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Looking to buy a used car? You're not alone. Between private-party and dealership sales, more than 37 million used vehicles changed hands last year. With that many shoppers hunting for deals on pre-owned vehicles (and with used car sales prices climbing to near record highs), it's important to approach your big purchase armed with as much information as possible to ensure you don't get ripped off. Here we'll share some steps for how to buy a used car, how to spot signs that indicate a car's history and conditions, and tips for buying a used car from a dealer.
1. Determine how much car you can afford
2. Build a target list of used vehicles
3A. How to buy a used car from a private seller
3B. How to buy a used car from a dealer
4. Check prices
5. Check the vehicle history report
6. Contact the seller
7. Test-drive the car
8. Have the car inspected
9. Negotiate a good deal
10. Do the paperwork
1. Determine how much car you can afford
If you're taking out a loan to pay for your car, a good rule of thumb is to cap your car expenses at 10% of your take-home pay, including your car payment and other ownership costs, such as fuel and insurance. If you plan to buy a car that's out of warranty, it's also a good idea to set aside a "just-in-case" fund to cover unexpected repairs. One way to do that is to pocket any savings you made by purchasing a used car versus a new car every month — if your used purchase is $100 less than a similar new car, you'll put away $1,200 a year to keep your vehicle in top shape. The Edmunds Car Affordability Calculator can give you a great starting point if you're unsure how much to spend on a used car.
2. Build a target list of used vehicles
Vehicles like the Honda CR-V and Toyota RAV4 generally make for good used cars, partially because they're highly regarded by consumers. But that also makes them a more expensive choice compared to a similar Ford Escape or Kia Sportage, which are also both solid picks. If you're looking to save money, consider more than one brand. We suggest making a list of a few vehicles that meet your needs and fall within your budget. Edmunds reviews have great information to guide your choices.
If you're planning to buy a vehicle less than 5 years old, consider one that's certified pre-owned (CPO). CPO vehicles have long-term warranties backed by the automaker, not just the dealership selling it to you. Franchised dealerships that sell the same model new are the only ones that can sell a CPO car of the same brand. If you want a CPO Chevy Equinox, for example, you'll need to buy it from a Chevrolet dealer.
One easy place to start building your target list is the Edmunds used car inventory page. To find exactly the car you want, filter your search by any of several factors, such as price, miles on the car's odometer, features, and the dealer's distance from you. Most other websites have similar methods for finding vehicles nearest to you.
Searching for private-party sales can be a little trickier. There are the obvious sources, like Craigslist and other public marketplaces, but these sources don't always offer the same search parameters and may not be as factually accurate. Alternatively, you might get lucky and find the perfect car with a for-sale sign in the window around your neighborhood.
Where to look
There are several places to buy a used car. The prices you'll see will depend on where you are shopping. The more common places include: the used car sections of new car dealerships, independent used car lots, and used car retailers such as CarMax.
Related article: Where's the Best Place to Buy a Used Car?
Online retailers such as Carvana and websites where private-party sellers list their cars, such as Craigslist or Facebook Marketplace.
Related article: Best Used Car Websites
3A. How to buy a used car from a private seller
Buying a used car from a private seller involves a bit more work on the buyer's end than simply showing up at a dealership. Some private parties are only interested in accepting cash, for example, so if you're planning on getting a loan for your new purchase, you might have to look elsewhere. Getting a prepurchase inspection can also be a challenge, and if the seller isn't interested in facilitating that (at your expense, of course), then that could be a red flag that the car may need more work than the classified ad lets on. Finally, shopping for just the right private-party used car requires coordinating schedules with one or several sellers, while buying a pre-owned vehicle at a place like CarMax provides plenty of options at one location.
Related article: How to Close a Private Car Sale
3B. How to buy a used car from a dealer
By contrast, getting a used car from a dealer tends to be a simpler process. One retailer could potentially have dozens or hundreds of used cars to choose from, meaning if you're not quite sure what you want, you could test out a few different models to settle on your wish list. And if you're not paying cash, financing tends to be easier to find at the more reputable used car dealers out there. Then again, buying a used car from a retail location usually means paying more for the car you want since the dealer has to pay staff and keep the lights on — a private seller usually just wants to get the car's fair value, with no overhead to compensate for.
You'll also get less cash at a dealership for your trade-in versus selling your car privately, which can add another element of expense to doing the entire deal at a retail location.
Related article: How to Trade In a Car
4. Check prices
Prices are partly driven by where you're shopping. If you want to shop at a retailer, you'll find used cars in used car sections of new car dealerships, independent used car lots, and national used car retailers such as CarMax. CPO cars typically cost the most, given that they typically have fewer miles, are often in better condition and have some warranty coverage.
If you'd like to save a little money and don't mind doing some more legwork, private-party sales typically cost less than retail dealerships. Finding used cars for sale by the owner requires sifting through classified ads or hunting around social media sites, but the price can be several hundred to a couple thousand dollars less.
Whichever route you take, you may notice that prices are higher than the last time you bought a new car. Unfortunately, prices for both new and used vehicles are expected to remain high for the foreseeable future. If you're considering purchasing a vehicle, now is probably the best time.
To see what other people are paying for your preferred model, look at the Edmunds Suggested Price on each vehicle's inventory page. However, this figure only accounts for retail sales.
5. Check the vehicle history report
Even if you're buying from a close friend or family member who can vouch for its history, get a vehicle history report on any vehicle you're considering. This early step is essential. AutoCheck and Carfax are the best-known sources for vehicle history reports. These reports can reveal vital information about the car, including whether the odometer has been rolled back or if it has a salvage title, which means it has been declared a total loss by an insurance company. Most major dealers offer these reports for free if they have the vehicle in their inventory.
If the retailer doesn't have a report on hand or if you're searching for a private-party vehicle, you'll use the car's vehicle identification number (VIN) or license plate number to get this information. If you're shopping for multiple vehicles, some websites offer package discounts, meaning you get up to four reports (Carfax) or five reports (AutoCheck) for a discounted rate versus buying them one at a time.
Related articles:
AutoCheck vs. Carfax: Which vehicle history report is best for you?
What Is a Salvage Title Vehicle and Are They Worth Buying?
VIN Lookup: How to Perform a VIN Check
6. Contact the seller
Once you find a prospective car, don't run out to see it. Call the selling dealer first. This is to establish a relationship with the seller and verify information about the car. If you're buying from a dealer, a phone call or text is the best way to ensure the car is still in stock, and you can also ask to see an emailed copy of the vehicle history report before you spend your precious time inspecting the car in person. Sometimes the seller will mention something that wasn't in the ad that might change your decision to buy the car.
The same rules apply if you've found a vehicle for sale by owner. Reach out via email, direct message, or phone to verify the condition of the car and ask a little about its history, including why the seller listed it. You can also ask if the seller has already run a vehicle history report and if there are any service records available to confirm its condition.
If you want to go deeper, our used car questionnaire is a good reminder of what to ask. You will notice that the last question on our list is the asking price of the car. Although many are tempted to negotiate even before laying eyes on the car, it's better to wait. Once you see it, you can tie your offer to its condition. Negotiating in advance can also make a poor first impression and leave the seller less likely to consider your offer.
If things are going well, set up an appointment to test-drive the car. Try to do it in daylight hours so it's easier to see the car's true condition, and ask the seller not to start or move the car before you arrive. That way, you can inspect if there are any cold-start issues such as exhaust smoke or sluggish starting.
7. Test-drive the car
Test-driving a used car is the best way to know if it's the right one for you. It's also a good way to assess a particular car's condition. So tune out distractions like a chatty salesperson and focus on the car. Here are some things to check:
- Is it easy to get in and out of the car without stooping or banging your head?
- Is there enough headroom, hiproom and legroom? Remember to check the space in the back seat too.
- Is the driving position comfortable? Do you sit too low, too high or just right in the car? Can you tilt or telescope the steering wheel for a better fit?
- Are the seats comfortable? Are they easily adjustable? Is there a lumbar support adjustment for the driver? How about for the front passenger?
- Is the check engine light on? If so, get that problem inspected before buying.
- How is the visibility? Check the rearview mirror and the side mirrors. Look for potential blind spots.
- Use your nose. Do you smell gas, burning oil or cigarette smoke?
- Check out the tires. How old are they? Is there enough tread left?
- How are the brakes? Are they doing the job of stopping the car? Do they squeak?
- Pop the hood. You don't need to be a car expert to see if something looks wrong. Check around the engine area and inspect lines, hoses and clamps. Wiggle hoses to check the integrity of the rubber. Dried or cracking hoses will need to be replaced, so factor that into your discussions on price. If something is leaking, steaming or covered in oil, it's time to ask questions.
- Does the air conditioning blow cold and the heater blow warm? Do headlights, brake lights and turn indicators work? Test them to be sure.
After the test drive, ask the owner or dealer if you can see the service records. These will show you if the car has had maintenance performed on time or at regular intervals. Don't be surprised if a private-party seller doesn't have them (or claims not to), and factor that into your negotiation as well.
8. Have the car inspected
If you like the car, consider having a mechanic inspect it before you buy it. If you have a mechanic you know and like, try to arrange to take the car to their shop. In some cases, a mechanic may even accompany you to look at the car (just know that the mechanic probably can't do as comprehensive an inspection as at their shop, with their tools, car lift and lighting). A prepurchase inspection costs $100-$200 and can alert you to problems you may not find yourself. It's a smart investment if you're serious about a car.
A private-party seller will usually let you have the car inspected without much resistance if you're closing in on a deal. But not every seller is comfortable handing the keys to a stranger. One possible compromise is to have the seller meet you at the mechanic of your choice. If the person balks, it could be a sign of deeper mechanical issues, or perhaps the seller can't be bothered. A pre-purchase inspection typically only takes about an hour or less.
Most dealerships will let you borrow a car for an outside mechanic to inspect. You'll be paying for the inspection, of course. If it is a CPO car, there's already been an inspection and the car has a warranty, so there is less of a reason to take it to an independent mechanic.
Related article: Inspect That Used Car Before Buying
9. Negotiate a good deal
Does the idea of "talking numbers" fill you with dread? It shouldn't. Negotiating doesn't have to be a drawn-out, traumatic experience. If you are reasonable and have a plan, chances are you can make a deal pretty quickly and easily. Decide ahead of time how much you're willing to spend to get the car. But don't start the discussion with this number.
Make an opening offer that is lower than your maximum price but in the ballpark based on your research of average prices paid for the car. Explain that you've done your research on Edmunds or wherever else, so you have facts to support your offer.
If you and the seller arrive at a price that sounds good and it's near the average price paid, you're probably in good shape.
And remember, the people on the other side probably dislike negotiating too — even if it's their job.
Related article: How to Negotiate Car Prices
10. Do the paperwork
If you're at a dealership, you'll sign the contract in the finance and insurance office. You'll likely be offered additional items such as a warranty (for a non-CPO car), anti-theft devices, prepaid service plans, or protective spray coatings for the underbody or interior upholstery.
Some people want the peace of mind of an extended warranty, so this is something you might consider unless the car is still under the manufacturer's warranty or is a CPO vehicle. Review the dealership sales contract thoroughly. In most states, it lists the cost of the vehicle, a documentation fee, possibly a small charge for a smog certificate, sales tax and license fees.
If you're buying a car from an individual owner, make sure the seller properly transfers the title and registration to you. It's important to close the deal correctly to avoid after-sales hassles. Before money changes hands, ask for the title (sometimes called the pink slip) and have the seller sign it over to you. If the seller has a loan or any other financial liability, there may be a lien on the title. In that case, you'll have to work out the final sale with the lienholder, who won't release their interest in the car until it's been paid off. Sometimes, you can work this out at the seller's bank, or the bank can handle all of the paperwork and mail the title directly to you.
Rules governing vehicle registration and licensing vary by state. If possible, check with your department of motor vehicles to ensure there are no past-due registration fees you might be responsible for. Whether you buy from a dealer or a private party, make sure you have insurance for the car before you drive it away.
Once you've done the paperwork, it's time to celebrate your new purchase — maybe with a drive-through dinner. You deserve it!
See our list of the Best Used Cars and save some serious cash without compromising on features or performance.
FAQs
What used cars not to buy?
You should avoid buying a vehicle with a salvage title, mileage over 200,000, inconsistencies on the odometer, and no maintenance records. A vehicle history report can help you spot many of these issues. You should also do some research on which models may have reliability issues.
How many miles does a good used car have?
For a used car, the fewer the miles, the better. A good rule of thumb is 12,000 miles per year. That said, a low-mileage vehicle doesn't automatically mean it's a good used car. A car with 70,000 miles and a regular maintenance history can be better than a 30,000-mile car with no recorded maintenance history.
How long does it take to buy a used car from a dealership?
Buying a used car at a dealership takes roughly the same amount of time as buying a new car. If you come prepared by knowing the car you want to buy, its estimated value for negotiation purposes, and financing preapproval from your bank, you could finish the purchase process in about two hours. Of course, purchasing a used car from a retailer could present some pitfalls, like if its real-life condition is rougher than what you expected from the online listing or if you need to secure financing from the dealership itself. Trading in your previous car can also be a little more complicated if you're buying used. If any of those complications apply to your situation, plan on at least three or four hours at the dealer before you drive off in your new-to-you ride.
Why should I avoid a salvage title?
A salvage, reconditioned or reconstructed title indicates that the car has been declared a total loss by an insurance company following a car accident, flood or fire — then rebuilt so that it's operational again. The quality of this work varies, so while it's possible that many mechanics can achieve nearly new condition, still others may cut corners in the repair work. Furthermore, getting a loan on a salvage vehicle is almost impossible, and some insurance companies will only offer liability coverage on such a car, meaning you don't get paid out if it's stolen or involved in a crash that was your fault.
Read "What Is a Salvage Title Vehicle and Are They Worth Buying?" for more information.
Is it better to buy a used car from a dealership?
A dealership provides several advantages over buying from a private seller. There's often been some reconditioning on the vehicle (detailing, upholstery cleaning or patching, infotainment software updates) and you also have access to auto loans and a chain of command if anything goes wrong with the deal. On the other hand, buying from a private seller can give you greater insight into how the vehicle was maintained, and it may be easier to negotiate a lower price.