Most of us realize that used cars are usually less expensive than new cars. But we often still shy away from that kind of bargain because we may be intimidated by just what we may be buying. Could it be a great deal, or a lemon? And how do you know? Well, there actually is a way to work through the process of buying a great used car if you follow a few simple steps and stick to your guns. Would it surprise you that your first stop should be your credit union? Well, it should be.

You need to know how much car you can afford, and what the terms will be before you go car shopping. When you talk to your credit union, make sure you understand the difference in rates, if any, between various car model years. Newer car loans are generally lower than the interest rates charged for older models. Why? The lender assumes more risk with an older vehicle, and they pass some of that risk on to you in the form of a slightly higher rate. Does that mean you should only buy newer models? Not necessarily. That newer car will probably cost more, so even at a lower interest rate your payments could be higher than the payments on a less expensive older model at a slightly higher interest rate. Of course, your individual credit-worthiness will impact the loan rate you are quoted, as with any other financial product. Be sure you ask, too, if the credit union is sponsoring a used car sale any time soon. These events can give you a great place to comparison shop for dozens and dozens of vehicles. The prices are usually marked on (or in) the cars, and may be purported to be "non-negotiable." But ask anyway. You may be able to negotiate a lower price, so why not check it out?

One more thing to check about car models you may be interested in is car insurance. It may be worth a call to your insurance agent to get a sense of what differences you might see in car insurance rates for different types of vehicles and models. Should you buy that Mustang or Taurus? It's not really a surprise that a very powerful engine might be more expensive to insure, is it? So check that out before you buy. You may also want to ask your agent what differences in rates you might see depending on who is driving the car. If your 17 year old son will be one of the drivers, find out what that means to your insurance costs on the vehicle models you are considering.

What's next? You are ready to start your additional homework. Sounds a little boring? Think about this. The salesman you are buying a car from has sold hundreds of them---or even thousands. How many have you bought? It makes some sense for you to spend a little time in research to even the playing field a little. And if you buy from a private owner, you still need to do your homework to know what little problems to look for that the owner himself may not even be aware of.

Fortunately, there are some disclosure regulations on your side. Some states require safety inspections and require that the results of those inspections be made available to prospective purchasers. Check with your state's transportation department web site or your state secretary of state's office or justice department as places to start looking for what help your state's regulations may provide you. The Federal Trade Commission also has a Used-Car regulation which says that dealers must disclose whether or not used cars have any unexpired warranty protection. These same agencies can provide you information about any lemon laws which may exist in your state.

When you are looking for your car, you will generally find that similar vehicles are more expensive from dealers than from private parties. There are several reasons for this. Dealers often recondition cars. Some offer warranties. And consumers may actually have more recourse if something does go wrong with a purchase from a dealer than from a private party. Consider, also, your own knowledge about cars. If you are a shade-tree mechanic in your own right, you may be able to evaluate a car with more confidence than someone without that knowledge. If that's your situation, it may be quite logical for you to gravitate toward purchase from a private party.

Most of us have some idea of what kinds of vehicles appeal to us. Make your short list, and hit the computer. You have a better resource than ever before to do some basic research about the models you are considering. One of the most popular such sites is http://www.edmunds.com/, but there are many others including Consumer Reports.

Let's assume you have identified the vehicle of your dreams, you know what it will cost to insure, and you have a good idea of how to check it out. These sites can also give you vehicle reports on specific individual vehicles when you input the vehicle's VIN number. The VIN number (Vehicle Identification Number) is usually visible just at the base of the windshield on the driver's side. A vehicle history report on each candidate is absolutely critical when you have narrowed your choice to 3 or 4 cars. You may also want to circle back to your credit union again to find the ideal vehicle. Many large credit unions have buying services where they will take the information you provide about what vehicle you want and they will search for it for you. Then you can input the VIN and make sure the car is worth pursuing before you even go look at it. Make sure you know what, if any, fees such buying services will cost you.

Another source for your vehicle could be from companies such as Hertz and Avis which sell "program cars," or cars which have come out of their rental fleets. They often have low mileage and are far less expensive than new cars, but even these vehicles should be thoroughly researched if you are considering purchasing one.

Would you believe that you may want to make one more pass at your credit union once you've found the perfect car? Suppose you've identified one at a local dealer, you are convinced you have their best price, and you've checked out the VIN number and talked to your insurance agent. And you know how much your credit union will lend you at what terms. But you don't know what they will lend you on THIS car. A great way to confirm that "the price is right" is to ask your credit union exactly what they will lend on the car you want to buy. If it's considerably less than what the asking price is, you may not have such a good deal after all.

Sound like a lot of work? It's really not when you consider that our vehicles are going to transport us and our loved ones at 65 miles per hour (or more!) for what we hope is a good long time. Do the work up front to find a safe, reliable, affordable vehicle for your family. It's a great use of your time!