A new car loses up to 47 percent of its value after just three years. To get the most for their money, car buyers who use regular or bad credit auto financing often opt for a used car. Though this can be a financially smart move, it also carries some risk.
A used car can be damaged, which can skyrocket the cost of ownership to levels unpredicted.
Until now, the onus has been on the car buyer to research a used car using a vehicle history report. Experts also recommended that a mechanic inspect a used auto before signing on the dotted line. In California, the situation is changing due to a new law regarding used vehicles, sponsored by state Assemblyman Bob Blumfield.
This legislation requires that a California car dealer run vehicle identification numbers for used cars through the National Motor Vehicle Title Information System. This will reveal whether a vehicle has any detrimental events in its history.
Causes for concern include odometer rollback, frame damage, and a salvaged title. If a car has any of these, the dealer must affix a red sticker to its window, alerting car buyers of its history.
Mr. Blumfield stated that purchasing an automobile is second only to buying a house in terms of financial commitment. He believes now is the best time to ensure that family vehicles represent a safe, wise investment. In the current economy, people are stretching hard-earned money even further to afford good and bad credit auto financing.
The new legislation also permits used car dealers to increase documentation fees to cover costs for vehicle history reports. From a short-term perspective, this is not financially positive for a car buyer. However, over the long term, the cost of a vehicle history report can pale in comparison to the expense associated with a damaged vehicle.
