While these regulations are definitely needed, the fact is criminals will always find a way to bypass regulations. Rather than relying upon the government to protect your next auto investment, here’s what you can do to reduce the chances that you end up with a car with a “washed” title:

1. Don’t buy a car from a private individual if their name isn’t on the title of the car they are selling. When it’s time to sell a car with a washed title, a lot of con artists will say that they’re “selling this car for my friend or relative, that’s why my name isn’t on the title.” If this story is true, they should be able to supply their friend or relative when it’s time to complete the transaction (as recommended in our 7 tips for buying a car from a private party post). If not, you should be suspicious.

2. Inspect the car carefully. While most salvage and flood damage vehicles are easy to spot - you can use your nose to smell must and mold from flood damage, and you can look for signs of body repair to spot a major salvage repair - some salvaged vehicles are impossible to spot without a full mechanical inspection. This is just one more good reason to pay your local mechanic to inspect any used car you’re going to buy.

3. Get a vehicle history report. Carfax and Autocheck both offer vehicle history report services, and for a relatively small amount of money you can get a guarantee that the car you’re looking at doesn’t have a washed title.

4. Use your head - if it’s too good to be true, walk away. One of my biggest pet peeves is with consumers that don’t understand one simple fact: If it seems too good to be true, it IS too good to be true. If you find a used car selling for half as much as all the similar used cars you find, ask yourself “What’s wrong with this car?” Nine times out of ten the people who get taken advantage of didn’t bother to stop and consider why the car they bought was “such a good deal.”

If you follow these four tips your chances of buying a salvaged or flood-damaged car drop to about zero.

Secondly, auctions require you to buy a car pretty quickly. Even as a used car manager tasked with buying dozens of vehicles a week, it was a hectic process. If you’re not very careful and attentive, you can make a mistake. I’ve failed to notice damage and bid too much, and I’ve even had auctioneers “run me up” with phantom bids, etc. Auctioneers are clever and they’re paid based on how many cars they auction off. They WILL try to trick you.

Finally, “public” auctions are usually filled with cars that licensed dealers had no interest in. Dealers like to buy cars they think they can sell for a profit - everything else they ignore. Cars that are ignored by dealers are usually taken to a “public auto auction” where they’re sold to less knowledgeable consumers. (This is only true of most public auto auctions, but true government auto auctions are made up of government fleet vehicles that can be bid on by anyone). If you decide to buy a car at auction, here are some tips:

1) Decide what kind of car you want before you go. Before you start buying cars at auction, you should know what you’re at the auction to buy. A lot of big mistakes are made when you buy a car you know nothing about, so choose a specific make and model (i.e. a 2002-2006 Silverado 4×4), and then only buy that model. Make sure you know what to look for, what to check for, etc. Also make sure you know what to pay. Check edmunds.com, kbb.com, and nadaguides.com for price info. Don’t bid on a car unless you know everything about it - that’s how you make a mistake.

2) Don’t feel like you need to buy when you go to the auction. One of the biggest mistakes first time auction attendees make is feeling pressure to buy. My advice is to go to a few auctions and just watch - don’t bring any money with you. Just watch and learn. You’ll be amazed at how much you can learn watching a few auctions.

3) Leave your ego at home. If you find a car you like and you start bidding, you might have a little competition. Nice cars always have a few bidders, and someone might decide they want the car more than you. If a bidding war erupts, don’t let your ego get the best of you. Don’t spend more than you should just to beat another bidder. Besides, that ‘other bidder’ might be a shill - someone who works for the auction whose job it is to artificially raise prices. It’s illegal, but it happens all the time.

4) Look in your local new car dealer’s “back lot.” Buying at an auction is hit or miss - you need to be very careful and a little lucky to find a good car. But buying an inexpensive car out of your local dealer’s back lot is easier and safer. Most new car dealers will sell you a car out of their back lot so long as you agree to buy “as-is” - they’ll even let you take it to a mechanic before you buy.

I’m not a big fan of buying at an auction - you can almost always find a better deal on a dealer’s lot.

When it comes to a used car, each of these guides will give you two numbers – the wholesale value (also known as the trade-in value) and the retail value.

Wholesale or Trade-In Value: This is what you can expect to get for a vehicle that has normal wear and tear. It’s usually a fair price for vehicles in average condition for their mileage and age. Because this is an average, half of the vehicles on the road will be worth more, and half will be worth less.

Retail Value: This is what you’ll pay for a vehicle that is completely free from defects – it has been 100% refurbished, and it’s as nice a car as you can hope to find for that year and for that mileage. Dealers and private individuals will try to charge full retail value, but keep in mind that less than 3 percent of the cars in the United States are in such excellent condition and worth retail value. In other words, retail value is usually the most you should ever pay for a used car.

When figuring out a fair price for a particular vehicle, it’s important to remember you must adjust for miles and condition. Here are some of the things you’ll need to account for:

• The average annual mileage in the U.S. is 12-15k miles. If the car you’re looking at or trading in has more than twice the average, you should expect to deduct more than the recommended mileage deduction. It’s commonplace to double or even triple the mileage penalty for extreme mileage situations (this is particularly true with NADAGuides).
• If the vehicle needs tires, deduct $400-$600 from the value of the car– if you’re not sure how much you can always call the local tire store and find out.
• If the vehicle needs a windshield, deduct at least $300 from the value.
• If the vehicle needs minor scratches repaired or small dents knocked out, that again will cost a few hundred dollars.
• If you can stand five feet away from the vehicle and see dents or scratches on the car, you should have a body shop look at it to get a sense of how much it’s really going to cost. Believe it or not, a seemingly minor cosmetic flaw can run into the hundreds or thousands of dollars.
• If you’re looking at any substantial body damage, get a second opinion. Body estimates can vary widely.
• Whatever the damage is, it’s best to have an estimate in hand. That will make determining the actual value of a car much easier.

It’s important to remember that you should be just as aggressive valuing your own car as you would a car you’re trying to buy - fair is fair.

The process of valuing a car using kbb.com or Edmunds.com is only a guide. The actual price of the car will be determined by factors such as the local market, the time of year, and how available that type of vehicle is. When you come up with a value, don’t feel like that is the only acceptable one. Too many times people get caught up in a specific number - instead, tell yourself that if you can get within $500-$1000 of the value you’ve determined, you’ve done pretty well. Besides, if you’ve done your homework and you’ve followed all our car buying negotiation tips, you’re going to get a good deal.

As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.

Listen to this article.

Before we give you our negotiation tips, we want to let you know how the used rental car system works. Once you understand the system, the negotiation tips will make a lot more sense.

Generally speaking, rental car companies go to big car manufacturers and lease thousands of cars from them each year. This lease only lasts six to twelve months, during which time the car is rented out at airports, vacation destinations, etc. The rental company then takes these cars back to the manufacturer, where they’re labeled “program vehicles” and sold at special dealer only auctions.

So, when you hear the words “program vehicle” or “program car,” that’s code for “used rental car.”

Our negotiation tips:

1) Tell the dealership that you know their “program car” is really a rental car. Telling the salesperson that you’re in on the secret lets you take control of the conversation.

2) Explain that you’re okay with buying a used rental car, but only if the price is really good. You’ve already exposed their secret, and now you’re taking advantage of the perceived lower value of a used rental to get a better price.

3) Let the salesperson know that if you don’t get the deal you want, you’ll go somewhere else. This threat is often times meaningless, but not when it comes to buying a used rental. The dealership knows that used rentals are commodities. By saying this, you’re telling them that if they’re going to sell you the car they need to do it on price.

4) Offer to wait for a different vehicle at a better price. Used rental cars are sold at auctions held once or twice a month. Tell the dealer that you’re willing to wait for them to buy a car at the next auction for a better price. Once the dealership manager knows that you’re not in a hurry, they’ll probably try harder to sell you the car they have than risk you leaving and buying somewhere else. Remember - one of the keys to getting a good deal is to be patient.

5) Make sure you walk away. Once the dealership has made their best offer, let them know that you’ll consider it, and then leave. By leaving, you make sure you’re getting the best price. Sometimes, you might be gone just five minutes before you get a phone call with a better price. In fact you might not even make it out the door before the manager runs out to tell you to he/she can take a couple of hundred dollars off. Physically leaving is the best way to make sure you’ve been given the dealer’s best price.

Once the sale is over, it’s a good time to familiarize yourself with used car financing basics, as well as review some of our car financing tips.

There are three different types of vehicles that can be called “lemons.”

1) A manufacturer buyback. This type of lemon would have had a major problem that the manufacturer of the vehicle acknowledged and then subsequently bought back from the original purchaser.

The best way to figure out if a car is a “manufacturer buyback” would be to purchase a vehicle history report. Carfax is an excellent resource for finding out a vehicle’s history, and so is a company called Autocheck. If a car has been bought back by the manufacturer it will most likely show up on a CarFax or Autocheck vehicle history report. While it is true that in most states a vehicle seller is required by law to tell a buyer if they’re buying a “manufacturer buyback” (cough, lemon) sellers don’t always disclose this information. Also, if you buy a vehicle history report you’ll see how many times a car has been bought and traded-in. Beware of cars that have been traded-in and sold multiple times - that’s an indication that something is wrong with the car.

2) Cars with the same, constant problem. If you’ve had a car that always had the same, constant problem that you could never get fixed, that’s also known as a “lemon.”

The problem that won’t go away can be anything: a bad air conditioner, a constantly failing transmission, you name it. Usually, this problem is specific to the individual vehicle, and unfortunately these things are hard to discover. In an ideal world, you would be able to look at the vehicle’s previous service records, but that’s not always possible. The best way to make sure you don’t end up with this type of lemon would be to get the car professionally inspected before you buy.

3) Cars with major design flaws. These are cars that have lots of problems because they were poorly designed in the first place.

The third type of lemon is a vehicle that has a major design flaw. Since design flaws are specific to certain vehicles and certain model years, and because they usually rear their heads after 2-3 years, Consumer Reports is a great resource for finding vehicles with design flaws. You can also call a local dealership’s service department for the make you’re considering – for example, if you’re looking at a 2004 Corvette, call your local Chevrolet dealer and ask the service department if they have any tips about the 2004 Vette’. If you’re nice and respect their time, they’ll probably give you some good tips. Also, you can check out blogs, forums, and other Internet resources.

While it’s important to use caution to keep from buying a lemon, the good news is that “lemons” are pretty rare.

As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.

Generally speaking, certified used cars are:

• Vehicles that have passed a thorough inspection which makes them eligible for an improved warranty and special financing.

• Less than five years old with less than 50,000 miles.

• The certifying authority (usually the dealership) must have made sure that all the maintenance is up-to-date, which means that all the oil changes and transmission flushes, etc. (normal maintenance) should be complete.

• The vehicle’s wearable parts (brake pads, tires, etc.) must have at least 50% of their life left.

Once the inspection has been done and all the maintenance is completed, the dealership will declare the vehicle “Certified”. Certified used cars have a better warranty than a normal used car, and often times they qualify for better than average used car financing rates.

In most cases, certified used cars are a good deal, and you should buy one if you can. However, before you buy a certified used car there are a few things you need to watch out for.

1) Certified used cars that are under one year old are almost always used rental cars.

Rental cars aren’t necessarily bad: they’re usually well maintained and an excellent value, but they’re not for everyone. Check out our advice about buying used rental cars if you’re not sure.

2) Remember that not all certifications are created equal.

If you’re at Dealin’ Dave’s car lot and they have certified a car, that might not mean anything. Dealin’ Dave’s certification may just be a sales gimmick. It’s better to buy a vehicle that has been certified by an auto manufacturer like Ford, Toyota, GM, BMW, etc. They all have superior certification programs, better than you would find at any dealership.

Finally, before you buy a certified used car, always ask for the “vehicle certification inspection” report. The inspecting mechanic fills out this report, and it gives details of his/her opinion of the various parts and functions of the vehicle. Dealerships are required to keep these reports on file after they certify a vehicle, and a lot of times they also have to give you a copy when you buy the car. If the dealership doesn’t have this report (or if they won’t show it to you) go somewhere else.

As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.

1. Private Individual

If you decide to buy from a private individual, you have some benefits. The pricing tends to be pretty reasonable, and you get to meet the person that’s driving the car. They’ll tell you its history and why they’re selling. A lot of times they’ll show you service records, and these things are all very valuable.

One of the big disadvantages with buying from a private individual is that you don’t know whom you’re dealing with - there’s a chance that the seller is a con artist. Another major disadvantage is that you don’t have any recourse if the car turns out to be a lemon.

2. Independent Dealership

The second option for buying a used car is to go to an independent dealership (usually these are small lots that only sell used cars). These dealerships tend to have a wide selection of older and specialty vehicles. Also, because they’re small, they have low overheads, so the pricing tends to be very good – better than a franchise dealership.

However, their small size means that they don’t have an image to protect – if they get some bad press, nobody knows who they are anyway, so it’s not a big deal for them. They’re also not well regulated – it’s just not efficient for the limited number of state regulators to spend a lot of time at the small dealerships.

3. Franchise Dealers

Your third option is to buy a used car from a big new car dealership, also known as a franchise dealer (because they’re a manufacturer franchise, like a Ford, Toyota, etc.). Franchise dealers have a few disadvantages – people don’t like to buy from them because they’re usually the most expensive (which is true, but if you follow our negotiation tips it won’t matter). Also, if you’re going to have a bad buying experience, it’s probably going to be at a franchise dealer - they’re more likely to pressure, manipulate, and/or ignore you simply because they’re so big.

Despite these negatives, the advantages to buying a used car from a franchise dealer are great. That’s why we recommend buying a used car from a franchise dealer. Here’s why:

• Franchise dealers are often closely regulated by state regulators, and they are subjected to annual reviews by the manufacturer they represent.
• If you don’t like the way you’re treated at a franchise dealer, you can call the auto manufacturer they represent and complain. You’ll often get results.
• Franchise dealers spend millions of dollars in advertising to build their public image. If they wrong you, threaten the dealer with bad publicity from local TV, radio, and newspapers. You can also try putting a sign on your car that says “So-and-So dealership lied to me”. It won’t take long before they do the right thing.

As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.

Note: Here’s some tips you can use to figure out if a car used to be a rental.

1) How long are you going to keep it?

Just like we talked about in Questions You Should Ask Before Buying Used, it’s important for you to know how long you’re going to keep the car you buy. Used rental cars tend to have more general wear, so they don’t hold up as well 5 to 10 years down the road as a privately owned used car. If you’re looking to buy something that will last forever, you probably shouldn’t consider a used rental car.

2) Do stains, smells, scratches, and dents really bother you?

While no one likes stains, smells, scratches, etc., most of us are willing to live with one or two. But the thing about used rental cars is that they almost always have more stains, more smells, more scratches, and more dents than you’d find on a non-rental used. Don’t get me wrong here - some used rental cars are in excellent shape (particularly those commonly rented by retirees). But if you’re sensitive to certain smells (like cigarette smoke, for instance), if you’re a neat freak, or if you’re just picky (which is OK as far as I’m concerned), a used rental car isn’t a good choice.

3) Are you simply looking for basic transportation?

If you’re not going to be emotionally attached to your car, a used rental car is an excellent idea. They often qualify for factory backed “certified used programs”, which include upgraded warranty coverage and special financing rates that often compare to new vehicle financing rates. Here’s a good example of what I’m talking about - I had a customer who was a traveling salesman. He spent most of his life in his car, driving from place to place. He needed a car that was fairly new in order to keep up appearances, as well as something that was very reliable (preferably with a warranty). But he didn’t really care about wear and tear, and he wanted to spend as little money as possible. For him, a used rental car was the perfect choice.

4) Are you credit-challenged?

If your credit is less than perfect, a used rental car is a good way to buy a fairly new car while keeping your monthly payments down. Used rental cars often qualify for factory backed “certified used” programs, which usually have aggressive financing available for people with bad credit. Used rental cars also tend to be easier to qualify for (credit wise) than other used cars because of the way they’re valued by the bank. If you’re credit challenged, make sure you investigate this option.

5) Rental cars are well maintained and tend to have few mechanical problems.

It may sound crazy, but rental cars are usually better maintained than cars owned by a private individual. Rental car companies don’t actually buy new cars from the manufacturers — they lease them. A company like Hertz will lease a new Toyota Corolla from Toyota, returning the vehicle to Toyota once it reaches a certain age or mileage (hence the terms “fleet vehicle” and “program car”). One of the terms of the lease is that the rental car company must perform all the manufacturer’s suggested maintenance, and must retain proof of doing so. Rental companies also tend to do a nice job of getting things fixed or adjusted under warranty.

As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.

1. Used Car Financing Rates Are Higher

Used vehicle interest rates are higher than new vehicles for a few reasons, but the main reason is that used vehicles represent more risk to the lender. Used vehicles are more likely to suffer a major mechanical failure that could render them worthless (like a engine replacement, or instance).

2. It’s Harder To Get Financing For A Used Car Than A New Car

It’s much harder to acquire used vehicle financing than new vehicle financing, and the reason is really simple. New car manufacturers (like Toyota, Ford, Chevy, etc.) want to sell cars, so they’ll provide special financing to people to help them be able to buy. Additionally, new vehicles often come with rebates and/or special interest rates. If you have less-than-perfect credit, it might make sense to buy a new car.

3. Used Car Financing Is More Restrictive

Typically, most banks will not lend money on any used vehicle that has more than 100k miles or is more than 8 years old. These higher miles, older vehicles represent much more risk for the lender because they’re more likely to suffer a major breakdown. Older vehicles are also more likely to be stolen and “chopped up”, making recovery impossible. NOTE: If your credit is less-than-perfect, lenders will probably restrict you to a vehicle that’s not more than 5 years old and/or one that has less than 75k miles.

4. Credit Unions Are Great Used Car Lenders

In just about every case, your local credit union will offer the best financing for a used car. I strongly recommend you join whatever credit union you can. Credit Union interest rates are usually excellent, and they are much more likely to provide Often times you can join a credit union through your work (your HR department should know about this). If not, many credit unions allow people to join based on the neighborhood they live in. Search for a credit union to join here.

5. Leasing A Used Car Is Usually A Bad Idea

In my entire career, I have never seen a used car lease that made financial sense. Typically, used car leases are structured just like new car leases. There’s an upfront payment, a low monthly payment, and a low mileage limit. Unlike new car leases, however, every used vehicle lease I’ve seen had $500-$1,000 in extra fees. Finally, used vehicle leases aren’t usually substantially less expensive than a comparable new vehicle lease. For all these reasons, plus the fact that most used vehicle leases don’t protect a customer the way a new vehicle lease does, I don’t recommend anyone lease a used car.

For more information, check out our section on New and Used Car Financing.

Our little Audi developed a power steering leak at one of the seals. This type of repair can be pretty easy in most cars, but our Audi is a little different. In order to replace or rebuild the power steering rack the sub-frame needs to be lowered to gain access to the rack. This operation is listed as a 12-hour repair in the automotive labor repair manuals. In most shops, the labor rate is about $100.00 per hour (as of Sept. 07) and that means the labor alone on this repair is about $1,200.00. But that’s just the start.

Removing the rack is only the first step in the repair process. Once the Audi power steering rack has been removed, we still need to fix the leak. This can be accomplished in one of two ways: 1) Replace the rack or 2) Rebuild. Amazingly, the cost of both of these options is nearly the same - about $1,000.00. So, most people opt to replace the rack. Now we’re up to $2,200 to fix a leaky steering rack, but we’re not done yet.

The Audi’s steering rack uses a very special power steering fluid called Pentosin CHF 11S. This is the only fluid that can be used in the rack, and it runs about $20.00. Per quart. The good news is that the system only takes 19 quarts. And the hits just keep on comin’.

So let’s recap: We’ve purchased a $1,000.00 power steering rack, $1,200.00 of labor, $380.00 of power steering fluid and a 10% shop supplies fee of $258.00. That’s a grand total of $2,838.00 (plus tax). Sounds a little scary I know, but our Audi is damn-near useless without power steering…

What’s the bottom line? While an Audi A6, BMW M5 or Mercedes Benz C class all sound like great ways to show the world you have arrived, they might empty your bank account. If a power steering rack repair can be this expensive and complicated, just imagine what an air conditioning repair will cost! Our advice, avoid used luxury vehicles whenever possible. With that being said please understand we don’t dislike German luxury vehicles. The German manufactures have excellent warranties on their new vehicles. Most new German vehicles cover all maintenance and repairs for the first four years or so. This type of coverage can give you real piece of mind — but the moment that the warranty expires, watch out! Things can get pretty expensive in a hurry.