Getting a Fair Deal on a Used Car

Car

For anyone not familiar with the process of selling/buying a car, it can be rough. Some of my first gigs out of high school were selling new/used cars and car maintenance, a breakdown of decisions involved may help expedite this process. Few sellers are just going to give buyers a car, “fair” may be the best way to look at this process.

Consider going to an auto auction, and paying a mobile mechanic to join you beforehand for a few hours to examine inventory and pay for a month of unlimited AutoCheck service to make informed bids. Autocheck will let you run unlimited VINs. Check the auctions previous auction winners and if the auction will let potential buyers start the car. It may cost $200 ($150 mechanic, $50 carfax), but the time frame is convenient and the risk – return seems manageable.

Ebay doesn’t appear to be that bad of an option due to protection mechanisms and clear time-frame. After a small sample of the selections and prices on Ebay, it’s much less appealing compared to Craigslist.

Nevertheless, here is an approach buying from a private seller on Craigslist:

Negotiation: 

Let’s start here for a macro perspective of the process and how to derive a fair dollar figure and terms.

Upcoming cloud software products like Jubaloo, are automating the processes involved, extracting as much data as possible quickly, and giving dealerships the ability to squeeze margins out of the market. It seems helpful to avoid coming off as a dealer swiping up all of the margins from the private owners market. Find a balance between taking time to make a well informed decisions and committing to a deal when it’s still available, feel out the seller, use instinct. Keep an eye on the market, be consistent, timing is critical and not always controllable, convey personality and disposition.  The most common cars sellers are resellers (from auto auctions), scammers, passive sellers (usually a higher asking price), and time sensitive sellers (best asking price).

Leverage information in the negotiation, the more data the better, make the deal as transparent as possible, and keep in mind data integrity (garbage in, garbage out). For example, it’s better to collect data from a mechanic you trust rather than some random cheap mechanic. Use a mechanic that is clearly ASE certified, AAA approved, and will provide a typed invoice and inspection sheet with a time-frame of upcoming services. Make sure to use vehicle history reports and pricing guides. It might be difficult to convince owners of seemingly “good deals” to have their vehicles examined, likely they are on a time crunch. Point out it’s possibly in their interest, it will let them come to an agreement quicker by providing independent proof of the cars condition or if it’s that good of a deal,call a mobile mechanic (and pay the extra $70, compared to a shop that will charge about $50, if anything for something real basic) . See if they’ll split the cost of the inspection and vehicle history report. If need be, propose adding specific terms to a warranty assumption, such as agreeing to an “implied warranty of merchantability”. If the inspection yields any immediate issues, get an estimate from a nearby mechanic, ask the owner to fix it or lower the price. If the price seems high or the car isn’t the greatest fit, use time to your advantage, don’t make an offer, ask if the owner is flexible on price and find the lowest they’ll go. If you’re interested consider using time, “to purchase the car right now i’ll pay… “.

It’s easier to purchase with cash especially if you plan to negotiate but a cashiers check will give you additional protection, such as the ability to stop the check. Have the cash available but if possible go to your credit union and use a cashiers check if the seller doesn’t want to go to the DMV. Also, possibly don’t make the exchange till you complete the title transfer and registration.

Initial Email:

In the initial email, don’t come off as a dealer or too much of a pain. Keep it short and simple, an over the phone conversation will provide a chance to ask questions.

i.e.

Hello,

I’m interested in your vehicle on Craigslist.

I have a few initial questions. Would you have any issue if I ran the Carfax? Are you available to show it today?

Thanks in advance.

2nd Email:

Thanks for the quick reply. Excellent, do you have the plate? Please call me when you get a chance, so I may ask a few questions and get a feel for the situation. I’ve had a rough experience buying a car lately. Would you mind if we met in a public place (not some rough, sketch neighborhood)?  🙂

Another approach that seems less effective.

Hello,

I’m interested in your vehicle on Craigslist.

I have a few initial questions. May I have the license plate? Do you have a recent vehicle inspection, would you let me take it to a mechanic? Do you have a link on how you derived the price? Lastly, are you available to show it today?

Before or during telephone conversation: 

Run a vehicle history report:
Carfax has an accuracy guarantee and development of myCarfax to easily manage and update public service history. On the other hand, Autocheck seems to be the industry standard, more thorough with exclusive partnerships, and will let you run by VIN (vehicle identification number), instead of plate which is associated to the seller.
https://secure.carfax.com/creditCard.cfx?partner=CFX_X&affiliateId=0
http://www.autocheck.com/consumers/gatewayAction.do?siteID=0&WT.mc_id=0

Find a nearby auto inspection shop. AAA has an 86 point inspection (and AAA gives premium members half off your first pre-purchase inspection if you mail in a rebate form):
Again, ask the mechanic to provide you with the information you’ll retain after inspection.
http://www.calif.aaa.com/home/automotive/maintain-vehicles/vehicle-inspection-program.html

Pricing Guides:
NADA (the industry standard, greater price volatility): http://www.nadaguides.com/?aid=80698&nozip=1&nopop=1
KBB (much more optimistic): http://www.kbb.com/

Over the phone:

It’s best to overcome any major issues asap to avoid spending time travelling to a car that doesn’t have a title available or other major issues (the car dies after if you bring it to a stop- not always preventable if the seller isn’t straightforward).

Do you have time to talk?
Do you have a Carfax report?
Why are you selling it?
Do you have a recent vehicle inspection, would you let me take it to a mechanic?
Do you have a maintenance record? what did you use to keep track of oil change intervals (excel file, write it down)?
Do you have a link on how you derived the price?
Are you available to show it today (meet in high traffic public place)?
Flexible with price?
Time frame to sell?
Passed SMOG?

In Person:

Questions: 
Is the mechanic able or willing to release service records if they are unavailable on CarFax?
Are they the original owners?
How long have they owned the car?
What are their daily driving habits?
How many miles did they usually drive?
Was it highway driving or around town?
Has the car ever been any accidents or fender benders?

Examine:
GoogleDocs Checklist Spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0ArhAm2zcAccQdDB4NHVCM2JXNFhxRlFuUzJKV3BIZFE&usp=sharing

Research the model of the vehicle, find out if there are any known issues?

Examine the pedals and drivers’ seat for wear.

Check the tires, especially the front, for wear.
With the car off, jiggle the steering wheel back and forth. There should be less than one inch of play, and no funny clunking noises.

Check the shocks by pushing the car down three times and releasing at each wheel.

Examine under the rocker panels on the side of the car for rust.

Check the coolant before the test drive,. It should not be brown.

Check the floor of the passenger compartment for soft spots (rust), and the inside of the trunk for holes.
When starting, the engine should turn quickly and the car should start easily.

A rough running car can mean any number of things, from leaky air hoses to plugged fuel filter to old spark plugs. Don’t discount a car just because it runs rough.
When driving the car, the brakes should not shake, grind or squeal loudly. Some squeaking is normal for disc brakes. The brake pedal should feel firm but not hard.
An automatic transmission should shift solidly. If you are unsure about the auto trans, shift it manually. There should be little lag between moving the shift lever and gear changes, and the engine RPMs should change quickly.
A manual transmission should be easy to put into gear, and the clutch should catch close to the floor.

Be sure to try the reverse gear as well!

Make sure all electric accessories work: windows, locks, audio system, seats, keyless entry and alarm (if equipped).

Check all doors for locking (manual and auto), windows, open them from the inside, the outside, and closing.

Turn on the heater (even if it’s summer) within moments of turning the car on. How long does it take to provide heat?

Test the air conditioning. If you have a meat thermometer, bring it and put it in the center vent to check the temperature. 50 degrees Farenheit is pretty cold.

Test drive the car like you’d normally use it. This includes freeway and city driving. Keep an eye on the temp.
While parked with the engine running, turn the steering wheel completely in both directions. A squealing noise indicates a slipping power steering pump drive belt. While this may be fixed by an adjustment, overheating from friction may have damaged the belt and it may need replacing. There should be no growling noise; such a noise indicates low power steering fluid, easily confirmed by inspecting the reservoir. Low power steering fluid is likely caused by a leaking power steering system, which could be a simple hose or clamp, an easily accessible seal (in an older vehicle), or a damaged steering rack, which can be quite expensive to replace.

Check the auto trans fluid with the engine running. It should smell sweet and have little particulate matter. Burnt orange or brown fluid means it hasn’t been changed in a long time. A burnt smell indicates a slipping clutch band, which may require a transmission rebuild to correct.
With the hood up, let the car idle with the AC running. Listen and look for the operation of the cooling fan near the radiator. If there was no overheating, this should be working fine. Keep your hands clear, as the fan can start and stop without warning (even if the car is off for a short period after it’s hot).

Check the oil with the engine off after the test drive,

Examine the battery

Check the air filter.

Examine the gaps between body panels. Uneven gaps indicate shoddy accident repair.

Consider bringing a small magnet with you.

Items to register the vehicle and transfer title:

Bill of Sale (for buyer/seller): http://www.dmv.ca.gov/forms/reg/reg135.htm

Make sure sure to sign and obtain a title. It’s best to have seller and buyer go to the DMV.  If possible, schedule an apt online.

Notice of Transfer and Release of Liability (for seller):
http://dmv.ca.gov/online/nrl/welcome.htm
http://www.dmv.org/ca-california/title-transfers.php

The license plate belongs to the seller, the vehicle owner, instead of the vehicle. The DMV will provide a new plate after inspection and registration.

Additional Resources:

Checklist when inspecting yourself:
http://www.dmv.org/buy-sell/used-cars/used-car-work-sheet.php
Tax Calculator:
http://www.carmax.com/enus/tax-title-tags-fees-calculator/default.
Lemon Law:
http://www.lemonlawyerca.net/lemon_law_used_cars/Used_Cars-3-Lemon_Law.htm
How to guide:
http://www.wikihow.com/Buy-a-Used-Car-from-a-Private-Party
http://www.angieslist.com/articles/7-things-you-must-do-when-buying-used-car.htm
http://eagain.net/blog/2007/02/20/buy-a-car.html
http://www.dol.wa.gov/vehicleregistration/tipsbuyingcar.html
https://docs.google.com/file/d/0B7hAm2zcAccQekJMSlpkRVQ2Z1E/edit?usp=sharing

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