Is That Used Car A Dud?

That 2005 LandRover Freelander you have your eye on is jammed full of options including a navigation system, a choice sound system, and just the right measure of interior room to transport your family of four. Best of all, the price is pleasing: you checked what the value of a Freelander is with approximately 40,000 miles on the odometer and believe that you paid less than what you could have been charged for the automobile.

The Justice Department Steps In

That used Freelander you like is a great value. But does it pass Justice Department muster?

However, there is something that you and every last consumer should do before signing your sales contract: stop by the US Justice Department’s new vehicle database internet site (link at http://www.usdoj.gov/) to discover your vehicle’s history. Starting this past January, the federal government established a website featuring the vehicle history of tens of millions of cars, trucks, vans, SUVs, etc. in its database. It isn’t done yet, but it can still provide powerful data about your specific car.

The database already contains data from 37 states with the remaining 13 finalizing their information. Come January 2010, all states must take part and insurers and scavenger yards must start sharing their info by the end of the following March.

Sneaking Past Damaged Cars

Though incomplete, the database could help you learn if your car has had an accident, been damaged by floodwaters or if it has an unspotted vehicle history. Various hurricanes over the past several years ruined hundreds of thousands of cars, but many of those vehicles were cleaned and put back on the road months later to unaware buyers. By retitling damaged vehicles and selling them in other states months later, unsuspecting consumers were left with a car that could become rusty, experience transmission, engine or other serious engineering problems, or start to reek.

As of right now, the federal government says most vehicles are already listed. To find your information, you will need to pay a fee to enter a vehicle’s identification number (VIN) tag which will divulge selective information about that car. Just one VIN can be checked at a time and, as mentioned, not every vehicle is listed yet. Updates are made monthly, however when the system is fully operational in 2010, some duds could still sneak in.

A Beginning, A Good One At That

Of course, the database isn’t perfect and there is extensive room for improvement. By the way, the law to produce the database dates back to 1992, but it wasn’t enforced until lately. Consumers, insurance providers, lenders, and other interested parties will be able to check VIN tags which should uncover correct information about a car prior to you making a purchase decision.

Clearly, the federal vehicle database is a very good move whose time has come. Once full compliance has been achieved, the database has the potential to save buyers plenty of heartache the next time they buy a used car.

See Also — KBB Forecasts Used Car Price Bubble

KBB Forecasts Used Car Price Bubble

Used car prices will often fluctuate depending on the popularity of the vehicle as well as other factors including the price of gasoline. Indeed, in 2008 owners of compact cars saw their prices increase as gasoline topped four dollars a gallon. Getting 30 mpg on the highway is certainly advantageous when pump prices are high resulting in an increase in used car values.

Fewer Used Cars Available

Kelley Blue Book (KBB) is seeing another factor play in with the used car market and that factor is the federal government’s car scrappage program. Called “cash for clunkers” by consumers, the Car Allowance Rebate System (CARS) program has already removed about 250,000 used cars from the market, with an additional 500,000 slated for scrappage as the program is extended thanks to two billion dollars in additional funding.

KBB says that the clunkers program is removing used car inventory at a faster rate which means that dealers are stocking up on used car inventory while they can. This quest for used cars is pushing up prices, creating a bubble scenario.

“Dealerships have reported increased foot traffic, creating a false sense of automotive market recovery,” said Alec Gutierrez, senior analyst of vehicle valuation for Kelley Blue Book. “As a result, dealers are going to auction to restock inventory, driving up used-car values. However, the effect of a supply reduction of this magnitude could have an immense impact on these values in the short-term, exacerbating the already-limited supply at auction. If this bubble comes to pass, dealerships will end up with excess inventory of both new and used vehicles and be forced to offer deep discounts to remove surplus inventory, driving values down. Ultimately, there will be the possibility of a severe contraction in auto sales as soon as the Cash for Clunkers program runs out of funding.”

Most Sought After Brands For New Car Buyers

KBB also found out in a recent survey that one in ten car shoppers have moved up their new car purchase thanks to CARS. The top brands being considered by people turning in their clunkers are Toyota, Ford, Honda and Chevrolet.

The federal government’s program was supposed to end on November 1st or when funds ran out, but with only one billion dollars in initially funding, CARS was quickly overwhelmed by customers thanks to pent up demand and huge deals on new cars.

See Also – US Brands Benefit From Cash For Clunkers Program

Finding A Used Car That Won’t Let You Down

High gas prices are putting a strain on American family budgets, forcing some people to make hard choices when it comes to their transportation. Unless you live in an area where mass transportation is usable, you’re probably doing just like everyone else — depending on your car to take you where you need to go.

Some people are fighting back by getting rid of their SUVs and pick up trucks, deciding to shop for transportation which will cost them less, at least less per mile. Sales of new compact cars rose sharply in May 2008, bolstered by people who were making that switch.

Not everyone is in the market for a new car, but they might certainly consider a reliable used car if they could find one. As you explore the market and research particular models, there are some things you’ll want to keep in mind to ensure that your used car won’t let you down:

Visit KBB — Kelley Blue Book is the authority on used car prices. Go to their website to see what the retail value is of the car that you want. You’ll pay less if you shop the classified ads with Craigslist and your local newspapers a good place to start. Note: prices of economical used cars has been rising dramatically as demand surges accordingly.

Compare Models — Late model used cars can set you back by $10-25,000, and deliver you good gas mileage. If you are mechanically inclined, consider a Toyota, Honda, or Nissan model that is at least ten years old. Some of the older cars get better gas mileage because their emissions aren’t as strict and they don’t have all of the airbags and other safety devices which add to the weight of the car.

Get It Inspected — Before I purchased my 2001 Dodge Neon in 2003, I ordered a Carfax report to verify that it hadn’t been damaged, salvaged, or had some other glaring problem. Though I didn’t have a mechanic inspect the car, it can be worth the $50-$100 you would pay to have your guys at the garage look the vehicle over.

Shop Around — Besides checking the classified ads, consider a certified used car especially one with an extended warranty. You’ll pay a premium for those types of cars, but you’ll also get a car that has low miles and is backed by the manufacturer. Also consider buying a rental fleet car — our Toyota RAV4 was purchased from Hertz Rental Sales, a fully loaded 2003 model we bought toward the end of 2004.

Finally, when researching the market, pull up objective road tests from websites including The Truth About Cars and get a copy of Consumer Reports April car buying guide for detailed information about your ride.

A used car can save you money on gas, insurance, and registration, but if it isn’t reliable, you could pay more for maintenance and repairs, effectively canceling out your savings in the process.