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How to Buy a Used Car: A Checklist

A Used Car Buying Guide

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.

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.

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.

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.

6. Contact the Seller

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.

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.

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.

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.

(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

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If you have questions about this story, please contact us at Editors@carfax.com