How to Buy a Used Car and
Not Get Taken

1. Pre- Shopping Preparation

The upside of a Used-Car Purchase
If you have the right information and you know where and how to shop, many experts will tell you that purchasing a used car can be a sound investment.

A used car can provide a good return on your transportation dollar, especially if the car is no more than two to three years old. When you consider that a new-car price generally includes the dealer's markup, the salesperson's commission, the manufacturer's transportation charges, and the cost of both their advertising campaigns, you realize that a good deal of a new car's price has nothing to do with the car itself. Add to this the fact that the moment you take delivery of a new car and drive it off the dealer's lot, you have reduced the market value by as much as 40 percent or more. In addition, by the end of three years the average car will have lost, through depreciation, approximately two-thirds of its value.

In many instances, used cars have lower insurance rates, lower titling fees, and sales taxes. Plus, if you're buying a luxury car, you will not have to pay the luxury tax (10 percent of the amount over $32,500) or the gas-guzzler tax.

The Downside of a Used-Car Purchase

Having made the case for a used car, van, or truck, we come to a fundamental used buyer's question: "Don't I run the risk of buying someone else's headache?" The answer of course is yes. The used-car business is full of bad buys and lemons, and we do not want to suggest that bargains are always there for the picking. Buying a used car does involve some degree of risk. You should also be aware that finance rates will usually be higher on a used vehicle than on a new one. Plus, you do run the risk of more maintenance costs and repairs with a used car.