How to Buy a Used Car: A Checklist
The high cost of a new car, truck, or SUV is driving many consumers to look at the used car market these days. But shopping for a used model can be far more complex than buying a new one.
Aside from the fact that the marketplace for used cars is larger and more diverse than it is for new vehicles, used car prices fluctuate for more reasons. These include the car’s location, age, condition, the number of miles on the odometer, and plain old supply and demand.
Still, if you proceed carefully and negotiate in earnest with a dealer or private seller, you can get yourself a great deal. Keep reading for our recommendations for your used car buying checklist.
1. Figure Out How Much You Can Afford to Pay
As with shopping for a new vehicle, the first step is determining how much you can afford to pay. Unless you have cash on hand, this will be determined by the amount of your down payment, the value of your trade-in (if you have one), and your budget for a monthly payment.
A good rule of thumb is to spend 10-15% of your take-home income on car-related expenses. If you take home $3,000, you’ll have $450 monthly to spend on your car. Keep in mind that that’s just a guideline. It includes costs such as maintenance and insurance but not depreciation.
Also, keep your monthly payment target to yourself and focus on the total cost of the vehicle, or the person working on your financing could give you an exceptionally long loan term with high interest just to hit your monthly payment target.
Get pre-approved financing
Check with local lenders – banks and credit unions – ahead of time to help you set a target price based on what you can afford and to shop around and get pre-approved for the lowest available loan rates. Be aware that borrowers with excellent credit scores generally get the most favorable rates.
2. Research Which Used Car Is Best for You
You’ll need to determine which vehicles meet your needs and budget. A good place to start the process is right here on Carfax.com. The Car Research section on Carfax.com contains a treasure trove of information on vehicles from previous model years, including detailed reviews, fuel economy ratings, and how much those cars are being sold for right now.
3. Browse Used Car Listings
From there, you can browse cars for sale on our Used Car Listings here on Carfax.com to get an idea of what’s available where you live and how they’re priced.
You can search for a specific make and model by body type or according to a set price range. From there, you can sort models in your search according to price, mileage, model year, or distance from your particular Zip Code.
Decide: buy from a dealer or a private seller?
If you’re cash-strapped and are looking for a well-worn model at the lower end of the price scale, you may also consider buying from a private party via an online listing site like Craigslist.
Consider a Certified Pre-Owned (CPO) car
Late-model and off-lease vehicles in top shape are often sold as certified pre-owned vehicles. They’re typically priced higher than non-certified models. Still, they’ve passed a stringent mechanical inspection, have been repaired or refreshed as needed, and most are sold with some warranty coverage.
Learn more about Certified Pre-Owned Vehicles
4. Check the Carfax Report
Perhaps the most essential benefit of Carfax’s Used Car Listings is: Each one comes with a free Carfax Vehicle History Report. Be sure to check the Carfax Report to see if that particular model has been in an accident, been declared a salvaged or flooded vehicle, or had multiple owners, and to confirm its maintenance records and miles driven.
Buy a Carfax Vehicle History Report
5. Figure Out a Fair Price for the Car You’re Interested In
The Car Research section of Carfax.com gives average transaction prices and price ranges for most models.
In addition, you can identify what a specific model is worth via our free History-Based Value service. This report produces a more exact value than other services by considering the year, make, model, mileage, location, condition, and other variables based on information contained in its Carfax Vehicle History Report. All you need to do is enter your Zip Code and the car’s vehicle identification or license plate number.
See also: What’s a VIN and how to find it on a car?
Based on these specifics, you’ll be able to determine a used vehicle’s average retail price and the car’s trade-in value, which is more or less a dealer’s cost. The third valuation estimate you’ll find is the “private party value,” which you can expect to pay for buying the vehicle from an individual on an “as is” basis. It usually lands between the other two figures. Use these estimates to help guide your negotiations with a salesperson or seller.
Each used car on Carfax’s Used Car Listings page will also indicate if the asking price is a great value based on average selling prices and data gleaned from the vehicle’s Vehicle History Report.
You can also use the handy Payment Calculator included with each Carfax.com listing to determine your monthly payment for that particular model, given the asking price, down payment, and the interest rate you’ve been quoted.
Find out the value of a car with Carfax History-Based Value.
Once you’ve isolated one or more used car listings on Carfax.com or elsewhere, contact the dealer to ensure the model is still in stock and confirm the asking price before heading out the door.
Carfax.com listings allow you to do this electronically. If you’re buying a car from a private party and are wary of venturing into unfamiliar territory to check out a car, arrange to meet the seller at a busy and brightly lit public location like a shopping mall parking lot.
7. Test Drive
Never buy a used car without proper examination and a thorough test drive to ensure it meets your needs and expectations and operates to your liking. Make sure to drive the vehicle on various roads at different speeds to check the acceleration, braking, and cornering. Test out all of the car’s features to ensure they work.
Learn more about How to Inspect and Test Drive a Car.
Take it to a mechanic
It’s always a good idea to take any used car you’re seriously considering to a mechanic to check it out and ensure it’s in good working order. They have the expertise and equipment to check for things you can’t see.
8. How to Negotiate for a Used Car
Never pay the asking price unless you’re buying a used car from a dealership that doesn’t allow haggling. You can almost always do better. And even if you are buying from a “one price” dealership, feel free to ask the salesperson to throw in a deal sweetener like extended warranty coverage.
A dealership salesperson will typically negotiate downward from the model’s advertised price. Likewise, private sellers usually advertise a used car at a higher price than they’re willing to accept. It doesn’t hurt to ask for the dealership or seller’s best price and work from there. At any rate, let the other party know you’ve researched the vehicle’s value beforehand.
Learn the Best Time to Buy a Car.
Start low
Begin the negotiating process by making an offer a little higher than the vehicle’s estimated trade-in value, or perhaps around 10-15% lower than the asking price, or whatever was thrown at you as the best price. Don’t bother throwing out an impossible “lowball” offer that will only insult the salesperson or seller and begin the process on a sour note.
See this month’s Used Car Incentives.
Be Ready for a Little Back and Forth
At this point, the seller may complain about being unable to come close to what you’re asking. With a bit of prodding, they will reduce the asking price by a certain amount, and unless you consider that a good deal, you should counter by raising your offer incrementally. You may go back and forth a few times in this manner. Salespeople may tell you they need to consult with the sales manager to get approval on a deal or come back with another offer.
Learn more about How to Negotiate a Car’s Price.
(If the whole car-buying process seems overwhelming, it is possible to hire an auto broker, to do it for you. For a fee, they’ll find a car and negotiate its price.)
9. Check the Paperwork
Once you’ve settled on a price, read the bill of sale before signing it; if you’re buying from a private seller, this could be as basic as a hand-written document that agrees to convey the vehicle from seller to buyer as is. If you’re buying from a dealer, check the numbers to see that they’re as agreed upon and that no extra charges have been added.
Make sure the title Is clear
Examine the vehicle’s title to ensure any car loan has been paid off and the person selling you the car is, in fact, the legal owner.
Sign the paperwork
Have them sign the title and note the car’s current mileage and/or other required information – having a signature in the wrong place or having missing details can delay transferring ownership.
Register the car
A dealership will usually handle registering the car with the state you live in; otherwise, take the title to the nearest state motor vehicle facility as soon as possible to get it registered and licensed in your name.
Next Steps
Used Car Articles
If you have questions about this story, please contact us at Editors@carfax.com
A Guide on How to Buy A Used Car
Ready to upgrade your wheels without going over budget? Here’s your complete guide on how to buy a used car.
With a pre-loved vehicle, you can enjoy the advantage of low costs, a lower depreciation rate, and unbeatable savings. Not to mention, when you buy used, you’ll be able to afford a newer model than you would have, had you bought new.
While buying used requires caution, our tips on considering mileage, reputation, and warranties will ensure a smart decision. From setting a budget to financing, we’ve got you covered in this article for a successful used car purchase!
Let’s look at how to buy a used car from a private seller and start the thrilling search for your dream used car!
Set a Budget
Among the most important tips for buying a used car, setting a budget is the most important. You can accelerate the car buying process if you settle on the maximum amount you’re willing to pay early on.
When setting a budget, don’t forget to account for extra expenditures, such as prospective repairs and car insurance prices, which are sometimes forgotten but can greatly influence your entire spending plan.
Still unsure of whether you should buy new or used? Consider your financial condition and how much you can safely set aside for a car purchase to create a realistic budget. Account for your monthly payment, ongoing costs, and any available savings for this investment. As a general guideline, try to keep car-related costs to no more than 15% to 20% of your monthly payment and income.
Once you’ve tallied up these costs, you may realize buying new is not only unwise but an unthinkable financial risk.
Choose the Best Car for You
With the financials out of the way, you can skip to the good part: making a wishlist. Make a list of your must-haves and all the cherries on top. Remember, buying used doesn’t mean trading in the thrill of the car buying process. Dealerships carry a wide selection of used vehicles that will cross off any number of your non-negotiables.
Looking for ample cargo room, cutting-edge safety systems, or fuel economy? There’s a used car out there that checks that box.
Aside from your wishlist, be sure to keep the car’s mileage in mind while looking for a certain brand and model. Low mileage could suggest less wear and tear, but moderate mileage on well-kept cars can still be a sign of a dependable vehicle. Additionally, auto-check for new vehicles with a clear motor vehicle history report and pick one with no history of significant collisions or damage.
You can also review the vehicle’s evaluations and ratings online from reliable sources like Edmunds or Kelley Blue Book to learn more about the performance and dependability of the used motor vehicle. You can further assess the car’s overall performance and spot any possible problems by consulting feedback from former owners and industry professionals.
Test Drive the Car
Source: Unsplash
Test driving the car is a crucial step in the buying process, and it’s best not to skip it. Before making your final choice, take the wheel and experience how the car performs on the road. This hands-on experience allows you to assess its handling, comfort, and overall feel, ensuring it aligns with your preferences and driving style.
Don’t hesitate to ask any questions that may be on your mind regarding the car’s history, maintenance, or any concerns you have. This time is your opportunity to gain confidence in your decision, ensuring the vehicle is the perfect fit for you.
Consider Vehicle Inspection
Source: Unsplash
You must get the car inspected by a skilled technician before purchasing.
For your peace of mind, insist on a thorough examination even if the vendor emphasizes how quickly the cars are selling. Any concealed defects or possible concerns with the car can be found through a professional assessment.
Take the motor vehicle to a dependable technician who specializes in the make and model you’re interested in for a thorough evaluation. To ensure everything is in working condition, the technician will inspect the engine, odometer reading, gearbox, suspension, steering wheel, brakes, and other crucial parts of the old car.
Additionally, they will search for evidence of prior collisions, frame damage, or any other problems that would not be noticeable during a typical test drive.
Opt for a Certified Pre-Owned Car
Examine certified pre-owned (CPO) vehicles for further quality and guarantee. These cars undergo thorough tests and frequently have extended warranties from respected dealers. CPO cars can cost a little more, but their comprehensive examination procedure guarantees you’ll get a well-kept car with low mileage.
Ask about the scope of the warranty coverage and any additional perks provided by the manufacturer or dealership when considering a CPO vehicle. Many customers find CPO programs an appealing alternative since they provide benefits like free maintenance, roadside support, and special financing rates.
Decide on Loans or Cash
When borrowing for a car, avoid committing to loans longer than five years to reduce overall costs. If you’re buying from a private seller, arrange financing or pay in cash.
You can research financing options, such as credit union loans, bank loans, or internet lenders, and compare interest rates, terms, and monthly payments to find the best fit for your budget.
Getting pre-approved for a car loan before shopping provides a clear affordability picture and eases negotiation. If you choose to pay cash, ensure you have the money ready. This way, you can enjoy benefits like no interest fees and simplified paperwork.
Pick Your Option, Read All the Paperwork, and Sign
As you approach the conclusion of the purchase, be sure to thoroughly read all the paperwork provided by the salesperson or dealership. Double-check that the agreed-upon terms align with your expectations and that no unexpected expenses have been added.
Carefully review the bill of sale, car history report, vehicle identification number, and warranty details, as the documentation typically includes these. Make sure the specifics of the car and the negotiated price match your understanding of the agreement. If you have any questions or concerns about the documents, don’t hesitate to ask the car dealerships for clarification or seek legal advice to proceed confidently in completing the transaction.
Take the Car Home Only When Financing Approval Is Ready
One critical step in the car buying process is to ensure you have received official financing approval before taking the car home. It’s essential not to sign any documents or drive away with the car until you have the approval in hand.
Some dealerships may try to sway you into falling in love with a car before revealing that you don’t qualify for financing. This tactic puts you in a vulnerable position, allowing them to pressure you into accepting a less fair deal. Protect yourself by obtaining financing approval on an auto loan first to confidently negotiate and avoid any potential pitfalls. You can look for financing options at platforms like CarMax.
Wrapping Up
Congrats on mastering the tips for buying a used car Now, research models, arrange test drives, and ask questions to find the best options. Remember to stay patient, trust your instincts, and keep your budget in mind.
And once you’ve found the perfect ride that meets all your requirements, take the next step to ensure its safety and convenience. Search for ideal storage and fleet parking spaces using platforms like Neighbor. With this solution, you can securely house your vehicle during repairs (or customization), giving you peace of mind and convenience in one go!
Happy car hunting!
FAQs (Frequently Asked Questions)
1. How much mileage is good for a used car?
The ideal mileage for a used car depends on various factors, including the vehicle’s make, model, age, and maintenance history.
As a general guideline, aim for a used car with an average annual mileage of around 12,000 to 15,000 miles.
However, a well-maintained car with slightly higher mileage may still be a good choice. Focus on the overall condition and service records rather than just the mileage to make an informed decision.
2. What should I check during a test drive?
During a test drive, inspect the car’s engine, brakes, transmission, and handling to ensure it meets your expectations.
3. What are the 3 advantages of buying a used car?
Cost savings: Used vehicles typically cost less to buy than new cars, allowing you to purchase a more expensive brand or a model with superior features while still staying within your budget.
Less Depreciation: Used vehicles have already experienced this early loss in car value, making them a more financially sound purchase than new cars, which face considerable depreciation over the first few years.
Reliability: Many used cars are still in great shape and have a proven track record of dependability, particularly when buying certified pre-owned cars or autos with a clear maintenance history.
4. What documents do I need to complete the buying process?
Ensure you have a valid driver’s license, proof of insurance, and any necessary paperwork required by your state.
