Guide to Buying a Used Car

Buying a Used Car?

It's a Good Time to Compare Used Car Finance Options!

Just because a car isn't new doesn't mean it can't be new to you. Buying a used car can be just as exciting as purchasing a brand new model. Unfortunately, getting a used vehicle can also be just as complicated as figuring out which new car would suit you best. That's why we've compiled a guide to help you buy a used car.

Set a Budget

Before you can start used car shopping, you should figure out your budget. This will help your process in many respects—including setting the right expectation for the types of vehicles you can purchase.

There are a few key factors to keep in mind while you're number crunching.

Personal Budget Factors

It's very important to have a realistic idea not only of what you can spend, but also of what you should spend on a used car. Just because you can afford it doesn't mean it's a good option for you.

It's generally suggested to spend no more than 20% of your monthly take-home pay on a monthly auto payment. However, this is just a broad recommendation and may not apply to every circumstance.

Keep all your other monthly expenses in mind, such as:

  • Rent or mortgage.
  • Utilities.
  • Groceries.
  • Phone and Internet bills.
  • Student loans/other debts.

If your monthly budget is mostly spent after taking care of necessary bills, it may be more prudent to keep your car payments on the lower side.

Used Car “Hidden" Costs

Owning a vehicle entails more than paying for the vehicle itself. There will be costs associated with your used car other than your monthly auto payment, such as:

  • Your car insurance rate.
  • Various taxes and fees.
  • Your car's depreciation rate.
  • Gas, oil changes, and other maintenance.

Don't forget to keep these factors in mind when determining your used car budget.

For more help on putting together the best payment plan for you, check out our used car taxes and fees calculator and browse our guide to creating a budget.

Narrow the Search

Once you have a solid idea of how much money you can spend on your used car, you can start determining which type of car within that price range will be the best option for you.

Types of Used Cars

There are plenty of used cars to go around, and several ways to generally categorize them. When you begin your shopping process, consider these options:

  • Certified pre-owned (CPO) vehicles—The purpose of CPO programs is to alleviate concerns about the condition of a non-new vehicle. Still, the inspections, repairs, and warranties involved in each program vary greatly. Make sure to read our guide on certified pre-owned vehicles for more information.
  • “Second tier" vehicles—These cars may not be the biggest sellers on the lot, but can still be reliable—and much cheaper—regardless of their less-popular manufacturers.
    • i.e. the Honda Accord and Toyota Camry are comparable in quality to the Chevrolet Malibu or Nissan Altima, but can cost much more.

Usage Considerations

Another good way to begin narrowing your search is figuring out how you will mostly be using the car.

For example, if you have a large family, you might want to consider a vehicle with more seating; if you have a long commute, you may want to focus on cars that get the best gas mileage.

Be honest with yourself, and separate the features you need in your car from the features you simply want.

Shop for a Used Car

You know what you want and how much you can spend, so now it's time to figure out where to find this vehicle. There are a few methods to find the best used car near you.

Online Forums

If you love to do research or have a decent amount of car-related knowledge, you may have good luck looking for a used car on websites like Craigslist.

Peer-to-peer car buying and selling websites are another option. These sites essentially act as a middleman between buyer and seller. The process is similar to using Craigslist, but sales are typically more regulated by the website.

There are other less active online options, as well. Many websites will offer used car listings, which will allow you to search for vehicles based on factors like:

  • Car mileage.
  • Make.
  • Model.
  • Proximity to you.

In Person

Of course, there are other ways to track down used cars for sale, including:

  • Used car lots.
  • Used car sections of a dealership.
  • Newspaper or magazine classified ads.

These methods typically involve more legwork but may be a good option to find deals that a buyer only using the Internet might miss.

Negotiating Used Car Prices

The price of a car, new or used, is almost always up for debate. If you put your negotiating skills to the test, you may be able to save some serious money when purchasing your used car.

Your number one ally at the negotiation table is information. Make sure you have a solid idea of the vehicle's general value, including:

  • The Blue Book value. The Kelley Blue Book is one of the most common references for used car values.
  • Prices of vehicles with similar:
    • Makes.
    • Model years.
    • Miles.

The specific price of the car will depend on other variables, like the condition the car is in and the vehicle's history.

Also ask if you can take the car for a test drive before making your final decision to buy it. This may reveal issues you may have with the vehicle that you can't discern from research alone.

Buying from Dealers

There may be several different factors in play when you purchase a used car from a lot or dealership, as opposed to a personal sale. Dealers usually have more information about and experience in vehicle sales and will typically stick to a bottom line.

Dealerships will usually also consider other elements when in negotiations with you, such as:

  • A trade-in car, if you have one.
  • Down payments vs. monthly payments.
  • Auto warranties.

Typically, it's recommended to start the conversation with the total price you want to pay for the vehicle, rather than trying to figure out monthly payments off the bat.

Negotiating with a dealer can be difficult or intimidating, so make sure to read up on our guide to negotiating before making an offer on your used car.

Private Party Sales

Negotiating with a private seller may be easier than talking to a dealer about the price you want to pay for your used car. Typically, an individual will have less experience in selling vehicles and will likely be more eager to get rid of their auto.

Still, pursuing a private sale means you're much more likely to purchase the car “as is"—making you financially responsible for any and all problems with the vehicle, known and unknown. Check our guide to buying a car “as is" for tips on how to best deal with this situation.

Vehicle History Reports

No matter who you buy your used car from, it is a smart idea to ask for the vehicle's maintenance and crash history.

A vehicle history report will reveal many points about the car that could help you not only negotiate a fair price for the vehicle, but also make an informed decision on whether or not it's worth purchasing at all.

Vehicle history reports use the car's vehicle identification number (VIN) to turn up information about:

  • Lemon status.
  • Accident history.
  • Major repairs.
  • Lien and ownership history.
  • Warranties remaining on the car.
  • Mileage and miles per year.

Buy Your Used Car

You've successfully planned a budget, researched your needs, located your vehicle, and bargained for a good price. All that's left is signing off on the dotted line.

But before you do, make sure you have all of your paperwork in line. Then you can drive off into the sunset with your (almost) new ride.

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