10 smart moves for buying a used car

Buying a used car can be a great deal -- if you play it smart.

Most three- or four-year-old cars and trucks can be surprisingly reliable, because automakers have done so much to improve the durability of every model.

Used vehicles cost a lot less, too -- with an average financed amount of $17,400, about $9,000 less than the amount for a typical new vehicle.

Buying used also means you avoid the depreciation hit new-car owners get in the first year, so a used car can hold onto its value longer, says Ronald Montoya, consumer advice editor for auto research company Edmunds.com.

But buying used can be an expensive and tragic game of "rush-in" roulette, if you're too hasty.

You don't want to overpay or get a vehicle that's been abused, crashed or dunked in a flood, and then dried out and shipped off to be sold to the gullible.

Let our 10 smart moves increase the chances your "new" used vehicle will be a great purchase:

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Smart move 1. Check the reliability of the models you're considering.

Two good sources of information are Consumer Reports magazine's April auto issue, available in the library or through the Consumer Reports website (www.consumerreports.org), and J.D. Power and Associates, an independent research company that polls buyers about their cars and trucks.

Think twice before buying a model that has a history of significantly more problems than average, especially if major mechanical components such as the engine or transmission are prone to breakdowns.

Smart move 2. Shop around for the best loan.

Many banks and credit unions offer better deals on used-car loans than you'll find if you try to finance through a dealership.

The typical 36-month, used-car loan costs a little more than 5%, according to our weekly surveys of major lenders, but you can do better than that.

Start your search by checking our database of the best auto loan rates from scores of lenders.

Then use our auto loan calculator to see how much the monthly payments will be.

Smart move 3. If saving money is your priority, buy from an individual rather than a new-car dealer.

When you've found a vehicle you like, use Edmunds (www.edmunds.com) or Kelley Blue Book (www.kbb.com) to see how much it's worth.

Their calculators will ask for a lot of information about the car or truck, from the make and model to its mileage and optional equipment. In the end, you'll be given three values. The lowest is what the car would be worth as a trade-in; the others are the prices when sold by an individual or by a new-car dealer.

The private party price is always lower than the dealer price because there's more risk. You won't get a warranty (unless some of the original factory warranty remains), and some naughty people sell cosmetically reconditioned wrecks to bargain hunters just like you.

Smart move 4. If reliability is most important to you, and you are willing to pay extra for the peace of mind it provides, go to a new-car dealer and buy a certified used vehicle.

Certified vehicles are supposed to undergo rigorous inspection and testing by dealership mechanics before being resold. They typically have fewer miles and cosmetic problems, and come with some type of warranty, though such agreements can vary considerably.

Expect to pay more for a certified auto. “It will raise the purchase price by an average of $1,000 more than the private party price of a vehicle,” Montoya says.

Smart move 5. Avoid dealers with a poor reputation.

Check with the Better Business Bureau and your state's attorney general to see if the dealer has had any complaints. Ask friends and family whether they know anyone who has had a good -- or bad -- experience with that dealership.

Be particularly wary of independent used-car lots. It's even more important to verify their reputation before you buy.

Smart move 6. Make safety a priority.

Favor cars and trucks that offer such lifesaving features as antilock brakes, side-curtain air bags and electronic stability control, which automatically tries to correct for a skid.

Also, check out how well the vehicle did in crash tests. The most demanding tests available to the public are done by the Insurance Institute for Highway Safety (www.iihs.org).

You can search for ratings by make, model and year. The best performers receive the IIHS’ Top Safety Pick award.

Think twice before buying a model that scored poorly on two or more of the institute's tests.

Dealers that sell and service the brand of vehicle you're considering can use the Vehicle Identification Number (VIN) to determine whether your car or truck has ever been recalled for a safety defect and whether the repairs were made.

This isn't a deal breaker. Automakers must fix safety problems for free, no matter who owns the vehicle or how long ago the recall was issued. But you should know what repairs are needed and be prepared to get them done before you buy.

Smart move 7. Obtain the history of the vehicle through a service such as Experian's AutoCheck (www.autocheck.com) or Carfax (www.carfax.com).

For about $35, you can use the VIN to see in which state the vehicle was purchased, whether it has been registered in other states, and if there is a history of accidents and title issues. Such checks are not perfect, but they may alert you to a problem.

“A worst-case scenario is if the car was in a crash or flood, and someone tried to patch it up and sell it to you,” says Lauren Fix, author of Lauren Fix’s Guide to Loving Your Car.

If you are buying from a dealer, insist the dealer provide you with such a report for free and carefully compare the VIN on the vehicle with that on the report to make sure they are the same.

Smart move 8. Check for a warranty.

The Federal Trade Commission requires dealers to place a "Buyer's Guide" on the vehicle that tells whether the vehicle has a warranty and what that warranty covers.

If there's no warranty, the "Buyer's Guide" must be marked "as is." That means you take your chances.

Get any promises in writing. Verbal promises don't carry any weight in a dispute. Pull out paper and pencil anytime a salesperson says, "We'll fix anything that goes wrong."

Some newer vehicles may have part of the original manufacturer's warranty in effect. Just remember, parts of that warranty could be voided if the previous owner didn't do all the proper maintenance, so pay attention to the next recommendation.

Smart move 9. Ask the private owner or dealer for service records.

“If a private owner doesn’t have records, that’s a sign the person didn’t take care of the auto the way they should have,” Fix says. Skip the car.

For dealers, ask whether the original owner bought the vehicle at the dealership. Then ask whether the owner had it serviced at the dealership. If the answer is yes, ask for the service records.

If the dealer balks, claiming there is a privacy issue, ask him or her to contact the previous owner and get permission or to simply cross out the previous owner's name and address before showing the records to you. If the dealer refuses, go elsewhere.

Smart move 10. Insist on taking the vehicle to an independent mechanic for an examination.

This is something any reputable seller should allow. If the seller refuses, walk away.

Make sure the mechanic examining the vehicle is familiar with the brand and has some kind of certification of expertise from a group such as the National Institute for Automotive Service Excellence (ASE). This checkup could cost $100 to $200 (get the price first), but that's cheap compared to the cost of finding serious problems later.