I ndustry experts estimate that 45 million used cars are sold in the U.S. each year. The buying and selling of used cars is a $336 billion industry, according to Pep Boys-Manny, Moe & Jack Inc., in Philadelphia, one of the biggest retailers of auto parts and accessories.

There are many reasons you might choose a used car vs. a new one, a primary reason being money. How can you make sure you're getting your money's worth in a used car? Conduct a thorough evaluation first.

You shouldn't rush into buying a used vehicle. That's advice from Mike Murphy, a seasoned mechanic in Largo, Fla., who produced a video to help consumers size up used cars.

Some used cars come with certification and warranty protection, but not all do. Your goal is to avoid unnecessary expenses by not purchasing a car loaded with problems. Follow this advice from a mechanic and you'll feel almost like one when you inspect a used car.

Step 1: Talk with a credit union loan officer
Many credit unions offer used-car financing rates at or near new-car rates. This means instead of paying 15% or more in interest, you might be paying close to 8%. A loan officer can quickly help you determine what loan you'll qualify for, which helps you as you shop. Loan officers also can help you find a fair price by referring to loan pricing guides available at any credit union. You don't want to end up paying more for a car than its "loan value."

Step 2: Do your homework
  • Figure out what kind of used vehicle you want—a car, sport utility vehicle, or maybe a van. What are your needs? What can you afford? Check used-vehicle prices on Web sites (see Useful resources). Or shop around local dealerships. It's a good idea to comparison shop so visit more than one dealership or Web site.

  • When determining what vehicle you can afford, find out the cost to insure it. Budget for the cost of the title and licensing, and add in a little extra money for any needed repairs.

  • Check safety records on the vehicle—read Consumer Reports magazine or visit the Web sites listed in Useful resources.
"I think when people make mistakes it often involves not doing the research," says Joe Wiesenfelder, senior producer for cars.com in Chicago. "It can be as simple as finding out what the vehicle is worth, based on a used car evaluation like on cars.com."

Step 3: Come prepared
Once you identify a few prospects, set out on a fact-finding mission.
  • Dress for the occasion. Wear comfortable clothes that you don't mind getting dirty and bring a flashlight, rag, and a pen and paper to write notes on.

  • Bring a friend. "Four eyes are better than two, especially if you don't feel comfortable in your ability to evaluate a vehicle, or you're not mechanically inclined and you want to bring someone who's a little more experienced in that area," says Wiesenfelder.

  • Ask the dealer or seller about the car's history and for maintenance records. Ask if the vehicle has ever been in an accident or ever been totaled by Mother Nature—such as in a flood. Also ask to see the title and compare the vehicle identification number (VIN) on the title with the one listed inside the car to make sure it's the same car.

Step 4: Get your hands dirty
Look for a number of things on a car before you even sit in it, let alone take it for a test-drive.
  • Start by walking around the vehicle to check the exterior—look for dents, scratches, and rust.

  • Check how well the doors, trunk, and hood open and close.

  • Look inside the trunk—cars.com recommends you lift the carpet, if possible, to check for rust. While you're there, check out the spare tire to make sure it's inflated and in good condition.

  • Open the doors and look at the interior. Take a deep breath—if you smell mildew inside a car, that may tell you the body probably had or has a water leak. "If the interior looks real ragged or worn-out, that tells you a lot of miles or abuse have been put on the car," according to Murphy.

  • Look underneath at the undercarriage for rust, and check the exhaust system to see if it appears to be in good condition (no perforations).

  • Inspect the tires; they can tell a lot about a vehicle. Cars.com recommends doing the penny test: Insert a penny, Lincoln's head upside down and toward you, into the tread until the coin rests in the groove. If you can see the top of Lincoln's head from the side of the tire, the tread probably is worn too far. If you can't see the top of Lincoln's head, the tire is good and won't need to be replaced right away. Check for uneven wear on all the tires—uneven wear could mean an alignment problem.

  • Open the hood and take a look at the engine. This area is hard to inspect if you're not mechanically inclined, but look for general things—cleanliness or fluid leaks. Look for rust and check the oil: Pull out the dipstick, wipe it clean, reinsert it, and withdraw it again—is the oil clean and the level correct?

Step 5: Take a test-drive
  • Start up the engine, but don't drive off yet. Have your friend look for smoke when you start the car and look at the engine while it's running. A lot of smoke from the exhaust pipe is not a good sign, and different colored smoke (white, blue, or black) could mean something is seriously wrong with the car, from a blown head gasket to burning too much oil. Note: in colder temperatures, vapor is common and shouldn't be confused with smoke.

  • Sit in the car and check the windows, all lights (headlights, brake lights, turn signals), windshield wipers, locks, power seats, radio, and the horn.

  • While driving or before you leave the lot, check the heat and air conditioning. "If it's summer, people aren't going to turn on the heat, vice versa in winter. This can be a big mistake because some of those repairs can be extremely expensive," says Wiesenfelder. He suggests running the heat with the ventilation system to recirculate for a few minutes before switching to air conditioning. Otherwise, cold outside air will blast you the instant you turn on the air conditioning and you won't be able to tell if the air conditioning itself is cooling the air.

  • Wiesenfelder says another test-drive mistake people often make is not driving at a variety of speeds or on a variety of road surfaces. "There are certain problems that don't reveal themselves at slower speeds, and it's less likely the car will overheat if you're going 60 miles per hour— if it's prone to overheating." Test-drive on side streets, highways, smooth roads, and bumpy roads.

  • Test the brakes and cruise control to ensure they are working properly.

  • Pay attention to the ride—is it smooth? "When you drive the vehicle, obviously you want to feel comfortable with the way it handles and steers. Trust your gut feelings when you're driving the vehicle," says Murphy. Comfort counts, too. Are the seats comfortable? Is there enough headroom?

  • Take your time test-driving the vehicle. "People often feel rushed, whether at a dealership or buying from a private seller. They just drive around the block a few times, which is a mistake," says Wiesenfelder.

Step 6: Look again
  • Check the engine again after it's shut off. Listen and smell—is there any clattering noise or the smell of burning oil or other bad odors/noises? Check for leaks once again.

Step 7: Have it inspected
When you find a strong candidate, have a pro inspect it. When consumers look at a car, Murphy says, "There's so much to look at, and they would have to be mechanically inclined or have some mechanical experience to know where things are and to catch any problems."

Wiesenfelder says the steps above are a good first pass. "Once you've done all that and you're still interested in the car, you should have it inspected. At the very least you'll know what you're in for—for example, they may tell you that you only have about 3,000 miles left on the brakes."

A final tip: "You really have to use your first instinct—what you first think is probably true. Use your head, not your heart—don't fall in love with a used car because it's the right color or you love the radio in it," says Murphy.

     Useful resources

    Ask if the vehicle
    has ever been in
    an accident or
    if it's ever been
    totaled by
    Mother Nature—
    such as in a flood.

    You really
    have to trust
    your first instinct—
    what you first think
    is probably true.

    Take time
    test driving
    the vehicle.
    Don't just drive
    around the block.

Useful resources:
Web sites:
  • Carfax.com
    Provides vehicle history reports and consumer information about automobiles.

  • cars.com
    Provides complete local and national inventories of new and used vehicles; tools such as automotive reviews, model reports, advice, dealer locator, and financing information to make the researching and buying process easy. Remember, check with your credit union about loan rates.

  • edmunds.com
    This site provides extensive automobile reviews, consumer information, information about incentives and rebates, and expert analysis of late-breaking developments in the automotive world.

  • Kelley Blue Book
    A good source for used car values. Provides the Blue Book retail value on used cars, new car pricing reports, trade-in and retail values of motorcycles, previews of new models, and title history reports on a used car.
  • "How to Inspect a Used Car"
    This video answers common used-car buyers' questions in an easy-to-understand format. You'll be more informed about how to inspect used vehicles after viewing it. The cost is $16.95 plus $3 shipping and handling. To order, call 800-542-2400 or send an e-mail request with your name, address, e-mail address, and a telephone number to [email protected].


© 2000 Credit Union National Association Inc.