How to buy a used car. Part 3

Questions to ask a private seller

- When did you buy the car? How many previous owners? Current mileage? Who is the Owner? Any liens? Answers like 'This is a friend of mine's car', or 'I bought this car a couple of months ago' should put you on guard. You need to deal with the actual vehicle owner and he/she has to sign the bill of sale. If a car is sold just a few months since its purchase, this may indicate that this car has a problem or the seller is in the 'curbsider' business.
- Any previous accidents? Major repairs? Any repairs needed now?
- What's the mechanical condition? Any concerns? Any smoke when the engine is started? Is the transmission shifts without issues? General condition? Interior? Exterior? Any rust? Scratches? Dents? Chips on the windshield? Any other damages? Where and how regularly the car has been serviced? Are the service records available? What is the reason for selling?
When was the last emission test done?
Don't expect the seller to provide you with all the information. He/she may be unaware about previous accidents or other problems. Refer to the vehicle history report and the result of mechanical inspection. I wouldn't recommend buying a car after an accident or after a major repair, e.g., with a re-built engine or transmission.
- Is the car drivable now? The car may not have valid license plates or insurance or have some mechanical problem, so you won't be able to test-drive it.

Questions to ask a dealer

- Is the car still available for sale? A few times, I have witnessed the situation, when over the phone a sales person tells you that a car is available, but when you come, he/she would tell you that the car is sold and he/she wasn't aware of this. So ask to confirm.
- Ask to confirm the mileage, price, color and that it has the options that you are looking for: air conditioner, automatic or manual, ABS, cruise control, etc.
- Ask about any additional fees. Some dealers may set the advertised price fairly low to lure more buyers, but add some additional 'administration' or some other fees later.
- Ask when the car was placed in service and is it still covered by any type of warranty. For example, a car that is advertised as a 2009 model might have been originally sold and placed in service in August 2008, so the original warranty will be counted from that date.
- Ask if the car had any accidents or major repairs.
- Ask if any service records available.
A car might have been originally sold from the same dealer and they may have its service records. It's nice to know if the car has been maintained regularly.
- Ask if the price is negotiable.
For example, if the car is advertized for $14,000, ask if it's worth to come if you only want to pay $13,000. Usually, dealers are more willing to discuss the price when they feel that you are the real buyer.
- Ask if the dealer can arrange the car be brought for an inspection to your mechanic.
- If it looks like this is the car you want, ask for the VIN number, so you can check the history records.

Checking used car history records

In the next step, check used car history records. This will help you eliminate some of the vehicles with potential problems. A car or truck that you are interested in might have been restored after an accident. It could have been a rental vehicle or its odometer has been altered. A history report contains a lot of other useful information. To check a history report you need the vehicle's VIN number. Read more: How to check a car history by the VIN number.

At the dealership

Before visiting a dealer, be prepared, read how the process works. Edmunds.com has a very interesting article called Confessions of a Car Salesman that explains how the dealership sales department works. If you don't want to read the whole article, the most useful section is at the page 10.
When dealing with a dealer, the simple rule is that you came here to make a business transaction, exchange your money for a car; you want a car, dealer wants your money. You don't have to become friends with a salesperson, neither do you have to get angry or argue. Leave unnecessary emotions or empty talks aside and look at it as a pure business transaction; concentrate on facts and details. Just because a salesperson is nice to you, doesn't mean you should let your guards down when discussing the details; in the end, if you can reach a fair deal, both sides will be happy. Dealers know how to use different sales strategies, and if you visit a few dealers, you might even hear the same sales pitches and stories. Emotion is a big part of the sales process. You just test drove a clean shiny car and you are excited thinking about driving it home today. This is when important details and numbers can get overlooked. Take a break to weigh pros and cons, discuss the deal with your friend or even better come back tomorrow with a clear mind; the car will still be there and if not there are plenty of others.

Having the vehicle inspected

Inspect a vehicle carefully, take your time. It's a good idea to bring a friend who is more familiar with cars. Here is a little trick that may help you: If possible, come earlier than your appointment and check the vehicle when it's started cold. Many problems are easier to detect when the vehicle is first started: a car may smoke when it's cold or the engine may be noisy or the transmission may engage with a delay. Some of these types of problems might be less noticeable once the car is warmed up. Test-drive for as long as possible to get the good feel. During a test drive, pay attention to the vehicle performance. Watch out for noises, see if the car drives straight and holds the road well. Read our Illustrated used car checklist to learn what to look for in a used car. As a final step, bring the car to the mechanic of your choice for an inspection. Sometimes you can find a mechanic who can come with you to the dealer and inspect the vehicle on-site. Another choice is to arrange with the dealer to bring the vehicle to an auto repair shop or another dealer of your choice for an inspection. When you get a used car inspected, if possible, try to speak personally to the mechanic who did the inspection; don't rely on the inspection report alone. Ask a mechanic if he (she) would buy this vehicle or not and why. Ask if it looks like the car has been well maintained or not and what kind of problems to expect. A word of caution, NEVER give a deposit or sign a contract before the car is inspected. If you bought a car and later found out there is something wrong with it, it won't be easy to return it back.
It's also a good idea to check for outstanding recalls and safety campaigns. You can call an authorized dealer's service department and ask to check if there are any recalls that need to be done on the vehicle. They will need the VIN number to check their database. If there are recalls that need to be performed, you can even ask a dealer selling the vehicle to arrange any recalls done by the authorized dealer before you pick up the vehicle. You can check for recalls here: Safety Recalls - NHTSA or Transport Canada - Road Safety Recalls Database.

Negotiating the deal

Often when you use a proper negotiation strategy, you can get a reasonable discount. Here are a few proven tips:
1. Start negotiating from the beginning. See if you can get a discount from the very first time you phone about the car. If a car is advertised for $15,000, ask if it's worth to come if the $14,000 is your bottom line, considering that you are the real buyer. Usually they won't say no, which means that when you come, you can start negotiating down from $14,000, not from $15,000
2. Negotiate the total price. Dealers always like to add some additional fees on the top of the sticker price. Ask to calculate a total price "on the road" and use it for a negotiation.
3. Don't be afraid to make a lower offer. If they are asking $15,000, offer $13,000. If the salesperson believes you will really buy a car, he/she will go down in price and maybe you will then get the car for $13,800 or thereabouts.
4. Be ready to leave if you feel any pressure or if you have any reservations about the car or the deal, there are so many other cars available. You don't have to decide immediately. Do not give a deposit or sign anything until you are absolutely satisfied with the car and the conditions of the deal. Take a break to think the deal through.
5. Nothing works better than competition. Let's say you have two cars on your list that you're interested in. Show it to the salesperson and say you will buy a car from whoever gives you the better price. For example, if one of the salespersons offers you a $500 discount, phone to another dealer on your list and ask them if they can match it.
6. Whatever is promised by a dealer, ask to confirm in writing. Negotiate all the details of the deal. If the dealer promises to install new tires, make sure you agree on what kind of tires - cheapest available or of a reputable brand like Michelin or Goodyear. If there is some kind of warranty that comes with the car, make sure you understand all terms and condition. If the dealer promises to show you all service records, make sure you check them before paying for a car.

Many questions may come up when buying a used car such as how to transfer the ownership, how to register the car from another state or province, what papers are required to register the vehicle, the owner's and buyer's responsibilities, etc. Because each province or state may have different laws and requirements for the sales transaction of the car, it is best to call your local vehicle registration office or Department of Motor Vehicles, or legal authorities.
Be careful when doing the paperwork. For example, if you buy from a private owner, make sure there are no registered liens against the vehicle and that the person who signs the Bill of Sale is the actual owner of the car. Check with the Vehicle Registration Authorities to make sure the car has not been stolen. If buying from a dealer, read the warranty policy and all the papers including the fine print very carefully. Do not rely on verbal promises. Whatever is promised by the salesperson, get it in details in writing. Find out if the remaining original warranty will be transferred into your name. Different manufacturers have different warranty policies about this.

Buying an extended warranty

All new cars come with original warranty provided by a car manufacturer. This original warranty covers most of the vehicle components for a certain period - most commonly, three years or 36,000 miles. After the original warranty expires, you will have to pay for all repairs out of your pocket. This is when an extended warranty may be helpful. An extended warranty is essentially a service contract between the car owner and the warranty company. According to this contract, the warranty company will pay for the repairs covered by the contract for a specific period of time. It's something like a health insurance for your car. With an extended warranty, you are protecting yourself from unexpected repair costs.
For instance, you bought a used car that is out of original warranty and the transmission fails. If you don't have an extended warranty you will have to pay out of from your pocket, transmission repair may cost you more than a couple thousand dollars. If you have a good extended warranty, it would cover most of the repair costs; in some cases, you would only have to pay a diagnostic fee, or a deductible, depending on the type of warranty you have.
However, not all cars are qualified for an extended warranty and not everything is covered. Items like belts, brakes, tires and other wearable parts are usually not covered. In addition, you still have to maintain your car properly and keep all the receipts.

Do's and Don'ts when buying a Used Car

Do look at your finances and set yourself a limit what you can afford before shopping.
Don't buy a used car without doing some research on reliability and common problems - some cars are prone to expensive problems and should be avoided when used.
Don't buy gas guzzlers; days of cheap gasoline are in the past.
Don't look for a lowest price.
Do look for a well maintained car in good condition for a reasonable price.
Do check the used car history report to find out about previously reported issues with a car.
Don't buy cars with engine or transmission problems, badly rusted cars, cars that have been flooded or restored after an accident.
Do take what you have been told about the car with a grain of salt; rely on facts.
Don't be rude to sales people; they are just doing their job and trying to earn a living for their families.
Do test drive a car for as long as it takes you to get the good feel before making a final decision.
Don't buy a car if something doesn't feel right.
Do test drive another car of the same model to compare condition.
Don't buy a car unless properly inspected by your mechanic or a used car inspector.
Don't base your decision on monthly payments.
Do
ask to calculate the total price including taxes and interest.
Do walk away if you feel too much pressure.
Do negotiate and shop around; use competition to your advantage.
Do negotiate closer to the end of the month to get a better deal.
Don't buy a car without taking a break and thinking the deal through.
Do check all the paperwork carefully.
Don't forget that a car needs to be maintained well to last.

Read more:
What to look for when buying a used car »
10 best used cars/SUVs that are good on gas »