Car Handbook

Considering an "Experienced" Car?

The good thing about buying a used car is that it has a history. The bad thing about buying a used car is that it has a history. Experience can be a good teacher. When you buy a used car, it’s possible to know the reputation of the make and model better than you would for a new car, especially a freshly minted model. You won’t know, however, if the vehicle was treated properly, unless you’re a good gumshoe detective. Learn to be one.

To start your research, take a trip down to the local library where books and magazines provide comparative information or go online and see what information you can find. Every April “Consumer Reports” publishes a detailed report of repair and maintenance frequency for used cars. The publication lists cars by price and provides important safety and fuel efficiency information. But don’t stop there. “Road and Track,” “Motor Trend,” and “Car and Driver” have automotive reviews, too.

What’s a Used Car Worth?

Even those who know next to nothing about cars will tell you to consult the blue book to find out what a used car’s value is. But don’t be thrown when you discover that the blue book is orange. The book’s actual title is the “National Automobile Dealers Association’s (NADA) Used Car Guide,” and it’s pocket-sized. NADA’s blue book can be found at the library, most bookstores and online at www.nadaguides.com. Other guides also exist, including “Edmunds” (www.edmunds.com) and “Kelley Blue Book” (www.kbb.com). Car prices may vary between these books, but many dealers and loan officers go by NADA’s guide, so it’s your best bet. The websites are very user friendly as well. They will ask you questions about the car, and then give you a likely price.

The blue book shows the average trade-in price, average loan price, and average retail price for each model car by year. If the car is older than seven years, look it up in the “NADA Older Used Car Guide.”

The guides offer estimates only. Naturally, if the car you’re purchasing was stampeded by elephants escaping the zoo, its value will be lower than what NADA lists. And don’t buy the first car you look at. Comparison shop to get a feel for prices in your market.

Three Ways to Get What You Pay For

When buying a used car, you need to be even more diligent about making sure you’re getting your money’s worth than when you’re buying a new car. New cars are expected to work perfectly. Used cars come with a history of accidents, repairs, rattles, dents, and dings.

Following these three important steps will help protect you from being fleeced when buying a used car:

1. Check the reputation of the seller,
2. Obtain the title information, and
3. Have a complete maintenance and body check.

Although you can’t guarantee that you’ll know everything about the car if you take these steps, you’ll have gone a long way toward it.

1. Check the Reputation of the Seller

Although it isn’t possible to check the reputation of a private individual, you can check out a dealer. You should find out the following:

• How long has the dealership been in business?
• How does the Better Business Bureau rate it?
• Has it been sued by the Minnesota Attorney General? If so, why?

All these questions should be answered to help you feel secure that the dealer will honor any contract you sign.

Your Best Bet Is a Reputable Dealer
The best protection against fraud is to work with a reputable dealer. Call the Better Business Bureau, ask opinions of friends and relatives, and maybe even get names of former customers for reference.

2. Obtain Title Information

The title is like a résumé of your car’s life, indicating how many miles it may have on it and if it is a prior salvaged vehicle. To get title information, contact the Minnesota Department of Public Safety Driver and Vehicle Services Division at (651) 297-2126. The Department of Public Safety can verify the odometer reading and whether or not the car was salvaged. You can also demand this information from the dealer. When a car is sold to a dealership, that dealership takes control of the title. Nothing prevents the dealership from showing you that title.

1. Obtain a CarFax Report Online: For a fee, companies like CarFax (www.carfax.com) will give you specific information about the car you are looking at. Obtaining a detailed report may answer important questions such as: Is there a problem with the odometer reading? Does the car have an accident history? Does the car have a clean title?
2. If the Car Was Totaled: By Minnesota law, the title must be stamped “prior salvage” if the car was totaled and then rebuilt any time after June 1993. If this is the case, you’ll want to check that everything was put on the car when it was rebuilt. A previously totaled car may not be as structurally sound as another car. Have the car checked at a body shop before you decide to buy it.
   
3. Odometer Readings: The lower the mileage, the higher the price for the seller. It’s no wonder billions of dollars are bilked from consumers every year by sellers who turn back the miles on odometers. Because about 90 percent of odometers that are rolled back come from other states, you should research out-of-state vehicles thoroughly. To get a copy of the title, you’ll need to contact the Department of Motor Vehicles in the state where the former owner lives.

3. Have a Complete Maintenance and Body Check

Even if the previous owner and dealer seem trustworthy, and say there’s nothing wrong with the car, have the car completely inspected by a qualified auto repair shop. Salespeople aren’t mechanics. You can take the car to a gas station mechanic or to a diagnostic center. A body shop is also a good place to stop to see if the car has had body damage or has been in an accident. If the owner won’t allow you to have the car inspected, take your business elsewhere.

Can You Read Between the Odometer’s Lines?

Let’s say you answer an ad for a 10-year-old car with only 50,000 miles. That’s considered a “cream puff” in the industry because it has far less mileage than you’d expect for a car its age. Mr. Al Smiles, who’s selling the car, is looking to grease his palm. He tells you the car was driven by a little old lady who just went to the grocery store and back. How would you check out his story?

First of all, realize that by rolling back the odometer, also called “whipping” or “busting” miles, Mr. Smiles can make a big profit. An average of more than $1,000 is added to the price of cars with rolled-back odometers, according to the National Highway Traffic Safety Administration. Odometer fraud rips off customers by more than $1 billion a year.

By law, all sellers, private or otherwise, are required to verify that the odometer reading is accurate to the best of their knowledge. If Mr. Smiles knows the mileage is higher than the odometer reading either because of the odometer’s mechanical limits or because of odometer tampering, he must disclose this. The law states that the seller must provide this information for all vehicles, except those that are ten years old or older, exceed 16,000 pounds, or are not self-propelled—such as trailers or other pulled vehicles.

Signs of Odometer Tampering

If Mr. Smiles isn’t forthcoming with information, check the following for signs that the mileage shown on the car is wrong:

• Numbers on the odometer look misaligned or the odometer doesn’t work.
  
• Missing screws or loose parts on the dashboard, indicating the odometer has been disassembled.
  
• Unusual wear on the brake pedal, carpet, and driver’s seat, suggesting more extensive use of the car than the mileage reading indicates.
  
• Non-original or mismatched tires on cars with odometer readings under 30,000 miles. Such vehicles should have the original tires and all the tires should be of the same brand and model.
  
• Dated oil-change stickers on the door jambs showing mileage inconsistent with the current reading.
  
• Dated repair orders or inspection certificates in the glove compartment, under the seat, or in the trunk, showing mileage inconsistent with the current reading.
  
• A recent title, a title stamped “duplicate,” or a title issued in another state.
  
• A short ownership time of perhaps a month or less. The “date issued” section on the title will tell you how long the last owner had the car. Short ownership may indicate that a dishonest dealer put the car in a spouse’s or friend’s name and then rolled back the odometer before reselling the car. The spouse or friend will most likely verify the false reading if you call to inquire about it.

Certified Used Cars

A dealer cannot advertise a used vehicle as “certified” (or some similar word) if the dealer knows or should have known that any of the following apply to that vehicle:

1. The odometer does not indicate the actual mileage that the vehicle
   has driven;
   
2. The vehicle has been repurchased by a manufacturer or dealer pursuant to a warranty or lemon law;
   
3. The title to the vehicle has been “branded” with some designation, such as damaged, flood, junk, lemon law buyback, manufacturer repurchase, non-repairable, rebuilt, reconditioned, or salvaged;
   
4. The vehicle has sustained damage in an accident, fire, or flood which substantially impairs the use or safety of the vehicle;
   
5. The vehicle has sustained frame damage;
   
6. The dealer fails to provide the buyer with a completed inspection report indicating all of the components inspected prior to the sale; or
   
7. The vehicle is sold “as is” or with some other warranty of merchantability disclaimer.

Your Personal Inspection

Your inspection will not replace a mechanic’s inspection, but you can eliminate obviously poor vehicles with a few tools and a little know-how.

You’ll need to get down and dirty to do this inspection, so wear old clothes and work gloves. If that isn’t your style, find a mechanically-minded friend to go with you. It’s also a good idea to bring a friend to help you check the lights and exhaust when you start the car, to offer opinions on seat comfort, and for moral support.

Your Tool Kit

When you’re used-car shopping, you’ll need to carry the following to make your own inspection:

• Flashlight: to look for rust in dark places such as wheel wells, and for inspecting under the hood.
  
• Rags: to check the oil and other fluids and to clean your hands.
  
• Magnet: to detect panels filled with plastic body filler, indicating the car was in an accident. The magnet will not be attracted by plastic.
  
• Notebook and Pen: to write down your findings so you can compare the cars you’re considering.

What to Look at:

1. Look for leaks.
With the engine off, check the pavement under the car. A wet black stain means leaking oil. A reddish stain is transmission fluid or power steering fluid. If the stain is colorless or green, it could be a leak in the cooling system. A colored stain could also mean leaking brake fluid. A clear leak that smells like gas probably is gas and could signify a fuel system leak. Don’t linger over the spill because gas is toxic to breathe and highly flammable.

2. Check the radiator.
Never take the cap off a hot radiator. If the radiator is cool to the touch, remove the cap and inspect the water or coolant. If it looks rusty, that could mean corrosion in the cooling system. Next, look for oil in the radiator. It usually appears as a shiny film floating on top of the water or coolant. If you see oil in the radiator, the car probably has an extremely serious problem such as a cracked head or head gasket leak.

3. Check the battery.
Look for cracks and leaks. Find out how old the battery is. You can check the cell’s fluid level in older batteries. If the plates in the battery aren’t covered by fluid, the battery hasn’t been properly maintained. This is an indication that the rest of the vehicle may not have been well-maintained, either.

4. Check the dipsticks.
Look at the engine oil dipstick. A low oil level could mean the previous owner didn’t maintain the car regularly. Or it could be a sign that the car burns too much oil. If the oil is gummy or dirty, it hasn’t been changed often enough and the engine could be badly worn out.

Next, check the transmission dipstick while the car is idling. A low fluid level may indicate a leaking transmission. New fluid is red. Discolored fluid could indicate a transmission problem, but it doesn’t always mean trouble. If the fluid smells burnt or is discolored, have a mechanic check it out before you buy the car.

5. Test the shock absorbers and struts.
Push down on each corner of the car. The car should not bounce more than twice. If it does, the shocks and struts need to be replaced. Remember that they are installed in pairs, so even if only one corner of the car fails the bounce test, you will have to buy at least two new shock absorbers or struts.

6. Check the tires.
Make sure the “wear bars” in the tread depressions don’t show through. If they do, the tires must be replaced immediately. If the tires are worn unevenly, particularly if one side of the tread is more bald than the other, the car probably needs an alignment. Be sure to check the spare tire. Often, a seller puts an old tire in the trunk, so even if the mounted tires are new, you can examine the wear patterns on the spare. If you think the car needs to be aligned, consult a mechanic before buying it. The problem could be minor, but it also could indicate the car has been in an accident and will never align properly, or that other important parts such as the tie rods and ball joints need to be replaced.

7. Check the tailpipe.
Run your finger around the inside of the tailpipe. Assuming the car does not have a diesel engine, it probably burns too much oil if the residue inside the pipe is greasy or sticky. White or gray powder, however, is nothing to worry about.

8. Watch the dashboard lights.
Now you’re ready to turn the ignition key to the first position. Make sure the alternator, oil pressure, and “check engine” lights go on. If they don’t, it could mean a bulb needs to be replaced. Or it could mean that the seller has deliberately disconnected the lights to prevent them from signaling mechanical trouble. Start the engine. Now the lights should go out. If they don’t, the car could have a problem with the systems indicated.

9. Let the engine idle.
With the car in park, raise the hood and listen to the engine. If you hear a loud noise that sounds like a sewing machine, the car may need a valve job. Step on the accelerator and rev the engine. If you hear a rumbling or hammering sound, the rods or bearings may be bad. Either way, that can spell expensive repairs.

10. Look at the exhaust smoke.
With the engine warm and running but still in park, press down on the accelerator and look in the rearview mirror. If the smoke from the exhaust is white, it’s generally a bad sign. It might be only water vapor, but it could be a warning of a cracked engine block, head, or head gasket. Likewise, blue smoke can mean the car has bad piston rings or needs an expensive valve job. Black smoke means a too-rich mixture of gas to air, sometimes fixable with a simple adjustment, other times requiring an expensive sensor or computer repair. Under normal weather conditions, the smoke should be clear and colorless when the engine is warm.

11. Test the exhaust system.
A rumbling noise from under the car but not under the hood is an indication of a substantial exhaust leak. Have a mechanic check to see if the exhaust system needs work or if the muffler needs replacement.

12. Test the brakes.
If the car has power brakes, step down on the brake pedal with the engine running. You should not be able to push the pedal all the way to the floor. It’s a bad sign if there is less than a 1½ inch clearance. Don’t just tap the brakes. Hold your foot in place for a minute or more to be sure the brakes don’t give way or feel mushy.

Test Driving a Used Car

Don’t let the owner take you for a ride! Insist on getting behind the wheel yourself for the test drive. Drive over hills, on city streets, and on freeways. Make sure the car doesn’t pull to one side. Brake the car and check to see that the brakes don’t lose pressure when you press hard on them.

If the car has an automatic transmission, see if it shifts smoothly. Drive forward and backward in an empty lot to see if there’s any noise or slippage. Be sure to turn off the radio while driving so you can listen for strange sounds coming from the engine. Finally, if the test drive was scheduled ahead of time and the owner warmed up the engine, be suspicious. A warm engine can conceal many flaws.

Beware of Flooded or Salvaged Used Cars

Buying a used vehicle has certain risks. According to experts, however, buying a flood damaged car or truck can be especially risky and potentially very expensive. For one thing, many newer vehicle models have sensitive electronic wiring and computer components under the seats and in the dash. Although damage from small amounts of water may be reparable, serious flooding in the vehicle compartment often permanently impairs essential onboard computer systems. Furthermore, the water may damage not only electrical components, but also the structural frame and vehicle interior. Worst of all, such water damage may not appear for months or even years.

In any given year, thousands of badly damaged vehicles are cleaned, repaired, and shipped from state to state. As the thousands of cars and trucks are shipped from state to state, some sellers may try to hide the vehicle’s tumultuous history. The Minnesota Attorney General’s Office urges Minnesota consumers and businesses to be aware of flood damaged vehicles and unscrupulous sellers who may try to hide the vehicle’s history.

How Car Titles are Hidden

Fraudsters often use a combination of cheap cosmetic repairs and title “washing” or “laundering” to hide a vehicle’s past. Title laws vary between states, and crooks use this lack of uniformity to their advantage. Some states even lack salvaged vehicle “branding” requirements, which require title notations indicating that a vehicle has been “flood-damaged,” “salvaged,” “rebuilt,” or other similar history. In Minnesota, for example, the registrar of titles must record the term “flood-damaged” on the certificate of title for a vehicle for which the application for title and registration indicates that a vehicle has been classified as a total loss due to water or flood damage. Such laws may not be enough, however, to protect consumers from unscrupulous dealers who often move previously totaled cars and trucks through several states until the vehicle obtains a clear or “washed” title. Minnesota titles do not reveal the original owner of a vehicle that has been sold numerous times; it only lists the current owner. Thus, if a flood-damaged car in Louisiana gets run through Kansas before finally being sold in Minnesota, the title will not reveal that the car was originally from Louisiana.

Tips on How to Avoid Flooded Cars

1. Check the vehicle’s title.
Make sure the vehicle you are eyeing has a clean title. Doing so can help you avoid numerous headaches in the future. You can obtain title information by contacting the Minnesota Department of Public Safety Driver and Vehicle Services Division at (651) 297-2126. If you are buying from a dealership, you can also demand this information from the dealer. If the dealer refuses your demand, go elsewhere.

2. Obtain a CarFax report.
A CarFax report can be purchased for $39.99, five reports for $59.99, or unlimited reports for $99.99 by accessing their website (www.carfax.com). CarFax also offers a free record check and reports the total number of vehicle history records that exist in their database for that vehicle; you can decide at that point if you wish to purchase a report. While state-based title searches can be useful, they may be limited by government data practices laws or unscrupulous means of title “washing” (shuffling the vehicle through several states). CarFax reports may contain certain information regarding the vehicle’s past whereabouts and the vehicle’s accident history missed by state-based title searches. Additionally, CarFax has access to information regarding the vehicle’s repairs, which can be extremely helpful. A word of caution however, CarFax may not have the complete history of every vehicle, so use this as just one tool when you are considering a used car.

3. Conduct a physical inspection.
A good auto detail can do wonders in concealing evidence of flooding. Take your time and conduct a thorough inspection. Here are a few suggestions:

• Look under the carpet in the trunk and under the seats. Evidence of dampness, rust, mud, or silt may indicate flooding.
  
• Inspect the door speakers, windshield wipers, radio, air conditioner, and other electronics. They often won’t work if there has been water damage.
  
• Beware of new or mismatched items in an older car, including new electrical components, seats, and carpeting that doesn’t match the interior.
  
• Check for rust and excessive flaking metal on the undercarriage or springs under the dashboard and seats.
  
• See if there is any obvious paint overspray indicating recent body damage.
  
• Smell for a musty or moldy odor, particularly in the trunk.

4. Go on a test drive.
Don’t accept a salesperson’s word that the damage was minor; demand proof.

5. Use extreme caution when buying online.
Online car sales are becoming increasingly popular. You can go online to narrow down your search for local cars and then go inspect/drive the car before making a purchase. Many people, however, are buying cars from far away, uninspected and unseen. Remember, just because you are buying a car from Madison or Chicago, it doesn’t mean the car wasn’t originally flood damaged in Houston or Jacksonville. If the delivered car is not as represented online, it may be very difficult to resolve the problem. If you do buy a car online, make sure you use a secure escrow service
such as PayPal.

Final Issues

If you’ve decided on a car you want, then make a bid. It’s a good idea to review the strategies in "Negotiate From the Driver's Seat" before negotiating the sale. If the car comes with a warranty, check it over. Read about used car warranties in "Words About Warranties." Finally, get ready to sign the contract. The car may soon be yours!

Signing the Contract

Before you sign, take out your magnifying glass—or whatever it takes—to help you read the fine print on your purchase contract. Sure, sure, everyone says that. So what specifically should you look for on a used-car contract?

• See if the warranty is noted and that you receive a completed copy of the buyer’s guide.
  
• Make sure any agreements you made with the seller to repair the car as a condition of the sale are written into the contract.
  
• Check that it’s in writing that the dealer has completed all federal government safety recall service needed for the car.
  
• Make sure all blank lines are filled in on the contract.

Remember, there is no three-day cooling-off period for car sales!