Tips for Used Car Buyers

Figuring out the right price for a used vehicle with an unknown history is never easy.

But with some work, you can find great deals. New cars, on average, lose 15-30% of their value the moment they're driven off the lot, according to auto Website Edmunds.com. At the same time, cars are being made better, with many models happily chugging along well past the 100,000-mile marker. So unless you're the type who simply has to have the very latest model parked in your driveway, you could save yourself a bundle by buying used.

Used cars can be bought through a dealership—as a certified pre-owned car or not—or from an individual. Either way, you should do your homework before you buy. Here's what you need to know.

Certified Pre-Owned Vehicles

Pro:	No lemons. All certified pre-owned vehicles are thoroughly inspected by a factory mechanic and come with generous extended warranties. BMW, for example, includes a 6-year warranty for all of its used vehicles from the day they were first sold.
Con:	You pay more for this extra level of protection. According to figures from Edmunds.com, you could expect to pay an average of $37,423 for a certified 2007 Lexus GS 300. If you bought that same car, uncertified, from a dealership, it would cost an average of $35,799. An individual would charge an average of $33,951.
Advice:	A certified pre-owned car is perfect for consumers who don't know a lot about cars and fear they won't be able to spot a lemon. Be warned, though: Manufacturers' certified programs vary. Some offer considerably longer warranties or more thorough inspections than others. You can find lists of the most comprehensive ones at Edmunds.com or Kelley Blue Book.

To check pricing data in your area, click on Edmunds.com's True Market Value tool or Kelley Blue Book. Only you can decide if the peace of mind is worth the heftier price tag. If the monthly payments stretch your budget too tight, consider buying that same make and model from a private party. While you won't get the factory inspection, you could hire a mechanic for $100 to look for any problems.

Buying From Individuals

Pro:	The cars are cheaper.
Con:	You're buying a high-ticket item from a complete stranger. Once the deal is closed, you'll have little recourse if you got stuck with a lemon. (In most states, lemon laws only apply to cars bought through a dealership.)
Advice:	Buying a vehicle from a private party will take the most legwork, but it will also most likely yield the greatest deals.

One of the easiest ways to narrow your search is to use one of the many auto Websites, such as Autotrader.com and Cars.com, which provide detailed descriptions and pictures of vehicles in local areas.

Learn more about buying a car online.

Once you've found a vehicle you like, find its vehicle identification number (VIN) and run a vehicle history report from CarFax or AutoCheck, which collect accident, theft and repair data from a number of sources, including insurance companies and motor-vehicles departments.

Since not all accidents are reported to insurance companies, it's important to inspect the vehicle yourself, says Jack Nerad, editorial director at Kelley Blue Book. You needn't be a mechanic to spot a problem: Even people who don't know the difference between a spark plug and an air filter can usually tell when something's not right.

According to David Claeys, purchasing manager for CarMax, a national used-car retailer, the most common sign that a vehicle has been in a major accident is clamp marks (which look like holes or gashes) on a vehicle's frame, because this usually indicates that the car has been in a frame machine. Other things to look for: signs of repainting, such as variations in paint color between the inside of the trunk and the outside, and poorly closing doors, hoods or trunks. It's also a good idea to compare the VIN number on the dashboard with the number on the sticker inside the door. This could indicate that someone is trying to pass off a salvaged or stolen car as slightly used.

Even if everything checks out, ask to see the owner's service records and be sure to get the vehicle inspected by a trusted mechanic, says Philip Reed, consumer advice editor with Edmunds.com. If a seller hesitates on either point, walk away. There are plenty of great used cars out there, so there's no reason to take a chance, he says.

Dealership Vehicles

Pro:	Most states have lemon laws that provide consumers with some protection if they buy a seriously problematic car.
Con:	You don't get the comfort that comes along with a certified pre-owned vehicle, and you're still paying more than if you bought it from a private party.
Advice:	Buying a non-certified vehicle from a dealership can be a risky proposition. Not all dealerships are trustworthy, obviously. And no one knows how to hide a problem as well as a professional does, warns CarMax's Claeys. So it's crucial to follow all of the above advice as if you were purchasing the car from a private party. Even if the dealership says its mechanic inspected the vehicle, it's still a good idea to bring in an independent professional to look it over. An up-and-up dealership won't say no, says Claeys.

Among the 3 choices, you'll need the sharpest negotiating skills when buying a non-certified vehicle from a dealership. Often, the dealership will just throw out an astronomically high price to see if it can get it, warns Edmunds.com's Reed. But dealerships are also willing to sell at bargain prices. So don't get discouraged. Just indicate that you've done your research and checked a pricing guide. “Sometimes just showing a little hesitation can cause the salesman to take another $500 off the price to seal the deal,” says Reed.