Buying a Used Car

Before you start shopping for a used car, do some homework. It may save you serious money. Consider your driving habits, what the car will be used for, and your budget. Research models, options, costs, repair records, safety tests, and mileage – online and through libraries and bookstores.

Before You Buy a Used Car

Whether you buy a used car from a dealer or an individual:

• Test drive the car under varied road conditions – on hills, highways, and in stop-and-go traffic.
• Ask for the car’s maintenance record from the owner, dealer, or repair shop.
• Determine the value of the vehicle before you negotiate a purchase. Check the National Automobile Dealers Association’s (NADA) Guides (www.nadaguides.com), Edmunds (www.edmunds.com), Kelley Blue Book (www.kbb.com), and Consumer Reports (www.consumerreports.org). Some of these organizations may charge for this information.
• Research the upkeep costs for models you’re interested in, including the frequency of repairs and maintenance costs.
• Examine the car using an inspection checklist. You can find checklists in magazines, books, and on websites that deal with used cars.
• Check whether there are any unrepaired recalls on a vehicle. Start by asking the dealer if the vehicle you’re considering has a recall. You also can check yourself by entering the VIN at www.safercar.gov, or by calling the National Highway Traffic Safety Administration’s (NHTSA) Vehicle Safety Hotline at 1-888-327-4236. If there is a recall, ask the dealer to fix it, or to give you information showing it was fixed. Keep in mind that federal law doesn’t require dealers to fix recalls on used cars, so you might need to get the repair done yourself. But don’t wait – according to NHTSA, all safety recalls pose safety risks and left unrepaired, might lead to accidents.
• Get an independent review of a vehicle’s history. Check a trusted database service that gathers information from the state and local authorities, salvage yards, and insurance companies. For example, the Department of Justice’s National Motor Vehicle Title Information System (NMVTIS) (www.nmvtis.gov) offers information about a vehicle’s title, odometer data, and certain damage history. Expect to pay a small fee for each report. The National Insurance Crime Bureau (NICB (www.nicb.org) maintains a free database that includes flood damage and other information. You can investigate a car’s history by its Vehicle Identification Number (VIN). You also can search online for companies that sell vehicle history reports. If the report isn’t recent or you suspect that is has missing or fabricated information, verify if with the reporting company. The information in the reports may not be complete, so you may want to get a second report from a different reporting company. Some dealer websites have links to free reports.
• Consider hiring a mechanic to inspect the car.

Pay in Full or Finance

You have two choices: pay in full or finance over time. Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest and other costs. Consider how much you can put down, the monthly payment, the financing term (such as 48 months), and the annual percentage rate (APR). Rates usually are higher and financing periods shorter on used cars than on new ones.

Dealers and other finance sources (like finance companies, credit unions, and banks) offer a variety of financing terms. Shop around, compare offers, and negotiate the best deal you can. If you’re a first-time buyer – or if your credit isn’t great – be cautious about special financing offers. They can require a big down payment and a high APR. If you agree to financing that carries a high APR, you may be taking a big risk.

• If you decide to sell the car before the end of the financing period, the amount you get from the sale may be less than the amount you need to pay off the financing agreement.
• If the car is repossessed or declared a total loss because of an accident, you may have to pay a considerable amount to repay the loan even after the proceeds from the sale of the car or the insurance payment have been deducted.

If money is tight, you might consider paying cash for a less expensive car.

If you decide to finance, make sure you understand the financing agreement before you sign any documents.

• What is the exact price you’re paying for the vehicle?
• How much are you financing?
• What is the finance charge (the dollar amount the credit will cost you)?
• What is the APR (a measure of the cost of credit, expressed as a yearly rate)?
• How many payments will you make – and how much is each one?
• What is the total sales price – the sum of the monthly payments plus the down payment?

Happy Shopping. WFCU offers low-rate auto loans. Apply today.