auto budget

Guide to Buying a Used Car Without Going Crazy

Meg Favreau — Mon, 02 Jan 2012 11:24:09 +0000

One night about a month ago, I was telling my friend about the brain-frying frustration I was experiencing trying to buy a used car off of Craiglist. "I feel like I can spend infinite time on this," I told her, "And there are infinite options."

"Everyone I know who has tried to buy a used car on Craigslist has gone absolutely crazy," she said. That response was like getting bird poop in your eye and then being told it's happened to other people — it's nice to know you're not alone, but it really doesn't help the situation.

It was a good reminder of how stressful buying a used car is, though, especially when you're buying from an individual though a classified site like Craigslist like I was. I spent a LOT of hours researching vehicles, goings for test drives, and heading to check out cars only to be told they just sold to someone else. I learned a lot in the process, and I did finally find a car — one that was in good condition and in my price range. No matter what you do, buying a used car is going to be stressful — nobody wants to throw thousands of dollars away on a lemon. I can't tell you that you won't be stressed out, but here's some information I wish I had known up front that will hopefully make your car-buying process easier. (See also: 5 Myths About Car Insurance)

A Few Things to Consider First

First of all, the suggestions in this article pertain primarily to buying a car from an individual or a dealer that does not provide certified pre-owned vehicles. My budget was $4,000 — low for a car, I know, but I wanted to avoid car payments at all costs. This meant that certified pre-owned vehicles were out of my price range.

Two of the primary things to check on when you're buying a used car have to do with the title, and you should find out about these before you even look at the car. First of all, make sure that the seller has the physical title, and that the title is in his or her name. If you hand over payment for a car, and that car turns out to have a lien on it (i.e., money is still owed to the bank for the car loan), you might not end up owning the car you just bought.

Also check whether or not the title is a salvage title. A salvage title means that at some point, an insurance company deemed the car in question beyond salvageable. While sometimes salvage titles pertain to theft and the car itself is fine, it often means that the car was in an accident. Even if the car was rebuilt, the car's structure is usually left weaker after this type of an event and is generally less safe.

Narrow Your Options

One of the biggest problems I had with buying my car was getting overwhelmed by choice. My main criteria was that I wanted the car to "run well for at least two years." But that left a huge number of vehicles for me to choose from. I felt that with my price range, I needed to take what I could get. But with some urging from my boyfriend, I further refined my criteria. I wanted a short car, because I only have street parking, and I wanted it to have under 100,000 miles on it. I also wanted to buy a car from someone who was moving or changing cars for a good reason (such as getting a bigger car for an expanding family), because I figured that'd net vehicles in better condition. While part of me felt like I might be missing out on a great deal by focusing my search like this, it did make things easier.

Make Space in Your Budget

Remember that the cost of the car itself isn't the only cost. There might be an increase in your insurance, DMV fees, or unexpected mechanic costs. Include funds for these costs in your car-buying budget.

Do Your Research

I did a LOT of research into the cars I looked at. Here are the big four sites that I used.

Kelley Blue Book

The Kelley Blue Book is the standard for finding what used cars are worth. Plug in the information on a car you're thinking of buying, and it will tell you how much suggested selling price of the car is. The site will even provide different price levels based on the car's condition.

Edmunds

Edmunds provides car reviews and gives suggestions on whether or not a particular used car is generally a good buy. If it isn't, they'll generally give suggestions on similar cars to look at. They didn't have information on a couple of cars I was interested, but in general, it was a very helpful site.

MSN Autos

The MSN Autos site has what I found to be one of the most valuable resources in my car search — reliability charts that show what problems different makes of cars usually have and the cost to fix them. For example, the 2002 VW Cabrio has moderate engine problems, but the repairs are all relatively inexpensive.

Carfax

Once you have a car you like, enter the vehicle identification number (VIN — it's at the base of the windshield), and Carfax will give you a report on the history of that car. It steered me away from an otherwise great-seeming car that turned out to fail the California emissions test five times in a row, and it showed me that the car I did eventually buy had no serious problems.

Check the Car Out

If you see a car you really like, make an appointment to see it as soon as you can. If it really is a good car at a good price, there is an excellent chance that someone else will buy it before you get there. This happened to me several times.

Get someone to go with you. Not only do you probably need the ride, but a second person can provide lots of help. My friend both helped me inspect cars and provided a voice of reason when I wanted to settle for a not-so-great vehicle just to be done with the whole process.

Check the car out carefully. Hopefully, this is a "duh" comment. There are a lot of great resources online already about what to look for — check out About.com's 10 Questions to Ask When Buying a Used Car From a Private Seller or Consumer Reports test drive checklist. If you have a trusted mechanic, arrange for him or her to look at the car.

If you are buying from a dealer rather than an individual, see what your warranty options are.

Buying the Car

Do your research to get as good of a grasp as you can on your state's car sale laws. We all know the truth to various stereotypes about the user-unfriendliness of the DMV, so this might not be easy. But a good scouring of your state DMV's website should give you the information you need about paperwork, when you need to report to the DMV, and fees.

Make sure to get documentation of everything associated with the sale, and pay with a cashier's check, not cash. If you didn't get the car checked by a mechanic before, bring it by soon to make sure everything is okay.

Above All, Be Patient

Remember what I said at the beginning about feeling like there are infinite options? I wanted so many times to give up in some way — to settle for a vehicle that wasn't really what I wanted, to go out of my price range and get a loan, to break down and whine about the fact that I don't live in a city with good public transportation anymore. But with some patience and research, I purchased a car that was kept in excellent condition and fit all of my criteria.

I'm thrilled about my new used car. I hope you enjoy yours too.

Do you have any other used car buying advice? Share in the comments below!

This article is from Meg Favreau of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Save on Your New Car: Send Mom, Not Dad, to the Dealer

Catherine Lutz and Anne Lutz Fernandez — Fri, 06 Aug 2010 12:00:07 +0000

Some people just shouldn't go car shopping on their own — like Chris, who drove home to his horrified family in the garish chartreuse coupe on which he got "a great deal." Chris should have never walked alone through the auto dealer's doors, not only because he is colorblind — but because he is a man.

In generations past, buying the family car was considered Dad's job, but women now account for just over half of all automotive buys and play a big role when the family chooses a car. And that's a darn good thing for the household budget. Ahead of your next trip to the new car showroom or used car lot, you'll want to know what the automakers and dealers know about gender differences in car buying:

Although on the whole more knowledgeable about cars — how they work, who makes what model, how Road and Track rated a new vehicle — men tend to be less rational about their purchases than are women.
While men in a recent market research survey put "styling" on the top of the list of attributes they found most important in a car, women ranked it 11th. Women placed practical items like "visibility from the driver's seat to both the front and rear" high on their list.
Men are more likely to carry into adulthood the unshakable desire to own their childhood "dream car." Whether or not it is a practical or affordable purchase, they may well go ahead and snap it up. A man can overlook the difficulty of getting the kids in and out of rear car seats when he test-drives the gleaming model whose poster was on his bedroom wall as he grew up.
Unlike women, who approach salespeople with a set of questions, men are more likely to display their knowledge at the dealership rather than test or build on what they think they know.
Women are more focused on cost, using dealer incentives like rebates to reduce the overall amount they will pay while men generally use them to buy a more expensive car.
Men fall out of love with vehicles at mach speed. Research shows that it takes only four months for the average man to grow bored with his car and become susceptible to advertising and sales pitches to buy a new one. Women bask in the pleasure of their new purchases more than three times longer (though still not terribly long).

Knowing all of this, you may decide it's sensible to send Mom, not Dad, to the dealer next time. Of course, these are generalizations. There are men who buy cars pragmatically and women who buy them impulsively. (Unsurprisingly, it is an industry goal to turn women into more emotional purchasers.)

Nevertheless, car shoppers of both genders would benefit from following a dispassionate process that involves these steps:

Ask yourself whether you really need a new car or just want one. Owning your current car a year or two longer could save you thousands.
Make a checklist of realistic, everyday needs before researching models that fit those criteria. Avoid buying for peak cargo, passenger, or terrain needs; instead plan on renting a vehicle for these occasions.
Conduct research online and view vehicles at an auto show before entering the high-pressure setting of the showroom. Try to avoid the pitfall of using research to justify an emotional decision rather than to help make a reasoned one.
Rely on trusted sources for comparative information that don't accept advertising from the car companies, such as Consumer Reports.
Bring your most frugal friend or family member with you to the dealer to help you stick to your needs checklist.
Know how much a car will cost you to own, not just to buy. A car with a higher sticker price can cost you less to own over the first five years based on, among other things, its depreciation rate, repair costs, miles per gallon, and cost to insure. A good site for this data is Edmunds True Cost to Own™.
If you cannot save up before buying, secure financing before going to the dealer. Understand how much you need in total (roughly two times the monthly loan payment) to own your car. Dealers know how easily payment shoppers can be convinced to buy more car once in the showroom.

Guest Post Blurb:

This is a guest post by Catherine Lutz and Anne Lutz Fernandez. Catherine is an anthropologist at Brown University’s Watson Institute, and Anne is a former marketer and banker. They are the authors of Carjacked: The Culture of the Automobile and its Effect on Our Lives (Palgrave Macmillan). Read more by Catherine and Anne:

This article is from Catherine Lutz and Anne Lutz Fernandez of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: