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BUYING A USED CAR THE IQ WAY

A used car, wisely bought, is a much better buy than a new car for most of us. You can buy more car, lose less in depreciation up front and enjoy lower payments—three good reasons to smile. But if you're not careful, buying a used car can be a disaster! You might pay too much for an unsafe car that's a lemon and vastly overpriced.

But do it the IQ way, and you'll be driving a fine car every time. Do it like this:

1. Determine your Available Cash

I’ll show you how to do that right here in Chapter 2 of this guide.

2. Check out the used vehicles online at Educators or at the Sturtevant branch.

While Educators  Auto & Lease cannot sell you a vehicle, they can lease you a vehicle. Genuine Cap Cost and real transparency in the entire transaction mean you won’t feel pressure or be mislead. Educators Auto & Lease offers traditional leases and lease to own.

3. If you’re buying a used vehicle some place other than at the credit union, follow these steps:

Shop for cars with an NADA loan value about $800 under your Available Cash figure. Don't worry about the car's asking price. That's what the dealer dreams you'll pay.

Incidentally, the reason you're looking for cars $800 under your Available Cash figure is to leave room in your budget for dealer profit, taxes and the like.

When you buy a used car, where you shop isn't nearly as important as how carefully you shop. Look in the newspaper. Look on used car and new car lots.

Quick IQ Tip: Don't shop on rainy days.

On rainy days, it's hard to see body damage and you're less likely to give the car a thorough check-over. Don't be in a hurry. Each used car is unique. A car that looks just fine can be a monster.

4. Get previous owner information, if possible.

If you're looking for a car by yourself at a dealership, and have found one you like, without fail, get the name and number of the previous owner. If a seller won't (or can't) give you this information, don’t buy the vehicle unless you have it thoroughly checked out by a mechanic or diagnostic service. If the dealer will tell you the previous owner’s name, ask the previous owner:

1. How many miles were on the car when it was traded in?
2. What was wrong with the car? Make a list of the car's problems, in detail.

5. Get the vehicle inspected by your mechanic before you set the price.

Take the car to a mechanic of your choice. If the seller won't let you have a vehicle inspected, don't buy the car. Don't even take it as a gift.

Auto service centers, such as tire dealers or department store auto service facilities, are good for pre-purchase inspections, as are independent diagnostic services that do not make repairs. Also search used vehicle inspection services on the Web for inspection services in your area.

With your list of problems from the prior owner, ask your mechanic to check the car carefully and tell you how much he'll want to put the car in good running order—not to make it like new. Taking a car to a mechanic is the most important step you must take. Don't buy a used car if you don't do this.

6. Use estimated repair costs to negotiate a better price.

Budget the repair costs and use them as bargaining chips. If your Available Cash figure is $5,000, and a mechanic says you need to spend $1,000 on repairs, you can't spend more than $4,000 on that particular car. Don't be shy in telling the seller that.

Quick IQ tip: Forget the asking price.

Start bargaining up from loan value (or less). You can use a third-party, commercial, online price guide such as nadaguides.com to get loan value. Or call Educators!

7. Negotiate warranties after price is set.

After you agree on price, negotiate a warranty. Don't even mention warranties until you agree on price. If you do, some sellers will just add the cost of a warranty to their selling price without telling you.

The warranty to fight for is a free 90-day, 100 percent drive-train warranty. Under the terms of this warranty the seller will repair anything that makes the car run for three months. Power windows and the like aren't covered, but you can live with that. If you can't get a free 90-day warranty, try for a 60 or 30 day.

The warranty to avoid is any “50/50” warranty. It's you pay half, they pay half. What's the problem here? If you have a $50 repair, some dealer shops will bill you $100. Your 50 percent now just happens to be the whole bill.

Quick IQ tip: Used car service agreements.

What about used car “service agreements” and the like? Extended service agreements can be good. But many dealers charge two or three times as much for their agreements as they are worth. Don't automatically fall for the dealers' sales pitch. Shop around. If you are an auto club member, see what they offer.

IQ Car Buying Guide is prepared by Remar Sutton and Associates and licensed to Educators Credit Union. Copyright 2007. All rights reserved.

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