Buying a used car can be an excellent way to save money, especially for young adults working entry-level jobs and looking to get the most out of their budget. However, it's crucial to approach this purchase wisely to avoid potential pitfalls. Here are some essential questions and tips to guide you through the process of buying a used car, ensuring you make a smart and informed decision.

Become a Serious Car Nerd

Before you even step onto a dealer's lot or browse online listings, doing some preliminary research is essential. This preparation can save you significant money and prevent headaches later. Start by considering the type of car you need, how you’ll use it, and your budget. Don't forget to account for other costs like registration, insurance, gas, and maintenance. Having a clear picture of what you can afford and what fits your needs is crucial.

Once you have a few cars in mind, ask for the out-the-door prices in writing from dealers. This helps you spot any last-minute add-ons or hidden fees that might not have been mentioned initially. Verify that the advertised prices and discounts are applied correctly and that the vehicle is actually available.

Check the Car Seller's Reputation

Before visiting a dealership, look up the dealer’s reputation by contacting state and local consumer protection agencies for any unresolved complaints. Searching online for reviews or complaints about the dealer can also provide valuable insights. Knowing who you're dealing with can help you avoid potential scams or unreliable dealers.

Understand the Vehicle Information Package

Dealers must display a Buyer's Guide on every used car they offer for sale. Some dealers may use a Carfax report,  while looking for used cars, look for links to free CARFAX Reports. This guide provides important information about the car, including whether it’s being sold “as is” or with a warranty, the major mechanical and electrical systems, and any significant problems to watch out for.

Use the Buyer's Guide to your advantage. Ensure that any promises made are put in writing, ask for an independent mechanic to inspect the car before you buy, and obtain a vehicle history report. This report can give you insight into the car’s past, such as accidents, title information, and maintenance records.

Be Wary of Add-ons

Be careful of add-ons. Dealers often push their super expensive add-ons like gap-insurance or VIN etching at the last minute. These can add thousands to your purchase price and aren’t always necessary. If you do want an add-on, make sure you understand exactly what you’re paying for and get it in writing. At First Alliance Credit Union offers add-ons like GAP and Debt protection at a significant savings to our members when they finance through us.

Get an Independent Inspection

A vehicle history report is useful, but it's not a substitute for an independent inspection. Pay for an independent mechanic to conduct a thorough mechanical inspection of the used car. This can help you avoid purchasing a car with major problems, even if the car has been "certified" and inspected by the dealer or is being sold with a warranty.

If the dealer won’t let you take the car off the lot for an inspection, you might be able to find a mobile inspection service that can come to the dealer. Alternatively, ask the dealer to take the car to a facility you choose. If the dealer refuses, consider finding another dealer.

What Questions to Ask When Buying a Used Car?

When you're ready to talk to the seller, make sure to ask these critical questions:

1. Can I inspect the interior and exterior of the car?

   Look for any significant dents, scratches, rust spots, mismatched paint sections, or uneven body panels that might indicate previous accidents or repairs.

2. How was the car maintained and serviced?

   Find out if the car was serviced at a dealership, by an independent mechanic, or by a "shade tree" mechanic. Ask if the maintenance is up-to-date and if service records are available.

3. Was it in any accidents?

   Even if an accident is not listed on a vehicle history report, it's important to ask. Find out how the car was damaged and how it was repaired.

4. What is the car’s ownership history?

   Ask if the current owner is the first and how many previous owners there were. Knowing the car's history can give you insights into its condition and reliability.

5. Does it have a clean title?

   Avoid cars with "salvage title" or unresolved ownership claims. Verify the title status to ensure there are no hidden issues.

6. How did you arrive at this price and is it negotiable?

   Use online pricing guides like Kelley Blue Book or Edmunds to ensure you're getting a fair price.

7. Can I take it for a test drive?

   A test drive can reveal potential issues that might not be visible during a static inspection. Pay attention to how the car handles, any unusual noises, and overall comfort.

8. Can I get a pre-purchase inspection?

   An independent mechanic's inspection can alert you to any hidden problems and provide a cost estimate for necessary repairs. Make sure to consider a used car buying inspection list to help you know what to look for.

Consider Your Payment Options

You have two main options for paying for a car: pay in full or finance over time. Financing increases the total cost because of the interest, so consider your down payment, monthly payments, the financing period, and the APR. Low monthly payments might look tempting, but they often come with longer loan periods and higher overall costs.

Shop around and compare offers from different sources, including banks, credit unions like First Alliance Credit Union, and other lenders. Understand the total cost of the car with financing, not just the monthly payment.

Have other questions about buying a used car? Ask us!

Understand Car Returnable Policies

Ask the dealer about their return policy and get it in writing. Federal law doesn’t require dealers to give you a cooling-off period, but some states have their own regulations. Knowing the return policy can save you from a lot of trouble if something goes wrong.

Know Your Warranty Options

The Buyer's Guide will show any warranty coverage changes you negotiate. There are different types of warranties: “as is,” implied warranties, full and limited warranties, and unexpired manufacturer’s warranties. Make sure you understand what each covers and get all warranty documents.

What to Do If You Have Problems

If you encounter issues covered by a warranty or service contract, follow the instructions to get service. If you can’t resolve the dispute with the dealer, consider contacting your state attorney general, using a dispute resolution organization, or filing a suit in small claims court. The federal Magnuson-Moss Warranty Act can also help in some cases.

Cruise into more information with Kayla in the video below

Conclusion

Buying a used car can be a smart financial move if you approach it with the right information and questions. By doing your homework, checking the dealer's reputation, understanding the Buyer's Guide, and asking critical questions, you can make a purchase that suits your needs and budget. Remember, the goal is to drive away with a reliable vehicle that won't break the bank or cause unexpected problems down the road. For more personalized financial advice, visit First Alliance Credit Union and start making good money moves today.

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