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If you are considering purchasing a used car, you absolutely must run a history report AND have a mechanic inspect the car on a lift. Never pay cash for a deposit on a used car. If the deal falls through, you'll never get your cash back, but you can always dispute a credit transaction.
When buying a used car there are many things you need to do in order to make sure that you don't get scammed or end up with a lemon. There are many pros to purchasing a used car instead of a new one; such as getting much more value for your dollar than you would with a new car since somebody else took the big depreciation hit. If you follow this used car buying guide we will teach you how to buy a used car and avoid the scams and pitfalls that you might come across.
Search online used car classifieds and newspapers. This might seem obvious but don't just go straight to a used car dealership to start shopping. You can start with the local newspaper automotive classifieds section, but these are narrowly focused with limited market area. You want used car sites such as Cars.com, UsedCars.com, CarsDirect.com and Car.com which have thousands of listings that you can search.
Read our full chapter, used car quotes to learn more >
Best Advice On This Entire Page For Buying a Used Car
DO NOT buy a car without running a history report to verify what you are buying. You would not believe how many emails I get from people who bought a car, then found out it was previously wrecked, now they are stuck. If the seller doesn't have the VIN in the listing and won't give it to you then this is not a car that you want to buy. I've found many VINs to be false, and you have no recourse, as you are buying a car "As Is," so find out problems before you buy, not after.
AutoCheck offers an unlimited report package! With the unlimited package you can run as many reports as you want for 60 days. We recommend this option since it gives you the best value and you can compare the histories of all of the used cars that you are considering. See if the AutoCheck unlimited package is right for you.
Click here to read our complete section on Vehicle History Reports >
There are 2 basic types of used car loans. The first is when purchasing from a dealer. The second is when buying from a private party. Most banks will NOT lend money on a car that is more than 4 or 5 years old. Banks charge at least 2% higher APR on used car loans than they do for new car loans. Online lenders are much cheaper. Their used car loan rates are closer to new car loan rates. Make sure your credit score is at least 680, then as a prime borrower, and you can choose the lowest APR. If your credit is bad and if you're in too deep, maybe now is not the time to buy a car.
Up2Drive will finance used cars bought from dealerships and myAutoloan.com will write loans if you are buying a used car from a dealer or private party. Auto Credit Express can help if you have bad credit.
Read our used car loan article to get all of the information you need >
When implementing our steps on how to buy a used car, the one-on-one negotiation is the most difficult step! You want to use all of the facts to your advantage so you can get the lowest price possible. Take time to do all of the research we recommend before starting the negotiation process. There is a ton of additional information to cover.
Visit our used car negotiating chapter >
Once you and the seller agree on the price, discuss payment options. If you want any kind of traceability, get a bank draft, with the seller listed as payee. Cash is dangerous to carry around. With a bank draft, you have a record that you paid the seller money in case there are problems down the road. If the car turns out to be stolen, you can cancel the bank draft. But you can't cancel cash. Some people don't want a paper trail, but be aware of the risks.
Our Free CarBuyingTips.com "Used Car Bill Of Sale Form" is a useful Excel spreadsheet (actually 2 forms in one). The first spreadsheet is a Used Car Bill Of Sale, which takes the guesswork out of what information you need when transferring title of a car from the seller to the buyer. The second form is a Deposit Slip Form, similar to the Bill Of Sale. The deposit slip is used as a written confirmation between the buyer and seller itemizing the selling price of the car. This form is from our free spreadsheet download area.
For additional information read our full article on completing the used car sale >
It may be impossible to get a warranty for an older high mileage used car. In this case, it's even more important to have a mechanic check out that used car first. You don't want to inherit any surprise problems.
If you buy from a private seller, it's "As Is," you have no choice, get an extended warranty. Have a good mechanic perform an inspection of the car. Why should you spend money on a mechanic? I'd rather spend a few dollars on a mechanic now, than $3,000 on repairs later when the axle falls off. The mechanic is a great investment if it alerts you to a costly engine repair that even the seller was unaware of.
When buying a used car that is out of the manufactures warranty, you are at risk for costly repairs. That's why we recommend buying an extended warranty. In our extended warranty chapter, we review online warranty sites like CARCHEX and Warranty Direct for extended warranties at much lower prices. If you buy a 3 or 4 year old used car, that's when the manufacturer's warranty expires and you will be on the hook for the repair costs. Unless you have an extended warranty, you are exposed to potentially large losses.
Click here to visit our extended warranty chapter >
Buying from Car Rental Agencies
A rental car is just like any pre-owned car, but most have scratches and scrapes. Their engines are probably maintained better than privately owned cars, as they are kept in constant care and maintenance during use. The companies tend to take them out of service by one to two years of age, so you are getting a decent car which the rental company has already absorbed the largest portion of the depreciation. Rental car companies tend to use no haggle pricing and you'll often find that pricing to be higher than it should be.
Buying From a Dealer Myth: "I bought from a big dealer, it's got to be ok!"
You must always perform due diligence no matter who you buy from. If you're buying a certified Lexus, BMW or Mercedes, there is nothing certified about it. We hear from our readers that they run history reports on high end certified pre-owned cars and they find all sorts of problems. Most dealers don't do a lot to recondition the car but they claim 175 point inspections. When buying from any dealer, make sure to get an AutoCheck report to verify the cars past history.
Most States Do Not Have a Used Car Lemon Law!
Lemon laws apply mostly to new cars sold to private people. Many people think there is a used car lemon law, but in most states there is none, except for states like New York or Massachusetts. Check your Attorney General's web site for information on lemon laws in your state.
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