How to Buy a Used Car

How this Guide is Organized
1. Finding the Right Used Car
2. Used Car Budgets
3. Certified Pre-Owned Cars vs. Used Cars
4. Finding the Right Used Car Seller
5. Inspecting a Used Car
6. Get Used Car Financing
7. Used Car Warranties
How To Buy a Used Car

Getty Images/Kevork Djansezian

No offense to new car buyers, but when it comes to saving money, used car shoppers are smarter. A new car can lose up to 20 percent of its value the minute it’s driven off a dealer’s lot. For a new car buyer, that’s money right down the drain. When you buy a used car, however, that loss has already happened – to someone else.

While buying used means saving some money upfront, you do give up some peace of mind. Used cars don’t come with the same guarantees and warranties that new cars do. If you’re not careful, buying a used car can go from something that saves you money to a giant money pit.

However, buying a used car doesn’t necessarily mean giving up getting a reliable car with that new car smell (especially since you can get new car smell in an air freshener). By taking your time, doing your research and sticking to your budget, you can get a used car that will make you happy and save you money.

Finding the Right Used Car

New car buyers can only buy from new car dealers. Used car buyers have more options. They can buy from a dealer, or from the guy down the street. With so many options, it pays to cast a wide net. Most used car listings are available online (we’ve got more than a million used car listings), so it’s easy to find the right car from the comfort of your couch.

Having so many options can be overwhelming, so it’s important to have an idea of what you want and need from your used car. Think about how much you can afford to spend, how much space you need, the performance you want, the kind of fuel economy you’d like to get and features that are must-haves for you. You can use our used car rankings to find the best used cars for your needs.

Used Car Budgets

Part of deciding on the car you want is making sure it fits in your budget. Newer cars and cars with low mileage will cost more than older cars with more than a few clicks on the odometer. Playing the mileage game can help you get into the car you want, but there can be downsides to a less-expensive, higher-mileage car. The more mileage on a car, the more likely it is to need repairs.

Certified Pre-Owned Cars vs. Used Cars

You also need to decide if you want to go with a certified pre-owned car or a plain old used car. CPO cars are used cars that the manufacturer has bought back and inspected. The manufacturer usually offers additional warranty coverage on CPO cars, and sometimes offers financing and special offers. A CPO is as close to buying a new car as you can get when shopping used. All of those CPO extras come at a cost, however. CPO cars tend to be more expensive than used cars. Still, the extra peace of mind a CPO car offers might be worth the extra money.

Finding the Right Used Car Seller

New car buyers have to buy from new car dealers, but used car buyers can buy from anyone with a car to sell. Private sellers tend to offer their cars at lower prices since they don’t have overhead costs. While going with a private seller means you can save money, you do have to do some extra legwork, like taking care of registration and taxes. Dealers will usually do those things for you.

You also need to be careful when dealing with private sellers. They’re selling their car, so they’re more likely to be emotionally invested in it than a dealer. They also may not have done their research on what the car is actually worth. That could make a private seller harder to negotiate with. Private sellers aren’t regulated like car dealers are, so if the deal goes sour, you won’t have as many avenues to rectify it. You can’t check customer or Better Business Bureau ratings on a private seller. And, while the vast majority of private sellers are honest people who just want to sell their cars, there are scammers out there. Learn how to protect yourself from used car scams.

While dealers offer some protections that private sellers don’t, you still need to look out for yourself. Used car dealers are in business to make a profit, and that profit comes from selling cars for as much money as they can get. Don’t expect a dealer to look out for you; be your own advocate. Use online resources to make sure you’re getting a fair price on the car you want. Get all terms of the deal in writing, and if you have any questions or uneasy feelings, don’t buy the car until the dealer addresses them.

Inspecting a Used Car

Used cars don’t have the same guarantees that new cars do, so you have to protect yourself. Check the car’s specs (we’ve got them covered in our used car reviews), and ask to see documentation for things like regular maintenance and repairs. The National Highway Traffic Safety Administration keeps a database of vehicle recalls. Check it to see if the car you’re thinking about buying has any recalls. If it does, don’t buy it until the seller can prove that the recall has been addressed.

Just like you need documentation to prove that a car has been maintained, you need to get documentation that it hasn’t had any damage that could haunt you down the road. Services like Carfax or CarCheck use a car’s vehicle identification number (VIN) to check for things like issues with a car’s title and any major accident or insurance claims the car’s been involved in. Getting one of those reports will run you about $40, but it’s money well spent.

All the documentation in the world won’t show if a car is a ticking time bomb of repair bills. Things like rust, wear and tear or simple parts failure can show up on cars that otherwise have a clean bill of health. Before committing to a car, take it on a thorough test drive and get it to a mechanic for a checkup. Spending $100 upfront with a mechanic will be worth it when it saves you from buying a car that may require thousands in repairs. There are a lot of other things you can do to avoid buying a lemon.

Get Used Car Financing

Most people finance their used cars. If you’re buying from a used car dealer, you may be able to get financing there, but the loan the dealer offers may not be the best deal. Before you buy, see what kind of loan terms you qualify for from different banks and credit unions. If you’re buying a used car from an individual, you can use those loans to make the purchase. If you’re buying from a dealer, you can compare their loan terms to the ones you already have and pick the best deal.

Used car financing rates, especially for loans less than $10,000, tend to be higher than new car financing rates. While that difference tends to be offset by the used car’s lower price, make sure you factor interest into your monthly payments. Learn more about used car financing before you start shopping.

Used Car Warranties

Many used car dealers offer extended warranties. Even if you buy from an individual, you can get a warranty from a warranty company. The question is, should you?

Most consumer advocates recommend against getting an extended warranty. For one, your used car may have some of the manufacturer’s original warranty left on it. Extended warranties can also be expensive, and many are restrictive. When you need them, they may not cover you. Even dealer warranties may not cover needed repairs. If you decide you want an extended warranty, make sure you comb through the fine print and understand exactly what is and isn’t covered.

Laugh all the Way to the Bank

The final step in buying a used car is enjoying your savings and consoling your friends as they watch the value of their new cars drop. Just remember to be nice to them – they aren’t as smart as you are.