9 Tips for Buying a Used Car
Buying a used car is truly a case of let the buyer beware, as most sellers won't openly divulge all the known problems so you have to ask specific questions.
Car shopping should be exciting and not stressful however there is a certain anxiety of the unknown when purchasing a used automobile. I have bought and sold several vehicles and have learned from making mistakes. In this guide, I will explain the process I take to shop for a used vehicle and the precautions that should be taken to ensure you don’t buy a lemon.
1. Know what you want and research the price range
Decide what vehicles you are interested in and research the make and model to determine if it is a reliable brand/car based on user feedback and automotive journalist reviews. Consumerreports.org is a good source for user feedback. Contact an OEM dealer to see if there have been any recalls or known mechanical issues. Once you have determined that the year (or generation) of the model that you want is reliable, then shop to gather information on availability, trim, features and price range. Websites like Autocatch.ca and Canadian Black Book are a good source for shopping and gathering value data.
2. Test drive
Whenever possible take a car for a thorough test drive to see how it runs and handles. Test all electrical components (such as air conditioning) to ensure everything is in good working order. If something doesn’t work, like power windows, then consider how much it will cost to fix and use any deficiencies as leverage for negotiating a lower price. When buying a car sight unseen, i.e. from eBay, you take a chance on there being problems with the vehicle that you won’t realize until you take possession and then it may be too late for any recourse. Buying a used car is truly a case of let the buyer beware, as most sellers will not openly divulge all the known problems so you have to ask specific questions about the vehicles’ history.
3. Thorough examination
Carefully inspect the vehicle inside and out. Make observations and point out deficiencies to the seller such as excessive interior wear, missing trim parts, scratches, dents and rust. Don’t expect a used car to be perfect but avoid ones with excessive mileage, rust, wear and tear. If you do buy a used car with excessive wear or issues, know what you’re getting yourself into. Open the hood and check the drive belts condition and look for oil leaks. Shine a flashlight under the car and look for rust and oil leaks.
4. Warranty, recalls and service history
Most new passenger vehicles come with a 3 year, 60,000 KM comprehensive warranty and 5 year, 100,000 KM powertrain warranty. These warranties can be transferred to a new owner. Dealerships also offer extended warranties, which are worth consideration. Whether buying a used car from a private seller or dealership, ask to see the service history to ensure that all routine maintenance was performed at appropriate intervals. Also ask if there has been any warranty work done or manufacturer recalls.
5. Used vehicle information package for private sales
In Ontario it is mandatory for a private seller to obtain a “used vehicle information package” from the Ministry of Transportation (MTO). The package costs $20. The UVIP has five sections. Vehicle details list the VIN and if the car has a “brand” applied such as salvaged or rebuilt. This is an important detail because one should be very careful knowing what the meaning of any “brand” is. Section 1 also gives a wholesale and retail value which is the average price range for the year, make and model, not taking into consideration condition, mileage and options. The buyer will pay sales tax on the greater value of the actual sale price or the wholesale price. If the purchase price is below the wholesale value or the car is more than 20 years old, an appraisal is required to verify the value.
Section 2 of the UVIP shows the current registrant, the date they took ownership and the last registered odometer reading (usually when they renew a licence plate sticker). Section 3 shows the Ontario vehicle history listing previous owners and registration dates. Section 4 shows if there are any liens on the vehicle. The lien should be cleared before the new owner takes possession. Section 5 is the bill of sale portion that must be completed by the buyer and seller with the selling price. This original portion is required to transfer ownership and used to calculate HST payment from the buyer to the MTO. It is the responsibility of the buyer to transfer the vehicle within six days, even if it is unfit (not going to be driven right away).
6. CarProof verify
You’ve come this far so do your due diligence and get the complete history on the car you are seriously considering buying. The seller and UVIP will only tell you so much. The next logical step is to obtain a CarProof history report. The report will list vehicle details, registrations, liens, stolen reports, accident damage and repair history, insurance claims, recalls and U.S. history. This information will help you determine if there is any questionable history with the car that may affect its value. To obtain a CarProof report through their website, all you need is a VIN. The report costs around $50. CarFax is another vehicle history report however CarProof is more Canadian relevant.
7. Mechanical inspection
Now that you’ve test drove the car, thoroughly inspected it, reviewed the UVIP (if buying from a private seller) and analyzed the CarProof, it is critical to have your mechanic inspect the vehicle before you finalize the deal. Mechanical inspection is most important when buying an older car privately. If buying a used vehicle (that is still under warranty) from a reputable dealership, this step can be skipped.
Your mechanic will inspect the cars’ brakes, tires, lighting system and other safety features. All of these items must be in good working order for the vehicle to “pass safety” and receive a MTO Safety Standards Certificate, issued by a licensed mechanic. The certificate costs on average $100 or an hour of labour time. It is usually the sellers’ responsibility to pay for a Safety Standards Certificate however this can be a point of negotiation. Either way, it is important to have your mechanic inspect the vehicle to ensure there are no significant issues that you are not already aware of before you finalize the purchase.
8. Drive Clean emission test
By law, certain light duty vehicles must pass a Drive Clean emission test before they can be licensed and driven on Ontario roads. Generally, you need to get the test every two years, once the vehicle is seven years old. Used vehicles require a valid Drive Clean test pass when they are sold in order to transfer the ownership if the model year is older than the current year. A test is not needed if you are transferring a vehicle to an immediate family member or it is a hybrid vehicle or a light duty vehicle model year 1987 or older.
Like the UVIP and Safety Standards Certificate, getting a Drive Clean test is usually the responsibility of the seller however this can be negotiated. If the vehicle fails the test, find out what repairs are required to achieve a pass and take the cost of those repairs into consideration with the negotiated sale price.
9. MTO paperwork
If buying a used vehicle from a dealership, they take care of all the paperwork (except insurance) and the process of taking ownership/delivery is simple. When buying a car privately it’s more work to get organized. You want to be prepared as the line-up to see a teller at an MTO office can be a long wait. To transfer ownership, the buyer needs the signed bill of sale showing the sale price, signed ownership portion, Safety Standards Certificate and Drive Clean test pass (if you want to register the vehicle as “fit”), licence plate portion if you are putting on plates that you already own, proof of insurance if you are registering licence plates, vehicle appraisal if the car is 20 years or older plus sufficient payment for registration fees and HST 13% on the sale price. It is the buyers’ responsibility to register ownership at the MTO within six days from the date of sale.
I recently bought a 1990 Nissan 300ZX Twin Turbo from a private seller. Fortunately the car was low mileage, clean and well maintained. I went through the above steps to ensure that there were no underlying issues, especially it being a 25-year-old high performance sports car. Again, I will stress to have a mechanic you trust inspect the car before you finalize the deal. Make a conditional offer based on “my mechanic’s approval.” If something needs fixing than renegotiate the price or walk away. The old saying applies when buying a used car – let the buyer beware. Do your due diligence and follow the steps outlined here to choose a quality used vehicle for a fair price.