With today's four-bucks-and-higher gas prices, a used car can make a lot of sense over buying a new overweight monster from the new car lot. However, unless you're buying certified pre-owned, most used car purchases aren't covered by stringent consumer protection laws and don't carry the guarantee of the manufacturer, meaning it's a decision made without a safety net. As a used car buyer you should always be careful — no matter how you're buying the car. To help, we've prepared the following seven point checklist to help you on your way.

1. Decide What You Need In A Car

You may want a Ferrari Enzo, but if a large part of your day-to-day driving experience involves towing a boat it may not be the best choice. Choosing the car you want is a visceral decision that relies mostly on emotions, but picking the car you need is a logical decision that relies on thoughtful analysis. Make a list of the typical driving tasks this car will need to undertake (this is especially important if this will be your primary vehicle). Here's an example list:
I Will Use This Car For:
  • Driving back-and-forth from work (80 miles roundtrip)
  • Carpooling with two coworkers
  • Weekend Vacations
  • Tailgating
In this situation, the driver needs something that can comfortably carry three people, lots of gear and get reasonable gas mileage given the long commute. An ideal vehicle could be a sedan with a large trunk, a station wagon or a small SUV. If the driver wants something sporty or luxurious there are options for each. If mileage is a concern, you can use sites like Fuelly to determine how certain cars perform in your area. If you haven't memorized the features and offerings of every car from every carmaker, the Perfect Car Finder is an option.

2. Know What You Should Pay For This Car

The old saying is that a car depreciates the second you drive it off the lot, but no two cars depreciate in the same way. Factors such as quality perception, availability and the number of cars that end up in the rental fleet all impact the price. Thankfully, there are many companies that evaluate all of the factors and will give you a price for a specific car based on the mileage, features and condition. These include Cars.com, Edmunds and Kelley Blue Book, which is the industry standard. But there's a catch. Mileage, features and make/model are all objective measures that are easy to get and hard to lie about. Condition is an important factor but is a subjective measure. Anyone searching on Craigslist knows that nearly every car seems to be listed in "GOOD CONDITION!" despite occasionally not having a motor. Don't take the seller's word for it. Conditions range from "Poor" to "Fair" to "Good" to "Excellent." Few cars are truly excellent as that rating means the car has no defects, no visible scratches or dents and has never needed nothing other than regular service. The majority of cars are either "Good" or "Fair" and the price will vary based on that determination. According to KBB a "Good" car means:
the vehicle is free of any major defects. This vehicle has a clean Title History, the paint, body and interior have only minor (if any) blemishes, and there are no major mechanical problems. There should be little or no rust on this vehicle. The tires match and have substantial tread wear left. A "good" vehicle will need some reconditioning to be sold at retail. Most consumer owned vehicles fall into this category.
By comparison, a "Fair" car meets the following description:
"Fair" condition means that the vehicle has some mechanical or cosmetic defects and needs servicing but is still in reasonable running condition. This vehicle has a clean Title History, the paint, body and/or interior need work performed by a professional. The tires may need to be replaced. There may be some repairable rust damage.
Being able to prove the difference to the seller could result in a lower price or, at the very least, help you avoid paying too much. [Source: Autos.MSN.com]

3. Learn About The Car's Seller

One of the best ways to avoid being ripped off is to know more about the person selling the car. You probably wouldn't buy an iPod from someone with a pocket full of them on the subway, so why would you buy something that costs 100 times as much from a random person? The amount of information you can get depends on where you're buying the car from. If the car is being sold by a major dealer of new and used cars there are numerous resources. Check with friends, google the company and, most importantly, check with the Better Business Bureau. Most large companies will have some complaints, but you can check to see if there are numerous unresolved issues. This is especially important for smaller used car lots along the highway. If the car is being sold online you've got a few resources. Buyers on eBay have a distinct advantage, as the site tracks "feedback" for buyers. You can search for the seller ID and lookup feedback. Using this feature you can see if they have a high positive feedback rating (over 90% is good), if they have lots of experience selling items (little experience is bad) and will let you see what other people say about them (if it says "They lie about the condition of their cars" beware). If the car is being sold on an online listing board like Craigslist it is harder to discern if the seller is on the up-and-up, but even here there are a few things to look for. Look out for keyword spammers, people who are unable to use proper English and PEOPLE WHO USE ALL CAPS. If you're buying the car in person it is hard to know for sure anything about the person unless you ask. This is one of the few cases in your life where it is completely acceptable to discriminate when buying a product. Not buying a sports car from a teenager that looks like he's hooned a car is completely reasonable. If it is a large purchase don't be afraid to ask probing questions about the seller's employment or other details, though try to be tactful about it.

4. Ask The Seller The Right Questions About This Car

Once you've gone through the first three steps and decided this may be a car you want you need to make sure you know all the important details. With the obvious exception of KITT, most cars can't tell you how they've been driven. There are some general questions you want to ask about the driving experience. Basic questions include:
  • What kind of commute do you have?
  • How fast do you drive?
  • What mileage have you typically had with the vehicle?
  • Where is the farthest the car has traveled?
  • Do you store the car inside, outside on the street?
  • Who else drives the car?
Additionally, you may want to ask specific questions for the car. Though all cars experience different driving conditions, most models have predictable faults. Check with your mechanic, online forums, friends and the Consumer Reports car survey to see what faults you should look for. For example: if it is a car with a manual transmission you may want to determine how long the clutch typically lasts so you know if it may need replacement.

5. Make A Detailed, In-Person Inspection Of The Car

If at all possible, you'll want to look at the car in person. It is fairly easy for a used car seller to hide the details of an accident with angled photography and Photoshop. Seeing a car in person and making a thorough inspection can turn up minor issues that you can use to help encourage the seller to lower the price or, if drastic, can help protect you from buying a lemon. There are numerous lists on the web you can print out and take with you if you're not an experienced used car buyer. This detailed list from MSN Autos covers all of the major details and encourages you to bring a magnet to check for repairs made with Bondo and a flashlight to check unlit sections of the car. If at any point the owner stops you from checking out a portion of the car consider that a big red flag. If you don't feel comfortable making an investigation yourself then check with your mechanic to see how much they'd charge to look over the car (you shouldn't pay more than $100 for this service).

6. Investigate The Vehicle's History

Someone selling a newer Ford Focus may not have much in the way of historical paperwork, but you'd expect the owner of a classic or even older non-classic car to keep detailed service records detailing the car's history. How many people owned the car before this current owner? Was it ever a rental car? Does it have a clear title? These are all important pieces of the car's history you'll want to know. The easiest way to get this information is with a CARFAX report, which will often be supplied by the seller. If not, they can be purchased for $25.00 from the CARFAX website. Using only the car's Vehicle Identification Number (VIN), the site will deliver a report that will indicate if the car has ever been in a reported accident, the number of previous owners, title status, history as a private or commercial car, service records and previous odometer reading. This clean sample report shows a 2001 Camry that was once a fleet vehicle with a history of an accident. This junk sample report shows a vehicle with a salvage-junk title, which indicates this car went through a serious accident. Any car that shows a flood, salvage or junk title should be given special attention (if not completely avoided) and should be sold at a large discount. Be concerned if you find a car that has a mileage lower than the previously reported amount, especially if it is a mechanical odometer.

7. Get Everything In Writing Before Handing Over Money

New car buyers are often offered warranties and have the protection of lemon laws to protect them from being sold a non-functioning vehicle. These protections aren't as common for used car buyers. When purchasing a used car from a dealer they're required by the Federal Trade Commission to give you a Buyers Guide, which must tell you:
  • whether the vehicle is being sold "as is" or with a warranty
  • what percentage of the repair costs a dealer will pay under the warranty
  • The major mechanical and electrical systems on the car, including some of the major problems you should look out for
This guide becomes part of the contract when you buy the car and can help protect you if something goes wrong with the vehicle. Private sellers are not covered by the FTC "Used Car Rule" and are not covered under implied warranty laws, so assume that all cars are sold "As Is." If the owner makes any promise when selling over the car, such as offering to replace equipment or fix an item, make sure to get a signed piece of paper stating just that. Anything not stated in a contract will be difficult to enforce. Having all the details of a sale in writing is also a good way to verify that both parties involved in the sale have agreed to the terms of the sale. [Source: Federal Trade Commission]

Conclusion

A used car is a great way to get a car you'd otherwise not be able to afford and to save money. There are risks when buying a previously owned car but it doesn't have to be a crap shoot. With used cars there isn't a guarantee that a vehicle purchase will be without problems, but those who take the time to do their homework can increase their chances of getting a good deal. If you have a tip for buying a used car include it in the comments below. [Photo by Scott Olson/Getty Images]