When buying a car, it pays to shop around – for your financing as well as for the car. Because finding the right car and the right loan are really two separate financial decisions.
Whether you decide to buy from a car dealership or a private party, a bit of research and caution now could save you a bundle later. When you visit a dealership, don’t be tempted to only look at the shiny new car showroom. Cars are expensive, and they depreciate—lose value—the minute you buy and drive one off the lot. So also consider a used car, preferably a newer model that is “certified” and not sold “as is.”
This “top 5” checklist can keep you from being taken for a ride:
- Take a test drive, maybe several. Never buy a car from someone who won’t let you test drive it, but don’t be upset if the seller comes with you. Take time to test it under a variety of speeds and road conditions, and compare several vehicles. It’s great if you can take a car to a reliable mechanic or repair shop to look it over.
- Check the car’s history. It isn’t easy to figure out where a car has been, and no one source covers it all. But always check the car’s history for accidents and damage. A good place to start is www.NMVTIS.gov, the government National Motor Vehicle Title Information System, which is free. You can also order a CarFax or AutoCheck, for a fee. A dealer may provide one for free, if you ask.
- Have your financing arranged BEFORE you buy. If you plan to get a loan, check with your bank or credit union first. Most car dealerships also provide financing, but most have a yield spread so they make money. This is not illegal, but it is a higher cost to you.
- Know the car’s approximate value. You don’t want to overpay. So before visiting car dealers, decide on the vehicles you want to see and test drive. Then figure out the approximate values for those models. Find car values at http://www.kbb.com (Kelly Blue Book), http://www.nada.com (National Automobile Dealers Assn.) and Consumer Reports.
- Understand the law and your rights. Some dealers offer “certified” and “as is” vehicles. Ask about the difference, because “certified” used cars often have a more rigorous inspection. While a seller cannot conceal a car’s defects, you can’t return a car once you’ve purchased it even if there is a defect you overlooked. So, don’t sign anything unless you are 100% sure you want to buy. One advertising gimmick to avoid is “exec” cars, because they don’t exist. Dealers can buy fleet cars when a large company sells some at auction, but that doesn’t mean an executive drove the car.
And don’t forget…
- Shop around. Don’t fall in love with the first car you see.
- Don’t be in a hurry. Take a week or more to shop and research.
- Don’t fall for high-pressure, especially if a sales person insists that you must buy today or the deal will disappear.
- Take someone with you. It’s nice to have a second opinion – and second set of eyes.
- Be wary of buying online. You should be able to test drive a car before you buy.
Going for that test drive? Here are 14 checkpoints…
- Does the car ride smoothly?
- Is the steering wheel easy to turn?
- Do you hear any unusual noises?
- Is there any vibration at higher speeds?
- Do the tires have plenty of tread left?
- Does the engine “purr” or does it sputter?
- Can you brake easily and smoothly?
- Does the body show signs of rust or accidents?
- Is the paint peeling or heavily retouched?
- Do all the parts work (windows, locks, seats, mirrors, airbags)?
- Does interior show signs of heavy or unusual wear?
- Is there rust or moisture in the trunk?
- Are there nicks or small cracks in the windshield?
- Has the VIN (Vehicle Identification Number) or odometer been altered?