When you buy a car from an individual, you pay with cash, a money order, or a bank cashiers check. The money can come from savings, a checking account, a family loan, or a loan from a bank or financial company. Most sellers do not like personal checks.

Buyers sometimes expect a private seller to “take payments” but any smart seller will not agree to such a plan. It is too risky. As a buyer, it’s better to get your own loan.

Requirements for a car loan

Loans from banks or finance companies require that you have a not-so-bad credit score, have an income sufficient to repay the loan, and have no excessive debts that might interfer with your ability to repay the loan. Loan companies do not want to give money to people who are unable to repay a loan.

Buying a car with bad credit – or no credit

People who have a bad credit history — a history of not making payments on time or of missing payments on other loans – will have problems getting a car loan. The lender will assume that if you have had problems in the past, there is a good chance that you’ll have problems again.

Most first-time car buyers have no credit history. Having no credit history is almost as bad as having a flawed credit history. Loan companies don’t have enough data to make a decision about you, so they often take the safest route and reject your loan application. Building good credit takes time and there is no quick easy solution.

The solution for people with bad credit or no credit is to get a co-signer, who agrees to make payments if you should default. Although the loan is completely in your name, the co-signer would have to pay if you do not. It is a good way not only to get a loan that you might not otherwise be able to get, but it provides a good way to build your own credit history for the next time you need a loan.

Getting a loan

When you buy from an individual, get a complete description of the car, year of manufacture, make, model, and list of options. Also get the VIN (Vehicle Identification Number), the price you intend to pay for the vehicle, and take this information to your bank, finance company, or online loan company to apply for a loan. The amount of the loan for which you will be approved will depend on the age of the vehicle, its “black book” value, your income, your debts, and your credit score. If you can’t get approved for the full amount of the price of the vehicle you want, you’ll have to come up with cash to make up the difference.

The bank or loan company will look at your information, get your credit score (and your co-signer’s), and verify your income and debt information. They will come back to you to let you know that you are approved (or disapproved), and the amount of money they are willing to provide to you for the vehicle. The bank or loan company will write you and/or the seller a check.

Write a Bill of Sale

It is good to create a simple legal document called a Bill of Sale. It can be an informal handwritten document, or you can pick up a printed version at any office supply store. It should contain the names and addresses of both buyer and seller, a description of the vehicle, makes/model/year, VIN number, and mileage. A smart seller will also insert a clause stating that he vehicle is being sold “as-is” without warrantees or guarantees. Both buyer and seller should sign and date the document. Make a copy for both buyer and seller.

Get a clear title

Make sure the seller has a clear title that he can hand over to your at the same time you hand him your money. If he still has a lien (loan) on the vehicle, you should conduct the transaction with the seller at his bank. That way, you can see that his loan gets paid off with your money and that the bank gives you the title directly. Accept no promises from a seller about sending the title to you later.

Inspect the vehicle

It is also good to have had a mechanic inspect the vehicle before the sale to make sure you understand the car’s condition. It is not a good idea to simply accept the seller’s word about the condition of a car. Not that sellers are dishonest (although some are) but he may not know about some hidden problems, and therefore can’t tell you about them.

Also get an AutoCheck® Vehicle History Report. so that you’ll know if the car has been wrecked, flooded, or has been involved in accidents. Although these reports can have incomplete and sometimes inaccurate information, they are very valuable when buying a used car.

Where to find cars from private sellers

They are everywhere. Newspaper classified ads. In free “auto trader” magazines at your local auto parts stores and supermarkets, and at online classified web sites. We also suggest you check out eBays list of  where more used cars are sold every day than from any other source. Just take caution and ask a lot of questions.

Summary

Buying a car from an individual is not difficult, but there are precautions you need to take to make sure you don’t have problems. Remember, used cars are nearly always sold “as-is” which means you can’t take it back if you find problems later. Furthermore, lemon laws don’t apply to used cars and there are no “3-day right of return” laws as many people believe.

For additional information and advice about buying used cars, see the Used Car Buyers Guide.

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Independent Used-Car Dealers – Independent used-car lots are a potential source of affordable cheap second hand cars. Many lots have older vehicles that can be real bargains, but might require a little work. You should take care to determine if the price is fair and that the vehicle has no hidden problems. Most used cars are sold “as-is” and come without any kind of warranty or return policy. Check out local used-car lots in your area but also consider large national or regional used-car dealers such as CarMax.

New-Car Dealer Used Car Lots - Many new-car dealers also sell pre-owned cars. Most new-car dealers only offer relatively late model used vehicles that have been taken in trade or are off-lease, and are in good condition — and are relatively expensive. But bargains can be found. Therefore, it doesn’t hurt to check out local new-car dealers but also look at other sources listed below. Some new-car dealers sell “certified” used cars — at a higher price. These cars have been inspected thoroughly and come with a short guarantee.

Buy-Here-Pay-Here (BHPH) Dealers – BHPH dealers are a different kind of used-car dealer that provides in-house financing, usually with no credit check. Most BHPH dealers are local and can be recognized by their “we finance anyone” or “no credit check” banners. Be aware that interest rates are usually very high and payment terms are strict. See “Should I Buy From a Buy-Here-Pay-Dealer Car Dealer” for more details.

Special Promtional Deals on New Cars- Don’t overlook this year’s (or last year’s) brand new cars as a potential source of good bargains. There are currently tons of heavy rebates and other incentives being offered by car manufacturers, especially on American brands, and especially on last year’s models, that can often make certain new cars less expensive than used cars of the same make and model. See New Car Rebates and Incentives.

Used Cars Online – Although the Internet is a good potential way to find cheap cars, take extra caution due to the possibility of getting scammed. If a deal seems to be too good to be true, it probably is. Craigslist and Autotrader are particularly frequented by scam artists. We recommend sticking with sites such eBay Motors, which has a buyer protection program (only for cars puurchased through the eBay site) and UsedCars.com, the Internet’s largest used car buying service, with over a half a million used car listings.

Lease a New Car – If your goal is simply to get low monthly car payments, leasing a new car can be 30% to 60% less expensive than buying the same car with a loan – cut your payments in half. This allows you to drive a brand new car for the same or less money than you might spend on a late model used car. However, be sure to read the free Lease Guide before you make a decision to lease. It’s cheap but may not right for everyone.         

Take Over a Car Lease - Take over a cheap car lease from someone who needs to get out of their lease early. Online services such as Swapalease offer car lease takeovers at bargain prices. These are almost-new cars being offered by sellers who are often desperate to get out of their leases. These can be excellent deals. It is the cheapest way to drive a almost-new car.

Government Car Auctions – This is an often overlooked source of cheap cars and trucks. Local, state, and federal government and law enforcement agencies frequently auction surplus and seized vehicles. Outstanding bargains are possible. To participate, you have to know where and when the auctions take place, and how to bid. See Government Auto Auctions for more details.

Damaged and Salvage Cars – Cars that have been damaged or salvaged can be a good source of cheap cars. See Damaged Cars for Sale for more details.  Salvage Auctions and Repossessed Car Auctions are other possible sources of cheap cars and project cars for sale. Obviously, a lot of caution must be taken to make sure you know exactly what you’re buying but, if done correctly, some great deals can be had this way.

Police Seized Property and Surplus Auctions – Law enforcement agencies seize and impound vehicles from law-breakers and sell them at public Police Impound Auctions, for bargain prices. Many are high-end late-model luxury vehicles in perfect condition. These agencies also sell Surplus Vehicles that are being replaced with newer vehicles. These auctions are conducted regularly and are open to the public.

Rebuildable Wrecked Cars – If you have mechanical skills, Buying and Rebuilding a Wrecked Car can be a way to a cheap ride. Cars that have been declared total losses by insurance companies can often be purchased as salvage vehicles and project cars for almost nothing. Many of these vehicles have little damage and can be rebuilt and restored to good running order for little money.

Unclaimed and Abandoned Car Auctions – Cities and towing companies pick up unclaimed abandoned vehicles every day from the sides of streets, highways, and parking lots. They try to find the owners, but if they can’t, the cars are sold at auction, often for almost nothing. The cars can range from junkers to almost-new vehicles. See our article, How to Find and Buy Unclaimed Cars.

If you are looking for a good cheap car, start with the suggestions above and remember to take extra caution to make sure you don’t get scammed and that you get what you pay for. Used cars are sold “as-is” which means that you have no right to get your money back once the sale has been made. It’s always a good idea to have your car inspected by a qualified mechanic before you make the purchase.

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We wondered about that question too. Are there certain cars that most people are buying, asking about, seeking information about, and asking for pricing on? What car makes and models are most popular? Are they the best cars to buy?

Well, we went to one of the most-visited used-car web sites, UsedCars.com, and found such a list. Actually, the site compiles a real-time list of the makes and models that their site visitors most often request information about, which is an indicator of the most popular cars.

The most-popular car list can change from day to day, but not by much. A vehicle that is #1 today might fall to #2 tomorrow, and vice versa, because the rankings depend on what online visitors to their web site are asking about and searching for on any particular day.  

Here’s the current list of most popular used cars at the time of this writing:

Notice that Honda is on top. Why? Because Honda is the most reliable brand of automobile. Used Honda cars will continue to run reliably almost forever if maintained properly.

The Ford F-150 is next. It’s the best selling make/model new vehicle of all time. No wonder it’s also in the top three of used cars too.

Toyota is just behind Honda in reliability and high-resale value, so it is no surprise the popular Camry model is on the list. Other Toyota models are popular too.

Then there’s the Ford Explorer, the most popular SUV, and the Ford Mustang, the most popular affordable performance car.

Finally, there are the Nissan Maxima and Altima, high in reliability and resale value, just not quite as high as Honda and Toyota. But many people like Nissan’s styling, particularly young people, better than Honda and Toyota.

Where to buy

If you prefer buying your used car from an individual private seller, you can find them in newspaper classifed ads, in free “auto trader” magazines at your local auto parts store or supermarket, and online on the Internet. We suggest you also look on eBay.com at their list of .

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First time car buyers have a choice of buying a brand new car, or buying a used car. Which is better?

There are advantages and disadvantages to either choice. Most people would rather have a brand new car with its new-car smell and latest style, but there are reasons that a new car might not be the best choice. Let’s take a look at the pros and cons of buying new and buying used.

Advantages of Buying New

• You get a brand new car with new-car feel and smell
• You get the latest style and technology
• You get the latest safety equipment
• You get a full manufacturer’s warranty
• You get Lemon Law protection
• You get lowest loan interest rates, if you qualify
• You get the option to lease
• You may get special manufacturer-sponsored pricing and financing

Disadvantages of Buying New

• Value of a new car depreciates rapidly
• Insurance rates may be higher than used
• Taxes may be higher

Advantages of Buying Used

• You avoid the high first-year depreciation of value
• If you buy almost-new, you may get same styling and technology as new car, at a lower price
• You get price flexibility by choosing between different model years, mileage, and condition
• You may buy “certified” vehicles with inspection and warranty – at higher cost
• You get lower insurance costs than same new model
• You get lower sales tax and personal property tax

Disadvantages of Buying Used

• You buy “as-is” unless some manufacturer warranty remains
• Lemon laws don’t apply to used cars
• You may be buying someone else’s problem, unless you have your vehicle inspected
• You risk buying a wrecked or salvage vehicle, unless you run a CARFAX Vehicle History Report
• You typically don’t have a lease option
• You pay higher interest rates
• You may get fewer safety features

 Summary

To summarize, buying a used car can be a better value for your money but it comes with higher risks.

If you are looking for cheap used cars, read the article Finding Cheap Cars for suggestions on where and how to find them.

Find already-discounted used cars at dealers in your area at UsedCars.com, the largest online used car source.

For online pre-discounted prices on new cars, see Yahoo! Autos . Price quotes are free and easy. Get multiple quotes so that you can compare deals.

Any used car purchase should include an extensive test drive, an inspeciton by a qualified mechanic, and a CARFAX Vehicle History Report. Also consider buying an extended warranty.

If you’re considering an almost-new vehicle, make sure you can’t get the same vehicle, new, at about the same price, which can happen if the manufacturer is offering special promotional deals. See Best Car Deals for cars that currently have special incentives, rebates, and low-interest loans.

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Until relatively recent times, it was standard for car dealers and finance companies to require at least 20% down payment on the purchase of a car. It was for a good reason.

Because cars depreciate in value from the moment they are driven off a dealer’s lot, a down payment helps offset that rapid decrease in value, which may keep the loan from becoming “upside down.”  It also protects the loan company or bank because, if they have to repossess the vehicle, they have a smaller risk of losing money.

Things are different now
Auto manufacturers and dealers are now very competitive and business must be fought for. They are willing to take risks that were unheard of just a few years ago. In many cases, down payment requirements have been reduced or eliminated altogether, primarily for customers with good credit.

Even if you have good credit, accepting a “no down payment” deal is not wise. Because your vehicle will depreciate in value faster than your monthly payments pay down your loan, you will be upside down for most of your loan term.

So, what is the problem with being upside down?
First, if you decide to sell or trade your vehicle before your loan is paid off, or nearly paid off, you’ll get a nasty surprise. You’ll find that you still owe more on your loan than your vehicle is worth. Maybe thousands of dollars more. You’ll have to find the extra money to pay off your loan.

Second, if your car is stolen or totaled in an accident, your insurance pays only what the car is worth, not what you still owe on your loan, which again, could be thousands of dollars difference. In order to pay off your loan after the accident, you must come up with the additional cash on your own.

How much down payment?
A down payment not only helps you avoid the problems of being upside down, but it also serves to lower your monthly payment. The amount by which it reduces your payment depends on the amount of the loan, the amount of the down payment, the length (term) of the loan, and the interest rate. You can use an auto loan calculator to play around with the numbers to find out the effect of different down payment amounts.

A good rule of thumb is 20% for a down payment. You can take advantage of manufacturers’ rebates, which can be used as a down payment. If you can’t do 20 percent,  do the best you can.

In some cases, especially if you have poor credit, the bank or finance company will dictate how much down payment you must make to get a car loan from them. It’s usually not negotiable. If it’s more than you can pay, try other banks, credit unions, or loan companies.

If you have poor credit, you might consider looking for your car at a dealer such as Drivetime.com, who specializes in working with buyers who have less-than-perfect credit. They have dealerships all over the country.

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You may still be able to buy another car if you are upside down on your previous loan.

There are two ways to go about it.

One way to buy with an upside down loan
You could sell your old car but you will have to add extra cash to fully pay off your old loan. You’ll need to pay off your loan so that you can give a clear title to your buyer. However, coming up with extra cash might be a problem, especially if you are upside down by a large amount. For many people, this solution is not possible.

Let’s look at some other ways.

Another way to buy if you are upside down
You can trade your old car at a dealer and let the dealer pay off the old loan. Sounds easy, but there’s a catch. If your old car is not worth as much as the amount remaining on your old loan, the dealer takes the difference and adds it to the price of your new car. If you are upside down by a large amount, this can significantly raise the cost of your new car. In some cases, a dealer will not allow the entire amount to be rolled into a new loan, which means you must come up with some cash as a down payment.

When you roll part of an old loan into a new loan, it usually puts you right back into an upside down situation, which is usually worse than your old situation. It is a vicious cycle that you would be best to avoid.

The best way to get out of an upside down loan is to simply keep your old car, keep making payments, until you are no longer upside down. Then, you have the option to do anything you want.

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All new cars come with a new-car warranty from the car manufacturer. There is typcially a general “bumper-to-bumper” warranty that covers just about everything that is not a wear-and-tear item, and a powertrain warranty that covers the engine, transmission, and drivetrain components.

For most new cars, the general warranty is good for 36 month or 36,000 miles, and the powertrain warranty for 60 months or 60,000 miles. Some car brands have higher mileage warranties, as high as 10 years and 100,000 miles.

There are also separate warranties on tires, batteries, and a few other components. 

That’s about warranties on brand new cars. What about used car warranties? Do used cars come with warranties?

If you buy a relatively new used car, it may still have some new-car warranty left. However, once that warranty expires, you are on your own when paying for breakdowns and repairs — unless you buy an extended warranty — a kind of car repair insurance.

Many new first-car buyers mistakenly think that auto insurance covers breakdowns and repairs not associated with accidents. That thinking would be wrong. Auto insurance only pays for repairs caused by an accident. Ordinary parts failures are not covered.

Extended car warranties protect you from the surprise expenses of having your car repaired, which can be very expensive in these days of high parts and labor costs. Of course, if you have plenty of money in the bank for such emergencies, you may choose not to have a warranty and simply pay for repairs out of your own account.

Many new-car dealers sell extended warranties but there are also independent companies that sell used-car warranties. Just make sure you understand exactly what is covered and, more importantly, what is not covered. Read the fine print.

Most independent warranty companies allow you take your car to any professional repair shop. Some are more restrictive. Some require you to pay up front for repairs and then get reembursed later by the warranty company. Some pay directly to the repair shop without you having to put up money first.  Some have time restrictions and others have mileage restrictions.

If you decide to buy a certified used car (see Certified Used Cars), you may be given a short warranty, usually about 90 days,  with your purchase. However, this doesn’t eliminate the need for an extended warranty that covers you after the 90-day warranty expires.

In summary, if you buy a used car and you can’t afford to pay for expensive repairs, you should consider buying an extended warranty to cover you after the new-car warranty has expired. Shop around for the best prices and most coverage. Check for online reviews of the companies you look at and check with the Better Business Bureau.

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Most car dealers do not directly finance loans on cars they sell. They work with outside banks and finance companies to provide loans for their customers. It’s up to those banks and finance companies, not the dealer, to approve and provide customers car loans.

However, a different breed of used car dealer, called  ”buy-here-pay-here” dealers,  do provide their own financing without an outside bank or loan company. They primarily function to sell used cars to people who have bad credit and cannot get approved for loans from conventional sources.

Buy-here-pay-here (BHPH) dealers can be recognized by their promotional ads or storefront signs. They use the terms “easy finance” or “no credit checks” or “we finance anybody” or “in-house financing” or “fast loan approval” or “we approve you regardless of your credit.”  They are sometimes called “tote the note” dealers.

How do buy-here-pay-here dealers work?
BHPH dealers typically sell older used cars for higher-than-market prices. They may ask for a down payment that essentially covers their investment in the car. Then the customer pays off the rest of the amount with a high-interest loan, which is the dealer’s profit.  There is no credit check because the interest rate charged is the highest allowed by the usury laws in that state.

The loan might be divided into 12-18 months of payments that are set up on a strict weekly or bi-weekly schedule. In many cases, the payments must be made at the dealership in cash or money-order. Personal checks are often not accepted.

Many BHPH dealers use special devices on the cars to make sure that customers pay on time and don’t skip town. One device is a starter interrupter. If a customer is late with one payment by even a day, the car will not start, and cannot be reenabled until the payment is made and a special code is punched into the device. If a payment is missed (late by more than a couple of days), the car will be immediately repossessed — no 30 day grace period. A GPS locator device hidden on the car tells the dealer where the car can be found.

If a car is repossessed, it is usually placed back on the sales lot to be sold to the next customer. BHPH dealers normally do not report repossessions to credit agencies. In some cases, a repossessed car might be sold at wholesale auction and the customer billed for the balance of his loan. This can happen if the car has been damaged or wrecked.

Should you use a buy-here-pay-here dealer?
Buying a car from a buy-here-pay-here dealer is an expensive option, but if it is your only option, and you know how it works, then you can use it.

Make your loan as short as possible to reduce the effects of the high interest rate. Have the car inspected by a qualified mechanic before you buy because such cars are sold “as-is” without warranties or guarantees. The dealer is not obligated to fix problems after the sale. Check out the dealer at your local Better Business Bureau (find their web site or call them on the phone).

Don’t expect your credit to improve if you make all your payments on time. Just as BHPH dealers don’t check your credit when you buy, they also do not report your good (or bad) payment record to the credit agencies. Unless your credit score improves for other reasons, you’ll end your loan with the same bad credit as when you started.

Summary
In summary, buy-here-pay-here dealers exist for a reason: to sell cars to people who have bad credit or no credit and are not able to buy a car any other way. On the other hand, they are often viewed as predatory, taking advantage of people’s misfortune with high prices and maximum-allowed interest rates.

You may be able to get a better deal from conventional discount used car dealers in your area. You can get free prices quotes from these dealers from the UsedCars.com web site. These dealers may also be able to find you a loan source.

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Here’s how to determine a fair price for brand new cars (see below for used-car pricing).

All new cars have a window sticker that displays the manufacturer’s suggested retail price (MSRP). It may also include destination charges, dealer-installed option prices, and other miscellaneous charges. The total of these charges is the price you would pay for that vehicle, less sales tax, without any discounts or rebates.

All these charges but destination charge can be negotiated. Manaufacturers charge dealers this fee for vehicle delivery, and dealers simply pass it along to customers without markup. It cannot be eliminated from the cost of a car.

Price can be negotiated for most vehicles. Unless the vehicle is a hot seller and in short demand, it’s usually possible to get dealers to discount the MSRP. But, how much? What’s the best price I can expect?

Here’s your strategy for negotiating price.

1. Get online price quotes

Use Internet car buying/pricing services to get price quotes. The quotes are free and you are not obligated in any way to accept them. We recommend you get quotes from multiple services so that you’ll have a number of prices to compare. The best sources for free quotes are:

• Yahoo! Autos
• InvoiceDealers
• Edmunds.com

The prices come from dealers in your area. Even though the prices are discounted, you may be able to do better if you are a good negotiator.

2. Learn about rebates and incentives

Visit Best Car Deals for information and advice about current car incentives, rebates, lease deals, and low interest loans, including 0% APR loan deals.

Also go back to Edmunds.com (see link above) and click on the New Cars section ”Rebates and Incentives” link. You’ll be shown the current incentive programs, if any, for the vehicle you’re interested in. Any price quotes you receive should already include any Customer Cash-Back Incentives, but you should verify this to make sure. If there are Dealer Marketing Support incentives, dealers are not required to share that money with customers, but many do.

3. Get dealer invoice prices

Invoice price is the wholesale price that a dealer is charged for a vehicle by the manufacturer. Dealers make their profit by selling at a margin over invoice price. Essentially, the best deal you should expect to get on a car purchase is something above invoice price, but less than MSRP, allowing the dealer to make some profit, which is needed to stay in business.

Get invoice prices for any vehicle make and model at Edmunds (see link above). It’s free.  Also check Edmunds’  TMV (True Market Value) price for your vehicle. It’s their best estimate of how much other people are actually paying for that car.

It is possible under certain conditions that you may be able to buy for less than invoice price. 

How so?

Dealers get certain bonuses and holdback fees from the manufacturer when vehicles are sold, especially when sales goals are reached. This reduces the actual cost of a vehicle to the dealer. Furthermore, any factory-to-dealer cash-back rebates (Marketing Support, mentioned above) also serve to reduce cost. If a dealer is willing to share some or all of these cost reductions with customers, your purchase price can actually fall below invoice price.

How much over invoice?

Here’s a good rule of thumb: On cars whose MSRP is $20,000 or less, offer $500 over invoice. For cars with MSRP of $20,000 to $30,000, offer $1000 over invoice. And for cars with MSRP over $30,000, offer $2000 over invoice. This assumes the dealer is getting no rebates or marketing support from his manufacturer.

These are only suggestions. If the car you want is in short supply due to heavy demand, you might not be able to get much of a discount at all. If it is a slow seller at the end of the model year when a dealer has plenty of inventory, you may be able to do better than invoice price, assuming there are manufacturer incentives. 

What to Pay for Used Cars — What’s a Good Price?

Used cars can vary in price depending on year model, mileage, and condition.

The best way to determine a fair price for a used car is to check with one or more used-car pricing guides such as Kelley Blue Book (www.kbb.com), NADA Guides (www.nadaguides.com), Edmunds (www.edmunds.com). Sellers generally use these guides to set their asking prices.

Private sellers often price their cars too high, allowing some room to negotiate with potential buyers.

Don’t fall into the trap of negotiating a price down, only to find out you still paid too much. For example, a dealer could set an asking price of $8000 on a car that worth only $6000. When a buyer comes in and talks the price down to $7000, he may think he’s gotten a bargain. However, the dealer made $1000 more than he should on the sale — and the buyer paid $1000 too much.

Dealer prices are generally higher than if a car is purchased from an individual.  However, UsedCars.com lists cars at local dealers at already-discounted prices. You can get free no-obligation price quotes online, which saves a lot of time when price shopping.

If you prefer to buy your car from an individual private seller, you can find hundreds for sale on the eBay Motors web site.

Prices are almost always negotiable. Dealers and individual sellers actually expect buyers to negotiate and set prices accordingly. Asking prices are generally about 10%-20% higher than sellers are willing to sell for. Dealers typically make more profit per-car on used cars than on brand new cars.

If a car is being advertised for an unusually low price, it’s probably for a reason. The car may have problems that the seller may not mention unless you ask. Beware of bargain prices unless you understand the reason.

Used car prices can also vary by area of the country. Convertibles, for example, are more expensive in sunny Florida than in chilly Vermont. Four-wheel-drive vehicles are in greater demand, and more expensive, in states with bad winters. Small compact cars are popular in college towns. Trucks are more in-demand in rural areas.

Use Kelley Blue Book and NADA Guides to check a used car you think you want to buy. Then have a mechanic check it over for problems. Any problems found, if you still want to buy the car, should be used to negotiate the selling price down further.

Also get a CarFax (www.carfax.com) vehicle history report to find out if the car has ever been seriously wrecked or totaled.

Beware of buying used cars on automobile clasified ad sites such as Craigslist and Autotrader, or even from newspaper classifieds web sites. Read about a common car sales scam in this article.

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Many car dealers sell “certified” pre-owned cars. How are these cars different from other used cars? Are they more expensive? Are they worth considering as a first car?

Most major automobile manufacturer’s dealers now offer “certified” used cars. A certified car has been inspected and repaired according to detailed manufacturer specifications before being placed on a dealer’s used car lot. Although manufacturer’s programs vary in details, all are fundamentally the same in concept.

Why is it important? Certified cars can significantly reduce one of the largest worries of used car buyers: that used cars can have hidden problems that cause problems and expensive repairs after the sale.  

Certified used car programs offer buyers less risk and greater peace of mind — for a slightly higher price. These programs have been very successful, which shows that customers like them.

What makes a certified car?

Certified pre-owned cars are usually no more than 3 years old, have low mileage, and are in excellent or “like-new” condition.

Each vehicle is inspected according to a detailed checklist that may contain 150 or more points of inspection, including engine and transmission, lights, airbags, exhaust system, power equipment, safety equipment, fluid levels, suspension, brakes, battery, tires and wheels, trim, windows, doors, paint, engine belts, hoses, alarm system, and more.

Certified used cars are typically offered with warranties, although the type of warranty and coverage can vary by manufacturer. Some simply extend new-car warranties on their certified vehicles. Others have a separate warranty that can range from 3 months to 5 years or more. There may be a mileage limit that generally ends the warranty at 100,000 miles, but could be less, depending on the program. Some certification programs also provide for road-side assistance and vehicle return policies.

What’s the cost of certifed cars?

Dealers like to sell certified cars because it makes customers happy — and because they make a larger profit. Customers like the peace-of-mind that comes with certified cars. For that peace of mind, customers can expect to pay a higher price than for a non-certified car.

How much higher cost? The added cost of certification varies considerably, depending on the dealer, the manufacturer, the program, and the vehicle. Typically, certified vehicles will cost about 5%-10% more than non-certified vehicles.

The amount might be as little as $500 for lower-priced vehicles and $5000 for luxury models.

What you should watch for

Vehicle certification programs are backed by major car manufacturers who provide dealer training, set standards, set policies, and back up warranties. Not all programs are alike, so make sure you understand the details of any program you may be considering. Look for a detailed inspection report, guarantee, and warranty that should come with the car.

Beware of certified cars not backed by a car manufacturer

In addition to manufacturer-supported certified car dealers, there are also independent used-car dealers who offer certified cars. However, be aware that these programs may not be of the same quality and, in some cases, may be out-and-out scams. Therefore, use caution when buying “certified cars” from independent used-car dealers.

Certified used cars can make excellent first cars for teens and other first-time buyers. The slightly higher cost comes with a full inspection and a short manufacturer-backed warranty for greater peace-of-mind.

Certified cars can be found easily online on the UsedCars.com web site. Not all the cars on the site are certified, so look for those that are.

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