What's wrong with used cars?

Quickly learn all the tips and tricks you need to buy a quality used car at a great price. Save on used car financing Apply online today! Discover how to locate used car bargains, how to find out if you're getting a good deal, and how to verify the history on virtually any used car. How to get discount financing and extended warranties.

Where is the best place to buy a used car? Here are some great places to locate a used car. Some you've heard of, and some you may not have considered.

• eBay Motors

• AutoTrader.com

• Cars.com

• Newspaper classifieds

• Shopper newspapers

• New car dealers

• Independent dealers

• Buy here pay here dealers

• For sale by owner

• Government auctions

• Police seizure sales

eBay is a great source of information even if you don't plan on buying a car on an online auction. By searching eBay's completed items you can easily see the final transaction prices of thousands of cars. Find out what cars are actually selling for, and not just an inflated asking price. Just print out the completed listing on cars you are considering. This is a great negotiating tool when you're dealing with a dealer or private seller.

Many people have bought cars on eBay with great success. Lots of people buy a car sight unseen and have the car delivered.

The key to buying on eBay is doing business with a trusted seller. Both dealers and private sellers list cars on eBay. Look for someone who has been selling on eBay for at least 1 year, and has a good feedback rating. Don't just look at the feedback score. Read the individual comments. Are there any recurring problems? Any negative feedback? If the seller has less than 95% positive feedback proceed with caution.

If possible go inspect the car before bidding. You can search for cars located near you. If the car is located too far away have a friend in that area look at it, or consider hiring a professional inspection service. It won' always be practical to inspect a car first, especially if you are considering multiple cars. On eBay dealing with a reputable seller is probably more important than inspecting the car in person.

It's a good idea to check CARFAX before you bid on a car at eBay. A CARFAX report will indicate if a car has been in a major DMV reported accident, or if it has a previous salvage history. CARFAX now reports if a vehicle has been registered in a flood area such as New Orleans. This helps you spot flood damaged cars. This will give you the vehicle history and tell you if the car has been in an accident, flooded or salvaged.

AutoTrader.com and Cars.com are online classified sites that lists cars from both private sellers and dealerships. Both sites are great for locating a specific vehicle. Their search engine allows you to find a specific car based on year, make, model, color and even price. You can set your search area from as little as 10 miles to nationwide. Once you find the car you have to contact the seller directly, either by phone or e mail, or go in person.

Newspaper classifieds are a great source for locating cars for sale by private parties. If you don't want to buy from a dealer start here first. Beware of dealers, both licensed and unlicensed, posing as private sellers in the classifieds. Dealers know that some people prefer not to deal with car dealers, and this is a trick they use to hook you.

Shopper newspapers are a great source for locating low priced used cars. You know, the free newspapers that are mostly ads, with few articles or news stories. These papers usually offer free ads to individuals selling their cars. Normally you'll find older, low priced cars in these paper, so it is a good source for bargains.

Auto classified magazines like which range in price from free to $2 are good for locating cars locally because they usually include a picture of the car. The cars listed in these types of magazines are mostly paid ads by new and used car dealers.

New car dealers are your best source for 1 to 3 year old one owner cars. New car dealers take trades in when they sell a new car. 1 owner cars from your local area are normally nicer cars because they are typically better cared for and maintained. But not every car at a new car dealership is a trade in. Dealers will buy cars from auctions and other dealers to supplement their inventory. Check the vehicle history and know what you are buying.

Independent dealers sell only used cars, so they don't take as many cars on trade. The cars that are traded are not as nice, on average, as the cars traded at new car dealers. These dealers buy cars from auto auctions and other dealers. Some independents deal in inferior cars, but many will sell only top quality vehicles. It's important to deal with a reputable dealer, so ask around for persona; recommendation, and always check the vehicle history before buying.

Buy here pay here dealers are both car dealers and lenders in one. They charge high prices and high interest rates for sub-standard cars. The financing is done right there at the dealership, and you usually have to go in weekly to make payments. Buy here pay here should be considered a finance source of last resort.

For sale by owner cars can be a great value. You can find cars parked with for sale signs in the window that someone wants to move for quick cash. Often you can negotiate a great price on these cars. Just make sure you are buying from the parson who has actually owned and driven the car, and not a dealer or curbstoner.

Government auctions. The General Services Administration (GSA) is in charge of liquidating vehicles that have been used by various federal agencies from the U.S. Forest Service to the Secret Service. These are mostly domestic cars and trucks from Ford, GM and Chrysler. I found a fleet of Chevrolet S-10 trucks that had been used by the National Park Service at one auction. The trucks were 6 years old, but had less than 15,000 miles on them. They were nice trucks, and they sold cheap. Local governments also get rid of their old cars at auctions. Police cars, school buses and fire trucks are auctioned off all the time. GSA and government sales are open to the public, and no dealer license is required.

Police seizure sales. Vehicles used in the commission of a crime are often seized by law enforcement. Most states have enacted legislation that require these vehicles be sold to the highest bidder. Local and state authorities auction vehicles to the highest bidder. The sales are open to the public. Mostly at these sales you'll find cars that are pure junk that should never be on the road. Occasionally you'll find an exotic car like a Ferrari or a Hummer. Be in the right place at the right time and you could buy it right.

Get a detailed CARFAX Vehicle History Report

A CARFAX report can reveal costly hidden problems. Never buy a used car without first getting a CARFAX Vehicle History Report

Spot major problems like:

• Salvage or previous salvage history

• Flood damage

• Odometer rollback

• DMV reported accidents

• Lemon law buybacks

• Stolen vehicles

CARFAX maintains a nationwide database of vehicle records obtained from state DMVs, insurance companies, vehicle manufacturers, police reports and private sources. A CARFAX will provide you with a detailed vehicle history report in seconds.

Questions to ask when buying any used car.

Before you buy any used car there are specific questions you need to ask. Whether you are buying from a dealership or a private seller. In fact, there are certain questions you must ask a dealer, and other questions you need to ask an individual. You need to know exactly you are getting, and you need to know when t walk away if those answers aren't satisfactory.

10 questions you must have answered before buying a used car from a dealer.

15 questions you must have answered before buying a used car from an individual.

Used car warranties

Unless you buy a car that is less than 3 years old, or has less than 36,000 miles on it, the factory warranty has most likely expired. There are some exceptions. Nissan gives a basic warranty for 3 years or 36,000 miles. After that, and up to 5 years or 60,000 miles you get a power train only warranty. The power train consists of engine, transmission and driveline. Warranties vary by model. In most cases the manufacturers standard warranty is up at 3 years or 36,000 miles.

Be careful when you calculate warranty coverage. The 3 years starts with the cars in service date. You may be looking at a 2003 Camry with 25,000 miles on it and assume it is still in under warranty. But if the car was originally sold in December 2002 the warranty has expired.

Cars are very complex. It can be extremely expensive to replace major components on a used car today.

There are hundreds of components that can easily cost $100 to $500 to replace. Parts like these:

• Brake master cylinder

• Power steering pump

• Fuel pump

• Windshield wiper motor

• Power door lock actuator

• Fuel injectors

• Sound system

• Water pump

The only way to protect yourself is to buy a car that is under warranty, or get an extended warranty that will take care of repairs. Even if you buy a car with low mileage that is still under warranty, it's a good idea to get an extended warranty that picks up when the manufacturer's warranty expires.

If you're buying a car from a dealer you can always buy an extended warranty from the dealer. In fact the finance manager will probably try to "hard sell" you to take the dealers extended warranty. That's because the dealership makes a huge profit on warranty sales, and the finance manager gets a cut of it. A warranty that the dealer is trying to push on you for $1,995 may only cost them $600. That's why they're so pushy about the extended warranty.

Compare the dealer's price and coverage to the cost of a discount extended warranty from Warranty Direct.

Types of used cars

You might think that there are only 2 kinds of cars. New cars and used cars. In fact there are many types of used cars. Some are very desirable, and some you should avoid at all costs. Know what kind of used car you are buying, and learn how to spot one that is being presented to be more than it is.

Certified Pre-owned. These are used cars that are in above average condition, and have been refurbished to the manufacturers specifications. True Certified Pre-Owned cars are only available from a dealer that sells that brand. That is, only Honda dealers sell Honda Certified Pre Owned cars, only Lexus dealers sell Lexus Certified Pre Owned cars, and so on.

Off Lease Cars. Virtually every carmaker has a leasing program. When leases are over cars are returned to the manufacturer, who then sell the cars to auto dealers. Most brands are available to all car dealers. So a Honda dealer may have Nissan off lease cars for sale. Many independent dealers specialize in off lease cars.

Trade Ins. These are cars that dealers take on trade when selling a new car. It's usually easier to verify the history of a traded vehicle. The customer who traded he vehicle is usually a local resident. The dealership may have a record of the service history, especially if they originally sold the car new.

Private Party. Cars that are for sale by owner. Usually you can learn more about the history of a used car when you deal directly with the owner. Be aware that many people have their car "for sale by owner" because they are unhappy with the price they were offered by a dealer. They may have unrealistic expectations of how much their car is actually worth. Some people try to unload their car when it starts giving trouble, so be sure to have it inspected by a mechanic.

Researching used cars

Before you go shopping for a used car you should research cars online. Find out which used cars are reliable, and which tend to have problems. An Acura is a great car, but 2004 Acura TLs are known to have vibration problems in the front end. Certain Toyotas have problems with engine sludge, and a new engine costs $4,000.

You can research any used car at Edmunds.com. Check the current market value, and find out what equipment came standard on the car, and what was optional. Edmunds also has a great forum where you can chat to other people who have bought used cars. Find out wahat the owners actually think about their car.

Kelley Blue Book is another great site for researching used car values. They give you retail, trade in, and private party values on used cars. You can even make adjustments for mileage, condition, and optional equipment. Print it out. This is a great negotiating tool to get a seller to drop their price.

Salvage cars

When a car is crashed, flooded, or stolen, and an insurance pays a total loss claim, a salvage title is issued. The intent is for the car to be sold for parts, but many auto rebuilders specialize in obtaining salvage vehicles, rebuilding them, and putting them back on the road. After a car has been rebuilt most states will inspect it, certify it as roadworthy, and issue a clean title for it. But once a car has been salvaged it's value will always be less than half of what a similar non-salvage car would be. Always check CARFAX to make sure you are not getting a previously salvaged vehicle.

You can't always spot a salvage car by visual inspection, but some things to watch out for are:

• Waves in the paint (look down the side of the car from an angle).

• Uneven gaps between body panels

• Any sign of welding under the hood or in the trunk

• Non-matching VIN plates

• Steering pulls to one side

• Vehicle seems unstable when driven

• Water leaks

• Excessive wind noise

Don't buy form curbstoners. These are illegal, unlicensed dealers who operate from the curb stone on the street. They typically buy and sell sub-standard cars that have hidden problems. If you buy from a curbstoner, and the car has problems, or turns out to be stolen or salvaged, there is not much you can do. These guys operate in the shadows, and quickly move from place to place. It's unlikely you could ever find them again. Most curbstoners pose as individuals selling the family car, when they are really buying and selling cars in volume. That's another reason to verify the history with CARFAX on any used car you are thinking about buying.

Matching VIN Plates. Every car sold in the USA since 1980 has a 17 digit Vehicle Identification Number (VIN). The public VIN plate is the main VIN plate on the car. It should be visible when standing outside the vehicle and looking through the windshield on the drivers side. The VIN also appears on other components like the doors, trunk, and hood. Check to make sure that all the VIN plates match. If one has a different number that component has been replaced from another car. Usually the sign of a wreck. If any of the VIN plates appear to be tampered with the car may be stolen.

How to spot a car that has been in a flood or hurricane. In the past 2 years 5 major hurricanes have hit he United States flooding and damaging over 100,000 cars. Most of which have been cleaned, repaired, and put back on the used car market. If you buy a car that has been underwater I guarantee you are going to have problems. The car may look pristine, but it is slowly corroding from the inside out, starting with expensive electrical components. If the ECU goes bad it could easily cost you $1,000 to replace it. Cars have thousands of electrical connections, and water damage causes them to start corroding. First the window won't roll down, then the airbag light comes on, then the car simply won't start.

Don't think that just because you don't live near the areas affected by hurricanes and flooding that you are safe. Cars are shipped everywhere. A car may be flooded in Florida and be in California the next week. Just take a look at all those car carriers on the interstate. Not all of them are delivering new cars.

So how do you spot a car that has been damaged by water?

• Pull back the carpeting and look for silt or mud.

• Does the car smell musty? That should be your #1 sign.

• Look under the dash for any signs of a waterline.

• Open the hood and check the oil. If it looks milky or frothy that's a sign of water in the oil.

• Check all the electrical accessories to make sure they work.

CARFAX has just added a new feature that shows if a car was registered in a flood area. They will also show if the car has been declared a total loss as a result of a flood.

How to spot odometer rollback

Most odometers today are digital, which makes it more difficult to tamper with the odometer reading. However, a professional odometer crook knows how to reprogram the chip in the car's ECU that records the vehicle mileage. Don't assume that no one can tamper with a digital odometer. It just takes more tech skills to change a digital odometer than the old analog style.

If you're looking at an older car that has the analog "wheel" type of odometer look to make sure all the numbers are aligned. If not the mileage has probably been clipped.

Your best defense against odometer fraud is to use your head. Is the overall condition consistent with the mileage?

Look for any components that show excess wear.

• Accelerator pedal

• Brake pedal

• Upholstery

• Driver's seat

• Radio controls

• Window & lock switches

• Key & remote entry

These components are used all the time. If the odometer shows low mileage but the car shows a lot of wear it may have had the odometer rolled back

If you have any doubts run a CARFAX. It can help spot odometer fraud, and shows each time the mileage was recorded.

You should also ask for maintenance records. Check for mileage consistency each time the car was serviced.

What to get when buying a used car. Here's a checklist of items you should get when buying a used car. The seller may not have everything on the list, but be sure to ask.

• The car. Take possession immediately

• Title

• Registration

• Owner's manuals

• Extra Keys

• Wheel lock keys

• All original papers

• Window sticker

• Emission docs

• Warranty papers for tires & battery

Take possession of the car as soon as you pay for it. Some sellers will want you to come back later for the car. They might claim they want to put the original radio back, or put the original wheels on. That's fine if you agreed to it. just don't hand over your money until you get the car. If the car were to be involved in an accident after you paid for it you could be liable. Some sellers will try to swap equipment off the car without your knowledge. Replacing new tires for 4 that are worn out, Or removing a new part that was recently installed on the car, and putting the old one back on. I've seen this trick tried by both dealers and private sellers, so watch out.

Get the title. If you're buying from an individual you should always get the title at the time you buy the car. If you're buying from a dealership and financing, then the title will go to the bank. But if you're paying cash you should be able to walk with the title. If you're writing a check then the dealer will usually hold the title until your check clears. This is standard practice, and not a problem, when dealing with a licensed dealer.

Owner's manuals. Be sure to get any manuals that came with the car. You may not ever read them, but it helps when you are ready to sell the car.

Extra keys and remotes. Be sure to ask for any extra keys and keyless entry remotes.

Original radio. If the car has had the sound system replaced ask if the original radio is available.

Original wheels. Get the original wheels if the car has had the wheels changed.

Window sticker. The window sticker will detail all the original equipment that came with the car. A plus for resale value down the road.

Emissions documents. If you live in a city that requires emissions testing be sure to get the documentation on the cars last inspection.

Warranty papers for tires and battery. If the car has had new tires, a battery replaced, or any other repairs that are still under warranty be sure to get all the warranty documents. This could save you money later.

VIN decoding

Every car sold in the United States since 1980 has a unique 17 digit Vehicle Identification Number (VIN). With the VIN you can tell a lot of information about the car.

• Year model

• Country of origin

• Make

• Model

• Engine size

The 10th digit of the VIN indicates year model. Beginning with 2001 models the 10th digit was a number. 2006 models have a 6 in the 10th position, 2005 models have a 5, and so on. Prior to 2001 the 10th digit was a letter. See our VIN chart for a complete list of year models.

The 1st digit indicates country of origin.

Cars built in the USA begin with 1.

Japan built cars begin with J.

German made cars start with W.

The VIN also identifies the exact make, model and engine size of the vehicle.

How to use the phone and e mail to eliminate used cars from your list.

There are millions of used cars on the market today. You need to quickly eliminate cars that don't meet your standards. Here's a quick checklist of questions you need answered before you spend time driving around looking at cars. If you see a car advertised that sounds promising call or e mail first.

• How many miles does the car have?

• Has it ever been wrecked?

• Does it have a clean title history?

• Does the car need any repairs?

If you do decide to go and see the car in person be sure to take along our list of 10 questions to ask before buying a used car at a dealership, or 15 questions to ask before buying a used car from an individual.

What to look for when inspecting a used car

• Smooth, even paint

• Paint on rubber moldings

• Uneven gaps between body panels

• Wavy body panels

• Matching VINs

• White film under hood

• Fluid leaks

• Exhaust pipes

• Overall wear & tear

• Operation of all components

Look for signs of repainting and previous damage. The paint should be smooth and even. Look at the paint closely from panel to panel. It should be consistent all the way around the car. If one area looks a little off-color, or has an uneven texture that looks like an orange peel, then the car may have been repainted. Look closely at rubber moldings, especially windshield moldings where the rubber meets the paint. If you see paint on a molding the car has definitely been repainted. Run a finger along the inside edges of the hood, trunk, doors and fenders. The edges should be smooth. If you feel a hard or ragged edge it most likely means that panel has been repainted.

Look closely at the gaps between body panels. Any excessive or uneven gaps indicate previous damage. Raise the hood and look at the bolts that hold the fender. Unless the car has been damaged there is no reason these bolts should be removed. If the bolts show any scratches or signs of repositioning that body panel has been damaged or replaced.

From the front and rear of the car step back a few feet and look down the sides of the car. The sides should be smooth all the way down each side. If it appears wavy the car has been hit in that area.

On newer cars each body panel is stamped with the cars VIN. Check to see that all panels have the same VIN. If one is different it means that panel was taken off another car that has been salvaged or stolen, and put on this one.

Look for a white film under the hood, in the wheel wells and underneath the car. This is a sign of salt deposits which indicates the car has seen heavy use in ice and snow conditions. Occasional driving in salty conditions is okay, but the car should be washed afterward. Salt will cause a car to rust, so you should avoid cars that show excessive signs of salt deposits.

Check underneath the car and under the hood for any signs of fluid leaks. Start the engine and let it run for a few minutes then move it and look for any fluids. A green or orange fluid is coolant and means the car has a radiator or coolant hose leak. Red fluid indicates a transmission or power steering system leak. Brown or black is oil or brake fluid. If you see any fluid leaks have the car inspected by a mechanic before buying.

Take a look at the exhaust pipe. A slightly chalky or sooty appearance is normal. if the inside of the exhaust pipe is oily it means the car is burning oil, and the engine is worn. A milky fluid coming from the exhaust pipe is actually residue from burnt oil and anti-freeze. This is a sign of a bad head gasket, which is a high-dollar repair.

Check all the car's equipment. does everything work properly. Check all of the following:

• Head lights

• Brake lights

• Windshield wipers

• Cruise control

• Power windows

• Door locks

• Fuel door release

• Trunk release

• Hood release

• Sound system

• Air conditioning

• Heater

• Any other accessories

Try to determine the overall condition of the car by carefully inspecting it's individual components. If you find too many problem areas move on to another car.

Why buy a used car?

It's a great way to save money, or to get a nicer car for less. For instance, a base model new 2006 Ford Explorer will set you back about $28,000. You can get a 2005 Explorer with the Eddie Bauer Luxury Package, leather seats, and navigation system for around $24,000. Buying used is a great way to get more for less.

Insurance savings. You can insure a used car for less. Insurance companies base their rates, in part, on the value of the vehicle. Your driving record also plays a part, but with everything else being equal it will cost you less to insure a used car than a new car.

Finance savings. Since you are financing less money your finance charges will be less.

Watch out for cars with excessively high or low mileage. Mileage plays a big factor in the value of the vehicle. Average mileage on a used car is 15,000 miles per year, so a 4 year old car could be expected to have around 60,000 miles. Anything more than that and you will need to deduct from the cars value. How much depends on the exact vehicle. A BMW 328 will take more of a hit on value than a Ford Taurus.

If the car has excessively low mileage find out why. Is it because the owner worked from home and didn't drive much, or is it because the car was in a major accident 3 years ago and was sitting in a salvage yard until 2 months ago when it was rebuilt?

Never buy a used car without test driving it first.

A test drive should be considered a final inspection of the car before buying. It's not a joyride. Car salespeople know that getting you to take a test drive is a powerful selling tool. That's why they push you to "just take it for a drive." That's exactly why you should wait before test driving. Make sure the car checks out, and the price is right, before you drive it. What to look for on a test drive:

• Does the engine start right away?

• Does the transmission engage smoothly?

• Does it accelerate to speed okay?

• Do you feel any vibration?

• Is there any wind noise?

• Do the gears shift smoothly?

• Are there squeaks or rattles?

• How does it handle a curve?

• Do the brakes feel firm?

• Does the car stop quickly?

• Is the steering wheel straight?

• Does the car pull to one side?

If possible have someone else drive while you ride along. Sometimes you can notice problems better when you are not concentrating on driving. When you go on a test drive turn the radio off so that you can concentrate on evaluating the car.

The engine should start immediately and idle smoothly. For automatic transmissions the transmission should engage as soon as you put it in drive. When the transmission shifts it should do so quickly and smoothly. If the engine suddenly speeds up when the transmission is shifting the car has major transmission problems which can cost $2,000 to repair.

Be on the lookout for excessive wind noise, vibration, squeaks and rattles. A certain amount of road noise is normal, but excessive noise or vibration could be the sign of mechanical problems or a previous accident. Try to drive over speed bumps or railroad tracks.

The car should drive in a straight line without pulling to one side, and it should handle a curve okay. If the steering wheel is off center or the car pulls to one side the car is not aligned properly and will cause premature tire wear. This can also be an accident indicator.

When braking the pedal should remain firm and not feel spongy or fade to the floorboard. If you feel a vibration when braking it's a sign of warped brake rotors. They can usually be machined, but if you need new brake rotors it could cost you $300 bucks.

If the car passes inspection, and you like it and want to buy it be sure and read our negotiating guide first.

Processing the paperwork

Buying a used car is a complex process. If you're buying at a dealership there will be a lot of paperwork involved. You can let the dealer handle financing for you, but you can usually save money by getting an online loan.

Read everything before you sign it.

Some of the forms a dealer may ask you to sign are:

• Odometer statement

• Bill of sale

• Title & registration forms

• As is form

• Arbitration form

• Insurance agreement

• Loan contract

• Bailment agreement

An odometer disclosure statement is required by federal law on all car sales by dealers unless the car is more than 10 years old. The mileage is recorded at the time the car is purchased and again when it is sold, and must be signed by both parties. Be sure the form you are asked to sign matches what is actually showing on the car. This helps to protect against odometer fraud.