18 Tips for Buying Used Cars: The Complete Guide

Buying a used car is a chance for you to bag a bargain and save money in the process, but...

Buying a used car is a chance for you to bag a bargain and save money in the process, but making an informed decision is not possible without doing your homework first. The guide below includes a comprehensive list of things to do when embarking on your used car-buying journey.

Plan Your Budget

Figuring out how much you are willing to spend on a used car is the first thing you need to do, and for good reason. First of all, buying a used car opens the door to other expenses such as licensing fees, insurance, and taxes. As a rule of thumb, you should not spend more than 20 percent of your salary on a used car, especially if you have other financial responsibilities and bills to pay. You also need to decide between taking out a loan to pay for the car or paying in cash. Some people go for the first option in order to purchase a more luxurious model, others take out a loan so they won’t have to dig into their savings. Keep in mind that a used car is probably going to require maintenance and a change of tires, unlike a brand new vehicle, so be prepared to set some money aside for any hidden costs you may encounter down the road.

buying a used car

Do Your Research

It is always a good idea to do your research before making any purchase, and buying a used car is no exception. Dedicate part of your research to finding the cheapest cars on the market and drawing comparisons between them. For example, cars with small engines are fuel efficient and some of them are even cheaper to ensure such as the Nissan Micra. On the other hand, sports cars such as the Audi R8 Spyder are expensive and cost a fortune in terms of insurance. When doing your research, come up with a list of three or four cars that meet your criteria in terms of budget, maintenance costs and anything else that comes to mind.

Figure Out What You Want

Do you want a family friendly car or something more sleek and sporty? This question is just the tip of the iceberg when it comes to buying a used car, so you need to sit down and compile a detailed list to use during your car hunt. Perhaps you need a spacious boot for your belongings, or maybe your goal is to own a hybrid car if you happen to be eco-conscious.  Narrowing down your options and painting a clearer picture of your dream car will surely stop you from having buyer’s remorse in the near future.

Pay Attention to Pricing Guides

Take advantage of online pricing guides and use them to calculate the market value of your prospective car. Arming yourself with knowledge about the model will help you negotiate the right price when the time comes. In addition to the price, the guide must include other features like the engine type, trim level, navigation system and whether the vehicle is a four-wheel drive or not. Keep an eye out for mileage since the average annual mileage on a car is around 12000 miles. The price of any used car varies according to this number. Moreover, check for additional features such as leather seats, backup cameras and forward collision warnings since their presence also directly affects the price.

Dealerships vs. Private Sellers

In terms of variety, dealerships have a wide selection of used cars that are usually in mint condition, making them more expensive in comparison to cars sold by private sellers. Dealerships also have certified pre-owned cars that were inspected and given a factory-backed limited warranty, and can provide you with a vehicle history report. This report gives you the full picture in terms of accidents and insurance history as well as registration records. Private sellers, on the other hand, may be cheaper, but there is no telling what you might find under the hood. The risk of getting scammed goes up when you deal with a private seller, unlike dealerships who cannot afford to be dishonest thanks to industry rules and  regulations.

Online Shopping

Nowadays, it’s possible to buy everything online and cars are no exception. Websites such as eBay Motors sells cars via online auctions and you can even filter your car search by location. CarMax also has an extensive catalog and their listed cars undergo rigorous inspection. Other websites such as Craigslist also have used cars that are sold by private sellers, but you need to be careful about who you choose to contact. The pros of online car shopping include lower prices and the ability to shop in the comfort of your own home. Some websites also offer car loan applications that allow you to calculate potential loan-amount scenarios.  The downside of online shopping, however,  is that it does not offer any purchase protection, so you need to be wary of scams and dishonest sellers.

When to Buy a Used Car

Timing is everything, so make sure you take a look at your calendar before attempting to buy a used car. Why? Because dealerships are more eager to negotiate and offer you attractive packages at the end of March, June, September, and December. The last week of December to be exact is the best time to buy yourself a Christmas present in the shape of a car. If your goal is to buy a used convertible, then winter is the perfect opportunity to haggle for a deal on one. Another great time to buy a used car is when your city is hosting a motor show. During motor show season, you may witness a lot of people purchasing new cars in your area. This, in turn,  will flood the market with used vehicles.

Checklists Go a Long Way

If you happen to find a car that ticks all the boxes in terms of model and features, then the next logical step would be to examine it using a checklist. The list will remind you to inspect everything, from the engine to the tires. Look at the overall condition of the vehicle, and keep an eye out for cars that were involved in damaging accidents or collisions. These cars are sometimes hard to ensure and being categorized as such will definitely affect their resale value. Other things to look out for include shattered glass fragments under the seats and dark transmission fluid. Car inspection checklists are available to download online for free and are a practical and inexpensive tool that you can use before hiring a professional for a more thorough inspection.

woman driving a used car

Hire a Technician

Cars that were fixed after an accident can are not always easy to detect and this is when a professional technician will come in handy. Fortunately, there are bespoke garages that specialize in these types of inspections, so you can hire one of their technicians to inspect the used car. A good technician with a keen eye for detail will catch any paint overspray or creases in the unibody and will also uncover any clocking or cloning scams. Clocking is used to hide the true mileage of the vehicle in order to sell it for a higher price, while cloning is done by simply using the same number plate as another car to get you to pay for its speeding fines and parking tickets. You can easily avoid buying a cloned car by making sure that the number plate matches the vehicle identification number. Number plates must also have their supplier name printed on them in small letters.

Get Your Hands on a History Report

The vehicle history report will provide you with vital information that will either encourage or discourage you from buying the car in question. The report will give you an insight into many things, including the car’s previous owners and its inspection and registration history. If the car changed hands more than once and during a short period of time, then this is definitely not a good sign and can only mean that a challenging repair issue was the culprit. A missing emissions record makes the car a liability since it is considered illegal to sell a car without a valid emissions record. A dark history of failed emissions is also undesirable, so make sure you bring up this issue with the dealer. Last but not least, the report should also disclose the type of environment where the car was driven. For instance, was it once a victim of a snowstorm, or did its previous owners frequently use it to tow their boat across the beach?

Test Drive the Car

Once the above step has been completed, you can go ahead and test drive the car, but make sure your insurance covers you first. The duration of this test drive needs to be at least thirty to forty minutes so you can properly assess the car while it is moving. Check if the doors are easy to open and close and that you’re comfortable behind the wheel. There needs to be enough headroom and legroom so you can easily get in and out of the vehicle. Take the car for a spin and turn off the radio to better listen to the engine and breaks. Use all of your senses while driving and make sure to check the climate control system and the navigation system as well. Take the car down a challenging road with many twists and turns that will test the suspension, transmission, and breaks. Venture out onto the highway to check if the vehicle has enough engine power to smoothly merge with highway traffic,  and do not forget to try the Bluetooth connectivity and the speakers. Finally, choose a parking space that mirrors the exact size of your garage and use it to park the car you intend to buy. If the vehicle is equipped with parking sensors and a backup camera, use them while you parallel park the car.

Master the Art of Haggling

Use your research to negotiate a good deal rather than just shaking hands with your salesperson and agreeing to pay the full asking price. Armed with your budget and your research, head over to the dealership and make them an offer they cannot refuse. The opening offer needs to be lower than the maximum price you are willing to pay for the used vehicle. Negotiate slowly and walk away if need be. Some car dealerships are in the habit of making prospective car buyers wait inside their offices in order to make them more inclined to buy the car. If they try doing the same thing to you, let the salesperson know that his offer is not good enough and tell him that you intend to shop elsewhere. Visit other dealerships and use the same haggling skills, and do not be afraid to play them off against each other. This is a great way to receive multiple offers with competitive prices that will help you save money in the long run. And before you finalize the deal, double check to see if there are any items missing such as the spare tire, the vehicle handbook or the spare keys. The last thing you need is to purchase the car and then discover that one of the above items is missing.

Add-Ons Can Add Up

If you show an interest in extra features such as alloy wheels or cruise control, then the salesperson will probably try and sell you a car with all the extra features you need and more. However, more features equals a higher price, so you have to weigh the pros and cos of having GPS or satellite navigation or a fancy climate control system for example. Do you really need all these expensive additions? Take into consideration that the above additions can be purchased separately and at a much lower price elsewhere. Warranties are also one more example of an addition that your dealer may throw in for free. This particular addition can save you around  $300 to $500 a year compared with buying it outside the dealership.

Payment Options

Pay in Cash: If you have enough savings in the bank to cover future expenses, then paying in cash is highly recommended for a myriad of reasons.   First of all, paying for the car in full means that you instantly become its owner, so reselling it becomes easy and hassle-free.

Pay by Credit Card: The problem with credit cards is that not all car dealerships accept them and some of them will only allow you to pay a limited amount via credit card.

Borrowing money: If you plan on applying for a loan, then you need to have a good credit rating in order to qualify for a 0 percent interest offer. And if you opt for a finance plan, then your car will belong to the finance company until you finish paying for it in full. Creating an emergency fund is highly recommended in case you run into financial troubles or experience a drop in income. The fund will act as your backup plan and help you pay your debts on time.

Know Your Rights

Your rights as a consumer may vary from one country to another. For example, according to the Consumers Rights Act in the UK, you are entitled to a repair, replacement and even a refund if the vehicle does not meet certain standards. If you can prove that there is a fault with the car within the first thirty days from receiving the vehicle, then you will be entitled to a full refund when you return it to the dealership. If the trader failed to disclose this fault and you discovered it during the first six months of owning the car, then that makes you eligible for a repair or replacement from the dealership. Finally, if you happen to discover this fault after six months, then you will also be entitled to either a repair or a replacement. You also have a right to reject the car and claim a refund from the trader, or you can keep it and receive a fair price reduction from them. However, if you bought your car from a private seller, then chances are it was sold to you ‘as is’, meaning that you will be unable to return it or even ask for a refund. Meanwhile, in the United States, the same ‘as is’ rule applies, but the level of consumer protection when it comes to used cars is not the same. Only seven states have minimum standards and consumer rights geared towards used-car buyers. Other states such as Arizona for instance, have a law that covers used car owners if and only if a major component of their used car breaks down within fifteen days of purchase or if the car has only clocked 500 miles.

Consider an Extended Warranty

If the used car you chose is more than four years old, then you’ll probably be offered an extended warranty by your seller. An extended warranty goes by many names such as mechanical breakdown insurance and extended service contract. This warranty vouches to pay for any unforeseen repairs once the factory warranty is no longer valid.  The items included in this warranty vary from plan to plan but they do not cover scheduled maintenance for tires, brake pads or oil changes. Extras such as roadside assistance and towing are sometimes included in plans that generally cover your car for a limited number of years, miles, or both. Some extended warranties are covered by auto manufacturers, which makes certified pre-owned cars eligible for this warranty.  You must not feel pressured to buy an extended warranty by your dealership, and keep in mind that your salesperson will often encourage you to add a warranty to your shopping cart so he or she would receive a commission in return.

Ensure Your Used Car

Be proactive and get your car insured before taking it out for a spin.  Most states require that you have at least liability insurance before you venture out onto the road.  Before you start contacting insurance companies for quotes, sit down and figure out what you need in terms of coverage for your car. For example, if your vehicle belongs to a model that is popular amongst thieves or is more prone to accidents in comparison to other models, then you’re most probably going to sign up for comprehensive insurance. Liability insurance is also important and is divided into two categories: bodily injury and property damage. Every state with the exception of New Hampshire requires at least a minimum level of liability insurance. As for comprehensive insurance, experts recommend getting comprehensive coverage if your vehicle is less than ten years old or if it is worth more than $3000.

Finish Up Your Paperwork

The car title is the most important document and functions as the official contract between buyer and seller. It must contain your signatures, an odometer reading and of course, the sales price. The contract will also include the state sales tax, documentation fee and last but not least, the registration fee. The dealership charges you for filling out the contract and this can cost you up to $700 in a state like Florida.

Completing a bill of sale is highly recommended and you can easily download a copy from the DMV website. Once you have filled it out, go over the bill and make sure that the vehicle identification number is written correctly and that the mileage corresponds with your newly purchased car. The bill of sale should also include the purchase price and date of sale, name, address, and signature of both parties, not to mention the model, year and make of your used car. Use the above documents to register your vehicle in your name at the DMV where your newly purchased car will have to pass the smog test and vehicle safety inspection. Some dealerships can register the car for you, which will save you the hassle of going yourself.

Finally, sit back and relax and make sure to celebrate your new purchase. You’ve earned it!

Related Post: 10 Tips for Buying a Salvage Car

Sources:

  1. How to Buy a Used Car – nerdwallet
  2. 19 Tips for Buying a Used Car – Money Saving Expert
  3. How to Buy a Used Car – wikiHow