Be prepared: Do your research and ask the right questions before you buy
Every Sunday, I would do the same thing: hit the papers with a thin black marker in hand and smudge-thumb through thousands of ½ inch used car classifieds, searching for the perfect used car. I knew what I wanted. Finding it was the hard part - and when I did locate that one used, yellow '78 Camaro with the black interior and less than 50,000 miles, I wasn't going to quibble about things like a pre-purchase examination.
I bought it, and beamed. Who needs an inspection when we all know that people are inherently decent. Most won't dupe or rip off another human.
I still thought that when the passenger window refused to stay up. Oh, it would roll up with no trouble and stay there, as long as you kept you hand on the window. But who needs a window, I thought to myself. I have a jacket, after all, and it really doesn't get very cold in southern California. But something inside told me that I should have checked that before I bought the car.
I shrugged it off. But when the Camaro exploded in a ball of white smoke and flames, I knew it to be true.
I got ripped.
Today, it's much easier to buy a good used car, for one simple reason - the Internet. The onslaught of information available via automotive and government websites makes it hard not to find a good used car at a fair price. The best way to go about it is to create a profile of your ideal used vehicle. Be as specific as possible, include preferred options, color, acceptable mileage range, and the approximate price you're willing to pay. Take your profile and shop used car classifieds, making a list of potential vehicles as you go. Narrow this list to a few select vehicles that fit your profile.
Turn into an automotive "private eye", with the Internet as your information-gathering tool. Check current trade-in and market values, as well as recalls on that model year. Read reviews, and study reliability information and safety ratings. There are a number of quality websites that offer this information at no charge. If everything checks out, take your research to the next step: investigate the specific car you plan to purchase, and order a specific used vehicle history report. Consider the rate of ownership change. Ideally, a 2 year-old-car should have one owner, and a five-year-old car shouldn't have more than two owners. Multiple owners may be a warning sign. Also, remember to ask the owner or dealer to provide service records. Note: dealerships will only have service records for vehicles they service in-house. If they do have records, however, chances are that they'll be well organized and complete.
Study pricing. Often, a significant price fluctuation - a 2002 Ford Explorer for $2000 less than market, for example - will indicate a great buy - or a lemon in waiting.
Shop options. As vehicles age, the options price gap narrows. Loaded used cars cost more, but deliver desirable options for much less than original cost. Well-optioned, deluxe models are easier to resell than base models of the same vehicle.
Get everything in writing: Especially price, terms, repairs, and/or trade-ins. This should be written into the sales agreement.
Know the difference between age and depreciation: With late-model used vehicles, the previous owner has absorbed a big chunk of the vehicle's total depreciation. Try to buy before the depreciation curve levels off and while the car is as new as possible. This generally falls in the two-to-four year old range, although it varies by make and model. Study prices versus vehicle age to determine that ideal window.
Investigate the lease and rental market: There are many excellent lease return cars on the market, especially cars driven by an individual for personal use, or in a company. Motor pool cars (e.g. utility company vehicles), less so. Maintenance schedules are excellent on rental cars, but drivers do abuse them.
Protect your investment: The remainder of the original manufacturer's warranty can usually be transferred. Seriously consider purchasing an extended warranty (3 months,/3,000 miles) free, and low-cost protection beyond that. When shopping any warranty, check the fine print, watching for excessive deductibles. And be sure the automaker recognizes the warranty - if not, you may as well use your warranty as a floor mat.