The increasing popularity of new car leasing has put many late model used cars on the market. Since a car depreciates most rapidly in the first couple years, many of these late model used cars represent good value. Expect the average used car to drop about 1/3 of its value after 2 years, sport utility vehicles, mini vans and sporty cars hold their value best, while medium sized cars, like the Taurus and Corsica, depreciate the most rapidly and therefore represent a good used car value.

Most lenders will have the NADA or Kelley Blue Book. Look up the cars you are interested in so you have an idea of what price range you'll be in. After you've decided on the type of vehicle you want, consult a source like Consumer Reports for frequency of repair records. Ask your mechanic for his input and advice.

USED CAR SOURCES

New Car Dealers - prices tend to be high, but many offer warranties and have on site repair facilities. Used car leasing is an option here also.

Independent Used Car Dealers - cars tend to be new car dealer rejects from wholesale auctions or fleet vehicles. Most lack repair facilities. Pre-sale preparation mostly cosmetic.

Private Owners - usually have the lowest price, but if you buy a lemon you have little recourse.

Banks and Credit Unions - sell repossessed vehicles.

No matter where you go ask to see all service and maintenance records. Buy from the original owner if possible.

THE TEST DRIVE

Before you start the engine, pop the hood and check all fluid levels. Transmission fluid should be pink and not smell burned. Radiator coolant should be green and not cloudy looking. Look under the car for signs of leaks.

Have someone start the engine while you watch the tailpipe for signs of smoke. (Listen for excessive exhaust noise). Blue smoke is a sign of oil use, black smoke indicates a rich or out of tune engine. Rev the engine up - there should be no engine shake or excessive noise.

Get behind the wheel - make sure you familiarize yourself with the controls before you begin your test drive.

Once underway check the brakes - they should operate smoothly and quietly and the pedal should feel firm when applied. The pedal should not drop after being applied for 30 sec. The steering should be precise with little slack or vibration. The car should go down the road without pulling to one side.

The engine should be smooth and powerful on hills and passing. Automatic transmissions should shift smoothly and without hesitation. A manual should not be noisy or exhibit shifting difficulty. Clutch engagement should be smooth and complete. Accelerate the car on a hill to test for signs of slipping. Listen for excessive exhaust noise or engine pinging.

Make sure all the lights and accessories work. Look over the body for signs of overspray, drips or mismatched colors. The car may have been involved in an accident. Excessive pedal and seat wear could mean the odometer has been tampered with.

Have an independent mechanic put the car on a lift and give it the once over. An engine compression test is a good idea. Ask the mechanic for a written estimate of needed repairs which you can use in price negotiations.

Most banks and credit unions will have a NADA or Kelley Blue Book - look up the value of the car. Remember to include mileage and accessories in your estimate. Consult Consumer Reports for the frequency of repair record on your car. Try to buy a one owner used car if possible.

Homeowners should consider using a home equity loan for their car purchase. The interest is usually tax deductible. Ask your lender for more.