should be no need to get an independent inspection of the car. If you distrust that dealership that much, go elsewhere.
9. When buying, say a Honda from a Ford dealership, you are probably also in no need of an independent inspection. Good dealers only sell cars they think are pretty good, whether or not it’s their brand of vehicle.
10. When buying from a free-standing used car lot, or from a private party, always take it to a mechanic of some kind. Call ahead to your favorite mechanic, or to the service department of the appropriate dealer to find out what they charge. This is money well spent. Trust me.
11. Some dealers, and some used car lots are better than others. Trust your instincts. If you don’t feel comfortable, if anything going on around you feels shady, leave. There are plenty of dealers and used car lots out there.
12. When you actually go to a car lot, bring with you printouts of the cars you’re planning to look at. Have written on them the values you got from kbb.com or Edmunds.com. Remember to start your negotiations with the trade-in value.
13. Test drive. Test drive. Test drive.
14. Do not buy the car the same day you first look at it. The best plan, when you are first going to dealers or car lots is to tell them that you are in the preliminary stages of looking for a new (replacement) car. No matter how eager you really are, don’t let them know it.
15. Be pleasant, but don’t smile a lot, especially if you are female. Maintain a neutral expression. Make it clear that you will work with that salesperson if you return to buy. Get his or her card and keep the promise when you do finally buy.
16. Do not be desperate. If your current vehicle has died, borrow or rent something while you search. If your current vehicle has been totaled in a wreck, hopefully you have the clause in your insurance that covers the cost of a rental for a couple of weeks.
17. Know how much you can afford and do not be talked into spending any more.
18. If possible, shop for a car loan before you begin this process, so you have your own financing in place. Again, the internet is your friend. Just Google car loans and you’ll find a number of websites on the topic.
19. Do not actually engage in price negotiating until you are pretty much ready to purchase.
20. If at all possible pay cash.
Here are some of the basics:
The internet is your friend. Use it.
Use an on-line pricing service (I'm fond of Kelly Blue Book, www.kbb.com) to find out prices. With a used car, I assume that the dealer never has any more than the trade-in value invested in the car. Use that number as your starting point for negotiations. If a particular dealership is charging noticeably more or less than the other places for the same kind of vehicle, something is not quite right.
Price negotiation should be the absolutely last step in the purchase. Know what you can afford and do not go over that amount. That may mean buying a less fancy or less new car than you'd like. Too bad.
Never be desperate and needing to buy the car right now. If your car has died or been totalled, borrow or rent a car to drive to the dealerships. Always behave as if you're not terribly anxious to buy just now.
Be friendly and polite, but maintain a neutral expression. If you're a woman, try not to smile too much. Really squelch that inclination to be smiley and friendly. No matter how much you'd like a particular color car, don't talk about that until very late in the process.
Go to the car lots and dealerships alone. Especially don't go with a spouse. If you're at the point where you're going to let them look at your trade-in, make sure you've brought along a spare key in case they decide to pull the "We've misplaced your key" trick. And then leave because they're unethical.
Trust your instincts. If for any reason you feel uncomfortable, leave. Because I bought so many cars in such a short time I got to be pretty knowledgeable about dealerships and used car lots in the Kansas City area. There was one in particular, a dealership for my own favorite brand of cars, that always made me feel icky, and after a while I stopped going there.
Absolutely do your research. Start out on-line by seeing what's out there in your area. I do this on the Kelly Blue Book site, and since I last bought a car, I see they allow for the kind of search that is most useful, such as body type, fuel type, transmission, and so on. Since I only drive a stick shift, that would have saved me a lot of trouble back when I was doing all that purchasing.
Also, once you've found a vehicle or two you might like at a specific car lot (which is the term I'm going to use to cover dealerships and free-standing used car lots) go to their website and see what else they have, as not everything will show up on the KBB site. A really good lot will make the Carfax report a part of the listing on each vehicle. Look at it. If there's anything you don't quite understand about it, make sure it gets explained to you at some point. If any car lot won't give you the Carfax reports, leave. Do not do business with them.
If you'd rather purchase from an owner, buy a membership in Carfax. Trust me, it will be worth it.
If you're buying from an individual or a free-standing used car lot, you must get the vehicle inspected by a mechanic. It's well worth it. If you're buying from any major manufacturer's dealership, that's probably not necessary. If you think they're that unreliable, shop elsewhere.
If it's at all possible, pay cash. If it's not, buy less car than you can afford, never have a loan that has you owing more than the car is worth, because if you have the misfortune to be in a wreck and it's totalled, you not only don't have a car, but you owe additional money, since your insurance only covers the current value of the car. Anyway, once you've paid off the loan, put that loan amount into a separate, dedicated savings account. The next time you need to buy a car, you are ahead of the game.
Test drive. Leave the car lot. Don't let them bamboozle you with the "Lots of people are interested in this specific vehicle" nonsense. There are always more out there, and usually more of the specific make and model you want. Even your color choice. Also, when buying used, more cars show up every single day. I have more than once visited a lot, not found what I want, then a couple days later double check their website and now they have exactly what I want.
Hang out if at all possible and watch what happens. See how they treat customers, see how they behave when not dealing directly with customers. I once wound up spending about three hours at one used car lot while my son test-drove a lot of cars. The sales floor was tiny and crowded, and I got to see a lot of sales being finalized -- this place was quite busy and later moved to a larger location. There was nothing there my son wanted, so we went elsewhere to buy. Five days later when his brother's car was totalled, I went straight back to that place and we did find one that had just come in. After we took delivery on it, the a/c wasn't working, so I took it straight back to them and they fixed it. It's a place I recommend.
I have found that the internet has drastically altered the car-buying process, and it's in favor of the buyer who makes use of it. You can show up armed with a ton of information about cars in general, and the specific car you're interested in. In short, do your homework, know what you can afford, and don't let yourself be rushed into the purchase.
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