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How to Buy a Used Car

Buying a Car

A Used Car Buying Checklist

The high cost of a new car, truck or SUV is driving lots of consumers to look at the used car market these days. But shopping for a used model can be a far more complex process than buying a new one.

Carfax’s Used Car Listings Come With a Free Carfax Report

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.

1. Figure Out How Much You Can Afford to Pay

As with shopping for a new vehicle, the first step in the process is to determine 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.

Learn How to Get the Most Money for Your Trade-in.

A good rule of thumb is to spend 10-15% of your take-home income on car-related expenses. That means if you take home $3,000, you’ll have $450 a month 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 especially long loan term with high interest, just to hit your monthly payment target.

Use our monthly car payment calculator, and figure out how much car can you afford.

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 prime credit scores generally get the most favorable rates.

Learn more about How to Finance a Car, How Your Credit Affects Your Car Loan, and Used Car Leasing.

2. Research Which Used Car Is Best for You

You’ll need to find out which vehicles meet both 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.

Research Used Cars and learn more about New vs. Used Cars.

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.

See Carfax Used Car Listings and learn How to Buy a Car Online. Shopping is even easier with the Carfax App.

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.

How to determine the best place to buy your used car.

Consider a Certified Pre-Owned (CPO) Car

Late-model cars and off-lease vehicles in top shape are often sold as certified pre-owned vehicles. They’re typically priced higher than non-certified models, but they’ve passed a stringent mechanical inspection, have been repaired or refreshed as needed and most are sold with some level of warranty coverage.

Learn more about Certified Pre-Owned Vehicles.

4. Check the Carfax Report

Perhaps the most important benefit of Carfax’s Used Car Listings: 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, 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 taking into consideration 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 either the car’s vehicle identification number 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, as well as 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 is what you can expect to pay 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 that’s included with each Carfax.com listing to determine what your monthly payment would be for that particular model, given the asking price, your down payment and the interest rate you’ve been quoted.

Find out the value of a car with Carfax History-Based Value.

6. Contact the Seller

Once you’ve isolated one or more used car listings on Carfax.com or elsewhere, contact the dealer to assure 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 giving it a 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 car on a variety of roads at different speeds to check the acceleration, braking and cornering. Test out all of the features inside the car to make sure 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 have it checked 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

Unless you’re buying a used car from a dealership that doesn’t allow haggling, never pay the asking price. 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’s salesperson will typically negotiate downward from the model’s advertised price. Likewise, private sellers will usually advertise a used car at a higher price than they’re ultimately willing to accept. It doesn’t hurt to ask for the dealership or seller’s best price and work from there. At any rate, be sure to let the other party know you’ve researched the vehicle’s value ahead of time.

Learn the Best Time to Buy a Car.

Start Low

Begin the negotiating process by making an offer that’s 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 not being able to come close to what you’re asking. With a little prodding, they will reduce the asking price by a certain amount, and unless you consider that to be 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 yet 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 someone, called 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, be sure to 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.

Learn more about Car Titles and Buying a Car With an Outstanding Loan.

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.

Learn How to Register a Car and How to Buy a Car Out of State.

Next Steps

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