How to buy a used car

September 7, 2022
September 7, 2022

How to buy a used car

by Aivaras Grigelevičius

The used car market is filled with vehicles waiting for new owners. Yet buying a used car is not only exciting – it can also be quite challenging! After all, not all second-hand vehicles are what they appear to be at first sight.

To make the process simpler, follow these tips – they will help save you money and find a machine that will last.

Table of contents:

How to buy a used car from a private seller or dealer

Step 1: Set a budget

Establishing a budget for your next car is crucial before you start exploring the market.

While most vehicle buyers tend to define a specific price they’re willing to pay for a vehicle, one of the main car buying tips is to consider the running costs, repair costs, and other expenses.

Firstly, try to include costs such as engine oil changes and repairs for minor or major defects. In other words, if you have a budget of $10,000, you should search for a vehicle whose price is between $8000 and $9000.

Additionally, consider fuel consumption. Never rely on the manufacturer’s claimed figures, as they’re never accurate. A study by Emissions Analytics suggests that the difference between the official fuel economy figures and their real-world results is about 24%.

Another thing you need to consider before buying a specific used car is the insurance costs. An insurance company will evaluate your car’s engine power, age, model, safety features, alarm system, and whether the car has been in an accident. Consult with an expert or check an online insurance calculator to learn which car would bring you better policy conditions.

Depending on where you live, you may also need to pay an ecotax. It usually depends on the vehicle’s fuel type, C02 emissions, engine power, car weight, etc. Calculate this before choosing the car you’ll buy.

Step 2: Choose a car financing option

There are two ways to buy a new or used car: paying the total amount upfront or getting approved for a loan (usually, either an auto loan or a consumer loan). 

Whatever financing option you choose, keep in mind there’s no right or wrong choice because each case is different.

Pros of buying a used car by CASH (or wire transfer):

  • You don’t owe money to financial institutions
  • You can sell the used car whenever you want
  • You don’t have monthly payments
  • The price is lower in the long term

Cons of buying a used car by CASH (or wire transfer):

  • You decrease your savings for unforeseen events
  • Your buying options are more limited

You should consider auto loans if you’re searching for a more convenient way to buy a used car. This option is preferable when you’re planning to buy a car from a dealership or an independent lot. However, financing used vehicles can be risky.

Always look for the lowest interest rate available, and make sure you read and comprehend all the terms and conditions of any deal you get into.

Furthermore, when acquiring financing for a used automobile, always look around because interest rates might change. If better financing is available elsewhere, it can even be worth purchasing another vehicle.

Pros of financing a used car:

  • You can buy a newer, more modern, and more expensive car
  • You can leave your savings alone
  • Car finance can be tax deductible

Cons of financing a used car:

  • More expensive in the long run
  • You may have to be committed to a specific car for a particular period
  • You have to pay a monthly fee
  • The more extended the financing period, the more a car depreciates
  • Car prices at dealerships are higher

Step 3: Set your vehicle priorities straight

A luxury Lexus SUV or a sporty Volkswagen Golf GTI may look cool, but take a moment to switch off your emotions and think about what you actually need from a car.

How to determine what kind of car you need

What’s your average yearly mileage? Do you really need a 4-wheel drive? Do you need space for more than 4 passengers? List every requirement and narrow it down to a vehicle that meets your criteria. Furthermore, consider the data found in car reliability reports. They could help determine which make and model to choose. 

One of the most challenging things is choosing the right powertrain. Depending on your choice, your new vehicle will make you happy or become an annoyance.

What are the pros and cons of choosing a petrol car?

Petrol-powered cars are known for their smoothness and versatility. They’re probably the least risky when buying a used car.

Pros

  • Runs smoother than diesel
  • Satisfactory maintenance cost
  • Cheaper
  • Usually more reliable

Cons

  • Not economical in the city at low speeds
  • Requires more frequent maintenance
  • Will be phased out in the future

What are the pros and cons of choosing a diesel car?

Very efficient, but also the least eco-friendly way to move around. The latest diesel engines may have acceptable pollution levels, but particulate filters and catalytic converters can be expensive to repair and replace. 

Pros

  • Very fuel-efficient
  • Can tow heavy trailers without much hassle

Cons

  • More expensive to maintain
  • Produces particles that are harmful to people’s health
  • Noisier
  • Will be phased out in the future

What are the Pros and Cons of Choosing a Hybrid car?

While there are several different types of hybrid (usually combining petrol and electric powertrains) cars, most of them have at least one thing in common – fuel efficiency.

Pros

  • Very fuel efficient
  • Depending on the type of hybrid, you may be able to drive it without petrol for a while
  • Favored by reliable car makers – Toyota and Lexus

Cons

  • Some hybrid powertrains can be complicated and hard to maintain
  • Will be phased out in the future

What are the pros and cons of choosing an electric car?

The automotive industry is slowly shifting to electric-powered vehicles. While the adoption of electric cars is gaining speed, there are a few issues that may not be acceptable to some drivers.

Pros

  • Extremely quiet
  • Offers low maintenance costs
  • Straightforward to drive

Cons

  • Infrastructure significantly depends on your location
  • More expensive to buy
  • Charging can become expensive

Step 4: Find a used car within your budget

Once you’ve narrowed down your choices and figured out roughly how much you’ll need to spend, it’s time to embrace your wishes.

If you’re willing to spend a certain amount on a car and know that a higher amount might make you tighten your belt, keep calm and stick to your initial plan.

Don’t buy the first car you like. Just keep an eye on what’s happening in the used car market until there’s a model that suits your needs and budget.

However, if you can’t find anything you like for your budget, you may drop 1 or 2 criteria to broaden your shopping list. For example, if you’re looking for a Lexus, maybe you should consider a higher-end Toyota or give up certain features like the sunroof, navigation system, or bigger-sized wheels.

Step 5: Contact sellers

When you find a potential vehicle, don’t rush out to see it. First, contact the seller.

This step is an excellent way to confirm the vehicle’s specifications, ask why the car is for sale, discuss any mechanical issues it has, and find out the vehicle’s accident history – accident damage significantly devalues a car. Also, you can request a vehicle identification number.

More experienced sellers will say something that would intrigue you to see or even buy a car outright during a call. However, there’s a chance that you’ll hear information that wasn’t in the ad, and that might change your mind.

Finally, never ask what the final price is. See a car for yourself and present yourself as a serious buyer.

Step 6: Get a vehicle history report

You found a car you like, you called the seller, heard everything you want, and even more. However, while you’re thinking about a test drive, take advantage of our VIN lookup tool and our VIN Decoder.

Vehicle history reports provide valuable and detailed information about how a vehicle has been used over the years. Also, it allows you to compare advertised information and identify cars that may have false mileage or may have been stolen.

Every piece of information strengthens your position in negotiation.

Step 7: Test drive and examine the car

This is the most exciting part of the vehicle buying process – sitting behind the wheel of the model you’ve researched so thoroughly. 

A test drive is a must when buying a used vehicle because it lets you feel accustomed to the features and allows you to determine whether the vehicle’s characteristics meet your needs.

Also, when you test drive a used car, consider the following: 

  • Arrange the test drive during daytime. It will help you to inspect the vehicle’s bodywork.
  • Listen for suspicious sounds coming from the engine.
  • Ensure the check engine light goes out as soon as the engine starts.
  • Ensure the clutch and steering wheel work properly. Try them out in as many ways as you can imagine.
  • Ensure the vehicle’s ride is straight and the car runs without veering to one side or another.
  • Drive both around the city and on the highway.
  • Find a safe place and try sudden braking. This will serve as a great test of the braking system. 
  • Find a hill to test the handbrake.
  • Test the car on different road surfaces. Occasional uneven surfaces can help reveal faults in suspension components.

Step 8: Negotiate the price

Not all people are born with the gift of negotiation. However, you should remember that the art of bargaining will help you save money.

If you choose to purchase a used car from a dealership, make the dealers compete with one another. Find a couple of comparable offers if you can and try to get the best deal.

Also, don’t purchase a car spontaneously. You’ll improve your position by turning down the initial offer.

Additionally, even a tiny flaw strengthens your position. Be kind but aggressive. Check a car thoroughly. You may even use the slightest scratch as justification for a discount.

This is another reason to get a car history report – any unmentioned accidents or other flaws can become a great bargaining chip.

Step 9: Do the paperwork

Compiling all required documentation is the last stage in purchasing a second-hand vehicle.

Car Title

The car title is the most crucial document when purchasing a vehicle.

The car’s brand, model, year, and vehicle identification number are all listed on the title, which serves as legal proof of ownership.

Bill of Sale

Some states require the seller to present a bill of sale to the buyer. A bill of sale typically includes information like a car’s VIN, the detailed description of a vehicle, the date of sale, and the purchase price. It should be signed by both parties when the car is sold.

Unlike the title transfer, a bill of sale doesn’t legally transfer vehicle ownership. Instead, it outlines the conditions of the sale and serves as a receipt for the buyer and a waiver of liability for the seller. Even if a bill of sale is not required in your state, it’s wise to fill one.

Proof of Sale

After purchasing your car successfully, there’s one more form that you should fill. Some states demand that you notify the DMV about a car purchase within a certain amount of time.

For instance, in California, vehicle sellers have 5 days to finish a Notice of Transfer and Release of Liability form.

Trading in or selling your car

Choosing whether to sell your present vehicle or trade it in might be challenging.

Even though vehicle trading might not earn as much money, many customers prefer the ease of trading in their current car at the dealership.

Some people decide to put in the effort, find the right buyer, and negotiate a higher price. Here are some recommendations to aid with your decision-making.

Trading in

It’s an easy way to dispose of your current car. Just turn it over to a dealership.

  • You won’t make as much money as selling a car.
  • You can use the trade-in amount as the down payment on a new car.
  • You’ll probably need to bargain over the trade-in value with a salesperson to obtain the best deal.
  • There’s a tax benefit. Most states only levy sales tax on the difference between the trade-in value and the cost of a new vehicle.

Selling it yourself

This requires a lot of work, including posting ads, interacting with people, and doing test drives.

  • It will likely be a lot more time-consuming and complicated compared to trading in.
  • You’ll have to negotiate with buyers – something most people aren’t skilled at it.
  • Even though you would have to pay a higher sales tax on a new vehicle, you can still be in the black if you sell your old vehicle for more money.

Things to consider when buying a used car from a private seller

The cheaper cost when purchasing a car from a private seller is the key advantage. If your budget is your top concern and you have some cash on hand, it’s almost always the wisest course of action.

Advantages of buying a used car from a private seller

  • There won’t be any additional charges that aren’t disclosed when you purchase a car from a private seller.
  • Private sellers will be motivated to sell their car as quickly as possible, giving you more room for negotiation.

Disadvantages of buying a car from a private seller

  • You cannot receive a warranty from a private seller.
  • Once you sign the title and provide the money to a private seller, you’re legally bound.
  • You assume all responsibility for repairs when you purchase a second-hand vehicle from a private party seller.
  • Only a handful of states allow used vehicles to be covered by lemon laws, and most don’t extend them to private sellers.

Things to consider when buying a used car from a dealer

There are several advantages to purchasing a used vehicle from a dealership: 

  • Instead of looking online for used car ads from private sellers, it’s simpler to browse a variety of vehicles on a dealer’s lot.
  • Finding something that satisfies both your demands and budget may be easier.
  • Dealers are also more likely to check a vehicle thoroughly.
  • Federal Trade Commission guidelines, as well as state and municipal laws, apply to them.

Dealerships offer certified pre-owned vehicles

Certified pre-owned vehicles probably are the safest way to buy a used car.

These pre-owned vehicles have had a comprehensive inspection, fixed any maintenance concerns, and are in good aesthetic condition with no missing trim, battered fenders, or shredded interiors.

  • Certified vehicles are offered through dealers rather than by private parties.
  • Dealers must show the pre-owned vehicle inspection report, describing all the areas examined and any model-specific recalls.

FAQ

Is it ever a good idea to buy a used car?

Yes. A used vehicle allows you to buy a modern car at a fraction of the cost of a new one. Also, it will allow you to avoid costly depreciation and spend less on insurance. 

What’s the best age for a used car?

The best-used vehicle age is 3 to 5 years. These vehicles have already lost much of their value without losing much quality. 

How much mileage is good on a used car?

The United States Department of Transportation Federal Highway Administration has said that the average annual mileage of a vehicle is 14,263 miles. It means the average vehicle mileage should be around 70,000 miles after 5 years. 

Is it OK to buy a 10-year-old car?

Yes, of course. However, before you buy a 10-year-old car, inspect it thoroughly and then decide if it’s worth the price. 

Does age or mileage matter more?

Neither. The most important thing is how the last owner has maintained it. If they serviced the vehicle regularly, you shouldn’t be worried if a car is 10 years old or if it has 100,000 miles on the odometer. 

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