Do Your Research!
Before you start shopping for a used vehicle do your homework. It may save you serious money.
The car dealer has the home-field advantage when it comes to vehicle shopping so you will need to know a little something about the vehicles you are interested in and their values. You don’t have to be an expert but you need to have a baseline of knowledge in order to gauge on whether or not all things considered the dealer’s asking price for the vehicle is reasonable. Car prices from dealer to dealer vary a great deal and used car prices vary even more. Make sure when you are examining and comparing two similar used vehicles make sure you are doing an apples-to-apples comparison (similar model year, mileage, options, costs, repair and maintenance records, safety tests, and mileage through libraries, book stores, and web sites. Research the model year of the vehicle you are thinking of buying you want to know the strengths and weak points of that model vehicle. You’ll also what to know your typical fuel economy, and the cost for repair and maintenance. There are many resources online to help you do this research. It is also a good idea to do a little background look into the dealer you are buying the vehicle from. You may be surprised with what you find.
Cash or Credit?
Once you have settled on a particular car, you have two payment options: paying in full or financing over time. Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest and other loan costs. You also must consider how much money you can put down, the monthly payment, the loan term, and the Annual Percentage Rate (APR). Rates usually are higher and loan periods shorter on used cars than on new ones. Dealers and lenders offer a variety of loan terms. Shop around to gain the knowledge to negotiate the best possible deal. Be cautious about financing offers for first-time buyers. They can require a big down payment and a high APR.
Be willing to walk away.
Don’t fall in love with the vehicle or let your emotions get the better of you. If you do you are more likely to overpay for the vehicle itself, pay more interest over the life of the vehicle loan, and get less money for your trade-in. If money is tight, you might consider paying less for a less expensive vehicle than you first had in mind.
Set the price First!
Car buyers have a very bad habit of shopping for or focusing on low down payments or monthly payments. Dealers are trained to extract the most profit out of every transaction. By getting you to “fall in love” with the vehicle the dealer will also try to have you focus on the “low monthly payments.” Dealers do this to distract you while they inflate other variables in the sale and financing transaction like the interest rate and finance charges, dealer fees and charges, dealer add-ons, extra warranties, and even increasing the price of the vehicle. This tactic will increase the dealer’s profit and cost you thousands over the life of the vehicle loan. Think of another large purchase like buying a home. You set and negotiate the price first before locking in payments. You have to know your budget and what you can comfortably afford to pay, but don’t let the dealer use that against you. This same rule applies to setting the value of your trade in. A dealer isn’t doing you any favors if they give you a deal on the new vehicle, and then offers you $2,000 below market value on your trade-in. The new vehicle purchase, the trade-in and financing are three separate negotiations — treat them as such.
The 4-Square Dealer shell game.
Some dealers pull out what’s called a four-square chart, which is designed to be very confusing to the consumer to fully understand what is going on. And what is going on is more dollars are coming out of your pocket. A former car salesman unveils on The Consumerist how that shell game is played: Buy using the 4-square game the unsuspecting consumer is put on the defensive and worn down with tricky math, while the salesperson appears to knock down prices.
Take a close look at the fees.
Before you sign anything, take a close look at all the numbers on each contract to ensure they are what you agreed upon. Don’t be surprised to find a number of fees on the sales contract, but be aware that some are standard, some are negotiable and some are simply outrageous. We have found most dealers in Florida impose a “Dealer Fee” or “Pre-Delivery fee”, which is intended to either increase their profit or offset costs they have incurred in preparing the vehicle and associated documents for the customer. The Florida statutes recognize this industry practice and require the following statement be included on all documents that include a line item for the fee:
“This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.”
If the disclosure is not there and your are charged for this fee you should call the office for a free consultation.
Be cautioned on the add-on Dealer services and extras.
As if predatory fees aren’t bad enough, there are useless extras pushed by dealers, including rust-proofing, window VIN etching, fabric protection and paint sealant just to name a few. Be careful about paying for these things the truth is that all modern cars already have rust protection from the factory. VIN etching can be done yourself with a kit, but it is hardly the theft deterrent it’s claimed to be. Fabric protection can also be done yourself with a spray can, and paint sealant is just a liquid wax you can buy at an auto parts store for $10. Don’t be convinced that you don’t need any of it. Also be aware of extra warranties or service contracts, if you vehicle comes with a warranty already compare that warranty to the add-on warranty the dealer is selling as for the service contract you should really investigate as to what your are really getting.
Inspect the vehicle.
Whether you buy a used car from a dealer or an individual examine the vehicle using an inspection checklist. You can find checklists in magazines and books and on internet sites that deal with used cars.
- Test drive the Vehicle under varied road conditions on hills, highways, and in stop-and-go-traffic
- Ask if the dealer has a maintenance record for the vehicle.
- Hire a mechanic to inspect the car. While pulling a CARFAX or an AUTO CHECK report on the Vehicle can often be a good place to start, they are NOT always complete. There are instances where a dealer buys a Vehicle at auction with a “clean” CARFAX, and then uses that clean CARFAX to help sell the vehicle, while they may know or should know the Vehicle has some issue (rolled odometer, or accident damage). Have your own mechanic take a look at the vehicle. It could save you a lot of money, time and headaches.
Read the Buyer’s Guide
Federal Trade Commission’s Trade Regulation Rule Concerning the Sale of Used Motor Vehicles (the “Rule” or “Used Car Rule”), 16 CFR Part 455, which was promulgated on November 19, 1984. The Used Car Rule became effective on May 9, 1985. Violations of the Rule can result in the imposition of civil penalties of up to $10,000 per violation.
The Buyers Guide – Section 455.2 of the Rule requires dealers to prepare and display a window sticker called the “Buyers Guide” before offering a used vehicle for sale to a consumer. The Buyers Guide must disclose whether any warranty is offered and the basic terms of any warranty. If the dealer does not provide an express warranty, then the Buyers Guide must indicate that the vehicle is being offered for sale “as is” (with no express or implied warranties), or with only the applicable “implied warranties” required by state law.
The Buyers Guide gives a great deal of information, including:
- Warranty information;
- What percentage of the repair costs a dealer will pay under the warranty;
- The fact that spoken promises are difficult to enforce; and
- The major mechanical and electrical systems on the car, including some of the major problems you should look out for.
The Buyers Guide also tells you to:
- To get all promises in writing;
- keep the Buyers Guide for reference after the sale; and
- ask to have the car inspected by an independent mechanic before the purchase.