When buying a used car, make sure you do your homework.... When buying a used car, make sure you do your homework. Private sales through individuals can mean deeper savings, but sometimes that comes at the cost of your peace of mind as some dealers will offer short warranty programs. (Valerie Everett, Flickr)

With the state of the economy many Americans are considering buying a used car rather than a new one when it comes time to replace their current vehicles. Shoppers may know the basics of how to buy a used car, but there are certain tips that can make the process go more smoothly. Before learning how to buy used cars, it would be worthwhile to discuss why anyone would consider buying a used car in the first place.

The main advantages of buying used cars are the lower initial purchase price, as well as lower property taxes (where applicable) and insurance costs. The main disadvantages of buying a used car are that there's no new car warranty and you are more vulnerable to used car problems that could cost you money, time and peace of mind.

To reduce your risk of hassles from buying a used car, there are a few precautions you can take during your shopping process.

Tips on how to buy a used car include:

Shop for newer used cars that still have at least a portion of their original manufacturer's warranty remaining: Most late model used cars have at least three-year/36,000 mile basic warranty coverage (and often longer "powertrain" coverage on the engine and transmission). This means you'll get at least a year or so of peace of mind if you buy a used car that is less than three years old. (Important: Be sure to confirm the used car warranty is fully transferable.)

Check into Certified, Pre-Owned (CPO) vehicles: These are late model used cars and trucks that typically have less than 50,000 miles and have been given multipoint inspections -- with any needed service or upkeep taken care of before the used car is put on the lot. CPO programs are backed by the automakers (Ford, GM, Volvo, etc.) and the vehicles often include a no-cost extended warranty on major parts such as the engine and transmission. CPO used cars are usually clean and well-maintained -- the "cream puffs" of the used car market.

Do a "background check" for indications that the particular used car make/model you are considering might be a problem car: One with an unusual record of either recalls or consumer complaints. You can find information about recalls and safety-related defects at the National Highway Traffic Safety Administration's Web site, and information about consumer satisfaction at JD Power & Associates. Consumer Reports is another good place to poke around. It's also a very good idea to do a simple Google or Yahoo! Web search; just type in the make and model of the vehicle and "lemon." You can bet if the car has a history of problems, there will be complaints all over the Internet.

Screen your candidate -- the specific used car you are looking at: Even if the make/model has a great reputation for quality and reliability, that particular used car may not have been well-maintained -- even abused. Have a third-party mechanic (not one working for the dealer) look the used car over as a condition of sale. If the dealer refuses to permit this, you should consider yourself well warned -- and walk away.

Ask to see the used cars' service records: If these are available, it's usually a good sign the car was well cared-for, and perhaps more importantly, proof (if the records are complete) that there weren't any unusual repairs or problems. If the used car records are not available, you should be suspicious. It doesn't necessarily mean the used car is a bad car, but you have to wonder why the seller would not have kept such a strong selling point as evidence of proper upkeep and maintenance. In such a case, it is doubly important to have a mechanic you trust give the used car a thorough once-over before you commit to buy.

Be sure it will pass both state safety and emissions tests (where applicable): In most states, this is a legal requirement, but don't assume it is. It can cost hundred of dollars (or more) to repair a used car that fails either state safety or vehicle emissions testing -- and in many cases, you can't legally register or drive that used car until it does pass.

Lastly, jot down the Vehicle Identification Number (VIN): located on a stamped plate on the top of the used cars dashboard and run a CARFAX Vehicle History Report to check for information that could impact your decision about a used vehicle. Some types of information that a CARFAX Report may include are title problems, accidents, ownership and service history. A CARFAX Report costs less than $30, and is well worth the expense.

As painful as getting a new car from a dealer can be, buying a used car is potentially fraught with even more pain, perils and pitfalls. Potentially. Aside from the dreaded (though largely stereotypical) used car salesman trying to rob you five ways 'till Sunday, you are buying someone else's problem, often with no warranty. But used cars offer a huge upside, namely price.  For new cars start to depreciate the second they drive off the dealer's lot. And if you buy your used car from a private party there's no dealer whatsoever. Which might just be the very best part.

The first and most important thing you can do to ensure the used car buying process works for you is research. Become an expert on the used car you want to purchase. Not only will this help you determine if the asking price is fair or not (and hopefully a steal), but will allow you to stay away from lemons. Newer or "late model" used cars will often times still have part of the original manufacturer's warranty in effect, especially "certified pre-owned" cars. Which is great. However, if the used car in question likes to break down, all the warranty in the world won't keep it out of the shop.

Forums are a particularly great source of information for a specific make and model year. Just be prepared to filter out a lot of noise. Even with a lot of loud, oftentimes angry opinions, some of the people that hang out on car forums are truly experts. Best of all, they'll talk your ear off for free. Always remember, just because a car has a certain reputation doesn't necessarily make it true. Also look for recalls (via Google) and reviews by independent watchdog groups like Consumer Reports.

Now that you're armed with some general knowledge, get into your potential used car's nitty gritty. Ask to see all the service and repair records. If the car in question doesn't have any service or repair records be prepared to just walk away – even if you really like the car and/or price. The maxim, "if it seems too good to be true, it is" holds extra water in the world of used cars. Besides, odds are a better deal is just around the corner.

Once you've determined that the used car in question isn't a factory lemon and has been maintained and serviced properly, bring in an expert. If you have a mechanic you trust, show him/her the car. If you don't have a mechanic you trust, find one. Ask friends, family, "car guy" acquaintances – you need to find an uninterested third party that can spot probable trouble spots, such as slipshod repairs, cheap replacement parts, excessive wear as well as signs of impending failure.

If your mechanic discovers any signs of trouble, be sure to get a CARFAX Vehicle History Report (all you need is the car's VIN number). It's well worth the $30. In fact, a CARFAX report is worth the money even if your mechanic sees no red flags. As long as you go into the used car process full of knowledge and with your eyes wide open, the secondhand car of your dreams is right around the corner.

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