Ask the Business Librarian 5-4

By Liz Kudwa

Q:  I’m thinking about purchasing a used car.  I’m worried about getting a lemon, and paying too much for the car.  Are there any tips out there for buying a used car?

A:  Yes, there are a number of resources for those who are thinking about buying a used car.  CNNMoney.com’s contributing columnist Gerri Willis has a great article on what to consider when purchasing a used car!

1. The market has changed
Did you know that the minute you drive a new car off a lot, its value declines by a little more than 40 percent? That’s according to Jonathan Linkov of Consumer Reports.  So with that kind of depreciation, you may want to think about getting into the used car market. Today it’s easier to find an almost new car with a lot of quality thanks to a glut of cars coming off lease.  Used vehicles often have the best values in the market. And with increasing reliability, buying a used car is not as risky as in the past. In fact, today’s vehicles can reach 200,000 miles without a major breakdown. Reported problems have declined to a fraction of what it was more than 20 years ago.

2. Avoid lemons — go certified
If you’re still wary of buying a lemon, consider a manufacturer’s certified pre-owned vehicle. These cars are a step above used vehicles. They’re inspected by a factory mechanic and some have generous extended warranties.
Generally they are one to two years old and have less than 80,000 miles. But you could be paying $4,000 more for a certified pre-owned vehicle than a vehicle that’s not certified. With this kind of expense, you’ll want to inspect the manufacturer’s certification program to see exactly what the warranty covers.

3. Predict reliability
When you’re buying a used car, there’s always the chance that you’re buying someone else’s problem — or accident. But you can minimize that risk if you research the model’s reliability rating. The more reliable a car is known to be, the better quality the used car will be in. You can do this by going to Consumer Reports. Ask for a repair history of the car you’re interested in. And you can always go to Edmunds.com to see what other drivers are saying about their cars.

4. Take it on the road
The only way to truly get a sense of a car is to give it a road test. Don’t follow the short effortless streets the dealer may want to show you. Instead, take it out on rough roads. Try to simulate how you normally drive. If you use highways to get to work, make sure to hit highway speeds. If you vacation in the mountains, make sure you head up a steep slope.  Turn off the car radio and make sure a chatty dealer isn’t breaking your concentration. This is the only way that you’ll be able to pinpoint odd noises, squeaks and rattles. Check your blind spots. Don’t assume that all the seatbelts latch or that all the windows work. In other words, take nothing for granted.

5. Keep your poker face
When it’s time to negotiate you want to keep your heart off your sleeve. “Don’t fall in love,” advises Linkov. “That makes it an emotional decision.”  Instead, do your research. Check out the car’s true market value on Edmunds.com or Kelley Blue Book at www.kbb.com. And if you’re wondering how much money your car may cost you over the long-run, check out the Web site’s true cost to own. This figure will calculate your car’s expenses over the course of five years taking into consideration the price of gas, insurance, maintenance and depreciation.  Don’t walk into a dealership until you know what kind of loan your bank will give you. Dealerships may have higher financing rates. And once you know how much you can spend, negotiate for the total cost of the vehicle, not just the monthly payments. If you focus on monthly payments alone, there’s a chance you could be extending the life of your loan for longer than you need.  There’s a lot you can tell from a vehicle’s id number, or its VIN number. To check to see if a vehicle suffered flood damage from the recent hurricanes log on to the National Insurance Crime Bureau’s database at www.nicb.com and insert the vehicle’s VIN number. You can also get the car’s history by plugging in the VIN number at www.carfax.com.
“They’ll ask for it,” says Kaplan. “You’re trying to avoid someone putting hands on your return.”
But maybe the best advice, says H&R Block’s Burlison, is to provide as transparent a return as possible. “The number one thing to avoid contact from the IRS is to make sure you report everything.”