Mistakes to Avoid When Buying a Used Car

Although the dishonest used car salesman is a long-standing cliché, people are often nonetheless charmed and misled by use car dealerships.

Mistakes to Avoid When Buying a Used Car from a Dealership

 Here are some mistakes to avoid when purchasing a used car from an auto dealership:

  • Not Negotiating the Price: Used cars are high margin items. If you pay the asking price without negotiating, you're paying too much. If the dealership insists that the price is so fantastic that they have customers lining up to buy it, ask yourself: Why are they offering such a great deal, when with that many customers eager to buy they could charge a higher price?

  • Not Getting the Deal in Writing: Car salespeople may make any number of claims or representations about a vehicle, its condition, or its history when trying to sell the vehicle to you, but if the sales pitch is later found to be false or misleading you're likely to hear, "We never said that", or "You must have misunderstood". If the dealership is making representations about a vehicle that it is not willing to put into writing, there's a good chance that what you're hearing is false – so get it in writing.

  • Buying from an Out-of-State Dealership: It's not necessarily a bad thing to purchase a vehicle from an out-of-state dealership, but when problems arise your options are constrained by distance. Many used car buyer share horror stories about having a car delivered from an out-of-state dealership, only to find that its condition was misrepresented, or struggling for months to get the dealership to pay off a lien or transfer title.

  • Making Poor Warranty Choices: When you purchase a used car, you may be able to get the benefit of the remainder of a manufacturer's warranty, and possibly even to extend that warranty. However, when that is not possible you will often face the choice of buying the car as-is or purchasing a third party warranty. Make sure that you investigate the warranty company, as many third party warranties are issued by fly-by-night operations that go out of business every two or three years, leaving their existing customers without coverage even as its owners resume business under a new corporation and name.

  • Failing to Investigate Financing Options: The car dealership has its profits at heart, not the question of whether it is getting you the best loan for your money. Review the financing available through the dealership, but also check to see what financing options you can arrange for yourself though your bank or credit union.

  • Making a Non-Refundable Deposit: Unless you are absolutely certain that you are going to buy a car, make sure that any deposit you pay on the  car is refundable. Have the dealership put it in writing that if you change your mind about buying the car, you are entitled to the refund of 100% of your deposit.

Mistakes to Avoid in a Private Used Car Sale

As risky as it can be to buy a used car from a dealership, the risks increase significantly when buying a car from a private seller. Here are some common mistakes people make in private used car sales:

  • Not Getting a Professional Vehicle Inspection: Used car purchases from private individuals are presumed to be "as is" sales, meaning that the seller is not responsible for any problems with the vehicle once you purchase the vehicle. If you don't get the vehicle inspected, you could be setting yourself up for a very expensive lesson.

  • Informally Assuming Loan or Lease Payments: If you are taking over a car seller's car loan or lease payments as part of the purchase of a vehicle, make sure that you are approved to do so by the financing company, and then complete all paperwork to transfer the car title and financing to your name. Keeping the vehicle in somebody else's name can create serious issues with insurance coverage, or with what happens if the seller decides to reclaim the vehicle and takes it from your possession.

  • Agreeing to Seller Financing: Private car sellers sometimes propose that buyers make payments on a vehicle over time, with the title staying in the seller's name until all payments are made. Even when this type of financing occurs between family members or friends, you'll find countless stories of bad endings, with denials that payments were made or even denial that a car sale occurred at all.

  • Not Immediately Transferring Title: After you buy a car, it should be titled in your name and not the seller's name. Transfer the title as soon as you can. You may even close the sale at a department of motor vehicles office, so that you may transfer the title immediately.

  • Buying a Car When the Seller Refuses to Allow Inspection: A car seller's refusal to allow you to have a car inspected should raise immediate concerns that the seller is hiding potentially serious problems with the vehicle.

  • Not Understanding Emissions Laws: If you live in a state that has emissions testing requirements for vehicles, you need to determine if the requirements will apply to the vehicle you are purchasing and, if so, verify that the vehicle will pass an emissions test before buying the vehicle. If the seller is responsible to show you proof that the vehicle can pass an emissions test, make sure you get proof of recent testing. Don't underestimate the cost of emissions repairs, or assume that an out-of-state vehicle will pass an emissions test in your state.

  • Buying a Vehicle from Somebody Other Than the Title Owner: If you find out during the process of negotiating a car purchase that the seller does not in fact hold title to the vehicle, make it clear that the actual title holder must be present when the deal is closed or that there will be no deal. Do not let somebody other than the seller sign to convey title to you under the seller's name, or present to you a title that was supposedly executed by the seller on a prior date.

How to Avoid Mistakes When Buying a Used Car

Before you purchase a used car, you should do some basic research:

  • Research Cars Within Your Price Range: Look for vehicles that are within your price range, then further research the reliability of those vehicles to determine which are likely to operate for the longest period of time with the lowest maintenance costs.

  • Shop Around: Look at a variety of vehicles from a variety of sellers, rather than focusing on a single vehicle or seller.

  • Check the Vehicle's History: While commercial services like CARFAX are far from perfect, they provide information about vehicles that may affect whether you are interested in purchasing the vehicle or whether the price is reasonable. You can also find a variety of free VIN check services that may help you verify whether a car has been reported stolen or salvaged.

  • Inspect the Vehicle: Your inspection of the vehicle should start with your own verification of its condition, including whether the lights, wipers, locks, windows, and other electronic components are working, whether the body is in good shape, whether the vehicle appears to be mechanically sound. Unless you are a qualified mechanic, your next step before completing a purchase should be to have an independent mechanic inspect the vehicle and verify its condition, along with any repair or maintenance issues.

  • Examine the Title: Make sure that the person selling the vehicle to you is the title owner, or that any co-owner is present to sign the title. Unless you are knowingly purchasing a vehicle that has previously been seriously damaged, make sure that the title is not branded (an indication that the vehicle has been totaled, salvaged or rebuilt).

  • Test Drive the Vehicle: Take the vehicle out for a test drive, and make sure you test the vehicle for a long enough period of time to get a sense of how well it performs, and for odd signs, handling problems, or other signs of problems with the vehicle.

  • Keep Your Options Open: Try not to fall in love with a vehicle, or get too excited over a car sale that seems like a great deal, before you consider other vehicles and complete the inspection process.

  • Don't Take the Seller's Word About Anything: Even if a seller is not trying to cheat you, the seller may know very little about the condition of the vehicle. If a car is on the verge of a major mechanical breakdown, it doesn't matter if the seller is deceiving you or is unaware of the problem – if you buy the vehicle based upon what the seller is telling you, it becomes your problem.

Copyright © 2016 Aaron Larson, All rights reserved. No portion of this article may be reproduced without the express written permission of the copyright holder. If you use a quotation, excerpt or paraphrase of this article, except as otherwise authorized in writing by the author of the article you must cite this article as a source for your work and include a link back to the original article from any online materials that incorporate or are derived from the content of this article.

This article was last reviewed or amended on Apr 11, 2018.