1. Determine your budget
It’s time to create a realistic budget to determine how much you should spend on a vehicle. Consider your down payment, monthly loan payment (if you’ll have one) and other expenses, such as gasoline, car insurance, repairs and maintenance.
There are a few different theories about how much you should spend on a used car. The truth is, there’s no one-size-fits-all answer. How much you spend is a personal choice based on your lifestyle and budget. But no matter what you do, it's always a good idea to purchase a car that's dependable and safe.
When setting your budget, remember that the purchase price is only part of the total cost. Registration, taxes, repairs, routine service and insurance can all affect what the car really costs you over time.
2. Decide what type of car fits your needs
Next, identify the key vehicle features that are most important to you. You’ll want to consider:
- Your lifestyle: Do you carry equipment for work or outdoor activities? Do you need cargo space for pets? Do you have children, and will you be carpooling? Answering these questions can help you narrow down choices to find the right make and model for you.
- Your must-have car safety features: Look for a used car with airbags (some newer models have upwards of six or more), antilock brakes, traction-control systems, enhanced safety belts and electronic stability control. Many newer models also have accident-avoidance systems. Think about the car safety features that are nonnegotiable for you.
- Ratings and reviews: It’s easy to research consumer reviews online and find out a car’s safety information. Learn as much as you can before making a purchase.
After doing your research, create a list of brands, makes and models. Stay open-minded as you visit cars in person or view them online. You may see something different that piques your interest.
Quick tip: If you’re wondering what to check when buying a used car, start with the basics – safety features, mileage, condition, title history and how the vehicle fits your day-to-day needs.
There are many ways to find a place to purchase a used car. Here are five routes to explore:
- Option 1: Buying a certified pre-owned car through a dealership
Dealerships offer the traditional in-person sales experience. Many display their pre-owned inventory online, so you can start searching there, or simply visit a sales lot.
You’ll notice the term “certified pre-owned” at many dealerships. This means the car has been sold by a brand-name dealership, inspected and then reconditioned with factory parts. The benefit is that it’s usually in fairly good condition and comes with a solid warranty. The drawback is that it might be slightly more expensive than buying a used car elsewhere. According to data from the automotive resource Edmunds, many consumers end up paying a 6% to 8% premium markup for a 3-year-old certified pre-owned car.
Keep in mind, you may be able to negotiate a lower price at a dealership, for instance, by shopping for a car during slower months or at the end of the month when salespeople are trying to meet quotas.
- Option 2: Buying a noncertified pre-owned car through a dealership
Many car dealerships also have other used, noncertified cars. These cars don’t necessarily get the same level of care and protection, but they do get an inspection and they may be more affordable, too.
If you find a noncertified pre-owned car you like, take extra care to review the vehicle’s history. You may want to request an additional inspection by a mechanic you trust, too. Without the dealership’s precertified warranty, you’ll want to do your own due diligence.
- Option 3: Buying through an independent dealership
Independent dealerships aren’t associated with any particular brand and offer a variety of car brands and models.
Independent dealerships allow you to look closely at different brands in one place and even test-drive them. Employees of independent dealerships usually stay hands-off during the sales process, so you don’t feel pressured to buy. In fact, some have a policy against negotiation. In other words, if you find a car at one of these dealerships, the price marked is the price you’ll need to pay.
On the other hand, another type of independent dealership may be willing to negotiate.
- Option 4: Buying through an online car retailer or online dealer
Searching for and buying a used car online has never been easier. Not only is it incredibly convenient, but it can give you access to a variety of cars nationwide. In fact, some online car retailers allow consumers to purchase a car completely online, and they’ll even deliver cars right to your home.
If you want more detail on the online process, read “How to Buy a Car Online in 5 Easy Steps”.
- Option 5: Buying through a private seller
You may also find a great deal on a used car from a private seller. Often, you can’t beat the price because private sellers aren’t associated with a dealership. But be aware and careful to avoid scams when you buy a used car from a private party. After all, a lot of personal information is exchanged, so you don’t want to be a victim of identity theft or title scams.
Check out websites like Craigslist and Facebook Marketplace, skim community publications, and talk to friends and family members. Once you find a car you’re interested in, contact the owner and ask questions about the vehicle’s history, inspection, mileage and more. It’s important to determine if there’s still an auto loan. If so, then you’ll need to contact the lender to sign the final paperwork. Lastly, you’ll also want to look closely at the most recent vehicle inspection report and ask the owner if you can test-drive the car.
