Tips for buying used cars from dealers

By October 8, 2015Blog

Used car dealers have a bit of an image problem. I’m not going to get into the stereotypes or horror stories, but let’s just say there are additional considerations when buying used cars from dealers:

  1. Check out the dealer’s reputation. Google is your friend. You can see if complaints have been filed with local consumer protection agencies. And talk with friends or family members who have purchased cars from local dealers in the last year or two.
  2. Assume each car on the dealer’s lot is being marked up at least a few thousand dollars. Yes, you can haggle the price down, but no dealer is going to sell a vehicle at a loss.
  3. Cosmetic improvements may hide serious defects. You can bet the dealer has waxed the car and power-washed the interior. But that doesn’t mean the car is in “excellent” condition. There may be serious mechanical or electrical problems that the dealer hasn’t addressed.
  4. Dealers don’t have to offer money-back guarantees for used cars. If a dealer offers one, that’s great — but get it in writing!
  5. The FTC requires dealers to post a “Buyers Guide” in every used car they sell, including demonstration models. The guide has to include warrantee information (if applicable), as well as various consumer warnings. The Buyers Guide becomes part of the sales contract, and overrides any provisions in the signed contract.
  6. Some states don’t allow “as is” sales from dealers. The list includes Connecticut, Hawaii, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New Mexico, New York, Rhode Island, Vermont, West Virginia, and the District of Columbia. Some other states have requirements that carefully define an “as-is” sale of a used vehicle.

There are many more things to watch out for when it comes to purchasing a used car from a dealer. To learn more, visit the Federal Trade Commission website at ftc.gov.

The main advantage of buying a used car is saving money. Here’s how Edmunds.com breaks down average used car prices for different types of cars sold by franchise dealers:

Edmunds used car prices chart

Keep in mind that these are average prices sold by franchise dealers. These cars tend to be newer and come with a higher markup than those vehicles sold by individuals, or those sold at auction.

And remember: At the end of the day, a shiny lemon is still a lemon.

This post was excerpted from Personal Finance For Beginners In 30 Minutes, Volume 1:
How to cut expenses, reduce debt, and better align spending & priorities
.