How to Buy a Used Car

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Purchasing a used car doesn't have to be like walking through a minefield. It can be challenging, but if you do your research and due diligence, you can feel confident that you're making a good purchase. In fact, getting a new-to-you car is exciting! It's important to have an expert look at the car before you buy it, and always read the fine print on your contract before signing it.

EditSteps

EditSample Forms and Payment Calculator

// Sample Used Car Sale Contract

// Sample Bill of Sale Disclosure Addendum

// Sample Monthly Car Cost Calculator

EditNarrowing Your Choices

1. Decide on your budget. Whether you're paying cash or taking out a loan, you need to know the maximum you're willing to spend on a car. Consider how much cash you have available to devote to a car or use an online calculator to figure out what kind of monthly payment you can make.^[1]
   
   • When figuring out a monthly budget, try not to spend more than 20% of your income on a car payment.^[2]
2. Choose the most important features for your driving needs. If you drive a lot, you may need a car with good gas mileage. If you need to haul things around, you may need a trunk or an SUV with the capacity to fold down seats.^[3]
   
   • List the things you need in a car, such as good gas mileage, high passenger capacity, and/or hauling space. Create another list of things you like, such as body style, color, etc. Use both of them to narrow down your model choices so you won't be distracted by a pretty car that doesn't fit your needs.^[4]
   • For good gas mileage, look for a car that gets 25 mpg or better. How much hauling space you need depends on what you plan to haul. For instance, if you own a small business, make sure to pick a car that will hold your equipment.
3. Look into insurance and repair costs. More expensive cars will have higher insurance rates. Plus, some cars are more costly to repair than other cars. Factor those costs into your decision when buying a car.^[5]
   
   • You can check with your car insurance company to compare rates on different types of cars.
   • Look online for comparisons of repair costs on car comparison websites. Some cars are more costly to repair because their parts are more expensive and/or more difficult to find. Plus, the more add-ons a car has, the more likely you are to have something break down.
4. Get pre-approved for financing if possible. One easy way to figure out the max you can spend is to apply for a car loan. You can get pre-approved for an amount through your bank, and then you have a max amount.
   
   • To apply for a loan, go online to your bank's website to fill out an application. You can also call into most banks to get financing.
   • Some banks may refuse to finance an older used car. Others may not finance one you buy from an owner. However, banks or credit unions typically offer lower interest rates than dealerships, so it's a good idea to try.
   • Don't rule out the dealership just because your bank is willing to finance your used car purchase. By letting the dealership know the interest rate you have negotiated with the bank, you may get a lower offer from the dealership. Of course, you can only finance through the dealership if you buy your car through them.
5. Check the safety ratings on the cars you're interested in. You want to be safe, of course, particularly if you're driving other people around. The government gives safety ratings to all vehicles, which you can look up on the models you're interested in.^[6]
   
   • Check your models at https://www.nhtsa.gov/ratings.
6. Compare and learn the price ranges for the models you like. Once you decide on a couple of models you're interested in, check into the typical price ranges for those models. You can see which ones are in your budget, as well as use the information to cut a deal when you go car shopping.^[7]
   
   • Visit sites that let you look up and/or compare the prices of cars, so you can determine which ones are more expensive. For instance, try sites like www.edumnds.com or www.kellybluebook.com.
7. Look at comparable cars across brands. If you like a small sedan, don't just look at a Honda Accord or Civic. Check out other brands, too, such as Kia and Ford. You may find a car you like just as well at a lower price point.^[8]
   
   • Don't forget to factor in things like dependability ratings and the availability of parts.

EditFinding a Used Car

1. Check out local dealerships. You'll find dealerships devoted completely to used cars. New car dealerships also usually have a used-car section. Browse a dealership that carries the type of vehicle you're looking for. Large dealerships are typically dedicated to one make of car, so you can look that type of car up online to find a dealership in your area.^[9]
   
   • For smaller dealerships, call ahead to see if they carry the type of car you're looking for.
   • One nice thing about buying from well-known dealerships is they sometimes offer a used-car certification. That means they've fixed everything that's wrong with the car, so you know you're not getting a lemon. On the other hand, these pre-certified cars tend to be more expensive than other used cars.
2. Look at online classifieds for cars for sale by owner. Check sites like Craigslist and Facebook marketplace to find listings for used cars. You can browse through these sites or search for particular models.^[10]
   
   • You can also ask your friends and family if they know of anyone selling a car. You may get a deal, and you at least have a character reference from your friend or family member.
   • You do have to be more careful when buying from another person. You definitely want to have the car checked by a mechanic, and you should be careful bringing cash to a transaction. On the other hand, you may get a better deal, as the owner doesn't have the overhead costs of a dealership.
3. Find cars on sites dedicated to selling used cars. These sites focus on used cars only, so you don't have to dig through other items for sale. Plus, you can narrow down your search based on the criteria you've set for yourself, such as the make, model, year, and so on.^[11]
   
   • Some of the main sites are AutoTrader, AutoList, and CarMax.

EditDeciding on a Car

1. Take the cars for a test drive. When you find a car you like, it's important that you drive it. It's a way to make sure it runs well, but you can also see if you like the way it drives. Be sure to give it a thorough test drive, going on both local streets and the highway.^[12]
   
   • Also, try parking and turning to check the car's maneuverability.
2. Have the car checked by a mechanic. Even if the car is certified by the dealership, it's still a good idea to have a trusted mechanic look at it. They can tell you if it has anything majorly wrong with it or if anything is likely to go out soon. You can typically schedule a mechanic to look at the car when you're not there if you need to. Just call and make an appointment.^[13]
   
   • If you don't have a mechanic you trust, ask your friends if they know of one. A diagnostic mechanic is the best option.
   • You can also find mechanics online under "automotive diagnostic mechanic." Check out reviews to find a good one. A mechanic will likely charge you $100 USD or so to check out the car.
   • If the car needs repairs and you still want to buy it, ask the mechanic to write out a report with an estimate for the repairs. Have them include the VIN, make, and model. Then, you can use that report to get a lower price on the car.
3. Look for red flags on the title. The title can tell you a lot about the car, and if you see certain red flags, you may want to walk away from it. For instance, if the mileage on the title doesn't match the odometer, the seller may be trying to cheat you; the title may say "mileage unknown" or "mileage exceeds mechanical limits." While high mileage may not be a deal breaker, you do want to know about it ahead of time.^[14]
   
   • Other red flags are title brands, usually at the top of the title. These brands can be things like "flood vehicle," "salvage," or "rebuilt salvage." Make sure you understand what the terms mean in your state before buying the vehicle. Typically, a flood vehicle has been in a flood. A salvage vehicle is one that has been deemed totaled by an insurance company, and "rebuilt" salvage can just mean parts have been replaced. It may not even run.
   • Also, make sure the description and VIN match your car. If they don't match, then that title doesn't belong to the car you're looking at, most likely.
   • If the owner won't let you see the title, that's a bad sign.
4. Run a title check on your car. Even if you've seen the title, it's still a good idea to run a title check on it. You'll need the VIN to run the title.^[15] View a list of companies approved by the U.S. Department of Justice for title checking here: https://www.txdmv.gov/motorists/buying-or-selling-a-vehicle/title-check-look-before-you-buy.
   
   • A title check will give you information on title brands and liens.
5. Use a vehicle history site to check the VIN. Ask for the VIN from the seller, and then put the VIN into a site that sells car histories. A history should tell you any major repairs, as well as any crashes the car has been in.^[16]
   
   • If the seller won't give you the VIN, that's a good sign you should walk away from the car.
   • You can try sites like www.carfax.com or www.autocheck.com.

EditMaking a Purchase

1. Remember to mentally add in the extra costs and fees to the purchase price. The purchase price isn't all you'll pay. You'll also need to pay the title, registration, and taxes. They can add up to about 10% of the price.^[17]
   
   • You can look up some of these costs on your state's websites. Use those estimates to calculate how much they will add to the price of the car.
2. Negotiate the price. Once you've picked out a car you'd like to buy, use the research you've done to get a better deal. For instance, if you look at the history and find it's been in an accident, you may be able to get a lower price. Always be ready to walk away from the car if you can't get the deal you want.^[18]
   
   • If you're not sure about what the price should be, use websites that estimate the fair market value for a vehicle to help determine how much you should pay, such as www.kellybluebook.com.
   • Similarly, use what you know about the average price for the make and model to negotiate a better deal.
3. Ask for a return policy in writing. While some states require dealers to give you a 3-day return period, others do not. It's always best to ask what a dealership's policy is. Getting it in writing will help you enforce it later.^[19]
   
   • The dealer might refer to it as a "cooling off period" or a "no-questions ask return policy."
   • If you're getting the car from the owner, you could write out a short contract that says you can return the car within 3 days. Both of you should sign it, and you may even want to get it notarized. However, always talk to a lawyer about legal advice.
4. Discuss the warranty with the dealer or seller. Your dealer may offer one of a variety of different warranties, so you need to make sure you know what you're getting. Often, the dealer may offer the car "As Is," which means you won't get a dealership warranty, though you may still ask the dealer to fix certain problems as a condition of the sale.^[20]
   
   • Some state laws allow for "implied warranties," meaning that if the car doesn't meet a reasonable expectation of quality, the dealer will need to fix it. You can look up your state's laws on the state's websites. A specific type of implied warranty is an implied warranty of merchantability, which means the car does what the dealer says it will do, such as run.
   • A full warranty specifically covers the following terms:
     • Warranty service is covered for free.
     • You can get a replacement or refund if the dealer isn't able to fix the problem after a few tries.
     • The car is covered for anyone who owns the vehicle.
     • To get warranty service, you just tell the dealer it needs to be done.
     • The implied warranty doesn't have a time limit.
     • Limited warranties would not meet all these conditions. Both full and limited warranties may not cover the whole car.
   • Check any manufacturer's warranties that may still apply to the car by calling into the manufacturer with the VIN. You will need to get this information from the dealer or the seller.
5. Read the contract and buyer's guide thoroughly. Before you sign anything, you need to go over it. Make sure you know what everything means and that it matches what you've been told by the dealership. Also, ensure that the dealer hasn't left something blank that they can fill in later.^[21]
   
   • The buyer's guide may include a description of your warranty.
6. Go over the financing if you're using a dealer's financing. You want to know what you're expected to pay and when. Also, check the interest rate against the average interest rate to make sure you're getting a good deal. Look up interest rates online if you're not sure about the one you're being offered.^[22]
   
   • If you don't like the financing offered, see if you can go through your bank, your credit union, or another bank.
7. Sign and finalize your contract before leaving. While it's tempting to take a verbal agreement and leave the dealership, it can come back to bite you. Always finalize everything if you're leaving with the car.^[23]
   
   • Some shady dealers may say you're getting a certain monthly payment that needs to be approved by a manager. If you leave a car to trade-in on this verbal agreement, you may be asked to pay a much higher payment later, and your other car may already have been sold.
8. Complete transfer of ownership with the dealer or seller. The seller must transfer ownership by filling in the title transfer certificate and signing a bill of sale. As the buyer, you must sign the bill of sale, pay the sales tax, and register and title the car with your state.^[24]
   
   • If the seller still owes money on the car, write your check to the lender. They'll send the title to the seller, who can then transfer it to you.^[25]

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EditTips

• If you are buying a vehicle from a private seller, check to be sure any associated lien on the vehicle has been paid off by the seller.
• If you do not feel comfortable negotiating prices or checking used cars for mechanical issues, consider using a car buying service.
• When negotiating, remember a lower price is not the only benefit you can request. Try asking for warranties, service contracts, or even free floor mats.

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• Fix Your Car's Air Conditioner
• Buy or Lease a Car when You Have Bad Credit
• Price Used Cars
• Not Get Scammed on Craigslist when Buying a Used Car

EditSources and Citations

EditQuick Summary

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