- Money – Make a budget. How much car can you afford? Where will the money come from? You should expect to pay about $25 for a single title check or about $45 for unlimited title checks and you should budget between $50 and $100 for each car you intend to bring to a mechanic for screening. Don’t forget state taxes and registration fees.
- Laws – Review the laws in your state to make sure you understand how to conduct a legal transaction and to make sure you take the steps necessary to register, inspect, and insure your new vehicle.
- Find your car: Choose an appropriate make and model, find out what it is worth, locate a vehicle in your area.
- Screen your car: Question the owner, get a title check with AutoCheck VIN Check, inspect the car, drive the car, have a mechanic inspect the car, review the terms of the sale.
- Buy your car: Make the deal, get financing or pay cash, make sure all the paperwork is in order.
Buying a used car often makes more financial sense than buying a new car. However, the process can take more time and there are more risks associated with buying a used car.
This article will help you save time and minimize the risks involved in buying a used car so you have a much better chance at finding a great value.
There are three main steps to finding a great value on a used car:
Step 1: Prepare
Think about your budget
- What is your price range?
- Will you pay cash or finance?
- Do you have an additional $24.99 for a title check and $50-$100 for mechanical inspection?
- Did you budget for taxes and registration (these costs vary for each state)
- Do you have enough cash flow to cover insurance, fuel, and regular service on the vehicle?
Think about your time frame
If you want to get a used car that you like, you can afford, and you can trust, it may take some time. Give yourself time to screen the car, test drive the car, and have a mechanic inspect it properly. Buying from a dealer may go quickly because they have many acceptable used cars in one place. Buying from an individual could take longer because you may have to go through the search process several times before you find the right car.
Think about how you want to buy
There are basically two places you can buy a used car: from a dealer or from an individual owner.
- Dealers: If you buy from a dealer, you will likely pay more but you will be conducting business with a company with a track record that you can research. They have an incentive to treat you fairly because they probably want to continue doing business in your community and will want your goodwill and recommendation. Some companies like Toyota and Lexus have certified used car programs that inspect vehicles prior to sale and back up their inspection with warranties. Do not assume a dealer is offering a warranty unless you have it in writing. On the other hand, dealers sell cars every day and will likely be very skillful in the negotiation process. Most states do not have lemon laws for used cars and allow dealers to sell cars “As Is”. Several states require an implied warranty, but this is not as strong a protection as a written warranty.
- Individuals: If you buy from an individual there is the potential to get a better deal. However, you are likely buying from a complete stranger which can open you up to scams. Some people like the fact that an individual seller isn’t necessarily a professional salesperson, because it levels the negotiation playing field. However, individual sellers almost never offer any form of warranty and you have to keep in mind that they are selling the car for a reason. Buying a car from a friend or a relative may eliminate some of the trust issues and get you a better deal. However, business deals with people you know may lead to friction and animosity if something unexpected should happen to the car.
Step 2: Find your car
- Choose a model: First you need to narrow down your choices and figure out what you want and need. Talk to your friends and family. What are they driving? Do they like it? How is the mileage? How is the reliability? Do online research at sites like Edmunds. They have a ton of free data on specs, resale value, reliability, and customer satisfaction. Narrow down your search to one or two makes and models.
- Figure out its value: When you have a car (or cars) in mind, research the value of that car. Edmunds has an excellent feature called True Market Value. This will give you a great idea of what the price of a certain model is worth in your area. Kelley Blue Book is another tool that can show you the value of the car that interests you. (You may also want to purchase the latest hard copy of the Kelley Blue Book Used Car Guide to bring with you as you search and negotiate.) Both of these tools should be used as guides not as guarantees.
- Locate your car: Whether you decide to buy a car from an individual or a dealer, there are a number of places you can find your specific vehicle. Here are a few suggestions:
- CarsDirect – Many new and used car listings from local dealers. Some private listings.
- Cars.com – New and used car listings from local dealers and private sellers.
- CarMax – Large chain of used car dealerships with no haggle pricing and huge inventory.
- Craig’s List – No frills free classified ads. Be wary of scams.
Step 3: Screen your car
Now that you have a potential car in your sights, it is important not to rush into anything. You must screen the car and screen the owner to verify that the car is in good shape. All negative points, no matter how minor, should be written down, they may not rule out your purchase of the car, but they can help you get a better price.
- Do you own this car? Make sure all liens are cleared before buying a car. In some states only the owner of a car can sell it in a private transaction – check the drivers license of the seller with the name on the title.
- Do you have proof that this car recently passed required state inspections?
- How long have you owned the car?
- Who did you buy it from?
- Why are you selling the car?
- What condition is it in?
- Has it been in any accidents?
- Do you have all the service records?
- How many miles does it have?
- What was the last major repair?
- Does the air condition work?
- How old are the tires?
Inspect the car yourself
- Print out this checklist and bring it with you. Mark off each item as you inspect the car
- Look for evidence of leaks on the driveway or wherever the car is parked.
- Take a test drive – do not buy a car you can’t test drive.
Do a title check:
There are a lot of scammers out there today. You should not buy a used car from anyone – dealer or individual – without doing a title check. An AutoCheck® title check will let you know if the car has been flooded, stolen, had its odometer rolled back or been in an accident. A title check is essential to screening a used car. When you first call about a car ask for the VIN. Run an AutoCheck® report on the VIN and find out whether you can rule the car out before you waste time going to see it. An AutoCheck® may not catch every problem so an inspection and mechanical check is still essential. If the title check is clean, verify that the VIN you checked matches the car you are looking at. You can find the VIN on the driver side dashboard and inside the driver side door jam by the latch. If the VIN doesn’t match in these two locations or they don’t match the VIN you checked, you do not want this car.
Take the car to a mechanic.
Have a trusted mechanic do a mechanical check. This should cost between $50 and $100. Have the mechanic write up a report that spells out any damage they find and gives cost estimates for any repairs that may be imminent. If you don’t have a mechanic you can trust, you may want to check the Mechanic Files which is a database of mechanics put together by those guys that host Car Talk on NPR. It let’s you search by location and includes comments and ratings by Car Talk listeners.
Review the Used Car Buyers Guide
If you are buying a car from a dealer, review the Used Car Buyers Guide that is posted on the vehicle. If a person or business sells more than six cars a year then federal law requires them to post a Buyers Guide on every vehicle. This document is the final word on whether there is a warranty on the car. If “As Is” is checked on this document then there is no warranty regardless of what the dealer told you. This document supersedes anything else in the contract. If the dealer agrees to any additional terms during the course of negotiations, make sure those terms are written on the buyers guide.
Step 4: Buy your car
Make sure you know how you are going to pay for your car before you meet the seller. Individuals will probably want cash. Dealers may take a check if you plan to pay in full, but they may also help you get a loan for the car. You will get the best deal on financing if you shop around for the best loan rates ahead of time. Here are some reputable financial services firms that offer secure online applications and quick rate quotes. The trick is to get several quotes and make these companies compete for your business. The dealer may be able to get you a better deal, but that is unlikely to happen if you don’t come to the table with a good loan already in hand.
- My Auto Loan – Rate quotes from multiple lenders for consumers with fair, good, and great credit.
- Your local credit union – If you are a member of a credit union, don’t forget to check their rates too!
Making the deal
You’ve found the car you want and it’s passed all your tests. Don’t fall in love yet. It’s time to make a deal. Look at the estimated market value at Edmunds and KBB. Is the asking price in the right ballpark? Look at your notes from the owner interview and test drive. Look at the repair estimates. Use this information as the basis for your fair counter offer. If you and the seller can’t agree on a fair price it is better to walk away than overpay. It is a buyers market for used cars there are always more available.
You and the seller agree on the price now it’s time to pull out your pen and get down to business. I urge you to review the laws of your state at your state’s department of motor vehicles web page before finalizing the transaction. It is up to you to make sure the all of the proper paperwork is signed and tasks performed in the right order to complete a legal sale. This is one area where purchasing a used car from a reputable dealer will make life easier because of their experience in performing these types of transactions.
It is essential that you get a properly signed vehicle title during the transaction. This is the paper that says you own the car. Depending on your state you may also need a bill of sale or receipt. You will need these forms and paperwork to properly register the car in your name. Appropriate inspection paperwork and proof of insurance may be required by your state to complete the registration as well.
Some Final Money Saving Tips…
The Extended Auto Warranty
Whether you buy your used car from a dealer or private seller, you may want to consider an extended warranty to protect your investment. For many people an extended warranty is an excellent idea. It’s like insurance. If you think you may want to purchase an extended warranty, get a quote from a reputable third party like Endurance Vehicle Protection or Warranty Direct. Armed with this information you can protect yourself from getting overcharged by used car dealers trying to sell you one of their products.
Remember, after you own a car you are required by law to keep it properly insured. Since insurance payments are a permanent expense, you owe it to yourself to get the best deal possible. You can use the internet to get an insurance quote directly from an insurer like Liberty Mutual or you can use a site like Insure Me to instantly get up to 4 competitive insurance quotes from some of the top names in the insurance business. Enter your zip code and either site walks you through a simple multi-screen process to gather the required information. At the end, you receive accurate quotes direct from the insurance providers. You can choose to purchase one of these policies on-line or walk away with no obligation, no fee, and no guilt. This is just another quick and easy way to use the internet to shop around for the best price.