Used Car Shopping
Some consumers may not have enough money to buy a new car but need a reliable way to get to and from home, work, and other places. They may try to find a good used car. Consumers buying a used car need to be diligent about ensuring they get their money’s worth. Used cars may come with a history of accidents, repairs, rattles, dents, and dings.
The Attorney General’s Office encourages consumers to consider the following information when purchasing a used car:
Research and Compare Prices
Internet-savvy consumers can take advantage of car sales and informational websites to learn about the safety, reliability, price, and performance of different vehicles. Learn the prices for different car models to make sure you don’t get taken for a ride by a seller.
Check the Reputation of the Seller
Once you have chosen a particular car and seller, contact the Better Business Bureau to check the seller’s reputation. Additionally, the Driver and Vehicle Services Division of the Minnesota Department of Public Safety licenses and regulates car dealers in the State of Minnesota. You may also ask friends and family if they previously bought a car from the seller or know anything about the seller.
Obtain the Title Information and History
Because some cars have a history of accidents, flood damage, or being totaled, research a vehicle’s history to safeguard from possible future problems. Information may be obtained by contacting the Minnesota Department of Public Safety Driver and Vehicle Services Division.
Many sellers will also provide vehicle history reports created by third-party providers for no charge upon request. You should attempt to obtain information about any flood damage, odometer rollbacks, lemon histories, salvage titles, emissions results, or use in a lease or rental program. In some cases, you may be able to contact past owners of a vehicle to discuss its history.
You can also check for information about vehicle recalls and technical service bulletins through the National Highway Transportation Safety Administration’s website, www.safercar.gov.
Perform or Obtain an Independent Vehicle Inspection
Even if the previous owner and dealer seem trustworthy and say there’s nothing wrong with the car, have it inspected by a qualified auto repair shop. Salespeople aren’t mechanics. You can take the car to an independent mechanic or to a diagnostic center. A body shop is also a good option for determining if the car has had body damage or been in an accident. If the owner won’t allow you to have the car inspected, take your business elsewhere.
Check for a Buyer's Guide
The Federal Trade Commission’s Used Car Rule requires dealers (i.e., those who sell more than six cars per year) to post a Buyer's Guide in every used car they offer for sale. The Buyer’s Guide will tell you the following things: whether the vehicle is being sold “as is” or with a warranty; what percentage of the repair costs a dealer will pay under the warranty; that spoken promises are difficult to enforce and to get all promises in writing; to keep the Buyer’s Guide for reference after the sale; to obtain a vehicle history report and an inspection by an independent mechanic; and the major mechanical and electrical systems on the car, including some of the major problems you should look out for.
Get a Good Loan
You will typically pay a higher interest rate on a used car loan than a new car loan. In addition, lenders typically will not finance more than 80 percent of a used car’s value. Be wary of finance companies or car dealers that advertise they can obtain loans for anyone, including high-risk individuals. You will often pay a higher interest rate from these lenders than at other institutions.
Banks and credit unions frequently offer the lowest rates on loans, but car manufacturers and finance companies also offer loans. The dealer won’t necessarily offer the best interest rate. For example, a dealer may obtain a loan from a bank at 11 percent and then sell the loan to a consumer at 15 percent, making a four percent profit margin for the dealership. When negotiating a loan, consumers should ask their dealer at what rate the bank is willing to lend and through which institution the dealer is making the loan.
Three-day Cooling-off Period?
A car-buying myth! Unlike some types of purchases, there is no legally required three-day cooling-off period in which to reconsider a car purchase, although some dealers will offer it as a sales tool. In other words, you won’t be able to return the car once you drive it off the lot. Therefore, do not sign a purchase agreement for a car unless you’re sure you want it.
Buying a Car “As-is"
Vehicles marked “as-is” at a car dealership are not covered by the used car warranty law, and consumers buying such vehicles assume all responsibility for repairs. This means that once you sign the purchase agreement and drive the car off of the lot, the dealership has no responsibility to take back the car or make repairs on it.
A Word about Service Contracts and Maintenance Packages
Motor vehicle service contracts and maintenance packages are two separate products. Motor vehicle service contracts are regulated by the Minnesota Department of Commerce. Service contracts are sold by both manufacturers and third-party companies. Make sure you understand exactly what company is behind your contract, since many companies that market these contracts are not the “providers”—the entity responsible for paying claims and performing under the contract. Unless the provider is a manufacturer or licensed dealer, it should be registered with the Department of Commerce and have filed information about its financial ability to faithfully perform its obligations.
To avoid needlessly purchasing duplicate coverage, consumers should find out the duration of, and the repairs covered by, the manufacturer warranty and compare them to the service contract. Not only should consumers determine what repairs are included before purchasing the service contract, they also need to determine how deductibles are applied (i.e., whether they are per repair or component) and whether pre-approval is needed for repairs. After carefully reviewing the terms, consumers can decide whether the coverage is worth the cost. Service contracts are optional products. A consumer does not need to buy a service contract or maintenance package to complete the purchase of a vehicle or obtain a loan for the car. Consumers should closely review service contracts to determine whether the coverage is worth the cost.
Maintenance packages typically only cover minor services, such as oil changes, tire rotations, and lube jobs. Some consumers complain that, although they believed their maintenance package would cover repairs, they found the packages useless once their vehicle broke down. In addition, maintenance packages often limit a customer’s mobility because they require the customer to have the vehicle serviced at the dealership where it was purchased.
Other Optional Products
Car dealerships offer a variety of other optional products to go along with the purchase of a car. Optional products are “high profit” items for car dealerships. Many items, such as paint sealant, fabric protector, or accessories may be obtained for a cheaper price from a retailer outside the dealership. Some consumers have complained that dealers talked them into purchasing optional products that they did not want or need.
Although you can’t guarantee that you will know everything about a car if you take these steps, you will have gone a long way toward it. The following agencies can provide more information for you in your search for a used car:
Federal Trade Commission
Consumer Response Center
600 Pennsylvania Avenue NW
Washington, DC 20580
TTY: (866) 653-4261
Minnesota Department of Public Safety
Driver and Vehicle Services Division
445 Minnesota Street, Suite 190
Saint Paul MN 55101
Vehicle Services: (651) 297-2126
TTY: (651) 282-6555
Minnesota Department of Commerce
85 7th Place East, Suite 280
St. Paul, MN 55101
(651) 539-1500 or (800) 657-3602
Online Car Sales
Although it may be an effective tool in locating potential buyers and sellers, the internet can also be a haven for fraudulent actors looking to make easy money at the expense of others. A current car scam illustrates the point.
A "curbstoner" is an auto dealer without a proper license who attempt to fly under the radar by posing as private sellers - placing vehicles for sale on the street and in parking lots and running advertisements in newspapers or on free online classified websites. Buying a vehicle from a "curbstoner" can carry risks.
So you want wheels. And you want the best deals on wheels. You’ve come to the right place. The Minnesota Attorney General’s Office has compiled the latest research and tips on buying cars, with crucial information concerning your legal rights as a consumer.