How to Buy a Used Car

Tips to buy a used car: use car shopping tools like pricing guides, online listings and vehicle history reports.
Philip ReedMay 18, 2021
Acceptance Insurance Review 2020

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Shopping for a used car is like going on a treasure hunt. There are amazing deals out there, and with the emergence of the Internet as a car shopping tool, you have every chance of finding a good deal on a car that meets your needs and fits your budget.

There are plenty of incentives to buy used instead of new: It will save you money on car insurance, registration, taxes and depreciation, which is the loss in a car’s value due to wear and tear over time. It also makes sense because cars have never been more reliable. It’s not unusual for some vehicles to be trouble-free for well over 100,000 miles.

Here’s an overview of the steps you’ll need to take to buy a used car. (If it isn't a used car you want after all, check our guide on .)

There are really only two ways for you to : Pay cash or take out a loan. If you’re paying cash, budgeting is pretty simple. But don’t spend all your savings. Remember to set aside money for registration and insurance — and possible future repairs.

Most people take out a so they can protect their savings and buy a more expensive model. It’s smart to because it simplifies the buying process and puts you in a stronger position at the car dealership. You’ll see later how preapproval fits into the process.

Use an to compute the best loan for you. Plan to put about 10% down and finance the car for three years. Ideally, the total of your monthly auto expenses shouldn’t be more than 20% of your monthly take home pay.


Now the fun begins — picking your car. Take some time to think about how you plan to use this car. For example, if you have a family, you’ll want enough room for everyone plus ample cargo space. If safety is a top priority, check out the for crash tests.

Narrow the field by making a list of must-have features. Then, search for models with those features using tools such as Car Finder on As you move forward, build a list of three target car models to research in more detail.

Every used car is different. Some have been driven more miles and have more wear and tear. But, in general, you want to make sure you're choosing models known for their dependability. Consumer Reports and J.D. Power collect maintenance reports from owners and rate all used cars.

A closely related issue is the . Some cars are cheap to buy, but will cost a lot in the long run because of insurance, maintenance, repairs and . Several automotive websites, such as Kelley Blue Book's Five-Year Cost to Own or Consumer Reports' Cost of Vehicle Ownership, show estimates of these expenses.

There are a lot of websites that list used cars, and each site seems to have its own character. Here are four good ones to check out:

Most used car lots have the cars in their inventory posted online. However, if you’re someone who likes to see and touch the cars you’re considering, there are countless used car lots across the country where you can do just that.

Once you find several cars for sale in your area — but before you physically inspect them — look up that car model in a pricing guide such as . You can use the guide to estimate the market value of the actual car you’re looking at by assessing its condition based on factors such as age, mileage and options. Once you have the price, if you want to make a deal, you’ll have the information you need to negotiate effectively.

When you look up a price, include the following information:

Most pricing guides give you several different prices. If you're buying the car from a dealer, look at the “Dealer Retail” price. If your next-door neighbor is the seller, you should look at the “Private Party” price. You might also notice that pricing guides tell you what the car is worth as a trade-in. Make sure to price your current car if you plan to trade it in at the dealership.

Before you drive across town to see the car you’re interested in, run a . Using the vehicle identification number (VIN), you can get a detailed report of the car’s history from Carfax or AutoCheck. It’s a quick way to know if you should seriously consider buying this car.

In some cases, online classifieds will have links to free vehicle history reports. If not, it’s worth it to buy one.

Here is some of the important information you'll learn:

A quick chat will answer lots of questions and save time. First, verify the information you read in the advertisement. Then, here are some basic questions to ask:

Up to this point you haven’t actually driven the car you’ve chosen. Now, you'll not only see if you like this model, you'll also have to decide if this particular car is worth buying.

Unless you're a mechanic, you can’t be expected to inspect a car thoroughly. However, you can give the car a pretty good initial inspection. If it looks good, then you can pop for a full inspection, which will cost you about $100.

Select a test drive route that has a little bit of everything: hills, rough pavement, curves and even a stretch of highway. Drive the car with the radio off — you can test that later. Pay attention to the following things:

After the test drive, check the back-seat leg room and cargo capacity. Now it’s time to blast the sound system and see if your phone connects via Bluetooth.

If you liked driving the car, and it seems to be in good condition, you should still take it to a mechanic. Private party sellers are pretty relaxed about this. Some dealers might give you pushback, claiming they’ve already inspected it. Go ahead and insist if you have any doubt about the car's condition.

On independent used car lots, you often see a sign in the window saying that the vehicle is “certified,” which can mean almost anything — and usually means nothing  — about the condition or reliability of the car.

But on new car lots, “certified” means the car's in a certified preowned (CPO) program, which have become very popular and make used car shopping a whole lot easier. CPO cars are thoroughly inspected and include an extended factory warranty. You really don’t need to take a CPO car to your own mechanic.

Here’s the part that everyone dreads: negotiation. But it doesn’t have to be stressful, particularly if you’ve done your research and have a good idea what the car you want is worth. Compare the seller’s asking price to the average market price you determined on the pricing guides. Chances are, the seller is asking more than the market average.

Let’s say the seller is asking $12,000 and your research has told you the car is worth only $10,500. Start by pointing out any concerns you have about the car’s condition. For example, you can say, “I like the way the car drives. But it really needs a new set of tires. And besides that, the book value is only $10,500. So I’d be willing to buy it for $10,000.”

Now, it’s up to the seller to either accept your offer or make a counteroffer. If his counteroffer still seems too high, you can either stick to your guns or invoke the time-honored phrase, “I’ll meet you halfway,” and split the difference. You can go back and forth until you agree.

When you bargain with a car salesperson at a car lot or dealership, keep in mind that you're dealing with a pro who knows all the tricks.

Here are a few tips to use on the car lot:

Before taking ownership of the car, you should add it to your insurance policy. Then, you only need to pay for the car — usually with cash or a cashier’s check. Make sure you get a title and have the seller sign it correctly. When in doubt, check the state’s registry website for more information. Most states allow about 10 days to register the car in your name.


If you're buying from a private party, and there is still a loan on the car, call the lender to find out how to close the deal. If the lender is a bank, offer to meet the seller in a branch office and sign papers there.

If you’re at a dealer, even if you have a preapproved loan to pay for the car, the dealership’s finance manager will probably offer to beat the terms of the loan. It doesn’t hurt to see if he or she can get a better interest rate. Just make sure all the other terms of the loan are the same.

Before the contract is drawn up, the finance manager will also likely pitch you additional products and services. Buying an extended warranty at the right price can provide peace of mind. But check first to see how much warranty still remains on the car. Many manufacturers now include “powertrain” warranties up to 75,000 miles. This covers all the parts that make the car driveable, such as the engine, transmission and suspension.

Once you sign the sales contract, the car is yours. So take your time reviewing the contract and don’t let yourself be pressured into signing just to get it over with. The contract will include the agreed-on sales price and these additional items:

Some dealerships might include additional fees, some of which are bogus. It’s tricky to know what’s legit and what’s just included to boost their profit. If the finance manager can’t explain a fee in the contract, ask to have it removed.

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