10 Steps to Buying a Used Car

Step 1: Starting out.

If you've decided to buy a used car, you've already made a smart decision. You can get a car that's almost as good as a brand-new one, without suffering the depreciation that wallops new car buyers as soon as they drive the car off the lot. Used cars — even those that are only one year old — are 20 to 30 percent cheaper than new cars. But there are other good reasons to buy a used car: Buying a used car means you can afford a model with more luxury/performance. You'll save money on insurance. The glut of cars coming off lease makes finding a near-new vehicle, or "cream puff," easy. Bigger bargains are possible for the smart used car shopper. Furthermore, the classic reasons to avoid used cars — lack of reliability and the expense of repairs — are less of an issue. Consider these related thoughts: Used cars are more reliable today than ever before. Some used cars are still under the factory warranty. Most new carmakers now sell certified used cars, which include warranties. The history of a used car can easily be traced using the VIN number. Financing rates for used cars have dropped in recent years. If you buy from a private party, the negotiation process is less stressful. True, you can't be the first one on the block with the trendiest vehicle. But your consolation will come with the knowledge that you got a great deal and made a smart financial decision. So read on, as we guide you along the road to used car happiness.

Step 2: Locating the right used car.

At the beginning of the car-buying process, many people already have in mind the car they want. But it's a good idea to stop right now and ask yourself: Will this car fit into my monthly budget? We'll explain how to determine what car you can afford in the next step. For now, make sure your choice isn't obviously exceeding your budget. Does it meet my current driving needs? It's possible that you need to expand your horizons when considering what to buy. You might want to think of other vehicles in the same class. For example, if you are considering a Toyota Camry you should also look at the Honda Accord, Nissan Altima, or Mitsubishi Galant. These cars were built for the same market, but they often have different features at lower prices.

Step 3: Used car bargains.
The cost of a used car is based on its condition, mileage, reliability, performance and popularity. Of course, you want a car that is reliable and performs well. But do you want the same used car everyone else wants? If so, you will pay a premium for it. In some cases, the only difference is the nameplate.
How much difference in price separates good-but-popular cars from the good-but-overlooked counterparts? Two Edmunds.com editors recently shopped in the family sedan class. They found that two-year-old Camrys and Accords were about $3,000 more than comparable 626s and Galants.

Step 4: Research your prospective used car.
You will find all the information you need to make an informed decision about what to buy on the Edmunds.com used car pages. The major topics are accessed by clicking the links to the left of the screen that list such information as: prices, standard features, specs and safety, warranties, consumer discussions, photos and video and resale values. A helpful feature is "Car Ratings" which includes a bar graph representing consumer satisfaction with this vehicle. You can also read reviews of the car by current owners.

Another essential part of the used car pages is "Price With Options." Edmunds.com has developed a True Market Value (TMV®) pricing system to act as a guideline when car shopping. By clicking a bar labeled "Customized Appraisal" you can price a used car more accurately. This figure is based upon thousands of similar sales across the country. We will go into more detail about how to use Edmunds.com's TMV later.

Step 5: How much can you afford?

The smart shopper will consider how to finance the car at the beginning of the shopping process. This will avoid unpleasant surprises later in the game and help you make an unemotional decision that fits your budget.

You will need to estimate three figures that will guide you as you go shopping:

Monthly payment. If you are going to take out a loan, how much can you afford to pay each month?

Down payment. How much cash can you put down to reduce your monthly payments?

Purchase price of the car. Answering the first two questions will help you determine a realistic price range for your used car.

Once you've determined how much you can spend for a down payment, a monthly payment and the purchase price of the car, print out these figures. Later, in the heat of the moment, when you are negotiating for a used car, you might need to check the card to bring yourself back to earth.

Step 6: Set up financing for your used car.
You have three ways to pay for your used car:

Cash. Need we say more? Money talks — you-know-what walks.

Financing through a bank, on-line lender or credit union. We highly recommend this route because it will usually save money and give the consumer the most control over the transaction.

Step 7: Used car markets.

The three most common places to buy a used car are: Private parties New car dealerships Used car lots

Of these sources, private parties usually have the most reasonable prices. It is also a more relaxed transaction to buy a used car from a private party rather than to face a salesman at a dealership. Call us 215-427-3319 for all your needs.

Step 8: Test driving a used car.
Used car shopping will involve inspecting the vehicle to determine its condition. This process is simplified if you buy a certified used car that has passed a thorough inspection and is backed by a manufacturer's warranty. But while buying a certified used car removes a lot of the guesswork about the vehicle's mechanical condition, you pay for this service.

Most new cars are sold with a three-year/36,000-mile warranty. Therefore, if you buy a car that is from one to three years old, with less than 36,000 miles on the odometer, it will still be under the factory warranty. If anything goes wrong with the car you just bought, the problem will be fixed for free. (Warranties vary from one manufacturer to the next. Always read the restrictions of the warranty before buying the car.)

If you are serious about buying a used car but have doubts about its condition, take it to a mechanic you trust. MHautobody is here to help. A private party will probably allow you to do this without much resistance. But at a dealership, it might be more difficult. If it is a certified used car, there is no reason to take it to a mechanic.

Once you get behind the wheel, your first impression will be the way the car feels when you sit in it. Is it a good fit? Does it offer enough headroom? Legroom? Are the gauges and controls conveniently positioned?

Try to arrange your test drive so that you start the engine when it is completely cold. Some cars are harder to start when they are dead cold and, when doing so, will reveal chronic problems. Turn off the radio before you begin driving — you want to hear the engine and concentrate on the driving experience.

Step 9: Negotiating for a used car.
Whether you are buying a used car from a dealer or a private party, let them know you have the cash in hand (or financing arranged) to make a deal on the spot. Preface your offer with a statement like, "I'm ready to make a deal now. I can give you cash (or a cashier's check) now. But we need to talk about the price."

At this point, you need to have a persuasive argument about why the price is too high. So let's talk about pricing. The foundation of successful negotiation is information. This is particularly true when buying a used car. And yet, the condition of used cars means prices will vary widely.
Edmunds.com has removed much of the guesswork in used car pricing by developing True Market Value pricing. After you have gathered information about a car you are considering, look it up on the Edmunds.com used car pages. When you're finished, print out the three TMV prices: Trade-In, Private Party and Dealer Retail.

Step 10: Closing the deal.

If you are at a dealership, you still have to go through the finance and insurance (F&I) process. If you are buying a car from a private party, you have to make sure that payment is made and the title and registration are properly transferred.

In both cases, you also need to make sure you have insurance for the car you just bought before you drive it away. Also, the F&I person will probably try to sell you a number of additional items: an extended warranty, alarms or anti-theft services such as LoJack, prepaid service plans, fabric protection, rust proofing and emergency roadside kits. Some people swear by extended warranties, so this is something you might want to consider (unless your used car is certified or still under the manufacturer's warranty). However, the other items typically sold in the F&I room are expensive and hold little value for you.

The F&I person may seem like a financial advisor, but he or she is really an experienced salesperson. Some F&I people can become very persistent trying to sell these items. Be firm. Say, "I'm not interested in any aftermarket extras, thank you. I just want the car."

Once the contract is ready, review it thoroughly. In most states, it will contain the cost of the vehicle, a documentation fee, a smog fee, a small charge for a smog certificate, sales tax and license fees (also known as DMV fees). Make sure you understand the charges and question the appearance of any significant, sudden additions to the contract.

Finally, you should inspect the car before you take possession of it. If any repair work is required, and has been promised by the dealer, get it in writing in a "Due Bill." Make sure the temporary registration has been put in the proper place and — you're finally on your way.

When you buy a car from a private party, you will probably be asked to pay with a cashier's check or in cash. But before money changes hands, request the title (sometimes called the "pink slip") and have it signed over to you. Rules governing vehicle registration and licensing vary from state to state. Check with the DMV in your state (much of this information is now available on DMV Web sites).

Once all of the paperwork is complete, it is finally time to relax and begin enjoying your new purchase: a good used car from MHautobody!!!