Related Links

Anchorage Daily News December 5, 1999

Wheeling and Dealing:
Do Your Homework, Stand Your Ground
When Buying a Used Car

By Sheila Toomey
Daily News Reporter

Once upon a time, used cars cost $1,000, maybe $2,000. If you bought a loser, you might be angry or inconvenienced, but generally you didn't lose that much.

Today, buyers can spend upwards of $25,000, especially for recent-model sport utility vehicles. Add the cost of financing and the inevitable repairs, and a used car can be one of the most expensive items a family buys.

So why do many people walk onto a used-car lot completely unprepared to duel with the smart, well-informed, highly motivated salesmen waiting for them?

Buying a car, new or used, is a fearsome ordeal for many Americans. We are not used to negotiating. Most things we buy have fixed prices, and haggling makes people uncomfortable.

Being armed with information gleaned from research done before you talk to any salesman will help level the bargaining field. Not arming yourself will probably cost you.

Several people named as victims in a pending consumer fraud lawsuit against a local dealer bought cars without even checking blue book values. As might be expected, they paid thousands more than the cars were worth.

"It's stunning in this day and age," said Assistant Attorney General Daveed Schwartz, with the state Consumer Protection Section. Used-car sales account for about 70 percent of all auto sales in the United States. Consumer protection agencies nationwide receive more complaints about used cars than any other subject, Schwartz said.

What follows is a list of suggestions compiled from consumer and government sources. These are only the basics. For more information, prospective buyers are urged to consult the written or Internet sources listed here. Those too are only a fraction of what is available.

Before Visiting the Car Lot

Decide what kind of vehicle you prefer. Must it seat four kids? Have four-wheel drive? Do you want a sedan or a compact? A van or a pickup?

Start watching the classified ads and check the books or web sites that list average used-car values, just to get an idea of what you can probably afford.

This is a good time to read an advice book like "Don't Get Taken Every Time" by Remar Sutton. His focus is new cars, but the chapters about sales pitches are illuminating and entertaining.

Check the specific dealers you decide to visit with the Better Business Bureau to see if there is a history of unresolved complaints.

Loussac Library offers a wealth of helpful information for prospective buyers, including books and data bases that will tell you how a particular model holds up over the years, if there have been manufacturer recalls, and what the known lemons are.

You don't need a library card to use the books or the free Internet terminals, municipal librarian Moe McGee said. Library staffers will be glad to help you.

Once you've gathered basic information, make any necessary reality adjustment before you go shopping. Salesmen love confused, ill-informed browsers looking to be talked into spending more than they can really afford.

Be prepared to walk away. "There are two cardinal rules for buying a car," Schwartz said. "Do your research, and be prepared to walk out of a dealership" if the negotiations aren't going the way you think they should. Having another prospect at another dealership and not giving the dealer you're talking to a check before a final purchase agreement is signed make walking out easier. And you can always go back in a few days and give the dealer another chance.

Know how much can you borrow. If possible, talk to a credit service ahead of time. Find out what it will lend you. The amount will probably vary depending on how old a car you plan to buy, but even some general information is better than none.

Letting the dealer finance your purchase should be your last choice, experts say. Even if you think your credit is bad, check with the credit union or bank where you have an account. You might be more eligible than you think, and they may be willing to work with you.

Just having a discussion with someone who understands financing can help clarify how much you should spend, what payments you should agree to and what interest rate you can expect to pay.

Do not choose a car dealer because his ads promise financing no matter what. Use your head. That's not possible. Dealers will finance some people who can't get financing elsewhere, but you should know before negotiations start what you can reasonably be charged. Financing is just renting money. Know what the "rent" --interest rate -- is before you sign anything, including a check.

Does a dealer promise "guaranteed financing O.A.C.?" Know what O.A.C. stands for? "On approved credit."

Don't buy more car than you can reasonably afford. "Some dealers sell cars to a customer they suspect might not be able to keep up payments,"

Schwartz said. "The car gets repossessed and sold by the credit company at auction, and the dealer shows up and buys his old car at fractions of the cost and resells it. There's nothing illegal about that."

Ready to Shop

Look around. Take a pad and pen and visit two or three car lots. See what they have that meets your criteria. One sadder but wiser buyer who had to sue a local dealer over a bad deal suggests parking a block away and walking to the lot so the dealer can't get your identity from your license plate or start a conversation about how much he'll "allow" you for a trade-in.

Wear old clothes so you can get down on the ground or lean over the engine. Take a flashlight.

Know the value of your old car. If you are getting rid of your present car, check its value in the same guides you use to check the value of the car you want to buy. The experts generally advise keeping trade-in negotiations separate from purchase negotiations. Offer your present car for sale at a different dealership and see what you are offered. Or sell it privately.

Don't buy yet. When you find a car that interests you, write down the make, year, model, condition, license plate if there is one and, most important, the vehicle identification number, usually called the VIN. It's often inside the driver's door. On this visit, do not talk to a salesman about anything substantive. Do not mention how much you expect to spend or what monthly payment you can afford. Above all, do not answer the question "How much do you want to spend?" Used-car prices tend to float up to what a customer is willing to pay. Be suspicious if a dealer does not display prices on the cars, Schwartz said.

If you have a hard time being tough, practice ahead of time how you will deflect direct questions. A polite but firm "I'm not ready to talk about that yet" might suffice.

Time for more focused research. After visiting at least two dealerships, go back to the books or the Internet and find out everything you can about the specific car or cars you are considering buying. For $5 and the VIN, the Division of Motor Vehicles can often give you a history of the car's title, meaning who has registered it, when, with how many miles on it.

Or you can buy a title history for $14.95 from a web site called Carfax. You need a credit card, but you can use the library's computers for free. Carfax doesn't have records for all cars, but if yours is there, you can see if it was ever sold as "salvage" and later "reconstructed."

Ask the dealer to show you the car's title or his copy of a Carfax report. Be suspicious if he won't. Ask for the repair records, and ask specifically if the car has been in an accident. Write down the answers.

If you find out who previously owned the car, see if they're in the phone book and call them up. Before taking their word on its condition, make sure the dealer is selling it for himself and not on consignment for the previous owner.

The negotiation. Armed with all the information you can find, go back to the dealer and start negotiations.

Take someone with you, Schwartz suggested, as a witness to what the dealer says. Not necessarily a spouse but someone whose judgment you trust and who will suggest leaving for a cup of coffee if you are getting carried away.

Be reasonable, but don't be shy about objecting to what the salesman is saying or how he is saying it, especially if he's mixing buying and credit and trade-in all together. Ignore appeals to your fairness or whines about overhead. Remember, if he's not making money, he won't sell it to you.

Test-drive the car. Consumer guides will tell you what to look for. Write down everything wrong with the car to use in negotiations. Remember, this is a used car and will probably have something wrong with it.

Ask lots of questions, Schwartz advised. There's not much legal protection for used-car buyers, but in Alaska, a seller is legally obligated to answer Questions truthfully. Take notes.

At this point, talk only about the car, its condition and price, not about trade-ins or financing. It may take persistence to keep the salesman on topic, but the experts all agree on this.

If he wants more for the car than your research suggests it's worth, make him an honest offer. If he says no or starts talking about monthly payments or credit rates or trade-ins, leave.

If you agree on a price, write it down so you can repeat it to the salesman if the number starts creeping up. Experts say numbers sometimes change between the oral agreement and what is written in the contract. Do not sign a contract with any blank spaces.

Salesmen use a number of subtle, perfectly legal techniques to keep the upper hand during negotiations. "I talk to a lot of consumers," Schwartz said. "They tell me they've often been kept at the dealership for hours on end -- five, six, seven hours. They feel it's a tactic to wear them down."

Writing your offer on their worksheet in small numbers and then writing the counteroffer from "the boss" with a big black marker pen to make it look final is a common tactic, Schwartz said.

You might amuse yourself by seeing how many such tactics you can spot.

Trade-in and other issues. Once a price for the car is agreed to, you can talk about other matters, including a possible trade-in. Don't let the dealer low-ball you, but remember, he is entitled to a reasonable profit. Sell it elsewhere if you can get a better price.

And keep in mind that this is a business transaction. It doesn't matter if the salesman likes you. There are plenty of legitimate used-car dealers, Schwartz said, but their job is to sell you a car and they will try hard to do that.

Don't pretend to know things you don't. Don't do a lot of chit-chatting. And don't lead with your ego. Salesmen are super psychologists. It doesn't take one long to figure out how to push a blowhard's buttons.

Let a mechanic have a look. All set to buy now? Stop. Don't sign anything. Don't write a check for any amount. Experts agree that you are asking for trouble if you don't have the car checked out by an independent mechanic. Set this up before you go shopping. It might cost $100, but it could save you from buying a real loser. Make sure the dealer knows up front that you won't buy unless he allows a mechanic to check the car. Don't accept "insurance problems" as an excuse. The dealer can work something out.

What about service contracts? Consumer advocates generally recommend not buying service contracts or any kind of insurance from the car dealer. If you do buy a service contract, the dealer may not claim he is selling you the car "as is." According to the Alaska attorney general's office, a service contract means the dealer is guaranteeing the car is free from "serious defects or dangerous conditions."

Safeguards

Get guarantees in writing. Is something guaranteed? If so, it should be written clearly in the contract and on the buyer's guide, a document that must by law be posted in every used car offered for sale by a dealer. Any promises about repairs, or the details of any warranty that comes as part of the sale, must be written on this form, or they may be unenforceable. Ask if the car passed a recent IM test. Ask to see the certificate. Make sure the dealer's assurances are written down.

Don't get lazy now. Do you have to be told to read everything before you sign? One hopes not. Your contract should disclose whether the dealer keeps part of the so-called documents fee or service contract fee if you buy one. In a pending suit against a local dealer, the state says the dealer kept about $80 of a $100 document fee. In Anchorage, documents fees can run as high as $350, Schwartz said. Keeping most of the fee is legal as long as the dealer discloses this to the buyer. Knowing how much the dealer is making off this can be useful during negotiations.

Remedies

There isn't much you can do if a used car proves to be a lemon and your purchase agreement doesn't include any enforceable guarantees. That's why it's so important to do your research up front. However, there are some remedies, especially if the dealer told you the car was in decent running condition and it isn't.

Complain to the dealer. Start by taking your complaint to the dealer, who may well work it out with you to your satisfaction.

Go to court. Nobody wants to get involved in a protracted legal dispute, but the courts may be your only option.

You may file a complaint with the Consumer Protection Section of the Department of Law at 269-5100. You can also call the Better Business Bureau at 562-0704.

If the dispute cannot be resolved short of legal action, you can file in Small Claims Court, where you don't need a lawyer, for amounts up to $7,500. If more money is at stake, you have to file in state Superior Court, where it is advisable to have legal advice.

The Law

There are few protections for used-car buyers, but there are some:

Resources

These resources are available for prospective car buyers. Anchorage's Loussac Library has a lot of material, including free Internet access.

Printed Materials
Available from book sellers:
Internet Sites