The study shows that your car color may reflect your personality to some degree. For example, the color silver, which over 30% of buyers choose, indicates wealth and prestige. (And I thought many choose silver because it comes standard, so they do not have to pay few hundred dollars extra on custom paint!)

If it is yellow, then you are probably idealistic and novelty loving. (When I see a yellow car on the road, I steer clear thinking the driver is advertising a big “L”, for learning, on the back. Don’t ask my why – I just do.)

Or, if you like green, you may have hysterical tendencies. (I mean come on! What about people “going green” in these days of global warming and environmental movement?)

The color red indicates lot of energy and zest, and the owner is likely to be fast mover. (No argument there – stay away from red cars on the freeway!)

And black car owners are supposedly aggressive, and have rebellious personality. (I don’t know about that, but I avoid black to keep the interior tolerable during summer afternoons.)

There is some speculation on whether auto insurance companies are using such psycho-analysis (psycho-babble?) to set your premium. But it appears they cannot, even if they would like to. There is no easy way for them to know about your car color, unless they actually ask you about it while selling insurance (the color is not encoded in any of the 17 characters of the VIN). So, go ahead and zip around in your bright red (or yellow, or green) SUV.

Visit Carfax.com with your list of cars and their VINs. This is where you look up the entire history of the car, from its birth up to now. Carfax offers a free service too, but it is more than your money’s worth to pay $30 for the detailed history report for unlimited number of cars. The icing is Carfax’s “buyback guarantee”, the offer to buy the car back from you at the price you paid if the report misses any serious violation. Enter each of the VINs on your list, and look them up.

Study the report carefully. Things you should check for are

1. if the car had been to any major accident or had storm/flood damage and salvaged in the past (remove it from your list rightaway);
2. any odometer “rollback” (inconsistency in mileage shown – a no-no again);
3. any report of it being stolen (run!);
4. ownership history – it is desirable to have a single owner for the entire period, and Carfax shows a “1-owner” seal of approval in its report. Also check if any rental agency owned the car during its early years – such cars tend to have many dents and scratches.

Pick out 4-5 best prospects from your original list based on these reports. Keep this new list short so you can inspect and test drive all of them in a single weekend. Check with your DMV office to see if the car has any outstanding lien on it – loan amount that the previous owner hasn’t paid off yet (you do not want collectors to knock on your door for money that you do not owe!).

Last but not least, you need to know how much you expect to pay for these cars in your area. This is the price you should bargain for with the dealer, no matter how high his quote is. Here comes Edmunds’ TMV (“true market value”) to your rescue. From your ZIP code, it will give you the average market price of your car, from both the dealer and private seller, based on the year, make, model, mileage and other details. Take a printout of this page along with you when visiting the seller.

Go on to Check the car out »

You want to buy a used car (why? because of this and this), and have a budget of $10,000. Which one car, among the several hundreds of different types out there, should you choose? For the sake of this discussion, we narrow the field down to the 4-door sedan cars in mid-sized segments. (Everything said here holds for most other types of cars as well.)

While choosing the car, first think about your needs. Do you drive a lot? With gas price touching $3 a gallon in most places, a car that gives 25 miles a gallon costs $450 a year less than another that gives only 20 miles (assuming a yearly driving average of 15,000 miles) – a net saving of $2250 over 5 years. If you drive on snowy roads, you may need ABS (“anti-lock braking system”) fitted to your car. (ABS comes standard in most new cars these days, but it was offered as an option in older models.)

After you have made your choice of the type, it is time to hit Internet. Look up the online inventory of all new car dealerships in your neighborhood (leave out used car dealers – it is harder to find a reliable car there), and also check out personal sales ads such as craigslist and classifieds in your local newspaper. New car dealers keep a variety of used cars that are traded in by customers who swap them for new cars. These are privately owned, and generally well maintained.

Besides, dealers may add a few months of warranty (more on this later) that gives you some peace of mind. The downside is having to deal with the dreaded salespeople, if you are not well prepared (worry not, this guide will teach you enough to face him with courage). A private seller, by contrast, is ready to sell without much hassle and also the car is usually cheaper. But the problem here is that you must buy his car “as is”, without any accompanying warranty.

Make a list of at least 10-15 cars based on your budget and other needs. (Dealers often “mark up” the price by several hundreds and even a few thousand dollars, which can be negotiated down. So if you like a car in the inventory that costs more than your budget, do not discard it just yet.) Ask for the VIN (“vehicle identification number” that uniquely identifies every car on the road) and odometer reading (number of miles the car has been driven so far) for each car on your list. The lower the mileage on the car, the less is its wear and tear (a rule of thumb is that the total number of miles should not exceed 15000 multiplied by the car’s age in years).

It is time to research your car »