How to Buy a Used Car in 11 Steps

Using tools like pricing guides, online listings and vehicle history reports can simplify your used-car shopping experience.
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Shopping for a used car is a lot of work, but when done right, it can be well worth your time. With the help of online car-shopping tools, you’ve got the best chance of making a good deal on a car that meets your needs and fits your budget.

There are plenty of reasons 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 well-maintained vehicles to be trouble-free for well over 200,000 miles.

But in the current used-car market — where supply is limited and prices are high — you may not be able to find exactly what you’re looking for at the price you want. And in some cases, buying a new car can be cheaper than buying used, especially if you’re looking for a late-model vehicle.

Despite those challenges, here’s an overview of the process, as well as what to look for when buying a used car, whether it’s from a dealer, from a private party or from an online retailer.

1. Determine how much to spend

There are two ways to buy a used car: Pay cash or take out a loan. If you’re paying with cash, budgeting is straightforward. Make sure you don’t spend all your savings and remember to set aside money for registration, insurance and possible future repairs.

Most people take out a car loan so they can protect their savings or buy a more expensive model. It’s smart to get preapproved for a car loan 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 auto loan calculator to run the numbers on payments and term lengths. NerdWallet recommends that you:

  • Plan to put about 10% down, which helps decrease the amount you’ll need to finance.

  • Aim to finance the car for no more than three years.

  • Budget so that, ideally, your monthly auto expenses — such as car payment, gas and insurance — won't be more than 20% of your monthly take-home pay.

Find your preapproval rates

Consumers Credit Union
LightStream
MyAutoloan
Learn MoreLearn MoreLearn More
Min. credit score

620

Min. credit score

660

Min. credit score

575

Est. APR

5.44-21.24%

Est. APR

6.49-12.49%

Est. APR

3.94-21.00%

Loan amount

$7,500-$500,000

Loan amount

$5,000-$100,000

Loan amount

$8,000-$100,000

2. Choose the features you need

With so many options available, picking the right car can be overwhelming. 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 Insurance Institute for Highway Safety for crash tests. In recent years, some advanced safety features that were once reserved for luxury vehicles now come standard on many models.

Narrow the field by making a list of must-have features. Then, search for models with those features using car finder tools on automotive websites like Edmunds. As you move forward, build a list of three car models to research in more detail.

Carvana
Capital One
Learn MoreLearn More
Min. credit score

450

Min. credit score

Did not disclose

Est. APR

3.90-27.90%

Est. APR

N/A

Loan amount

$1,000-$100,000

Loan amount

$4,000-Max. not disclosed

3. Research reliability and ownership costs

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 (which requires a paid subscription) and J.D. Power collect maintenance reports from owners and rate all used cars.

You’ll also want to consider the total cost of ownership. Some cars may be cheaper upfront, but the costs can add up in the long run because of insurance, maintenance, repairs and depreciation. Automotive websites, such as Kelley Blue Book's Five-Year Cost to Own or Consumer Reports' Cost of Vehicle Ownership, can help you estimate these expenses.

4. Find good used cars

There are a lot of websites that list used cars, and each site seems to have its own character. Many of them also have car-buying apps, if you’re shopping on your phone. Here are some options to check out:

  • Online marketplaces, such as Autolist, Autotrader and Used Car Search Pro, aggregate listings from online retailers, dealerships and sometimes individuals from across the country. Once you find a listing you like, they’ll give you the seller’s contact information.

  • Online auto retailers, such as CarMax, Carvana and Vroom, allow you to complete the purchasing process online. These retailers own the inventory and sometimes have return policies if you’re not pleased with your purchase.

  • Traditional private-party sales platforms, such as Craigslist and Facebook Marketplace, are popular shopping platforms if you’re looking to buy a used vehicle from a private party. Sellers are often looking to make a quick sale, so it’s possible to get a great deal — but be careful about scammers.

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.

5. Price the cars

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 Kelley Blue Book, Edmunds and the National Automobile Dealers Association. 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. With that in hand, you’ll have the information you need to negotiate effectively.

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

  • Year, make and model. The model is sometimes called the “trim level.” For example, when looking up a 2020 Nissan Sentra, SV is one of several trim levels.

  • Options. These are special features installed when the car was built, such as a navigation system.

  • Mileage. If a car has been driven more or less than the typical mileage, the price is adjusted accordingly.

  • Condition level. Read the descriptions of the condition levels carefully, as each pricing guide has its own rating methodology for determining the difference between “clean” and “outstanding,” for example.

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.

If you want to sell your car online, some websites will give you an instant cash offer, valid for a few days. These offers are a great way to gauge trade-in value, even if you don’t sell it.

6. Pull the vehicle history report

Run a vehicle history report on the cars you’ve selected. Using the vehicle identification number, or 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 listings will include access to free vehicle history reports. If not, it’s worth it to buy one.

What you'll learn from the vehicle history report

  • Does this car have a clean title? If a car’s been in a serious accident, fire or flood, and was “totaled” by the insurance company (declared a total loss) it still might be driveable. However, the insurance company will issue a “salvage title” to alert future buyers. Steer clear of cars with a salvage title because it kills the resale value, and the car might still have hidden problems.

  • Serious accidents are reported to the insurance company and will probably be on the vehicle history report.

  • Shady sellers might spin the odometer back to increase a car’s selling price. The vehicle history report can alert you to this scam.

  • The report will list each time the car changed hands.

  • Some reports show if required maintenance was done on time and where the work was performed.

7. Contact the seller

A quick chat will answer lots of questions and save time. First, verify the information you read in the ad.

Questions to ask when buying a used car

  • Are you the first owner?

  • Are the service records available?

  • Do you have the title and is it clear? (A clear title shows there are no liens on the car.)

  • How did you set the asking price?

  • Is there any important information that wasn’t in the ad?

  • Can I have the car inspected by a mechanic?

8. Test drive the car

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, but 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 get a full used-car inspection.

First, start the car. All the warning lights should turn on for a few seconds, then go out. At the very least, check for the four most important: engine, oil pressure, brakes and airbag. If you don't see these lights go on, then off, dig deeper.

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.

What to check when buying a used car

  • Visibility: Are there any blind spots?

  • Acceleration and cornering: Does the car have enough power? How does the steering feel?

  • Brakes: Are they responsive and predictable?

  • Ergonomics: Can you easily reach all the gauges and controls?

  • Mechanical condition: Listen for any unusual noises or vibrations that could indicate worn suspension parts or tires.

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.

9. Inspect the car

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. Expect the cost of a car inspection to run about $100 to $300.

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 vehicle is a certified pre-owned car. CPO programs have become popular and make used car shopping a whole lot easier, because the cars are thoroughly inspected and include an extended factory warranty. Those vehicles are pricier, but you don’t need to take a CPO car to your own mechanic.

10. Negotiate the best price

Here’s the part that everyone dreads: negotiation. But it doesn’t have to be stressful, especially if you’ve done your research and have a good idea what the car 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 $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 their 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, remember that you're dealing with a pro who knows all the tricks.

6 tips to use on the car lot

  • Don’t be a monthly payment buyer. If you have a preapproved loan, you're a cash buyer as far as the dealer is concerned and you should negotiate on the price of the car, not the size of the monthly payment.

  • Start low, but in the ballpark. Lowball the seller and they won’t treat you as a serious buyer. Instead, make an offer that is on the low side, but still enticing. Then, improve your offer slowly, perhaps in increments of $250.

  • Don’t be trapped in the sales office. Don’t let a salesperson leave you alone while they “go to talk with their boss.” Instead, roam around the showroom or go get a cup of coffee. Uncontrollable buyers keep salespeople off balance, which can help you in negotiations.

  • Negotiate slowly and repeat the numbers you hear. Take your time to understand all the numbers being thrown at you. Write them down, if that helps you. Confirm if you're talking about the “out-the-door” price, which includes all taxes and fees, or just the sale price of the car.

  • Ask about fees before saying yes to a deal. Some dealers include bogus fees to take back profit they lose during the negotiation. Get a breakdown of additional fees before you agree to any deal.

  • Always be ready to walk. If you aren’t making progress toward a deal, or you don’t like the way you’re being treated, just walk out. You don’t need an excuse. “I’m not going to buy” is good enough.

11. Make the purchase

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. (If the seller’s name isn't on the title, you could be a victim of title jumping, which is illegal.) When in doubt, check the state’s registry website for more information. Many states allow about 10 days to transfer ownership.

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 they 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 60,000 miles or more. This covers all the parts that make the car move, such as the engine and transmission.

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:

  • State sales tax. This is a percentage of the cost of the car.

  • Documentation fee. It seems crazy but the dealership actually charges you for filling out the contract. This “doc fee” is limited in some states. In other states, such as Florida, some dealerships charge as much as $895 for doc fees.

  • Registration fees. A dealer can register the car for you — one less thing for you to worry about.

Dealerships may try to add on extra fees, which are sometimes bogus. Ask the finance manager to explain any fees in the contract. If they can’t, ask them to the fees out.

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