How to Buy a Used Car

What to Look for When Buying a Used Car

Before committing to any vehicle, take time to evaluate its condition thoroughly. Here's what to examine:

• Vehicle history report: A vehicle history report reveals critical details about the car's past, including accident history, title status, odometer readings and previous ownership. Services like Carfax and AutoCheck provide these reports using the vehicle identification number (VIN) or license plate number.
• Body alignment and paint: Walk around the car and look for uneven gaps between body panels, mismatched paint colors or signs of rust. These could indicate previous collision damage or poor repairs.
• Tires: Check the tread depth on all four tires and look for uneven wear patterns. Uneven wear may signal alignment issues, improper inflation or suspension problems that could lead to expensive repairs.
• Under the hood: Look for signs of leaks, corrosion on the battery terminals and worn belts or hoses. Also, check the oil dipstick—milky oil could indicate a blown head gasket.
• Interior condition: Inspect the seats, carpet and headliner for rips, stains or excessive wear. Test all the controls, including windows, locks, seat adjustments and climate controls.
• Electronics and infotainment: Make sure the dashboard displays work properly, the radio functions and any smartphone connectivity features respond correctly. You can also bring your phone and a cable to test the connection.
• Brakes: During the test drive, listen for squealing or grinding sounds when braking. The car should stop smoothly without pulling to one side.
• Suspension: Pay attention to how the car handles bumps and turns. Excessive bouncing, clunking sounds or a rough ride could indicate worn shocks or struts.

How to Buy a Used Car From a Dealer

Buying from a dealership offers certain conveniences and protections, but you'll want to be thorough with your research and negotiations. Here's a step-by-step guide.

1. Set a Budget

Start by determining how much you can afford to spend. If you're paying cash, consider how much of your savings you can use while still maintaining an emergency fund. If you plan to finance the purchase, evaluate your monthly budget to determine a comfortable payment amount.

A common guideline is to keep your total monthly car expenses—including the payment, insurance and fuel—below 10% to 20% of your monthly take-home pay. You'll also want to plan for a down payment of at least 10%, which can help you qualify for better loan terms and reduce your monthly payments.

Learn more: How Much Is a Down Payment on a Car?

2. Research Vehicles

Think about the features that matter most to you, such as fuel efficiency, cargo space, safety ratings and reliability. Online resources like Edmunds, Kelley Blue Book and Consumer Reports can help you compare different makes and models based on your priorities.

Consider the vehicle's age and mileage as well. While older cars with higher mileage typically cost less, they may require more frequent maintenance and repairs down the road.

3. Research the Price

Once you've found a vehicle you're interested in, use pricing guides like Kelley Blue Book, Edmunds or J.D. Power to estimate its fair market value. You'll need the VIN or details such as the year, make, model, trim, mileage and condition.

Compare the dealer's asking price against similar vehicles in your area. This research gives you leverage when it's time to negotiate.

4. Check Your Credit

Your credit score plays a significant role in the interest rate you'll receive on an auto loan. Before you start shopping, check your credit report and FICO^® Score^Θ so you know where you stand. If your credit needs improvement, you may want to take some time to pay down existing debt or address any errors on your credit report before applying for financing.

Learn more: What Is a Good Credit Score for an Auto Loan?

5. Get Preapproved

Getting preapproved for an auto loan before visiting the dealership puts you in a stronger negotiating position. You'll know exactly how much you can borrow and at what rate, which helps you stay within your budget.

You can apply for preapproval through your bank, credit union or online lenders. Whatever you do, be sure to compare offers from multiple lenders to find the best terms.

6. Inspect the Car

Even though dealerships typically inspect and recondition used vehicles before selling them, it's wise to conduct your own evaluation. Walk around the exterior and interior, checking for any cosmetic damage or mechanical issues.

For added peace of mind, consider paying for an independent pre-purchase inspection from a trusted mechanic. This typically costs between $100 and $200 but can reveal hidden problems that might cost you much more later.

7. Take a Test Drive

A test drive is essential for evaluating how the car feels on the road. Drive on a mix of city streets and highways to assess acceleration, braking, handling and noise levels.

Pay attention to how the steering responds, whether the brakes feel firm and if there are any unusual sounds like rattling, whining or grinding. Test the air conditioning, heating and all electronic features during the drive.

8. Review the Vehicle History Report

Ask the dealer for a copy of the vehicle history report or purchase one yourself using the VIN. Look for red flags like multiple accidents, a salvage title, flood damage or inconsistent odometer readings.

A clean title and single-owner history are generally positive signs. Be especially cautious of vehicles that have changed hands frequently or were previously used as rental cars or taxis, as it could cause additional wear on the car.

9. Negotiate the Price

With no manufacturer's suggested retail price on used cars, there's often room to negotiate. Use your research—including the vehicle's estimated value, comparable listings and any issues found during the inspection—to support your offer.

Be prepared to walk away if the dealer won't meet a price you're comfortable with. If you have a vehicle to trade in, research its trade-in value separately so you can negotiate each transaction independently.

Learn more: How to Negotiate the Price of a Car

10. Finalize the Purchase

Once you've agreed on a price, the dealer will handle most of the paperwork, including the title transfer and registration. Review all documents carefully before signing, and make sure the final price matches what you agreed to.

Be prepared for the finance office to offer add-ons like extended warranties, gap insurance and paint protection. Many of these products or services are often overpriced and unnecessary. Take time to research any add-ons before agreeing to purchase them.

How to Buy a Used Car From a Private Seller

Buying from a private seller often means lower prices, but it also requires more effort on your part. Here's how to navigate the process.

1. Verify the Seller and Car Details

Before meeting in person, do some homework. Ask for the VIN and run a vehicle history report to check for accidents, title issues or odometer discrepancies. Verify that the name on the title matches the seller's identification.

Be wary of sellers who are reluctant to share details or seem evasive about the car's history. Trust your instincts: If something feels off, move on to another listing.

2. Choose a Safe Place to Meet

For your safety, arrange to meet the seller in a public location during daylight hours. Many police stations offer designated parking spots for online transactions, which can provide added security for both parties.

Bring a friend or family member with you, and let someone else know where you're going and when you expect to return.

3. Ask to Test Drive the Car

A test drive is just as important when buying from a private seller. Make sure the seller has valid insurance before driving, and bring your own insurance information in case it's needed.

Drive on different road types to evaluate performance, and don't rush. Take your time to get a feel for the vehicle.

4. Inspect the Car Thoroughly

Conduct a detailed inspection of the vehicle's exterior, interior and mechanical components. Use the checklist from the earlier section to guide your evaluation.

Since private sellers typically don't recondition vehicles before selling, you may find more issues than you would at a dealership. Factor any necessary repairs into your offer.

If you're satisfied with what you see, arrange for an independent mechanic to inspect the vehicle before you commit to buying. Some mechanics offer mobile inspections, while others may require you to bring the car to their shop.

If the seller refuses to allow an inspection, consider it a major red flag.

5. Negotiate the Price

Private sellers often have more flexibility on price than dealers. Use your research and inspection findings to justify your offer.

Be respectful but firm. If you can't reach an agreement, it's OK to walk away. There are plenty of other cars on the market.

6. Make an Offer Using a Secure Payment Method

Once you've agreed on a price, use a secure payment method. For large transactions, a cashier's check from your bank is generally the safest option. Avoid paying with cash if possible, and never agree to wire money to a seller—this is a common scam.

If the seller is willing, consider completing the transaction at your bank for an extra layer of security.

7. Handle the Paperwork

Unlike a dealership, a private seller won't handle the paperwork for you. Contact your local department of motor vehicles (DMV) to find out what documents you'll need. Requirements typically include:

• A signed title transferred to your name
• A bill of sale
• An odometer disclosure statement
• Driver's license
• Proof of insurance

Visit your DMV promptly to register the vehicle and pay any applicable sales tax.

Frequently Asked Questions

Drive Away with Confidence

Buying a used car takes patience and diligence, but the effort pays off when you find a reliable vehicle at a fair price. By researching your options, inspecting the car carefully and negotiating confidently, you can make a smart purchase that fits your budget.

As you shop for your next car, it's also a good time to check your credit. With a free Experian account, you can monitor your credit score and see what factors are helping or hurting it—so you're prepared when it's time to finance.