For many consumers, buying a car is second only to buying a home when it comes to big-ticket purchases, and the process can be just as daunting. Used cars can be an affordable alternative to buying new, but the potential risks involved in buying a used car make it all the more important to do your homework first. With the help of local independent auto dealers, Better Business Bureau of Minnesota and North Dakota offers the following tips for shoppers considering a used car purchase:
Research the reputation of the dealer:
- Contact the Better Business Bureau or visit bbb.org for a dealer’s BBB Business Review.
- Ask friends and family members to recommend dealers they’ve purchased from, and visit online review websites for perspective from other consumers.
Evaluate your finances, and budget carefully.
- Check your credit score with one of the credit reporting agencies before shopping. Your credit score may impact the type of financing you qualify for, the terms of a loan, or even which vehicles you can be approved for.
- Visit your bank or credit union to get pre-approved for a loan, so you can compare rates offered by the dealer.
- Use online resources such as Edmunds, Kelley Blue Book and NADA Guides to research how much you can expect to pay for a given used car in your area. Allow room in your budget for repairs, which will help give you realistic expectations of what you can truly afford.
Understand the different types of financing available.
- Dealers who offer financing through banks, credit unions and finance companies may send your application to multiple lenders to secure a loan. Ask questions about how your information is used, and how credit inquiries may impact your credit score.
- ‘Buy Here, Pay Here’ dealers act as the lender themselves, and may be willing to approve financing when other lenders will not. However, interest rates for such ‘in-house’ loans tend to be higher.
Don’t be rushed.
- When you’re ready to visit the dealer and see a vehicle, allow plenty of time to ask questions, inspect the vehicle, and take a test drive.
- Cosmetic and other potential issues with a vehicle are easier to detect in the light of day than they are later in the evening.
- This is an important purchase, so give the process your undivided attention -- both while evaluating a vehicle, and later when signing paperwork.
Ask specific questions about a vehicle’s history and condition.
- If a salesperson indicates that a vehicle has been “inspected” or “checked over”, ask for specific details. Was it a mechanical inspection, or just visual? Has the vehicle been put up on a lift?
- Ask for any records on the vehicle, including those related to inspection, prior maintenance, and any repairs or reconditioning done by the dealer.
- Ask for a vehicle history report, such as CarFax or AutoCheck. Most reputable dealers are willing to provide this, and it can reveal past issues such as accidents. Remember that a vehicle history is only as complete as information reported, and is not a guarantee of the vehicle’s condition.
Consider having a qualified mechanic inspect the vehicle.
- Reputable dealers encourage customers to have an inspection done by a qualified mechanic prior to purchase, and will generally allow a vehicle to be taken off-site for a short time with some basic information such as a customer’s driver’s license and proof of insurance.
- Pre-purchase inspections can cost upwards of $100, but may help identify potential issues and save on costly repairs further down the road.
- Make inspection arrangements in advance whenever possible, as your mechanic may not be available for an ‘on-demand’ inspection.
If evaluating a used vehicle yourself, inspect and test drive thoroughly.
- There’s more to inspecting a used vehicle than just “kicking the tires”, and there are many good inspection checklists available online to help in this process.
- When test driving a used vehicle, note how it handles, accelerates and brakes at varying speeds -- including on the highway. In a parking lot, test how easily the car starts and shifts into gear, and how easy it is to park. Turn the radio off to hear unusual noises that may indicate a problem.
Read the Buyer’s Guide sticker, and note whether the vehicle comes with a warranty.
- Under Minnesota’s Used Car Warranty Law, dealers are required to provide basic warranty coverage for most vehicles sold with less than 75,000 miles. Visit the Minnesota Attorney General’s website at www.ag.state.mn.us for specific details.
- Vehicles sold in Minnesota that have more than 75,000 miles, are sold for under $3,000, or are eight years of age or older are considered “as is”. This means the dealer has no legal obligation to fix any issues that may arise after purchase.
- Under North Dakota law, all used vehicles are sold “as is”, unless still covered by their original manufacturer’s warranty. For more information, consumers can visit the North Dakota Attorney General’s website at ag.nd.gov.
- Remember, there is no mandatory three-day “cooling off period” in Minnesota or North Dakota. Once you purchase a vehicle it’s yours, unless the dealer offers a return policy on their own.
Be clear on the terms of any deposit you put down.
- Not all dealers will agree to accept a deposit to “hold” a vehicle.
- If you put down a deposit on a vehicle, clarify with the dealer whether the deposit is refundable if you opt not to purchase, and get everything in writing.
Bring required documents to make paperwork easier, and understand what you’re signing.
- If you are unsure about what information and documents might be needed to complete the finance process (e.g., proof of residence, paystubs), call the dealer and ask for clarification.
- If you are trading in a vehicle, bring the title and lien release information with you.
- Make sure you read and fully understand the terms of any paperwork you sign. Ask questions about anything that doesn’t make sense, or differs from what you’ve discussed with the salesperson.
Get any additional commitments made by the dealer in writing.
- If the dealer has agreed to perform or pay for additional repairs as a condition of purchase, be sure to have these commitments written into the contract. This is sometimes referred to as a “We Owe” agreement.
- Get the timeframe for completion of repairs in writing, and make sure you understand who to contact to have work completed. Once the dealer has explained these items, it is the buyer’s responsibility to make sure work is scheduled in a timely fashion.
Ask about the title transfer process, and who to contact with issues.
- In Minnesota, the dealer will initiate the title transfer process, and is expected to submit paperwork to the state within 10 days. Ask the dealer when you should expect your title, and who to contact if you haven’t received it within that timeframe.
- Title processing can often be delayed at the state level. Minnesota buyers can check on the status of a title through a ‘Title Lookup’ feature on the Minnesota Department of Public Safety’s website, at www.dps.mn.gov . If the state has not received title transfer paperwork, contact the dealer for assistance.
- In North Dakota, the dealer will also initiate the title transfer process. North Dakota consumers can check on the status of a title transfer by contacting the North Dakota Department of Transportation Motor Vehicle Division.
Know who to contact if you experience issues with the vehicle after purchase.
- Although a reputable dealer will not knowingly sell a bad vehicle, issues can arise with any used car.
- If a used vehicle purchase is covered under Minnesota’s Used Car Warranty Law, contact the dealer for guidance on covered components and how to have repair work completed.
- If the vehicle is covered under the terms of a ‘third-party’ warranty (sometimes purchased through the dealer at the time of sale), consult your warranty paperwork for guidance on arranging repairs.
- If the vehicle was purchased “as is”, remember the dealer is under no legal obligation to assist with repairs. You can contact the dealer directly to discuss the problem -- many dealers are willing to work with their customers toward a resolution, even when not required to do so by law. But if you purchase “as is”, expect to pay for any repairs necessary after purchase and budget accordingly.
If having repair work done through the dealer, understand the repair process and plan ahead.
- Repairs on a used vehicle can take longer than anticipated when parts need to be ordered, or when repairs done under warranty require approval. Towing and loaner vehicles may not be covered, so plan accordingly.
- Remember that vehicle issues may not always be resolved in a single service visit, and repair efforts may reveal other underlying problems. Make sure all work is thoroughly documented on an invoice, and that you understand all charges.
- For additional information about your rights when having auto repairs done, Minnesota consumers can read about the ‘Truth In Repairs Act’ on the Attorney General’s website, ag.state.mn.us.
These tips were created by the Better Business Bureau of Minnesota and North Dakota, with input from local independent auto dealers, to assist consumers in making educated buying decisions.