A step-by-step guide to buying a used car

Laveta Brigham

A used car can be a great way to get a vehicle that fits your budget and your lifestyle. If shopping for new cars has given you sticker shock, it doesn’t mean you’re stuck with your current vehicle. Whether your current car is worn out, or you just want a […]

A used car can be a great way to get a vehicle that fits your budget and your lifestyle. If shopping for new cars has given you sticker shock, it doesn’t mean you’re stuck with your current vehicle. Whether your current car is worn out, or you just want a new set of wheels, a used car can be an affordable way to make an upgrade.

If you’re shopping for a used car, truck, or SUV, here’s what you need to know about how to buy a used car.

Before you even shop around for your next ride, you need to determine a budget. If you window shop first, you may find the perfect car that you can’t live without is not within your means.t. If you set your budget first, you can start your car shopping journey with reasonable expectations and avoid a car payment that you can’t afford.

Paying for your next car with cash is a good strategy when shopping for a used car. It’s a lot easier to save up $10,000 for a used Honda

  Accord compared with a new one that costs triple that amount. Sure, you won’t get all of the bells and whistles that come with the new model, but you’ll be saving so much cash that it probably won’t bother you.

That said, you certainly don’t need to pay for your used car with cash. If you want to take out a loan, you can get a used car paid off in less time with a lower monthly payment compared with a new car. The downside is that automakers don’t really run incentives on used cars, so you won’t be able to find 0% financing like you might be able to on a new car. Also, keep in mind that interest rates on used car loans are generally higher than those for a new car. Despite that, going with used instead of new is still a significant discount.

As for what a good monthly payment would be, that depends on your budget. A good rule of thumb is to spend no more than about 15% of your monthly take-home pay on transportation. By that, we mean your car payment, gas, insurance, maintenance, and any other expenses associated with your car ownership. If you’re shopping for a used car, you might be surprised by how nice of a car you can get while keeping your monthly car expenses within that range.

Get the trade-in value for your current car

If you’re planning on trading in your current car, this value works as a down payment on your new wheels. However, if you buy your used car from a private seller, then trade isn’t really an option. Regardless, you can get an Instant Cash Offer through our friends at Kelley Blue Book. All you need to get started is your VIN or your license plate number.

If you use the Instant Cash Offer tool, you can get an idea of what to expect for your trade-in value even if you don’t go through with the cash offer. Equipped with this number, you can factor it into your down payment when you’re doing the math on how much car you can afford.

Get preapproved for financing (if applicable)

If you do decide to take out a loan for your used car, you’ll want to get preapproved once you’ve determined the amount you’re going to borrow. To find that figure, you can use a car payment calculator or an affordability calculator as a guide.

Getting preapproved early on in the car shopping process has many advantages. It gives you an idea of how much car you can afford, what your monthly payment might look like, and how long it will take to pay it off. Getting preapproved won’t hurt your credit score, which is a good thing since you’ll want a strong number to get the best interest rate.

You don’t even need to visit a dealership or a bank to get preapproved. The whole process can be done right from your desk or your couch. 

Find the right car

Now that you’ve figured out your budget and have prequalified for a loan, it’s time to get into the nitty-gritty of researching which car is right for you. If there’s already a specific make and model that you have your heart set on, then you can research which trim levels, options, colors and wheel designs you like.

Be sure to read: What you should know about buying a used rental car

If you nothing strikes your fancy, start by thinking of the basics. Is this car just for you or will you be hauling passengers regularly? Do you need a lot of cargo space? Do you need or want an SUV or minivan? Would all-wheel-drive be beneficial in your climate? Asking yourself questions like these can help you narrow down which class of car is right for you. From there, you can research popular models by reading reviews, lists, and comparisons to refine your search.

Consider certified preowned

If you don’t want to pay full price for a new car, but you like the idea of a manufacturer’s warranty, then you should consider shopping certified preowned (CPO). Buying CPO compared with a noncertified used car has a lot of advantages. For starters, there’s the aforementioned manufacturer’s warranty (the length of which depends on the manufacturer) giving you extra peace of mind.

Another perk is the fact that the car has gone through a thorough inspection before the sale and you can be sure you’re getting a car in great condition with any important service items already addressed. A CPO car is generally a little more expensive than a noncertified used car, but the benefits usually outweigh the extra cost.

See: The pros and cons of buying a certified used car

Each automaker has its own CPO program with its own set of criteria and coverage. Use a tool to compare certified preowned programs and find the one that works best for you.

Search your local area

. You’ve figured out financing, done your homework to narrow down your search, compared CPO programs, and you’re finally ready to search for the car that checks all of your boxes. You can search by make and model, of course, but you can also narrow it down by certain trims, features, colors, and price ranges. Tailoring the search means you won’t spend hours combing through listings trying to find the perfect car. The more specifically you can narrow it down, the better your chances of finding a car you love.

Look at the vehicle history report

Many used cars offered by dealerships come with a free AutoCheck or Carfax vehicle history report. These reports show you important details about the car’s past like how many owners it’s had, where it’s been registered, service history, whether there are any open recalls, and perhaps most important, whether it’s ever been in an accident. If you notice an accident on a vehicle history report, you should definitely ask the selling dealership if they know anything about it. It’s possible that it was simply a fender bender that was professionally repaired, but it could be something more serious that would make you want to avoid the car.

Contact the seller

If you’re looking at buying from a dealership, it’s easy to contact them to set up a time to come look at the car. If you’re buying from a private party, it’s a bit of a mixed bag in terms of how easy it will be to reach the seller. Some are better at communicating than others. Others might be evasive. Still, there are plenty of good private sellers who are transparent, take great care of their cars, and will give you a good car-buying experience.

Take a test drive

The test drive is critical to the buying decision. You can get a lot of information about a car online, but there’s no replacement for seeing it in person, sitting in it, and taking it for a spin. Make sure you drive it both around town and on the highway to get a feel for both driving experiences. Play with all of the infotainment controls (while parked), push every button, open every cubby, and gather as much information about the car as you can in a short period. If you have a family, bring everyone along and load up the car seats to see how well everyone fits.

Read: How to test drive a used car

You might test drive a car that checks all your boxes, but find that you just don’t like how it drives. On the flip side, you could drive a car you were on the fence about and like it more than you expected. If you’re at a dealership, don’t be afraid to test drive many different models and trims. It will build confidence that you’re making the right choice.

Get a pre-purchase inspection

Unless you’re buying a CPO car that has already gone through an inspection, it’s a good idea to get a pre-purchase inspection (PPI) on a used car. This is an especially good idea if you’re buying from a private seller. As a general rule, the PPI is paid for by the buyer and it’s worth every penny. You can buy a car on the condition of the results of a PPI. If something nasty comes up as a result of the PPI, then it can save you the expense of fixing a major problem.

See: These are your best bets for used hybrids under $10k

Paying for a PPI and getting it scheduled might be a bit of a pain, but trust us, you’ll be glad you did it.

Close the deal

By the time you get to this step, you can buy your used car, truck, SUV, or van with confidence. Car buying can be an intimidating process, but if you do your homework and walk through the steps we’ve outlined above, then you’ll be sure you’re getting a good deal on a used car that’s right for you.

Read next:5 important facts about car insurance no one ever tells you

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