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Central Virginia

Educational Consumer Tips

Buying a Used Car

Author: Barbara Homiller
Published:
Category: Auto

Before you start shopping for a car, you'll need to do some homework. Spending time now may save you serious money later.

Payment Options

You have two choices: pay in full or finance over time. If you finance, the total cost of the car increases. That's because you're also paying for the cost of credit, which includes interest and other loan costs. You'll also have to consider how much you can put down, your monthly payment, the length of the loan and the annual percentage rate (APR). Keep in mind that APRs usually are higher and loan periods generally are shorter on used cars than on new ones. Dealers and lenders offer a variety of loan terms and payment schedules. Shop around and negotiate the best deal you can. Be cautious about advertisements offering financing to first-time buyers or people with bad credit. These offers often require a big down payment and a high APR. If you agree to financing that requires a high APR, you may be taking a big risk. If you decide to sell the car before the loan expires, the amount you receive from the sale may be far less than the amount you need to pay off the loan. If the car is repossessed or declared a total loss because of an accident, you may be obligated to pay a large amount to repay the loan even after the proceeds from the sale of the car or the insurance payment have been deducted. If your budget is tight, you may want to consider paying cash for a less expensive car than you first had in mind. If you decide to finance, make sure you understand the exact price you are paying for the car, the amount you are financing, the finance charge, the APR, the number and amount of payments and the total sale price.

Dealer Sales

Dealers are not required by law to give used car buyers a three-day right to cancel. The right to return the car in a few days for a refund exists only if the dealer grants this privilege to buyers. Before you buy from a dealer, ask about the dealer's return policy, get it in writing and read it carefully. The Federal Trade Commission's Used Car Rule requires dealers to post a Buyers Guide in every car they offer for sale. The Buyers Guide must tell you whether the car is being sold "as is" or with a warranty and what percentage of the repair costs a dealer will pay under the warranty. When you buy a used car from a dealer, get the original Buyers Guide that was posted in the vehicle or a copy. The Buyers Guide becomes part of the sales contract.

As Is - No Warranty

When the dealer offers a vehicle "as is," the box next to the "As Is - No Warranty" disclosure on the Buyers Guide must be checked. If the box is checked but the dealer promises to repair the vehicle or cancel the sale if you are not satisfied, make sure the promise is written on the Buyers Guide. Otherwise you may have a hard time getting the dealer to make good on his word. Generally the use of the words "as is" or "with all faults" in a written notice to buyers eliminates implied warranties.

Warranties

Dealers who offer a written warranty must complete the warranty section of the Buyers Guide. Dealers may offer a full or limited warranty on all or some of the vehicle's systems or components. Most used car warranties are limited and their coverage varies. A full or limited warranty doesn't have to cover the entire vehicle. The dealer may specify that only certain systems are covered. The dealer must check the appropriate box on the Buyers Guide to indicate whether the warranty is full or limited. You have a right to see a copy of the dealer's warranty before you buy. Review it carefully to determine what is covered.

Service Contracts

Like a warranty, a service contract provides repair and/or maintenance for a specific period. But warranties are included in the price of a product, while service contracts cost extra and are sold separately. The dealer must check the appropriate box on the Buyers Guide if a service contract is offered.

Spoken Promises

The Buyers Guide cautions you not to rely on spoken promises. They are difficult to enforce because there may not be any way for a court to determine with any confidence what was said. Get all promises written into the Guide.

Pre-Purchase Independent Inspection

It's best to have any used cars inspected by an independent mechanic before you buy. For a small investment you'll get a general indication of the mechanical condition of the vehicle. An inspection is a good idea even if the car has been "certified" and inspected by the dealer and is being sold with a warranty or service contract. A mechanical inspection is different from a safety inspection. Safety inspections usually focus on conditions that make a car unsafe to drive. They are not designed to determine the overall reliability or mechanical condition of a vehicle. If the dealer won't let you take the car off the lot, perhaps because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If that's not an option, ask the dealer to have the car inspected at a facility you designate. You will have to pay the inspection fee. Once the vehicle has been inspected, ask the mechanic for a written report with a cost estimate for all necessary repairs. Be sure the report includes the vehicle's make, model and VIN. Make sure you understand every item.

Dealer Identification and Consumer Complaint Information

The back of the Buyers Guide lists the name and address of the dealership. It also gives the name and telephone number of the person you should contact at the dealership if you have problems or complaints after the sale.

Vehicle Inspections

In the state of Virginia, a motor vehicle dealer is required to have an automobile inspected by an official inspection station before it is sold. It must be inspected or reinspected even if a valid inspection sticker is on the vehicle when it comes into the dealer's possession.

If a vehicle does not pass inspection, the dealer must either bring the vehicle into compliance or give you a written statement, before you buy, saying that the vehicle did not pass inspection. If you want to know the particular reasons for the vehicle's failure to pass inspection, the dealer must give you this information upon request.

Vehicles sold through auction are not required to be inspected.

About the Author: Barbara Homiller is Senior Vice President for BBB serving Central Virginia.