Evaluating a Used Car

In this topic, you'll learn:

• Buying a used car can cut your purchase cost, but there are risks to consider.
• How to research a car's unique vehicle identification number (VIN).
• How to do an informal inspection and when to seek the advice of a professional mechanic.

Purchasing a used car is a proven way to save money versus purchasing the same car brand new. A one-year old car could cost 20% or more less than a new one, yet still be covered under the manufacturer’s warranty. 

But even a used car can be a major financial decision, and buying a used car is not without risk. Evidence of a serious accident or a lack of maintenance is not always apparent from a visual inspection or test drive. You'll need to do a little extra work to make sure your investment is a wise one.

Before you begin evaluating a particular car, consider researching a variety of cars in an unbiased publication such as Consumer Reports. Simply avoiding the least reliable cars is a great way to minimize the expense associated with car ownership.

Regardless of the car that interests you, there are four steps worth considering when evaluating any used car.

Step 1: Research the Car's Vehicle History 
When buying a used car, it’s also a good idea to order a vehicle records check. These reports will tell you if the car has ever been in an accident or flood, they’ll show you the ownership history, and they may even show you how well a car was maintained by the previous owners.

Many dealers provide record checks free of charge, but if not, companies such as CarFax and AutoCheck offer reports for a nominal fee. You’ll need the exact Vehicle Identification Number of the car to run a report. There are also free databases you can search online that will offer some of the same information. Examples include the National Insurance Crime Bureau’s VINCheck service at https://www.nicb.org/vincheck and the Department of Justice's National Motor Vehicle Title Information System (NMVTIS) at https://www.vehiclehistory.gov.

When researching a potential car purchase, be sure to use multiple databases. Different states have different reporting requirements, and data reported to one database may not necessarily show up in another. When you get the report, a major red flag would be finding that the car had been in an accident, considered "totaled" for insurance purposes, or if it had ever been in a flood. Not all accidents are major, but cars that have undergone extensive repair may have serious safety or other mechanical problems (even if they look great). 

If the car has been in an accident, you may want to look elsewhere. Many experts also consider cars with many owners to be less desirable than a one-owner car.

Step 2: Informal Inspection
Cars may be described as "perfect" in an ad and they may look good in small pictures on the internet, but you’ll never know the true condition of a car unless you see it in person. A personal inspection allows you to inspect the car for damage, make sure everything works, and drive it around town and on the highway.

We suggest inspecting your car during daylight since artificial light can hide damage. Some scratches and dings are perfectly normal and acceptable, but before making the decision to hire a professional to evaluate the car (Step 4 below), here are points to consider:

• Do the colors all match? Do you see any paint on window or door trim that may indicate that the car has been repainted?

• Do you see any sign of rust? If a car is rusting, you’ll often find rust at the bottom of the doors and in the body panels over the tires. Rust may also appear as bubbles on the surface of the paint if it has not yet broken through.

• Is there ample tire tread? Measure tire depth with an upside down penny. If the top of the Lincoln Memorial is covered by the tread, the tire is good. If not, meaning tread depth is less than 2mm or 3mm, it will need replacing soon.

• Is the tire wear even across the width of the tread and between front and rear tires? Is the same brand and model of tire on all the wheels?

Even tire wear is normal, but any of the other points above could be a sign of a serious problem.

Step 3: Test Drive
If the car has passed your informal visual review, it's time for a test drive. It’s important to complete a thorough test drive under a variety of conditions - stop and go driving, around a neighborhood, and at highway speed. The vehicle should start easily and shouldn't shake, make excessive noise, or smoke. During the drive, note anything irregular such as vibrations or noises (leave the radio off). Does the car pull to one side or vibrate when braking? Does it accelerate evenly and brake quickly? Are gear shifts smooth and predictable?

Any problems you notice on the test drive could indicate serious problems. Problems with the transmission are especially difficult to fix and can cost thousands of dollars to repair. In fact, particularly with older cars, some people try to sell them in order to avoid such an expensive repair. Be skeptical of any car salesperson telling you that unusual driving behavior is "normal" for the car you are considering.

Step 4: Professional Inspection
If the car has passed your information inspection and road test, you may want to get a professional vehicle inspection. An inspection may be a good idea even if the car has been "certified" and inspected by the dealer and is being sold with a warranty or service contract. Not only should an inspection warn you about any serious problems, any minor problems can be used as points of negotiation should you choose to make an offer on the car.

Most repair shops offer pre-purchase inspections. To find a dependable service in your area, you can consider asking friends for recommendations or research local repair shops online. There are no standard operating procedures for pre-purchase inspections. Ask what the inspection includes, how long it takes, and how much it costs.

If the dealer won't let you take the car off the lot, perhaps because of insurance restrictions, you may be able to find a mobile inspection service that will go to the dealer. If that's not an option, ask the dealer to have the car inspected at a facility you designate. You will have to pay an inspection fee.

Once the vehicle has been inspected, ask the mechanic for a written report including a cost estimate for all necessary repairs. If you decide to make a purchase offer after considering the inspection's results, you can use the estimated repair costs to negotiate the price of the vehicle.