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Car Buying Tips

Posted by attorney Steven Fahlgren

I am often asked by friends for some car buying tips. They know that I have been involved as an attorney in dozens of lawsuits involving car dealers, having represented car dealers for several years before leaving an insurance defense firm to form a consumer protection practice and then having represented dozens of consumers against car dealers for the last five years.

Most people finance the purchase of cars. It is good to look at the purchase of a car for a good price and the financing as two different aspects of the transaction. Car dealers refer to the profit they make as “front end" profit or “back end" profit depending on whether it is profit earned on the increase of the purchase price of the car over what was paid for it or from financing the car and selling extras such as credit life, GAP insurance, warranties or other products. Of course, more profit in the dealer’s pocket usually means less money in your pocket.

This article will focus on obtaining a good car at a good price assuming that you are paying in cash or if you are paying with a credit union draft or check. Next week, we will address some tips relating to financing of cars and avoiding “Yo Yo" sales.

There are many resources you can look to when determining whether a car being sold is a good value. Edmunds, Kelley Blue Book, and other resources will assist you in learning the wholesale and retail value of cars depending on the options and mileage and Consumer Reports, can give you further guidance as to the predicted reliability of a particular make and model.

As a general rule, you should plan ahead of time and decide what type of car you want and how much you plan to spend. You should compare the prices of several dealers before you purchase a car. You should always look in the paper and online to see if there are any special deals that may be advertised because often you have to mention the advertisement to get the discount. Be aware that dealers are required to tell you extra charges in advertisements but you will need to read the fine print. Also, many advertisements are limited to a stock number represents one particular car which may be sold early in the morning. When you go in to buy a car, you should have a number in your mind above which you are not willing to pay.

As a general rule, you should not buy anything unless you have road tested it. It is also a good idea to have a mechanic look over the car before purchasing a used car and advise as to what repairs need to be made and the cost of those repairs. Some will do this at very minimal cost or no cost at all.

You should buy from a dealer with a good reputation. You should check whether the dealer is a member of the better business bureau and “google" the dealer online to see what that turns up.

There are certain questions you should always ask a dealer about a car you might purchase, particularly for used cars. Have you sold the car before and if so, why was it returned? Has the car been damaged in a motor vehicle accident? Has it undergone any significant repairs? Is there anything in the history, use or condition of the vehicle that is important to know about? Is the car a flood damaged vehicle? Was it ever a short term rental? Is the car safe to drive? Oftentimes, the answers to these questions may mean that the consumer will not want to buy the car or at least want a significant discount. If the dealer sells new cars of the same used make you are purchasing, then it can access the repair history for that car. You should ask for it.

Experts in the industry generally believe that those in the industry can spot a car that was previously wrecked quite easily whereas most consumers cannot. Although I believe the doctrine of caveat emptor (i.e., buyer beware) does not apply to car sales by a dealer to a consumer, the law is not well settled in this regard, so it is important to ask these questions. Remember to get important promises written into the contract document. Otherwise, there will be a fact question as to whether those questions were asked and the dealership’s answers and you will have a hard time relying on the promises or representations.

It is always a good idea to look at the CarFax reports which provide some answers to these questions but I have had several cases where accidents were not on car fax reports. An alternative is run by my friends as Experian. Neither resource is an exhaustive database. Indeed, I understand that CarFax’s agreement with various dealers who use these reports admit to that fact. So these resources can help you spot some problems but they are not a guarantee.

When you believe you have negotiated a good price, ask the dealer if that is the price the car is being sold. If the salesperson says yes, explain that you are pleased because you are not going to be paying any closing or administrative fees that some dealers tack on to the price of the car. If the salesperson responds by saying that such fees are charged, be prepared to walk away. Usually if you threaten to do so, the dealer will say that everyone pays those fees but then agree to reduce the price of the car before adding the fee back in to give you the agreed upon price. In my mind, you have just avoided a bait & switch. Whether you agree with that characterization or not, you have likely saved yourself hundreds of dollars. If the dealer insists on adding these “fees" to the negotiated price, consider walking away.

When you get ready to sign documents, read everything before signing any documents. Never sign a contract with blank spaces. Be sure you read and understand all parts of your contract. If the car is being sold “as is," there is usually no warranty although I have seen this contradicted with other warranty documents. Selling a car “as is" does not give a dealer a license to stretch the truth about a vehicle, but I have had to repeatedly argue this point to a lot of buy here/pay here dealers. Again, get those promises and representations in writing.

If you are financing the vehicle through the dealership, do not sign a purchase order or “buyer’s order" unless and until you can agree to financing. Some dealers will say that you have purchased the car by signing the buyer’s order even if you don’t agree or cannot agree to the financing, so wait to see the financing paperwork before signing any such thing.

If you are buying from a small dealer, it may be a good idea to check with DMV to ensure that there are no unpaid liens on the car you are buying. Believe it or not, consumers do not buy vehicles free and clear of liens without checking with DMV although I do not know of anyone who does. Indeed, one of my clients was almost run over when he objected to a repo agent taking the car he had recently bought from a defunct car dealer even though he was current in his payments because the previous lien had not been satisfied. Although there is a $25,000 statutory surety bond to help ease the pain, claimants are usually only paid pennies on the dollar if a dealer goes defunct.

Disclaimer: The above Article is intended to give you, the consumer, insight into various legal topics. This information is not intended as legal advice, but rather helpful topical information.

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