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. Choosing a used car is a great investment that allows consumers to purchase a reliable vehicle that fits their needs while still saving money, but the potential risks involved make it all the more important to do your homework first.
Michelle Corey, Better Business Bureau (BBB) St. Louis president and CEO, said consumers should make well-researched and informed decisions before purchasing a used car. “A used car might test-drive like a dream, only to be a clunker a few weeks later,” Corey said. “It’s important to know the vehicle’s history and your rights under a warranty.”
Nationally, BBB has received nearly 42,000 complaints regarding used car dealers in the past three years. Many of these complaints follow a simple pattern: a consumer buys a used car, the car soon after malfunctions or fails to pass an inspection, and the consumer wants redress. Locally, more than 3,400 complaints were made against used car dealers in the last three years.
Beyond the usual bait-and-switch routines, upsells and the sale of cars in sub-standard condition, BBB recently has received reports from consumers buying used cars online from bogus car dealers and receiving nothing in return for their purchases.
When shopping for a used car, BBB recommends the following tips to avoid driving off the car lot in a lemon:
- Do the research. There are many online resources to check the average retail prices of various makes and models of used cars depending on the year and how many miles are on the car. These prices will give you an idea of what the used car should sell for when looking at different locations.
- 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 for which you can be approved. Visit your bank or credit union to get pre-approved for a loan, so you can compare rates offered by the dealer. Allow room in your budget for repairs, which will help give you realistic expectations of what you can truly afford. Set a price limit. When calculating the cost, be sure to include the price of the tax, title, registration, and insurance. Together these costs are estimated to be 10% of the purchase price.
- 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. Many 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.
- 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.
- Look for and read the Federal Trade Commission (FTC) Buyer’s Guide. The FTC requires that dealers display a Buyers Guide on the window of every used car they have for sale and give it to buyers after the sale. It shows if the vehicle is being sold "as is" or with a warranty, the basic terms of the warranty, the systems covered and the duration of coverage. “As Is” means there is no warranty and frees the dealer from any responsibility for the vehicle’s mechanical condition. If a warranty is available, the guide says what percentage of the repair costs a dealer will pay and whether a third party contract or an unexpired manufacturer’s warranty applies. It also notes if a service contract is available, which costs extra, unlike the warranty. The guide informs consumers about the major mechanical and electrical systems in the vehicle, including some of the big problems you should watch for. If the dealer does not display the FTC Buyers Guide, you might want to shop elsewhere and report the dealer to the FTC.
Consumers may obtain BBB Business Profiles or post Customer Reviews by going to bbb.org. Assistance also is available by calling 888-996-3887.
BBB is a nonprofit, business-supported organization that sets and upholds high standards for fair and honest business behavior. BBB services to consumers are free of charge. BBB provides objective advice, BBB Business Profiles on more than 5.3 million companies, 11,000 charity reviews, dispute resolution services, alerts and educational information on topics affecting marketplace trust. Visit bbb.org for more information.