Buying a Used Car: What You Need to Know

In the past, buying a used car often felt like rolling the dice, especially for buyers with little technical knowledge. Although getting a professional inspection and test drive before you buy is still the best way to avoid a clunker, you can get helpful background knowledge before you even leave the house.

By using the resources mentioned below and following the advice in this article, you'll be well informed about the type of car you're buying, more confident that a specific vehicle is roadworthy, and better prepared to negotiate a fair price for a used car. (If you're looking for a new car rather than a used one, see Buying a New Car and Trading In Your Old One.)

Decide What Kind of Vehicle Meets Your Needs

The first step when buying a used car is deciding what vehicle works best for you. A Porsche 911 might sound exciting, but might not be the best fit for your lifestyle. Some of the most important factors and questions to consider when considering what used vehicle to get are:

• Size. Who and what will you be carrying? Look beyond the obvious to make sure your chosen vehicle meets your needs. A bigger vehicle doesn't necessarily mean it has more room inside. In recent years, some vehicles—especially crossover SUVs—have sacrificed storage space for style.
• Economy. How critical are operating costs, like gas mileage and tires, to you? You can easily find the EPA gas mileage for any vehicle, but it's an estimate. Check online to find road tests where the actual gas mileage has been calculated. Also, tire size and use can have a substantial impact on your operating costs. For example, if you pick an all-wheel drive vehicle, you'll likely need to replace the tires more often than with some other types of vehicles. Find out what tires cost and how long they'll last for your selected vehicle.
• Driving habits. Do you always drive on the street or do you sometimes go off-road? The utility of four-wheel drive vehicles comes at a sacrifice in other areas, like gas mileage, tire costs, and maintenance expenses. If you drive only on city streets, but want the style of a four-wheel drive vehicle, you'll need to decide if the added costs are worth it for you. Keep in mind that knobby off-road tires tend to wear out quickly when driven on pavement.
• Climate. Do you have seasonal snow or ice? Rear wheel drive vehicles can be difficult to drive in snow and ice, especially if the terrain isn't flat. Front wheel drive is better, but all-wheel or four-wheel drive is usually best. Do you live where extreme heat is a concern? Black or other dark cars can get extremely hot in warm, sunny climates. Interior seating materials are another important consideration in hotter climates; leather seats tend to heat up significantly in the sun.
• Features. Does your chosen vehicle include certain features—like video-assisted reverse, blind spot warning, automatic headlights, and lane assist—that are important to you? Make sure the year and model of the vehicle you're looking at includes all the bells and whistles you want.
• Condition. Are you looking for a flawless outward appearance or something less than perfect? The value of used vehicles can vary significantly based on the exterior condition. But future expenses might be less obvious. Look closely for areas of rust that could lead to expensive repairs. Be aware that cars that have been used near the coast or in a cold climate where salt is used to melt snow are more likely to have rust. For more information on the mechanical condition of used cars, see "Get an Inspection and Test Drive" below.
• Reliability. Will repairs ultimately make buying a cheaper car more expensive? Older vehicles are usually cheaper but might require maintenance or repairs that make the overall cost higher. Several websites and publications can provide information about reliability based on long-term road tests or feedback from consumers and maintenance professionals. Edmunds and True Delta, for example, have useful information on reliability and maintenance costs for almost any vehicle. Some car magazines conduct long-term road tests which are available online. A trusted local mechanic can also be a great resource. Good mechanics can tell you which cars they see frequently and what problems they encounter with specific vehicles. If you have a certain make and model in mind, find a mechanic that specializes in that brand, if possible.

Does the Price Fit Your Budget?

Once you've decided on a vehicle that fits your needs, find out if the typical price of that car fits your budget. Various websites—like Kelley Blue Book—provide estimates of car values, depending on the make, model, year, mileage, options, and condition of the vehicle. This estimate can provide a starting point for your negotiations with the seller.

Get Pre-Approved (If You're Not Buying with Cash)

If you aren't spending cash, it can be tempting to rush into a questionable loan when you're excited about an immediate purchase. Before starting the search for your vehicle, shop around for the best loan terms and get pre-approved. A pre-approval will expedite the purchase once you find the car you want to buy. (You can easily use online tools to see if you qualify for a car loan.)

Find Your Car

Numerous websites, including Autotrader and Cars.com, are available for finding used cars in your area or elsewhere if the inventory in your area is lacking. Generally speaking, prices for privately-sold cars are lower than for those sold at a car lot.

Used car lots come in all shapes, sizes, and levels of trustworthiness. Do some research on local lots before you decide to buy from one. Purchasing from the used car lot of a dealership or one of the national used car companies, like CarMax, might be costlier, but could provide you with added confidence about your purchase through offerings such as certification or a warranty.

Check Out the Car on Carfax

Once you've found a car that looks promising, get the VIN (vehicle identification number). Then, look up the Carfax vehicle history report, which provides important information for the specific vehicle, including the sales history, mileage, service records, collision repair records, recalls, and problems the vehicle might have had.

Get an Inspection and Test Drive

Even with the many resources available online, you should still have a mechanic inspect the vehicle and get a reliable professional to test drive the car before you buy it. Schedule an appointment with a reputable dealership or mechanic to take a look at the car. While the dealership or mechanic won't guarantee your purchase, they might find issues—or potential issues—with the car based on their expertise and their ability to thoroughly look it over. The small cost of an inspection and test drive could save you thousands in the long run if you avoid an unreliable vehicle.

Use Your Resources to Negotiate

Once you're ready to buy a specific car, use everything you've learned from reading this article to get the best deal possible. Start with the fair market value you found online and then mention any problems in the car's history, maintenance that needs to be done soon, and any issues you discovered in the inspection or test drive to negotiate a lower price.

Learn More

To learn more about buying a used car, get Nolo's Encyclopedia of Everyday Law, by the editors of Nolo. This handy guide contains hundreds of answers to the average American's most frequently asked legal questions.