Our detailed, step-by-step used car buying guide teaches you how to buy a used car the right way.
If you need to replace your vehicle, opting for a used car instead of a new one can be a smart investment decision. Not only will you save money on the purchase, but you will also incur less in the way of depreciation, taxes, and insurance.
Unfortunately, buying a used car can be a very stressful experience. Not only must you consider all the issues that come with a less-than-pristine vehicle, but you’ll likely also not have a warranty to fall back on should anything break.
How about we lift some of the burden off your shoulders and help you find one?
We’re going to show you how to buy a used car that, in addition to being a good fit for your lifestyle, is reasonably priced, safe to drive, and cheap to own.
The Best Way To Buy A Used Car
The following 10 steps will help you maximize your chances of buying the best possible used car for your needs.
1. Determine The Right Vehicle
Deciding what type of vehicle to buy will depend on your needs, personal preferences, and budget. Once the go-to for families and individuals alike, sedans have been displaced by the more utilitarian crossover SUV as the vehicle of choice for the masses.
If you have a big family or typically haul around a lot of people or things, a minivan or three-row SUV will likely be your best bet. As exciting as they are to look at and drive, coupes and sports cars are not very practical and should only be considered if you usually drive alone.
Pickup trucks are very popular in the U.S., but unless you occasionally haul long sheets of plywood, giant stacks of hay, and other similarly-sized items, they may be too excessive.
But, hey, it’s your decision, not ours. If you want to learn more about each vehicle body style, read our detailed guide on the 10 types of cars.
You should also consider what features you need as opposed to want, as well as the size class, reliability, fuel economy, safety rating, driving characteristics, and resale value of the vehicle.
2. Set A Budget
Just because used cars are generally cheaper than new cars doesn’t mean they are easily attainable. On the contrary, they can be expensive, and you need to determine how much you’re willing to spend on one.
So, how much can you afford?
Being able to buy the car outright as opposed to financing it will save you a lot of money in the long run. If you’re not able to and decide to take out a loan, a general rule of thumb to follow is for your total car payment to be no more than 20 percent of your take-home income.
Getting pre-approved for a car loan would be a smart move, especially when buying from a dealership. It will make you a cash buyer in the eyes of the dealer, and he or she might even offer you a better loan just to make the sale.
When determining your budget, don’t forget to consider the additional attention that a used car usually requires (pre-purchase inspection, new tires, etc.), as well as common ownership costs such as fuel, insurance, and routine maintenance.
If the car is no longer covered by a warranty, you might even want to put some money aside for unexpected repairs.
3. Build A Target List Of Vehicles
After determining the kind of vehicle you need and setting a budget, your next step is to make a list of several models that fit the bill.
Hondas and Toyotas are very popular choices in the used car market; however, their reputation for reliability can make them noticeably more expensive than vehicles from other automakers, even though many competing models are also well-built and dependable.
You can get an incredible value on a Mazda, Kia, Ford, and the like. If you’re on a tight budget or want to save money, be open-minded and consider multiple brands.
Looking for a used vehicle that isn’t too old and has a warranty? Consider a certified pre-owned (CPO) model.
Often less than five years old, CPOs are vehicles that have been refurbished, inspected, and certified by both the carmaker and dealership. They come with a long-term warranty, basically giving you the peace of mind of a new car and the affordability of a used car.
4. Locate Cars, Check Prices
Seeing as the main reason why you’re shopping for a used car is to save money, you want to make sure the car, truck, or SUV you’re considering is priced fairly. Many factors determine the value of a car, including where you do your shopping and even the time of year (learn the best time to buy a car.)
In addition to independent used car dealerships, you can find used cars at some new car dealerships; large online retailers like CarMax and Carvana; and online marketplaces for private sellers such as AutoTrader, Craigslist, and Kijiji.
Cars purchased from private-party sellers tend to have the lowest prices, while CPO cars are typically the most expensive.
Used car price estimators such as those provided by Edmunds, Consumer Reports, and CarMax allow you to gauge what others are paying for the models you’re looking at. They also let you filter based on mileage, features, and the seller’s distance from you.
5. Check Vehicle History Report
Unless you’re transacting with a family member or trusted friend who can vouch for the car’s history, it’s essential that you get a vehicle history report. In fact, you shouldn’t go out of your way to see the vehicle in person without first running such a report.
This is because, on top of showing you how well the car has been driven and maintained, a vehicle history report can tell you if it has been in any serious accidents, its odometer has been rolled back, or it has a salvage title (the insurance company has deemed it a total loss.)
Needless to say, the sooner you learn about the car’s history, the less of a hassle the buying process will be and the less likely you are to buy a lemon.
CarFax and AutoCheck are the best-known sources for vehicle history reports in North America. You will need the vehicle’s identification number (VIN) to obtain a report.
6. Contact The Seller
Once you have identified a car that fits your budget and lifestyle and has a good history, you’ll want to contact the seller to learn more about it and verify the information advertised.
A quick chat over the phone should answer a lot of the questions you have, so save time by starting with that.
For a full list of questions to ask the seller, check out our article on what to ask when buying a used car. Here are some of the basics:
- Why are you selling the car?
- Have you been the only owner of the car?
- Do you have the title and is it clear? (You don’t want a car that has liens against it.)
- Is there anything I should know about the car that wasn’t advertised?
- I need a pre-purchase inspection. Can I have the car inspected by an independent mechanic?
If the call goes well, make an appointment to see the car in person, perform a preliminary inspection, and take it for a test drive.
The meeting should ideally take place during the daytime rather than at night as that will make it easier to spot potential problems during your inspection.
7. See And Test Drive the Car
Up until this point, you haven’t seen the car in person or test-driven it. Take this opportunity to conduct a basic inspection of its exterior, interior, engine bay, and undercarriage for potential deal-breakers.
Our detailed guide on what to look for when buying a used car highlights many of the most important things you should look out for.
Ultimately, test-driving is the best way to know if any car, be it new or used, is right for you. Once you have performed your inspection, take the car out for a spin to see how well it performs and further assess its condition.
Here are some things to pay attention to during the drive:
- Is the car easy to see out of? Are there any glaring blind spots?
- Is the driving position comfortable? Are you able to adjust the seat and steering wheel to achieve a better fit?
- Does the car produce enough power? Does it corner well? Does the steering feel right?
- Do the brakes provide sufficient and predictable stopping power? Do they have a good feel? Are they squeaky?
- How are the ergonomics? Are the gauges and vehicle controls within easy reach and simple to use?
- Are there unusual smells such as gas or burning oil? Do you hear noises, vibrations, or anything that might indicate worn tires or suspension parts?
After taking the car for a spin, ask the seller for the service records, which will show you if all scheduled maintenance have been performed on time.
8. Have The Car Inspected
A pre-purchase inspection is different from the preliminary inspection you performed in the previous step. Performed by a licensed mechanic, it is more thorough and will reveal problems that you may have missed.
Don’t have a trusted mechanic you can take the car to? A Google or Yelp search should provide some good local shops that specialize in pre-purchase inspections.
How much does a pre-purchase inspection cost? About $100-$200.
Private party sellers take these inspections lightly, and it’s not uncommon for unscrupulous dealers to give you pushback, claiming they have already inspected the car when they probably haven’t.
Insist on having an inspection done on any used car you’re looking to get, except for CPO cars, which are generally always pre-inspected and come with a warranty.
Such a small investment can save you hundreds, if not thousands, of dollars in unexpected repairs.
9. Negotiate A Good Price
Do you dread negotiating the price of a car and envision it being stressful? It doesn’t have to be a painful, drawn-out experience.
Doing your research and having a plan will allow you to strike a good deal without breaking a sweat.
If you’re buying from a private-party seller, chances are he or she is as inexperienced and nervous as you are. If a dealer, you’re likely dealing with a pro.
Regardless of the seller, you can bet that he or she will try to get the most money out of you. Here are some great tips you can use to avoid being ripped off.
- Determine ahead of time how much you’re willing to spend on the car, but don’t start the negotiation with that figure.
- Your opening offer should be lower than the maximum you’re willing to pay, but not so low as to not be taken seriously. Shoot for a price that’s in the ballpark of the average price you researched in Step 4 and then slowly increase it if necessary.
- Take your time and negotiate slowly so that you don’t get confused. It helps to repeat or write down the numbers you hear.
- Determine if you’re negotiating based on the car’s sale price or its “out-the-door” price, which includes all fees and taxes.
- If you and the seller come to a price that you deem good, you’re doing something right. Conversely, if the seller asks for a price that’s higher than your researched price, explain that you have facts to back up your offer.
- Be ready to end the negotiation. If you’re not getting anywhere with the seller or feel mistreated, walk out. There are plenty of good used cars on the market.
Our comprehensive guide on how to negotiate a used car price provides additional tips that will improve your chances of getting a great deal.
10. Close The Deal
After agreeing on a price, you will need to close the deal by signing all necessary documents and register the vehicle in your state or province. If you’re at a dealer, you’ll likely be pitched additional features and services such as a warranty, anti-theft devices, and prepaid service plans.
Something like an extended warranty can give you added peace of mind if the car isn’t covered; however, you’ll need to do the math to see whether it will cost more than the repairs your car is likely to accrue during the warranty period.
Carefully review the contract to make sure you know exactly what you’re getting (price, features, etc.)
As for registration, a dealer will generally have the ability to register the car for you. This makes the buying process a little easier than if you were buying from a private party.
Before signing the contract with a private seller, see to it that the title and registration are properly transferred to you.
The rules governing vehicle registration and licensing are not the same for all states and provinces, so check with your local vehicle registration office for the applicable requirements.
Our guide on what to do after buying a used car provides a more detailed breakdown of everything you need to do. Read it!
How To Buy A Used Car FAQs
There is so much that goes into shopping for a used car that you might still have questions after reading this entire guide. Here are answers to several popular questions that will surely make you an even more informed buyer.
What Used Cars Should I Avoid?
Generally speaking, you should avoid used cars that have a salvage title; serious, cost-prohibitive problems; irregularities with the odometer; and no maintenance record.
Another red flag is if the seller refuses to allow you to test drive or have an independent mechanic inspect the car.
How Many Miles Should A Used Car Have?
The less mileage a used car has, usually the better. Most professional mechanics use 12,000 miles per year (19,312 km) as a cut-off point for whether or not a car has been overdriven, so an acceptable mileage for a 10-year-old car would be 120,000 miles (193,121 km).
Note, however, that having a low mileage doesn’t automatically make a vehicle a good used car. Factors such as reliability and maintenance history have to also be considered. You can learn more in our detailed used car mileage guide.
Is It Better To Buy A Used Car From A Dealership?
Buying a used car from a dealer has its advantages. Reputable dealers usually recondition the vehicle, have access to auto loans and warranties, and can make your life easier by completing all the paperwork involved in registering the vehicle.
On the other hand, you are more likely to negotiate a lower price and pay less if you buy from a private seller.
There are many benefits to buying a used car, but shopping for one can be quite a stressful and intimidating experience.
Has the car been in an accident? Has it been well maintained? Does it have money owing on it? These are just a few things you have to worry about when buying second-hand.
This guide showed you the best way to buy a used car, providing a series of easy-to-follow steps so that you’re not overwhelmed by the process. Don’t just read it — use it!
Just as well, share it with anyone you know who wants to learn how to buy a used car, and get other similar articles from our car buying page.