When a used car is all polished up and shining on the lot it’s hard to tell a classic from a clunker. A smart shopper can hedge the risk with a little preparation.
No doubt you’ve seen a car or two parked street-side for sale in high-traffic areas. These vehicles usually have handwritten “For Sale” signs and few other details. It’s easy to assume that these cars are for sale by owner but they may be curbstoned by shady sellers. Avoid such a scam by checking the title history through the Department of Justice’s National Motor Vehicle Title Information System to to see if the vehicle was recently sold. And beware if the seller’s name is not the same as the name on the title.
Inspection and Test Drive
Once you have narrowed your selection down to one or two cars, it’s time to kick the tires. Who knows what that is supposed to tell us, right? It’s best to make a thorough inspection of the car using a checklist. You will want to look for such things as unmatched paint or poor body fit -- indicating possible collision damage -- as well as rust around wheel wells, under doors and in the trunk. During the test drive you will want to make sure power options work, the vehicle doesn't pull to one side when braking and other important details on your checklist.
Know What It’s Worth
Negotiating a price is part art, part science. Before you can haggle, you’ll need to know what the vehicle you’re considering is worth. The National Automobile Dealers Association and Kelley Blue Book offer free market value calculators online. You can usually find these guides at your local library, too.
Maintenance and Mechanical
Ask for the car's maintenance record. Then hire a mechanic to get under the hood. Make your first deal with the seller: you’ll pay for the mechanic’s inspection if everything is OK, he will pay if the car fails the inspection.
A dubious seller may attempt to hide a car’s history by title washing. A vehicle’s title should show if it has been damaged or salvaged, but title documentation varies from state to state. By moving the vehicle through several different states, unscrupulous sellers try to wash away title details regarding a vehicle’s history. It's another good reason to order a title history report, getting a title guarantee in writing -- or buying from a trusted dealer.
Check the History
You will want to know if the car has been damaged in a flood, involved in a crash, labeled a lemon or had its odometer rolled back. Using the vehicle identification number your state motor vehicle department can research the car's title history. Look for terms like "salvage," or "rebuilt". The National Insurance Crime Bureau offers a free database that tells if the vehicle has been reported stolen or had flood damage, and for a fee the Department of Justice’s National Motor Vehicle Title Information System can give you additional information about a vehicle’s title, odometer data and damage history.
Off the Lot
Of course we all want to buy a car directly from the original owner -- especially someone we know. But if you're looking for a particular model or specific price range, you may be shopping with a dealer. Buying from a new car dealer can mean looking at trade-ins, demonstrators or lease returns. Independent used car lots can vary greatly in reputation, but they may offer older, more affordable vehicles and finance a car for buyers with poor credit -- at a much higher interest rate, of course.
Hal M. Bundrick is a Certified Financial Planner(TM), writer, entrepreneur and former financial consultant and senior investment specialist for two leading Wall Street firms. He has written for trade magazines, newsweeklies, and leading websites including Forbes.com and TheStreet.com.