fluids

Importance of checking engine on a used car:

Fluids can indicate condition of various components. Although usually dealerships swap out or top off fluids that can give away the condition of the car, it's still beneficial to know what to look for when checking fluid conditions and levels.

What kind of fluids are generally in a car?

Brake fluid - open the car owner's manual and see where the brake fluid reservoir is located. Usually it's located by the firewall (a wall that separates the engine and the interior) right above the brake booster (a round metal thing that is attached to a firewall that has a hose plugged to it). Look at the reservoir and check the level. If it's low, then there are leaks or brakes are very worn. Brake fluid doesn't get "used up", it can only leak or get low due to brake pad/shoe wear.
Engine oil - engine oil usually gets changed at the dealership, therefore it's very hard to pinpoint any problems. Check to see if the level is within normal range (normal range will be indicated on a dipstick). See if it's milkshake color (normal engine oil is light brown to dark black), and if it is, the car's coolant leaks into the engine crankcase, which is a very expensive repair.
Transmission fluid - it's worth checking, since many dealerships don't bother to replace it. Transmission fluid it is bright red pink (when new) to dark red when it's relatively old. Checking transmission fluid requires that you follow the direction in car's owner manual, because different cars have different procedure to correctly test fluid level. If the fluid is dark brown or black or smells burnt, then the transmission is very worn and will require an overhaul shortly. It is almost important to properly check the level, because we've seen cars before with level below normal even at dealerships! Transmission doesn't use up fluid, thus if it's below optimum level, this is a clear indication of a leak.
Coolant/Antifreeze - Caution: to avoid severe injury - NEVER open coolant system, radiator or reservoir or any other coolant system connections when the engine is hot! The system is under pressure and extremely hot! Usually most cars have what's called recovery tank. Basically it's a transparent tank on the left or right side of the engine bay (some cars have it in front of radiator) with cold engine and hot engine level indicators right on the tank. Look at the tank and see that the level is. If it's below the normal level, it indicates coolant leak somewhere. Car never uses up coolant, so any coolant leak is an indication of a leak. Coolant leaks can be a real pain to track down and fix, because they might come and go, or might be hidden somewhere. It's best to avoid the car with leaking coolant. You never know if coolant leaks into the engine (this happens when head gasket blows). After test drive if you smell any coolant around engine bay (rotten egg smell), don't buy such car. It might be something small, but chances are if it was something small, the dealership would've fixed it.
Power steering fluid - usually the small reservoir is located somewhere in the middle of the engine bay. The reservoir is under slight pressure, so when you check the fluid level, exercise caution. Fluid is not really a good indicator of condition of steering system. The best way to check steering system is listed for whistling from power steering pump when turning the steering wheel. Whistling noise indicates wear.
Differential fluid - differential fluid is very hard to check and requires the car to be up on a lift. However, if you look at the differential itself, you might spot wet spots around it. If there are wet spots, then it's leaking and generally leaking differentials have low oil level, which translates into more wear. It's better to avoid such car, unless there are no excessive noises from the rear end during the test drive. If there aren't any noises, then you might take it to get it fixed.
Windshield washer fluid - there isn't much to say about windshield washer fluid, other than check to make sure that the pump(s) is operational and the reservoir itself is not leaking.

Conclusion:

Examining and being aware of proper fluid conditions and levels will allow you to expand your ability to better evaluate the condition of the car and predict some problems before they arise.