Buying a Used Car

Buying a Used Car

So you decided it was time to buy a car and you are either very excited about the idea or terribly worried you might make a bad decision.  Or both! Unlike buying a new car, you will not always have the benefit of a vehicle warranty to protect you against potential repair bills.  There are trade-offs when buying a used vehicle, but they are not typically bad as long as you go into the purchase armed with as much information as possible.  

 

Just last week, I bought a 15 year old vehicle to drive for the winter.  I have a MINI 2 door Hardtop, which is tons of fun in the nice weather but not so much in the winter.  As such, I wanted to buy an affordable vehicle with good reliability and either four wheel drive or all-wheel drive.  After much shopping and researching, I bought a 2004 Honda CR-V. I had to drive 200 miles to buy one in the right shape/price, but it turned out to be a great experience (yes, I am that crazy).  

 

With my recent vehicle purchase as an example, let’s examine the tools and tactics I used to buy this Honda.  I spent about two weeks shopping for this vehicle, and because of my approach I found the right vehicle for me.

 

For the purposes of this article, I am focusing on older vehicles that come with no warranty and very little reconditioning.  For me, this is the fun kind of car to buy!

A Note About Certified Pre-Owned Vehicles

If you are looking for a newer used vehicle (less than 4 years old and/or under 50,000 miles), consider buying it from a new car dealer of the same make that you are shopping.  You will likely get a vehicle that comes with a good warranty and has been thoroughly inspected and reconditioned (new tires, brakes, etc.). You will pay slightly more for this type of used vehicle, but you get the protection of a new one.

Vehicle Research

I knew that I wanted either a small or mid-sized SUV, so that helped me whittle down the list of vehicles to research.  Once you figure out the type of vehicle you want, it is time to see which vehicles in that class will work best for you.  Every vehicle will have an issue of some sort. The goal is to minimize any future surprises. So, it makes sense to do some homework upfront.  Knowledge is power, so be sure to do your research. These sources have proven handy for me:

Consumer Reports (https://www.consumerreports.org/cars/) has tested just about every make and model of vehicle made.  They either buy or rent their test vehicles, preventing a manufacturer from “perfecting” a vehicle before it is tested.  

While CR is testing the vehicles when they are new, you can go back to your desired model year to see what was said at the time.  They also collect feedback from owners of those vehicles to create their reliability ratings.

CARS.com (https://www.cars.com/research/) gives you a similar review of vehicles in their Research section, however, they also show many more reviews from owners of the year/make/model of the vehicle you shopping.  I like these reviews because they are from a broader cross-section of buyers than Consumer Reports.

Kelley Blue Book (https://www.kbb.com/) is a really good source of information for vehicle values.  If you select “What’s My Car Worth?”, you can see both the dealer trade-in value and the likely price if buying from a private seller.  One word of caution: do NOT consider these values as gospel. Use this only for comparison purposes between vehicles (e.g. comparing a Honda CRV to a Chevrolet Equinox).  While these values are supposed to represent the local market, I find they are a little on the low side. Again, use it as a starting point.

RepairPal.com (https://repairpal.com/problems) is a really helpful site to show you the common problems with the car you are shopping.  As I mentioned, every car is going to have some issue during its lifetime, but it is important to know if there are any COMMON issues that might be costly.  For instance, one particular car I was researching showed a high likelihood of air conditioning compressor failures. Big deal, right? What’s that cost, $200 to fix?  WRONG. In this car, the compressor failure always takes out the entire air conditioning system. Repairs include removing the front bumper, grill, radiator, etc. Estimated cost–$2,000!  Pass!

Shopping Sites

Now that you’ve narrowed down your selection of vehicles, it is time to go shopping!  I have a few go-to sources to look for vehicles. In some cases, you may see the same vehicle advertised on all of these sites:  

CarGurus (https://www.cargurus.com/) is a new and used vehicle listing website that will include vehicles in a dealer’s inventory as well as some private party sales.  I like that the listings show you if the vehicle is a “Great Deal,” “Good Deal,” “Fair Deal,” or “Overpriced” based on the seller’s price vs. market value.  You can also see the pricing history and age of the vehicle in inventory (helpful when negotiating price). If you are looking for a Certified Pre-owned Vehicle, this is a good place to start.  

Other sites like Cars.com and AutoTrader.com are also good listing sites.  I just like CarGurus for the added info about the pricing vs. market

Craigslist (https://www.craigslist.org), per Wikipedia, is an American classified advertisements website with sections devoted to jobs, housing, for sale, items wanted, services, community service, gigs, résumés, and discussion forums.

Craig Newmark began the service in 1995 as an email distribution list to friends, featuring local events in the San Francisco Bay Area. It became a web-based service in 1996 and expanded into other classified categories. It started expanding to other U.S. cities in 2000, and now covers 70 countries.

It is relatively easy to search for a car in the “For Sale” section under “cars+trucks.”  It also gives you the opportunity to filter the ads by seller type (All, Owner or Dealer)–Owner means private seller–and by price, miles and many other qualifiers.  

Be sure to check out the “avoid scams & fraud page” (https://www.craigslist.org/about/scams) for some useful tips!

Facebook Marketplace (https://www.facebook.com/marketplace) is one of my new favorite places to buy and sell cars.  It is likely that you already use it to buy and sell items around your house.  If so, shopping for a car is very similar.

Like Craigslist, Facebook Marketplace (FBM) allows you to search and filter the ads.  It does not allow you to filter out the seller type (dealer vs. private sale), but then some used car dealers use a personal Facebook account to sell their used vehicles–possibly to trick you into thinking it is a private party sale?  

The best part of using FBM is that you can learn a little more about the seller by clicking on their profile.  Some key advantages:

  • You can see if they have been on Facebook for a while.  New sellers may be “fly by night” operators.
  • You can see what other items they have for sale.  In my area, there are several individuals who are selling multiple vehicles.  This is a red flag for me, as they may be buying junk and flipping them to unsuspecting buyers.  I avoid them out of principle.
  • Price changes are shown on FBM, which can tell you the seller is motivated to sell a slow moving item.

Auto Tempest (https://www.autotempest.com) is a relatively new site to me, and aggregates ads from several car shopping sites (including Craigslist, but not FBM).  It does not always seem to pull in all of the ads, but a good source to check out.

Avoiding Problems

You are now pretty far down the car buying funnel, getting ready to zero-in on that one car you really liked from an ad.  If the seller did their job, they presented a really good story about their car with detailed pictures. What more is there to do?  Go buy the car, right?

Kinda

I previously mentioned RepairPal.com.  Make sure the car you want to buy does not have inherent issues.  Once you decide the time is right, do the following when looking at the car:

Meet the Seller

If it is not at a dealership, agree to meet in a public place.  I feel this puts both parties at ease and may help you avoid a serial killer!  

Check Vehicle History

Check CarFax (https://www.carfax.com/) to learn about the car’s ownership history.  You can learn about the number of previous owners, most maintenance services, accident history and title status.  Most dealerships provide this report for free (and will show it on their ad). If not, it will cost you $39.99. Money well spent.

That last one is a big one:  do not buy a vehicle with a REBUILT or SALVAGE title.  That is a clear sign that the vehicle sustained heavy damage and was declared a total loss by the insurance company.  Yes, some of these vehicles can be repaired and put safely on the road. Why take the chance?  

During my last vehicle search, I drove an hour to look at a vehicle after the seller assured me they had a clean title.  As soon as I looked at the vehicle, I knew something was wrong. The seller must have seen my confused look (perhaps it was the raised eyebrow and red face?).  She tried to tell me that the SALVAGE title could be cleared up with a little work on my part. Luckily, I knew that once a title is branded, there is no “clearing it up.”  See ya!

Inspect the Vehicle

If you are mechanically inclined, give the vehicle a good inspection.  I find the Used Car Checklist from Popular Mechanics to be a great guide to a successful inspection.  It is hard to be objective about a car you may really like, so the list helps keep you on track.

If you are not comfortable with the inspection process, you have options:

  • Talk to a friend who is knowledgeable about cars and/or take them with you.  
  • Arrange to take the car to a mechanic or repair shop you trust.  Most sellers will agree to this, as they take it as a sign that you are serious about buying it.
  • Utilize a vehicle inspection service such as R8TR (www.r8tr.com).  This is a new (just launched in early December), low cost service available through the R8TR app.  Full disclosure: I am a R8TR for the metro Detroit area.  

Even though I will take inspection jobs through R8TR, I am more than happy to give you phone/online guidance at no cost. 

Buying the Car

Once everything else is in order and you are convinced this is the car for you, agree on a purchase price with the seller.  How you get there is up to you.  

I prefer to keep things on friendly terms and let the seller build value in the vehicle before talking price.  It never hurts to ask “will you take $X for the car?” Don’t be like the guy on Fast N Loud who offers half price.  That will kill the deal for sure. Be polite, yet firm.  

My experience of late is that private sellers are reluctant to accept a cashier’s check for the purchase.  I’m one of those people, having been burned on a fake check a few years ago.  

Method of Payment

I either take cash with me (not the safest thing to do, but comes in handy during the negotiations!) or ask the seller to meet me at my bank.  They get to see the bank cut the check. That adds both safety and confidence that the deal is legit. I have never wired money to a seller, but might do that if I need to make an expensive purchase out of state.

My good friend, Lee Snyder, who has bought and sold more expensive vehicles over the years offered this great feedback after I published this article.  It is so valuable, I am updating it with his information below :

The handling of funds at the sales transaction is always of concern. I don’t mind giving or taking a couple thousand dollars in cash. It can become a bit scary with larger funds.

On transactions with bigger sums I don’t like cash (although I won’t say no). I have bought and sold vintage Corvettes in the $20K – $50k range. In these cases I always require wired funds to my bank. The downside, you have to educate buyers on how this works, it requires advance coordination with the seller’s bank, there is a cost for this service (~$25.00) and, there is a delay of an hour or more before the funds are received in your account. I don’t sign or turn over the title or keys until my bank states funds are received.

In this age of electronic banking it is very easy check your balance in almost real time.

Last, sometimes this lag period is awkward for the seller as the buyer keeps asking questions while inspecting the vehicle further. I usually say I have some calls to make and walk away for awhile.

In conclusion,
TRUST reputable buyers or sellers like legitimate new car dealers.
DON’T TRUST anyone else. Take a photo of the buyer and buyer’s drivers license with your cell phone.

TRUST cash and wired funds
DON’T TRUST any other forms of payment.
NEVER TRUST personal checks or certified/cashier checks. This includes any checks you witness prepared by the buyer’ bank. The issuing bank can draw the funds back if the buyers funds become questionable i.e., the buyer stole the funds!

TRUST public areas like strip malls
DON’T Trust any private residence including bringing the buyer to your home.

ALWAYS have someone with you as a witness or protection. The bigger and uglier the better. NOTE: I think our blog host Bill Taylor will do this for a fee! 

Insurance & License Plates

Talk to your insurance company about your coverage before you buy the car.  Some companies give you a 30 day grace period before adding a car to the policy.  I prefer to add the car to my policy before I pick it up. You can always drop it if you decide not to buy the car.

Be sure to check your state law for the legal way to drive your new car away.  In Michigan, you can drive the car home without a license plate as long as you have proof you just bought the car.  Some states require that you get a temporary permit. Do the right thing, or else that great purchase will turn into an expensive ride home.

The advice provided above applies mostly to private party sales.  If you buy from a dealer, they will accept a cashier’s check, require that you have proof of insurance and will either help you with license plates or give you a temporary tag. Of course, you miss out on the great adventure of meeting new people in strange places!

Ask the Vehicle Nanny

As always, if you have any questions about buying a used car or need help along the way, I am very happy to help.  You can reach me through the Contact form at the top of the page.

Bill

This Post Has 9 Comments

  1. Glenn Hardy

    Very informative and thorough Mr. Nanny

    1. Bill

      Thank you, Glenn! And please…call me Vehicle Nanny. 😉

  2. Lee Snyder

    Great article Bill. The handling of funds at the sales transaction is always of concern. I don’t mind giving or taking a couple thousand dollars in cash. It can become a bit scary with larger funds.

    On transactions with bigger sums I don’t like cash (although I won’t say no). I have bought and sold vintage Corvettes in the $20K – $50k range. In these cases I always require wired funds to my bank. The downside, you have to educate buyers on how this works, it requires advance coordination with the seller’s bank, there is a cost for this service (~$25.00) and, there is a delay of an hour or more before the funds are received in your account. I don’t sign or turn over the title or keys until my bank states funds are received.

    In this age of electronic banking it is very easy check your balance in almost real time.

    Last, sometimes this lag period is awkward for the seller as the buyer keeps asking questions while inspecting the vehicle further. I usually say I have some calls to make and walk away for awhile.

    In conclusion,
    TRUST reputable buyers or sellers like legitimate new car dealers.
    DON’T TRUST anyone else. Take a photo of the buyer and buyer’s drivers license with your cell phone.

    TRUST cash and wired funds
    DON’T TRUST any other forms of payment.
    NEVER TRUST personal checks or certified/cashier checks. This includes any checks you witness prepared by the buyer’ bank. The issuing bank can draw the funds back if the buyers funds become questionable i.e., the buyer stole the funds!

    TRUST public areas like strip malls
    DON’T Trust any private residence including bringing the buyer to your home.

    ALWAYS have someone with you as a witness or protection. The bigger and uglier the better. NOTE: I think our blog host Bill Taylor will do this for a fee! Good luck.

    1. Bill

      This is great information Lee! I updated the article with your input as I feel it is too important to ignore. Thank you for the additional detail–you have bought and sold more expensive vehicles than me, so you’ve had more at stake in the transfer of money.

  3. Lee Snyder

    There has been a lot of cheap beaters I bought for my 3 boys while they were in college. Each car or truck was wasted when they were finished, especially when they hated the vehicle.

  4. Linda Yang

    Thank you for such a detailed guide! I am completely new to this field and really learnt a lot! Looking forwarding to buying a car within two weeks.

    1. Bill

      You are quite welcome! I hope it helps you through your used car purchase. Come back to the site if you have any questions with your car. I will be starting an “Ask the Nanny” column within the next week.

    2. Ann

      Terrific article with super helpful tips. Love the websites listed – I’ll be checking out repairpal.com next. We have no knowledge on how to do mechanical repairs (we can hardly change a tire), but we do have a great neighbor who is always willing to help. Thanks for the information!

      1. Bill

        Thanks, Ann! I have it on good authority that the Vehicle Nanny makes housecalls within a three house radius!

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