Warnings about buying used cars

April 7, 2008 9:33:52 AM PDT
Americans buy more used cars each year than they do new ones and that's more true than ever in this tricky economy. But when you buy a used car, very often you're the one who feels used. I hear the sob stories about crummy used cars day in and day out. Problem is, most people make no effort to check out a used car before they seal the deal. Guess what, folks: You cannot return a used car. Let me say that again: You cannot return a used car.

There are federal laws that guarantee refunds for certain products sold in certain places but cars are not one of them. It's an incredibly expensive piece of machinery and once you sign on the dotted line, it's yours.

I recently heard from a woman who bought a sleek Toyota Celica. Of course, she didn't find out until three months later that the car had been in a wreck so bad that the front end was in the front seat. If Sheri had the car checked out in the first place, she would have learned that there were still price tags on her rebuilt engine. Her hood was hopelessly crooked. The purchase hurt her pocketbook and could have hurt her. The car was too dangerous to drive.

So where should you shop for a used car?

New car dealers have advantages because they get so many trade-in vehicles. Most new car dealers have their own shops so they can tune up the trade-in and offer a warranty. Typically, dealers sell the cleanest trade-ins themselves and dump the dirtier ones at auctions. But these days, used cars are in such high demand that new car dealers may supplement their supply by buying at an auction.

By law, a dealer must post a "buyer's guide" on each used car that tells you whether the car is being sold "as is" or with a warranty. The buyer's guide becomes a part of your sales contract, so hang onto it. If the used car was serviced at the dealership, you may be able to get copies of the service records. If the dealer is offering a basic warranty on the car, you may be able to negotiate to get more things covered.

Used car dealers get most of their cars at the wholesale auctions, which are not open to the general public. Keep in mind that even reputable used car dealers may get mostly the leftovers that new car dealers didn't want. Beware of used car dealerships that are brand new, change names often or move around a lot. Used car dealers must also post the "buyer's guide" that tells you whether a car comes with a warranty. If the guide is missing, it's illegal.

Some used car dealerships call themselves "auctions" to generate excitement and make people think they're getting a deal. These make-believe auctions don't allow test-drives. One customer called me to complain that she bought a car at an "auction" and later learned the car couldn't drive in reverse. The auctioneer had driven the car forward when it came up for a bid and the customer had driven it forward -- right off the lot.

Used car superstores, like Carmax, are a handy place to test-drive all different kinds of cars. If you're a master bargainer, you can probably get a better price somewhere else. But if you're allergic to haggling, this could be a good choice for you. Just remember, even though the salespeople are low key and the showroom is sleek, a used car superstore still sells used cars. You need to scrutinize the car, same as always. One exception: Some used car superstores have actually begun allowing returns. There's a time limit of three to seven days, but it's progress. Why shouldn't cars be sold just like other products?

You can get a good deal buying from a private owner, because there's no dealer mark up. To protect yourself, insist on seeing copies of service records and records of the original purchase. (That will help you avoid illegal, unlicensed car dealers who pose as individual owners and unload defective cars on unsuspecting purchasers.) Scrutinize the car carefully, because it's not like dealing with a business that has a reputation to uphold. Private owner sales are assumed to be "as is" unless you draw up a written contract with the seller.

These days, computer databases are a godsend for used car buyers. Carfax.com is probably the best known. You just provide the vehicle identification number, or VIN, of the car you're interested in. Within minutes you can find out whether that car is a problem -- or a peach. You'll get a vehicle history report, which can reveal salvage cars, odometer fraud and flood titles. You can even find out whether the car was once a taxi or rental car. There is one weakness: These databases rely on government records. If the car was in a fender bender that wasn't big enough to warrant a police report, there will be no record of the accident. That's where a physical inspection becomes important.

You can do a rudimentary inspection yourself to get a feel for whether a car has ever been in an accident big enough to require body work. Scrutinize the paint in bright sunshine. Today's paints are extremely difficult to match, so you may see subtle color contrasts. Also look for paint lines. Shoddy shops will leave paint lines underneath the hood where they've taped. Look at the underside of door handles and you may see more paint lines. Sometimes you can detect overspray on a car's weather stripping too. If there is a tiny crack in the paint around the bolts that hold your doors on, that may mean those doors were removed for body work.

Open the hood and look for the factory stickers up underneath. If the hood has been replaced, the stickers will be missing or handwritten. Make sure the gaps along the sides of the hood are the same width from side to side and from top to bottom. You're looking for symmetry. Test to see whether all the doors open and close smoothly. Accidents can also damage electrical systems. Try out every single button, bell and whistle to make sure it's working. When I got out of college, I bought a used car without testing the stereo. It didn't work, and as a 20-something, my music seemed all important to me at the time.

If the car passes your self-inspection, have a trusted mechanic inspect it for you. This is an incredibly important step and one too many people skip. If the seller won't let you take the car to a mechanic, walk away from the deal. If you're looking for convenience, there are mobile mechanics who can bring all their diagnostic tools to you instead. If you don't have your mechanic check for flaws before you buy the car, don't be upset when he starts pointing out those flaws the first time you take the car in for an oil change.

Do Your Homework

Check the reputation of every new car dealer, used car dealer, "auction" or used car superstore before you buy a car there. In some states, the Department of Motor Vehicles keeps a file on dealers. In other states, those records are held by the Motor Vehicle Dealer Board. You should be able to learn the number and nature of complaints and how those complaints were handled. Also check with your local Better Business Bureau and your county and state consumer protection offices.

To get a feel for a fair price, check online resources like Edmunds.com and Kelly Blue Book, kbb.com.

Once you've spotted a car you like, go to Carfax.com or another database and pay for a vehicle history report.

Perform a visual inspection of the car yourself. If you don't feel confident doing this, you could take the car to an auto body shop and get an inspection.

Pay a mechanic to check out the car's innards and make sure everything is running smoothly. If not, you can walk away from the car or use that information to bargain for a better deal.

If you want the dealer to make repairs as part of the deal, get any and all promises in writing. Oral contracts are nearly impossible to enforce. Do not sign the contract or pay for the car until the repairs have been made.

Remember that dealerships have no obligation to take used cars back, unless they offer refunds, in writing, as part of their contract.

Where to Complain

If you feel a car dealer has defrauded you, file a formal complaint with the DMV or Motor Vehicle Dealer Board and it will investigate. Also complain to the Better Business Bureau and your county and state consumer protection offices to leave a paper trail for other consumers.