Quick tips for buying a used car

• Do not buy a car before doing research,
• Make sure you take your time to look at all the terms of your contract before you sign it, and
• Don't let anyone push you into buying a car.

Finding the right car

Where can I buy a used car? 

There are many places that you can buy a used car, including:

• A new car dealership,
• A used car dealership,
• A private party,
• Used car superstores
• Rental car lots, and
• Used car websites. 

You may want to visit more than one dealer.

You are usually better off buying a used car from a new car dealer rather than a used car dealer. Most new car dealers only keep the better cars that they take as trade-ins. They give better warranties, and they have better service facilities. The exception is used car superstores like CarMax—they sell reliable used cars, offer warranties, and have good service centers.

The best place to look for used cars is on the internet. Popular used car websites include Craigslist.org, Cars.com, Truecar.com, and AutoTrader.com.You can also read the advertisements in newspapers or visit local dealers.  Sometimes ads that look like an individual seller are actually by dealers.

Starting January 1, 2024, Illinois will allow you to buy a car from a licensed dealer over the internet. An authorized dealer can verify your identity, collect signatures, and complete the entire transaction online.

Note: Effective Effective January 1, 2024, if you live in Illinois and buy a car from another state and bring it to Illinois, you must apply for registration and a title within 45 days of the purchase. If you cannot meet the 45-day deadline, you can get a temporary permit with a valid Illinois driver's license. You also need to display any temporary permit or registration issued according to the law.

What kind of research should I do before buying a car?

The more knowledge you have about the car you want to purchase, the less likely a dealer can take advantage of you. Have the information with you so you can make the right choices on the car you have in mind without getting taken advantage of.

Before you start to research cars, ask yourself some questions:

• Which cars do I like best?
• What are the different options that are available?
• What is a fair price for the car?  Can I afford it?
• What safety features does the car have?
• Is the car right for my lifestyle?
• What is the car's history of maintenance, problems, and accidents?
• What are the pros and cons of a particular make and model of car?

There are many different ways you can research cars:

• Talk to other individuals who have purchased a used car,
• Look on the Internet for sites that offer customer reviews and information about used cars, and
• Look at magazines like Consumer Reports that provide basic price figures and repair records for various car models. Every year, the April issue of Consumer Reports features articles on used cars. The reports include fair prices and repair records of most used cars. Consumer Reports charges to look at online content, but your local library will have copies of the magazine.

You should also consult the Car Book. TheCarBook.com provides information on safety, reliability, fuel economy and other important features.

Two other usful sources would be Edmunds.com or the Kelley Blue Book at kbb.com, which can be used to determine the fair market value of a car.  

How should I "test" the seller to make sure I'm getting a good deal?

Before test-driving the actual car, learn about the seller over the phone. You should do this for two reasons:

• To find out as much as possible about a car before you go and see it, and
• To get a sense of the seller as this will prevent you from making the mistake of buying a bad car.

The phone interview can give you information on the car before you see it and can help you rule out certain dealers and sellers.

Questions to ask when calling the dealer or seller:

• Why are you selling the car?  (If it's a private seller)
• How many miles does the car have?
• What is the condition of the car?
• What unique features does it have?
• How many people have owned the car?     
• Has the car ever been in an accident?
• Can I see the service records for the car?
• How much are you asking for the car?

Tip: The "Odometer" is the gauge that says how many miles the car has traveled. Check to see if the odometer reading on the car is the same reading that the seller told you. If not, that is a warning sign that he or she is not saying the essential facts about the car.

How do I make sure a car is in good condition?

You will not be able to tell the condition of a car just by looking at it. You need to test-drive it and have it inspected by a mechanic. A reputable dealer or an honest private seller will be okay with you having a mechanic check the car.

There are Automobile Inspection Service companies that will inspect the car for you. You can find companies on the internet or in the telephone yellow pages by searching for "Automobile Inspection" or "Automobile Diagnostics Service."

These companies will check the major systems of the car (engine, brakes, drivetrain, etc.) and write you a report on their findings. The inspection might cost you $50 to $100. You can also ask a friend who is an auto mechanic or any other reputable mechanic. 

Another way to inspect a car that you are interested in is to get its vehicle identification number (VIN) and visit Carfax on the internet. At the Carfax website, you can get a vehicle history report about the car for about $40. This report may show if the vehicle has been involved in a serious accident or other disasters like a flood.

Paying a fair price

What financial issues should I think about when buying a car?

There are two ways to pay for your car:

• You can pay the entire amount of the car in full, and
• You can finance the car.  

When financing a car, you make monthly payments until the car is paid in full.  If you choose to finance the car, the total cost of the car increases because you are also paying for the cost of credit.

You have to consider how much money you can afford to pay for a down payment and monthly payments. If you fail to make monthly payments, the car might get repossessed.

If you finance the car, the two most important numbers are the finance charge and the annual percentage rate (APR). The finance charge tells you in dollars how much you are paying for credit. The APR tells you the loan interest rate. It is a fee that is charged by the lender to the borrower for the use of the borrowed money. Check out APRs among different dealers to compare credit rates. If one dealer is charging 9% APR and another is charging 14% APR, you will save some money by buying the car at the lower APR. 

Should I pay the price the dealer first asks?

No. Almost all used car dealers expect you to bargain about the price. Dealers may be willing to drop their prices between 10 and 20 percent, sometimes more.

You should:

• Shop around to get the best possible price by comparing models and prices in ads and at dealerships,
• Check publications at a library, bookstore, or Internet that discuss used car prices,
• Tell the dealer you want to know the "best price" he can give you on the car so that you can compare it to other sellers' prices,
• Never tell the dealer the price another car dealer has given you,
• Leave any dealership that does not give you a fair price, that treats you rudely, or that puts pressure on you to sign a contract before you are sure.

What should I know about warranties?

A warranty is usually a written promise that the dealer will fix the car for a certain period, like 30 days or 60 days. Some dealers charge for a warranty. It is better to have a written warranty than to not have one. You should always ask about the warranty on the car. 

Ask the dealer questions like:

• How long is the warranty?
• What does it cover?
• What is not covered?
• If the contract says, the car is being sold "As Is" this means there is no warranty.

Be careful of some warranties, like so-called "50-50" warranties, where the dealer agrees to pay 50% of parts and labor charges if the car breaks down in the first 30 days. Sometimes the dealer just charges twice the normal cost of repair, so the 50-50 warranty ends up with the buyer paying 100% of the repair costs! 

The law sometimes gives you an "implied warranty." That's a warranty that your car should work for a reasonable period. There is an implied warranty on any car sale unless the seller sells the car "As is" or if the contract states there are no implied warranties.  As of July, 2017, Illinois law automatically gives you an implied warranty for 15 days or 500 miles, whichever comes first. This 15 day warranty covers only power-train components and does not apply to cars with more than 150,000 miles at the time of purchase. Under this waranty, the dealer cannot charge you more than $100 for a repair of a covered component.

If a vehicle has a limited warranty, make sure to get the dealer to put all the terms of the warranty in writing. Make sure the written warranty states everything that is covered as well as how long the warranty lasts.

The safest rule to follow on warranties is to get everything in writing.

What is a service contract?

This agreement states that a service contract company, not the dealer, will fix the car for a set period for specified problems. Think twice before you buy a service contract. Service contracts are usually expensive and only cover problems with major items. It is often hard to get the service contract company to follow the agreement. If you decide to purchase a service contract or "extended warranty," you should try to negotiate the price as low as you can.

What should I do if I want to trade in my car when I buy my used car?

If you are considering trading in your old car: 

• Research the value of your car. You can use Edmunds.com or the Kelley Blue Book Website;
• Bring a copy of the title with you when you visit the dealer;
• If the dealer offers you too little on your old car, you can sell it yourself;
• If you owe money on your old car, be aware that the trade-in value may be less than what you owe, and the balance will be added to your new car cost.
• Talk about a trade-in with the dealer only after you've reached the best possible price for the car you're buying.

Myths about buying a car

1. I have a ‘Three-Day Right to cancel' a used car purchase. Not true.
2. The ‘Lemon Law' will help me if my used car needs repairs after purchase. Not true. The Lemon Law is a law that protects consumers who buy new cars.
3. All cars come with a warranty. Not true. Many used cars are sold without any warranties.  However, Illinois law does provide a short, 15 day/500 mile implied (automatic) warranty on 14 power-train components.

Problems that may arise during a sale

What do I do if the salesman pressures me to buy a car?

If a salesperson tries to put pressure on you to buy, tell them that you are not going to make a decision that day.  Explain that you will have to check out other dealers before you decide which car to buy. Sometimes the salesperson will say the car might not be there tomorrow, but that's just to get you to buy it faster. If you are uncomfortable with the salesman, ask for another one. If they don't give you a different salesperson, leave.

What if a dealer or salesman makes a promise about a car but doesn't keep the promise?

You can sue the dealer who lies or breaks their promise.

For example, if the salesman says that the car has a six-cylinder engine, but it turns out the car has a four-cylinder engine, the buyer could sue the dealer.

Learn more about filing a lawsuit.

How do I protect myself from a dealer who makes false promises?

If the dealer makes a promise that is important to you, have them put it in writing in the contract. If you have the promise in the written contract, you can take the dealer to court if they don't keep the promise. 

Financing the car 

How do I finance the car?

Usually, the dealer offers to get financing for you. You don't have to use the finance company that the dealer recommends. You may be able to find a better deal from a different lender.

• Compare the financing that other lenders offer you with the financing the dealer offers you,
• Compare the APR (interest rate),
• Compare the length of the loan.This can range from 12 months up to 72 months. The longer the loan, the lower the payments will be, but you will pay more over time, and
• Find out how much the monthly payments will be. The will be based on the price of the car and APR, and the length of the loan.

Check the current interest rates for used car loans at banks, credit unions, or lending referral companies like on the internet.

Learn more about car loans.

What does it cost to finance a car?

When you buy a car on credit, the lender must give you information about the cost of financing the car. You have a right to receive this information in writing before you sign the contract to finance the car. If the dealer has you signing on a computer screen, make sure to ask for a paper copy you can keep, before you sign anything.

If the loan is for a longer period, the monthly payment will be lower. But the longer the loan, the total interest you will have to pay.

Will my car payment be the same every month?

Not necessarily, the contract must tell you the amount of each of your payments, the number of payments, and when payments are due.

For most contracts, you make a payment of the same amount each month and a final payment of about the same amount. But some deals make you pay a regular monthly payment and then a much larger amount, a "balloon payment," for your last payment.

Watch out for large balloon payments. Illinois law allows auto sales contracts to use a balloon payment, as long as it is stated in the contract.

The contract must give you three options when the balloon payment is due:

• You can pay off the balance you owe,
• You can refinance the balance in terms like those when you signed the contract, and
• You  may return the car to the seller.

Do I get my down payment back if my credit application is rejected?

Yes, the dealer can't charge you anything if you cooperated when the credit companies rejected your application to finance the car. Many dealers will try to keep your down payment or otherwise charge you when the credit application is rejected. See the bottom of this article to find out where you can get help if this happens.

What can I do if I have bad credit and can't get financed?

The first step to take is to find out if your credit report is accurate.

You may obtain your credit report from a credit bureau. The three major consumer reporting companies are Equifax, Experian, and Trans Union. You have a right to a free credit report every year from each of the major agencies and can receive these reports through Annualcreditreport.com or by mail through Annual Credit Reporting Request Services. You may also receive a free credit report if you were denied credit. Do not contact the companies individually, because the free reports are only available through the Annual Credit Reporting Request Services.

If you find an error in the report, you have the right to let the credit bureau know that you disagree with the information, and to ask for an investigation. The credit bureau has 30 days to investigate and, if a mistake is found, they must fix the mistake. To contact a credit bureau for a free report, call: Equifax (800) 685-1111; Experian (888) 397-3742; Trans Union (800) 916-8800.

What if I don't like the decision of the credit bureau?

If you are not happy with the investigation of the credit bureau, you have the right to send a statement (100 words or less) to the credit bureau giving your side of the story. The credit bureau must put your statement on your credit report. That statement will be sent to creditors who ask for your report. 

Can I remove information from my credit report that I don't like?

No. If the information in your report is correct, you cannot have that information removed. Negative information usually can stay on your report for up to seven years.

Learn more about building better credit.

Auto insurance

What about insurance on my car?

Illinois requires drivers to have car insurance to cover injuries to other people and their cars. This is called liability coverage.

MYTH: I have liability insurance that is required by the State of Illinois, so my car is covered if I am in an accident.  Not true.  Liability insurance required by the state only covers the other cars in an accident--not the driver's car. Collision or comprehensive insurance covers the driver's auto.

Other types of insurance cover the following:

• Collision coverage covers damaged your vehicle in an accident, and
• Comprehensive coverage covers theft and fire damage to your car.

If you only have liability insurance, you meet the State of Illinois insurance requirement. But liability insurance does not cover you or your car if there is an accident. For you and your car to be covered, you need to have the following:

You can also use the Internet to search for free insurance quotes from reputable insurance companies. 

What is credit insurance?

Credit Life Insurance will pay off the contract if you die. Credit Accident and Health Insurance will pay off the contract if you become sick or are injured and unable to work.

Credit insurance might be a good idea for people who are over 50 years old and have dependents. This type of insurance is expensive for the coverage it provides, so don't buy it unless you need it.

Problems with the car after purchase

What do you do if your car needs repair?

• Find out if the car has a written warranty or service contract,
• Follow the guidelines on how to use the warranty or service contract, and
• It may require that you bring it to the dealer where you bought the car for repairs.

What if the dealer does not want to repair the car?

First, find out why the dealer will not repair the car. 

Write a certified letter to the dealer outlining when you bought the car, the car problems that require repair when they began, and why you believe that the dealer must make the repairs.

If you bought the car "As Is" the dealer does not have to repair your car unless you brought it in for repairs under the 15-day automatic implied warranty. The dealer may still have made promises to you during the sale that might amount to a warranty. Consult an attorney to determine your rights.

If a dealer refuses to fix the car as required by either the service contract or warranty, other legal options are available. You will probably need a lawyer to do this. See the end of this article for where to find a lawyer.

Where to Get Help

Also, you can try the Illinois Attorney General, Consumer Protection Division, or call toll-free: (800) 386-5438; Spanish: (866) 310-8398; TTY:(800) 964-3013.

Consumer websites that offer advice on car purchasing:

• Federal Trade Commission website, or call toll-free: (877) FTC-HELP or (877) 382-4357); TTY: (866) 653-4261. 
• Better Business Bureau website for advice and articles about car purchasing and other consumer issues.