How Not to Get Duped When Buying a Used Car

https://www.nytimes.com/2019/04/25/smarter-living/how-not-to-get-duped-when-buying-a-used-car.html

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If buying a used car makes you want to pull your hair out, you’re not alone. Aside from buying a home, buying a car is one of the most expensive purchases you will ever make.

Consumers buying used are looking for a good deal, whether the goal is a certified vehicle coming off a lease or a solid car you’re buying from the vehicle’s original owner. Here’s how to make sure you get the right deal with as little frustration (and interest paid) as possible.

If you already know the specific make, model and year of car you want to buy, searching is easy: Websites like autotrader.com, cars.com, carfax.com and truecar.com round up used cars, typically those being sold at franchise dealerships (e.g., a Honda, Subaru or Ford dealership) and independent auto dealerships (like used car lots).

Want to avoid the dealer markup? Or looking for a car older than dealerships in your area are selling? Or maybe even something rare? Good bets are eBay — yes, eBay — and Craigslist (and you can search across multiple regional Craigslist sites at craigslistcars.org).

If you don’t know what you want but you have a general idea — say, a four-door sedan coming off a lease or a crossover S.U.V. with under 50,000 miles — online tools like cars.com and autotrader.com can help you narrow down your choices, which Mark Schienberg, president of the Greater New York Automobile Dealers Association, suggests doing before going to a car dealership. What you don’t want to do is show up without really knowing what you want.

“You’ll see a lot of wonderful cars, and maybe there’s a sales person who’s trying to move a little bit of an older car that’s been on the lot for a while,” Mr. Schienberg said. You want to avoid being nudged into a car that’s not quite right or that is out of your budget.

About 50 percent of used cars are sold from franchise dealerships, according to the Greater New York Automobile Dealers Association. The rest are sold by independent car lots and consumer-to-consumer sales (like sales on Craigslist and eBay).

Franchise dealerships tend to have a lot of relatively late-model used cars, because leasing now makes up about 30 percent of new car sales, according to Experian Automotive, an information services company. That’s “resulting in really strong inventories of great late model used cars,” said Melinda Zabritski, senior director of automotive financial solutions at Experian Automotive.

The age and price of cars at dealerships depend on the local customer base, Mr. Schienberg said, but you’re unlikely to find a 10-year-old, $3,000 car at one. If that’s the type of car you’re in the market for, you’ll probably have better luck at an independent used car lot or by buying directly from the owner. Also, keep in mind that certified pre-owned cars tend to cost a bit more — perhaps even in the thousands — but for many people it’s worth the peace of mind.

Car buying services like Carmax and Carvana take the negotiating (and, for a lot of people, the stress) out of going to a dealership. Their price is their price, and that’s it. Phillip Reed, an automotive writer at Nerdwallet, said that most of the time those prices are at the higher range of what a car of that make, model and mileage are selling for elsewhere, but for a lot of car buyers it’s worth it to avoid the worry that they’re getting ripped off. He said trading in your car is an easier process, too, and can take a lot of the frazzled nerves (and haggling) out of the entire transaction.

You generally have two options for buying a car: pay in cash or take out a loan. For loans, monthly payments are at an all-time high, and they tend to have longer terms than ever before.

“Ten years ago, most loans in the used car space were 60 months. Now the most common loan bucket is 72 months,” Ms. Zabritski said. This is generally because of two factors: New cars are becoming more expensive, and larger cars, like S.U.V.s, are making up a higher portion of all used car sales, she said.

Since many of us budget on a monthly basis, most loan providers are going to focus your attention on that monthly payment and getting that as low as possible. But Mr. Reed said it’s crucial to figure out how much the car will cost over the life of the loan, since adding another 12 or 24 months to the term of the loan can easily add up to several thousand dollars, Mr. Reed said. Loan rates tend to be slightly better for new cars, so figuring out what the car will cost over the life of the loan might show that buying a new car would be cheaper once the car is fully paid.

Mr. Reed recommends getting prequalified for a loan from a bank or credit union then taking that with you to a dealership to see if they can beat it. This can make negotiating easier, too.

“If you say, ‘I’m preapproved, let’s just talk about the price of the car,’ it simplifies things and you don’t lose track of the value of the car,” he said.

If you’re buying a car directly from its owner and you want to finance the purchase, you’ll typically need to provide the lender (usually a bank or credit union) with your financial information along with the car’s vehicle information, bill of sale with the purchase price, pictures of the car and any financing still left on the car from the person you’re buying from. You can also expect to pay a higher interest rate than you would get on a car from a dealership, because it’s a riskier bet for the lender. (This is why it’s important to calculate how much a car will cost over the life of the loan, which you can do here.)

A lot of cars coming from franchise dealerships or a car-buying service will have some kind of warranty. That could be in the form of a Certified Pre-Owned program from the car’s manufacturer, or the dealership itself might offer a warranty. Terms of C.P.O.s vary by manufacturer, but they typically cover the car for time and mileage lengths and are valid at any of that manufacturer’s dealerships. Dealership warranties, however, might be limited to just that dealership.

When buying directly from a consumer, you should pull a vehicle history report, available from services like Autocheck or Carfax, which shows things like whether the car has been in an accident and how many owners it has had. Some used car sellers will even pay for the report and share it with potential buyers. However, some repair shops won’t enter repairs into those services, so it’s crucial to have your mechanic check out your car.

“There are some things that never get reported to anybody,” said Christopher Basso, a spokesman for Carfax. “A trained eye of a mechanic can spot those things that may not have been reported” and that the sellers might be trying to hide from potential buyers. If your mechanic does find needed repairs, take that knowledge back to the seller to negotiate a lower price, since you’ll have to pay for the repairs after the sale. (At the very least, try to get the seller to cover the mechanic’s cost of labor.)

If you don’t have a mechanic you trust, or you’re buying a car in a location far from your mechanic, services like Lemon Squad and Wrench can send a mechanic to the car’s location. Some of these services, including Wrench, provide their own guarantee, so if the mechanic misses a defect or flaw, you won’t be left alone in a bad situation.