Articles in various newspapers lately have reported that the price of used cars is going up. Because of the "economic downturn" we have experienced, it is suggested that folks are buying used cars instead of new ones, creating more demand, raising prices. The Legal Hotline for Michigan Seniors often answers questions on buying a car, selling a car, and what to do if you get stuck with a bad one. One of the Hotline Referral Panel Attorneys, Adam Taub, in Southfield, Michigan, is an expert in Consumer Law and regularly handles cases involving bad cars. Adam wrote a pamphlet to help people with buying a car and protect them from making a poor choice. He has generously allowed us to use the information from his pamphlet, The Best Way to Prevent Autofraud: Don't Get Cheated!, for this article.

Your choices for buying a car, other than your Aunt Nellie's clunker, are probably limited to buying from a dealer or buying from an individual. It used to be that the Classified Section of the local newspaper was where the action was for seeing what cars were available from individuals. Now, there are specialty newspaper-like publications, online advertisements like Craigslist, and many vehicle sales websites on the internet. Use the same care in dealing with an individual as you would with a dealer. Most buyers report that generally, there is very little "pressure" when you are dealing with an individual. When you go to a dealer, you may have many choices. Searching on your own, you can spend a lot of time and money chasing down cars listed in various types of ads. Dealers can more easily help you through the transaction and all the paperwork. Buying from an individual can mean you will have to learn and do many of the necessary things yourself to complete the transaction.

Leases are generally not a good idea if you are a person; leasing has few advantages. If you are a business, there are some.

Think about if you really need a different car. Maybe you don't need to purchase if you have a good running car that suits your needs. Stay with it. The less time you spend at a dealership, the less chance there is of getting cheated. But, if you really need a car . .

BEFORE GOING TO THE DEALER, make a list of cars that suit your needs.

• Read magazines and go online - you can do this at the library. Check the NHTSA (National Highway Transportation & Safety Administration) website for information about auto recalls and defects.
• Do not buy more car than you need. Remember: You can rent a U-Haul or Cadillac twice a year. Gas mileage will continue to be a consideration into the future.
• Consider safety features, reported reliability and fuel economy.
• Compare prices. For price comparison, consider the following:
  • MSRP (Manufacturer's Suggested Retail Price - sometimes called the list price and legally required to be posted on the window for new cars) or NADA (National Automobile Dealers Association - they publish guides (booklet and internet) for vehicle prices) or Kelley Blue Book Value. Kelley also publishes (booklet and internet) dealer and consumer value guides for autos.
  • Cost to insure.
  • Compare new and used car values. Because of depreciation, you will always pay a "premium" for a new auto. Consider a low-mileage, used car.
  • Pull your credit reports, all three separately, and make sure they are accurate; fix errors before you apply for credit at a car dealer. Better yet, create a fund for your next car by saving an amount each month. After you are able to buy your next car for cash, "pretend" you have car payments and begin the fund anew for your next car. Instead of paying interest on a loan, your fund will earn interest.

WHEN YOU GO TO THE DEALER, shop for the best price. Don't discuss financing.

• Test drive the auto; consider paying a trusted mechanic to inspect (possibly on a hoist), drive the auto and give you a report with a "buy" or "avoid" recommendation.
• Make it clear you do not want a credit report pulled.
• Get prices from three or four dealers. Get the prices in writing. If not, walk away. This isn't love so don't decide on the car that you fall for right away. There are thousands of cars out there; play the field and look around.
• Prices that seem too good to be true are too good to be true. Walk away.
• Make it clear you want the out-the-door cash price. If you can't get one, leave.
• Do not discuss monthly payments!
• Do not buy GAP (Guaranteed Auto Protection Insurance - this can cover the difference between what you owe on a vehicle and its market value), credit life or credit disability insurance. Do you really want a service contract? Read it!
• Make it clear that you do not want the salesperson to pull a credit report.
• Do not sign anything on the first day.
• Do not wait more than 10 minutes unattended. Leave.
• Do not be rushed. There are plenty of cars. You lose nothing if someone else buys the car you are considering. This might be the one time when cars are like buses and trains - there will always be another one. If the salesperson rushes you, don't go back.

ONCE YOU GET A PRICE, shop for the best price on a loan.

• Don't discuss a payment amount.
• Get the Adjusted Percentage Rate and finance charge in writing. If the seller won't give you this, leave.
• Ask to see the buy rate, in writing. If the seller refuses to give you this, walk away.
• Take those amounts to other dealers, banks and credit unions.
• Do not sign anything more than a credit application. Make sure it is accurate. If not, leave.

SIGNING PAPERWORK.

• Review all of the paperwork before signing any of it.
• Make sure that the numbers match up with what you agreed to. If not, leave.
• Demand to see the title, both sides.
• Read EVERYTHING. Get copies of EVERYTHING.
• Is there an arbitration clause? This will prevent you from taking a dispute to court.

Adam suggests a couple extra precautions if you are a senior. Since some salespeople think they can take advantage of seniors, consider taking another person with you to offer support and a second opinion. This will prevent a senior from the feeling of being held captive. Be aware that aggressive salespeople try to wear down your resistance - get up and leave before this happens. If anyone takes your keys or operator's license, demand a phone to call the police. Here are some situations reported to us by seniors. Keep them in mind and don't let them happen to you.

• I was only going to the car lot to look and did not intend to buy but I ended up buying a car that I did not want.
• I bought a car that I could not afford. I was talked into financing the cost of a car that was much more than I could afford.
• I was trying to help my grandson to buy a car and agreed to be his co-signor, but I must have signed the contract as a buyer and now I am the owner.
• After looking at a car I decided I did not want to buy it but the pressure was so intense I ended up buying it and regretting it; I felt like I couldn't leave the sales office.

If you have questions about buying a car or other legal matters you can call the Legal Hotline and make an appointment to have a lawyer call you back. (800) 347-5297.