How to Buy a Used Car: A Complete Guide
Used cars are a wise purchase as you get to have a reliable ride at a fraction of the cost.
If you're looking for a car while on a budget, you can check out used and pre-owned cars first rather than going for brand-new models right away.
Other than used cars being more affordable options, you'll also have a wider selection of models that will best suit your needs and preferences.
Whether you're switching vehicles or purchasing your first car, you can find the right model for your needs and budget when you go for pre-owned vehicles. Here is our comprehensive guide on how to buy a used car, covering everything from your initial selection to finalizing your purchase and ownership.
Why Would I Want a Used Car?
Apart from lower costs, getting and owning a used or pre-owned car offers multiple advantages. Let's look at some of the benefits that come with a used vehicle.
Used Cars Are Reliable Options
The convention back then was that new cars are better than old ones. Nowadays, cars are becoming more durable and reliable, which makes them last longer even if they're out of production. The abundance of support and spare parts for older models are also on the rise, so cars that have more than 200,000 kilometers in them can still be just as good as the day they went out of the factory.
No Excessive Fees
While car dealers market new vehicles with irresistible deals, they will often include additional charges and hidden fees. These may come in the form of shipping fees, destination charges, dealer preparation fees, and extra advertising fees that can cost more than $1,000 can come with brand-new cars.
Used and pre-owned vehicles won't have these fees, or will have them for way less than brand-new cars. Instead, used car dealers may charge you with a documentation fee as you sign the contract. We'll touch on this fee for used vehicles later on.
More Models to Choose From
Depreciation, the process wherein cars lose their value over time, is an advantage when it comes to used car shopping. Whether you're after a vehicle that's only been out for less than five years or want a much older model, you'll often get them for lower prices than buying them brand new. This means that you'll have multiple budget-friendly options if you consider getting a used car.
Furthermore, the used vehicle market offers models from various brands and of different types. You can find these options in dealerships, online retailers, and other trusted marketplaces.
Used Cars Come With Warranties
Pre-owned vehicles can still have existing warranties covering them, or have extended warranties from their manufacturer. Extended warranties, in particular, still let you bring these vehicles to their respective manufacturers for tune-ups or repairs. This also means that you get to spend on other expenses while enjoying lengthier warranty coverage.
Easy Access to Vehicle Information
Nowadays, it's easy to look for relevant information about your ideal car. You can find numerous YouTube reviews, websites, forum threads, and social media groups and spaces dedicated to specific car models. Getting into these technical and first-hand reviews lets you understand what the car you want is, common problems that you should look out for, and what model is best for what you want.
First Steps in Purchasing a Used Car
Be sure to follow these crucial steps on what to look for when buying used cars.
Determine What'll You Use the Car For
First, consider why you need a car. Consider why you need it now and what you'll be using it for in the future. If you have a growing family, you'll want a spacious sedan or SUV that has lots of seats and cargo space. If you're still living on your own and want something stylish, you can go for second-hand luxury vehicles like entry-level cars and sedans as your daily driver.
Set Your Budget
How much a used car costs is also one of your priorities when looking for one. Having a budget is more challenging than finding a used vehicle with affordable monthly payments. It revolves around the following factors:
- The cost of interest on your car loa
- How much you'll spend on car insurance
- Parking fees
- Maintenance costs
These factors let you determine the actual cost of your car, from buying it from the dealer to owning and maintaining it. You might find steal prices on certain cars, but if you factor in their insurance, maintenance, repairs, and depreciation, the actual cost might be more expensive than other cars. To help you learn a car's actual ownership cost, some automotive websites will give you estimates. We recommend checking these resources during your search before even considering buying a car.
Ideally, you'd want a good balance between the cost of buying and owning the car. An older model might be cheaper, but repairing and maintaining it can cost you in the long run. Make sure to look for all possible resources on spare parts, repair costs, and common issues related to reliability when you consider getting a significantly older model.
For instance, used car reviews offer insight into certified pre-owned (CPO) warranty coverage, average repair costs, and estimated reliability ratings. And for frequent problems surrounding a specific vehicle, you can check out dedicated websites and forums to read about first-hand experiences from owners.
A Note on Auto Insurance
Drivers eyeing used cars tend to disregard the cost of auto insurance. If you're looking to insure your vehicle, note that plan pricing can vary depending on its model. Hence, research is crucial when finding the best car insurance plan for a pre-owned car.
Consider Other Crucial Factors
Along with lifestyle, here's what you also should look for when buying a used car:
Safety Equipment
More and more modern vehicles can be equipped with advanced safety and driver assistance technology. That said, you can find pre-owned cars with these features, including automatic emergency braking (AEB) and adaptive cruise control. Check if the vehicle you're purchasing has such features before negotiating with the seller.
Strong Reliability
Some pre-owned cars have more mileage and issues than others. Since it’s inevitable that some cars are more well-maintained than others, you’ll want to look into the general reliability of the model you want.
As you research the car you’re looking to buy, you can check out Consumer Reports and J.D. Power to see different maintenance reports and ratings. This information can help you decide whether you should buy the vehicle or opt for another one.
Age
Newer vehicles that are two years old at most still have value, and can hold their price close to their SRP since their release. If you’re in the market for a used car, three to five-year-old models are your best option. These vehicles have finished their leases and are not as heavily used upon getting sold. This also means that they are significantly cheaper and ideal for those on a tight budget.
Mileage
How many miles should a used car have to buy it? Experts claim that a vehicle can reach between 12,000 and 15,000 miles on average. Now, let’s say you drive at least 12,000 miles. You can determine a decent mileage for a used car with this simple calculation:
If you’re buying an eight-year-old vehicle, for example, the calculation would be:
Based on this calculation, if the eight-year-old car has significantly higher or lower miles than 96,000, it’s highly likely to have issues that need attending.
Still, mileage is just one of many factors you should consider when buying a pre-owned vehicle. Other factors also come into play, including:
- Number of owners
- Whether the car was used on a highway or within a city Safety
- Performance
- Fuel economy
Look at the Warranty
We’ve mentioned that used cars can still have original warranties or offer the option of an extended warranty. Purchasing a pre-owned vehicle under its original warranty is typically the best choice. But if you can’t find one, you can go for a car with reasonable reliability or a certified pre-owned (CPO) vehicle. CPO cars come with a manufacturer’s warranty, service records, and clean accident history.
Get Leasing Right
If you’re leasing a used car, consider a model that already has warranty coverage or an extended warranty. You can also have a leasing company help you acquire a vehicle’s lease. This option ensures that you get a well-maintained car covered by its manufacturer’s warranty.
Find Affordable Used Car Financing
Additionally, you may need a loan to settle used vehicle payments. A pre-approved used car loan means more savings, so try to apply for one before buying your vehicle. If you’re getting a pre-owned car from a dealership, the retailer may offer a better loan or have you apply for it if you don’t have financing.
Looking and applying for a used car loan is the same as getting a new car loan. But used car loans come with higher interest rates since they’re riskier and cost you higher repair expenses.
To get the best financing deal, check your credit score to see what loans you’re qualified to apply for. Lenders approve used car loan applications depending on the credit scores of applicants. Also, make sure you’re financing your vehicle at the right lender. Places that offer used car loan financing include national banks, credit unions, finance companies, and vehicle dealers. Once you’ve found a lender, weigh your options for loan offers and apply for your loan.
Searching for the Perfect Vehicle: Where Can You Buy One?
Finding used and pre-owned car dealerships is easy. Finding the right one for you and your needs and budget is where things get complicated. Don’t worry, as here are some places where you can get a used vehicle.
Franchised New Car Dealers
Apart from new cars, these dealerships also have used cars on sale. They tend to sell vehicles at higher prices, but you can expect a smooth purchase when you buy from these distributors. Franchised new car dealers will arrange all the paperwork for you.
Most importantly, these used car sellers work with multiple lenders. If you need financing for your vehicle, a dealer can help you get a better deal. Franchised new car dealers also sell certified pre-owned cars and offer online shopping.
Used Car Dealerships
You can also get a used vehicle from one of these dealers:
Superstores
Like franchised new car dealers, used car superstores manage your vehicle’s paperwork, ensure seamless purchases, and work with various lenders. They even offer add-ons with your purchase.
Vehicle superstores also have a much more extensive inventory than new car dealerships. These superstores can ship the model that you like from their inventory to your local branch with ease.
Independent Dealers
These small, local dealers buy and sell used cars, arrange financing, and manage paperwork. Moreover, independent used vehicle sellers offer vehicles from wholesale auto auctions. They work without service departments as well. Most of these businesses are reputable, and are often vouched by your local Better Business Bureau or a consumer advocacy group.
Websites with Used Car Listings
In the past, drivers looked for used vehicles in classified ads, parking lots, and car lots. But nowadays, you can find pre-owned cars online. You can start your search on websites such as:
- eBay Motors
- AutoTrader
- AutoList (a used vehicle aggregator)
- CarMax
Used car lots and dealerships also have product catalogs online. Most dealerships have sales departments that ensure seamless online transactions for would-be used car owners.
Private Parties
Private-party purchases happen when you buy a car from an individual or private business. Unlike dealerships, these sellers don’t have overhead costs or make a profit from selling used vehicles. In turn, you can buy a vehicle for less than what dealers are offering. Furthermore, private sellers get the best return once they sell their cars.
How Much Does a Used Car Cost?
2020 data suggests that a used or pre-owned vehicle costs $21,558 on average. This can still vary depending on your budget and financing.
Check Car Prices
Once you’ve found your possible purchase, consult a pricing guide for the vehicle price. You can also evaluate its condition with the guide to know how much it actually costs based on its age, model, mileage, and other key factors.
A price look-up requires information such as the vehicle’s year, make, and model or trim level. This also includes its condition and special features. Keep in mind that pricing guides state varying costs for different cars, and will still depend on where you’ll buy your ride.
When checking vehicle pricing, look for labels like “Dealer Retail” (for cars offered at dealerships). Pricing guides can even provide a car’s trade-in cost, which is useful if you’re trading in your current vehicle.
A Closer Look at the Car You’re Purchasing
After narrowing your options for a used car, ensuring a well-maintained vehicle is your next step. Here’s how to check a used car before buying it.
Check the Vehicle’s History Report
Some companies provide drivers with history reports of specific vehicles, which tell you if you should buy your desired car or find another one. Before getting a history report, get the vehicle’s identification number (VIN) or license plate number from the seller. It helps dealers or companies provide the right information. A vehicle history report can contain the following details:
- Accidents
- Flood, fire, or other damage
- Title status
- Ownership
- Odometer readings
- Maintenance and service history
- Sales information
- Registration and inspection information
- Recalls
Inspect the Car Up Close
See the car in person to have a closer look at its actual condition. Check its underside first for any rust, leaks, and indications of collision repair. Then, enter the car and test the controls. Turn the knobs and press the switches to see if they work.
The smell of mildew is another warning sign you should look for. This can be an indication that the car might have been flooded and has water damage or its HVAC and cabin air filter isn’t working properly.
Go on a Test Drive
Before you take the car for a spin, check if the size and comfort of the vehicle suits your needs. Make sure that the seats cradle you well, and the controls are easy for you to understand. You should also check for visible exhaust smoke, unusual vibrations, and burning fluids during your drive. Finally, look at the underside for any oil and fluid leaks once you start the engine.
Get a Mechanical Inspection
Hire a mechanic or get a skilled friend to check your used car. The vehicle’s manufacturer can resolve any issues if the model is under warranty or contract. Otherwise, you’ll need to handle those problems on your own.
Research Common Problems Related to the Car
As mentioned earlier, you can look at websites, forums, and related sites to know the common issues related to the vehicle you want. These problems can range from simple upholstery issues and infotainment system defects to suspension and engine issues.
The Final Steps Before Owning a Used Car
You’re one step closer to owning your dream used vehicle. But before you finally drive it home, seal the deal with these steps.
Get the Best Final Price
Compare prices, then make an offer. If you’re negotiating with a car dealership, you can start your offer low and go back and forth with them. Also, take your time negotiating your final price and ask whether you’re paying extra fees. Some dealerships will try to regain profit through fraudulent payments, so look closely at the additional costs you’ll pay.
Sign the Necessary Paperwork
After finishing your transaction at the dealership, the salesperson will provide you with the papers you should read and sign. Go over these documents, checking for accurate figures, costly add-ons, and fees such as:
- State sales tax - the percentage of the vehicle’s price
- Documentation fee - the fee that the dealership charges you for signing the service contract
- Registration fee - Authorized used car sellers can register your vehicle for you. If the dealer does so, your contract should state a specific registration fee.
Moreover, watch for fraudulent fees that the dealership may include in your contract. And if you find any fee difficult to understand, have the finance manager explain it to you.
Most importantly, make sure that all the information on the paperwork is complete before signing anything.
Consider Whether to Get Add-Ons
Some used car dealerships may offer add-ons for your vehicle on top of your purchase. This can range from protective products to extended warranties and original accessories. Find out what these extras are and see if you can purchase them outside the dealer.
Buy the Right Used Vehicle for You
Used cars may not be as brand-new as current models, but they can still meet your needs. Purchasing a pre-owned vehicle involves multiple steps, from a look at specific factors to handling required documents. But this process is crucial as it’ll lead you toward a car you can rely on for daily driving or future travels.
Find everything you need to know about used and pre-owned cars when you check out the VIP Automotive Group blog today.