How to Buy a Used Car in 10 Steps

By Renee Valdes 11/06/2023 12:18pm

Buying a Used Car Quick Facts

• Determine how much you can afford to spend on a used car. If you plan to buy the car with cash, consider how much money you can comfortably pay.
• Be sure to read the expert reviews. A vehicle’s features and design can change drastically from one year to the next. Read the car reviews from the past several years to ensure you get the style and features you want.
• If buying from a private individual, Kelley Blue Book’s Private Seller Exchange manages the process for the buyer and seller, including a verification process to ensure the sellers are legitimate. Also, the service eliminates fraud and spam by handling the exchange of funds and the car title.

We realize buying a used car can rank right up there with getting a root canal. But opting for a used car over a new one presents many positive aspects, including saving money.

Because of car depreciation, purchasing a 3-year-old vehicle for significantly less than the same model new is possible. At a time when consumers pay an average of about $48,000 for a new car, buying a used one can mean significant savings. Another boon for today’s buyers is that the quality of modern cars is better than ever. Even a vehicle that’s several years old can provide many years of driving life.

With the right information and a few simple rules, the process of finding and buying a used car from a dealer or private seller can be less painful than you think. We’ll tell you what you need to know.

Steps for Buying a Used Car  

1. Figure Out How Much You Can Afford

Before even seriously browsing cars online — and absolutely before setting foot in a dealership — it is vital to figure out how much you can afford to spend on a used car. If you plan to buy the car with cash, consider how much money you can comfortably pay.

However, most buyers will take out a loan. If you plan to borrow money, calculate how much money you can spend by using our sister site Autotrader’s monthly payment calculator tool to help you crunch some numbers.

In addition to the initial or recurring costs, remember to budget for other expenses related to the car. These include car insurance, registration, and fuel. It’s also wise to set money aside for maintenance, both the routine stuff like tune-ups and potentially pricier things like car repairs.

By nature, used cars can need services sooner than new cars. And unlike a new car or leased car that comes with new car warranties and sometimes complimentary maintenance, the responsibility of servicing a used car will be on you.

So set a budget, whether it’s $10,000, $20,000, or $30,000 on a used car, and stick to it.

In addition to giving you a target price and parameters to work with, a target price will help if you take out a loan. Factor the monthly payment into your overall budget, including mortgage or rent, child care, utility bills, food and household expenses, and other debt such as student loans.

Also, be sure to factor in the car tax costs, title, registration, and insurance for the used car you plan to buy. As a broad rule and depending on where you live, tax, license, assorted fees, and other costs will add roughly 10% to the purchase price. This makes the price of a $30,000 car actually about $33,000, and if you’re financing the deal, you will be paying interest on that additional amount. For car insurance costs, obtain quotes on the vehicles you like the best from your insurance provider or several to compare prices.

2. Find the Right Vehicle for You

Once you’ve established how much you can spend on a used car, it’s time to find the right one for you, or at least a list of several candidates. Just remember that the pool of contenders only grows when you consider models over a range of years. This may seem daunting, but the good news is that with such a variety, there is a vehicle that’s right for you, whether it’s a small SUV, large pickup truck, midsize sedan, or a sporty convertible (and if it’s the latter, lucky you).

Kelley Blue Book offers extensive information on every major vehicle make and model. From expert and unbiased reviews from our editors to finding the horsepower and length of the car (will it fit in your garage?), all the information you need is at your fingertips.

As with any vehicle purchase, consider not just your present needs but your future ones, too. If you’re planning to grow your family, now is probably not the time for that 2-seat sports car. And if you’re planning on a third child, we recommend a 3-row SUV or minivan over a smaller 2-row model.

A great place to start is our Car Finder tool. It lists cars by category, such as trucks, crossovers, sedans, and more, plus it provides car features content. For example, if your next car must have a remote start and heated seats, it can filter vehicles with those features.

Be sure to read the expert reviews. A vehicle’s features and design can change drastically from one year to the next. Read the car reviews from the past several years to ensure you get the style and features you want.

3. Find Used Vehicle Prices

Now that you have narrowed your list of potential vehicles or prefer one specific car, it’s time to check its price.

In addition to finding the price of a specific make and model —  such as a Ford F-150 — be sure to check the boxes for features you want, such as 4-wheel drive or a crew cab.

When buying used, we encourage Certified Pre-Owned (CPO) vehicles. CPO cars go through a rigorous examination process by a dealership and must meet certain parameters for things like their condition. Certified cars are backed by warranties. Before selling, dealerships service and detail vehicles inside and out. The idea is that a CPO car looks and performs as well or almost as good as a brand-new one.

CPO vehicles generally cost more than a similar used car that isn’t certified. However, you get the best of both worlds with a CPO vehicle. You get a used car that will cost far less than a new one due to depreciation, and one meticulously checked for problems and is backed by a warranty, just like a new vehicle.

If buying the car from an individual, unless the car still has some of its factory warranty left on it or you buy an after-market warranty, you are more than likely buying the car “as-is.”

4. Check Your Vehicle’s Price

If you plan to sell a car you currently own and use the money toward your next vehicle, you’ll need to see how much your car is worth. We’ve literally written the book on this, and when you research the Kelley Blue Book car value, you’ll get a fair evaluation using our tool.

There, you can input your car’s make, model, and condition, along with its features. Be realistic about its condition and note that the buyer will want to negotiate if your car shows scratches and dents. Once you know your car’s dealership trade-in and private party value, you can determine which route works best for you.

If you want to be done with the vehicle and get it off your hands quickly and easily, you might consider an Instant Cash Offer. This process works exactly as it sounds. Dealerships come to you with official offers based on your car’s value. It saves the hassle of negotiating a trade-in at a dealership or dealing with lowball text offers from strangers if you are trying to sell on your own.

5. Line Up Your Financing

Research your finance options now that you have some vehicles in mind and your budget set. Most dealers offer to finance, but we always recommend seeking alternatives as well. That can be a loan from your bank or credit union.

If the dealer can offer you a better deal, that works. But getting pre-approved for a loan before shopping at a dealership online or in person gives you more flexibility and does not make you beholden to just one sales lot or dealership. It also gives you the upper hand when the deal-making starts.

TIP: When shopping for a car at a car dealership, don’t discuss financing until you know the final cost, with all fees and taxes included. We’ll tell you more about that in the section on negotiations below.

6. Contact Sellers

When you’ve browsed used cars for sale and found one that you like and fits your needs and budget, you can inquire about it. If the car is being sold by a dealer, it’s wise to call and see if it’s still available.

The same goes for a private party seller. In both cases, this is the point where you can ask questions about this specific used vehicle. If it’s being sold by an individual, ask why they are selling it and if there are any issues with the vehicle. Also, you’ll want to know if the seller has the title in hand, and that it’s clean (as opposed to a salvage title). You can also ask to see maintenance records and if they still owe money on the vehicle or if there is a lien on it.

So yes, you can always buy a used vehicle from a dealership. However, the car might cost a bit more money than buying a used car from a private party.

7. Get a Vehicle History Report

It’s always a good idea to check a vehicle’s history before you make a purchase. A vehicle history report is derived from the car’s vehicle identification number (VIN). It will show you information about accidents and maintenance and let you know information about its title.

You can get vehicle history reports from AutoCheck or Carfax. If buying a car from a dealership, they usually provide these free, so ask about them.

When considering a vehicle for sale from a private seller, getting a history report helps you head off potential problems or sticking points. It also helps you negotiate.

8. Examine and Test Drive the Car

At this point, it’s time to take the used car for a test drive. We know it’s exciting because we get giddy testing cars, too. But try to be objective and not let emotions get the best of you. This is also about deal-making, so put on a poker face.

Whether the used car is being sold by a dealer or an individual, you’ll want to focus on important aspects of the vehicle. Before getting behind the steering wheel, give it a proper inspection. Balding tires, torn seats, and fading paint show signs of neglect, improper care, or deeper issues. Sometimes, the car will give a literal warning sign, such as a check engine light.

Bring along a mechanic or trusted friend who knows cars. Ask the seller about doing this before you see the car in person. A legitimate seller will respect this wish and maybe even encourage it. Be wary if they say no. They may have something to hide, and in that case, you’ll do yourself a favor by walking away from the deal.

Also, before getting the car on the road to test its acceleration, handling, and steering, you’ll want to consider how you feel in the vehicle. Are you comfortable in the seat, and does it adjust for a proper driving position? This is important. You will likely spend years in this car and driving it thousands of miles.

Check for visibility. Does it have nasty blind spots? And if so, does it offer a blind-spot monitoring system to at least help prevent a problem? Also, consider passengers. If you are using a child seat in the vehicle, bring it along to test the fit and get a feel for getting it in and out of the vehicle.

If you have a teenager who is growing faster than a beanstalk, bring them along to see how they fit, too.

Once on the road, try not to get distracted by fancy features or a chatty salesperson. Again, make sure the car feels good to you. Be aware of brakes that don’t seem right, a vibrating steering wheel, or if the car is pulling to one side. These can be indicative of larger problems. Once again, if you consider a CPO vehicle, you get peace of mind that the used car is in fine working order.

On the flip side, if you’re buying a used car from a private seller, you’ll want to be especially sensitive to how the car feels and if it looks well-maintained. Don’t let somebody else’s problem become yours.

Finally, when safely parked, give it a tech test drive. Does your phone pair easily? Does it offer enough USB ports for your needs? If audio is important to you, play your favorite tunes. Check the trunk and other storage space in the vehicle. Will it fit your lifestyle?

In today’s world, it’s possible that a test drive can come to you. Ask the dealership about bringing the car to your house. This will also allow you to see how the car fits in your driveway and to test it on local roads. You can even load suitcases or other gear in the vehicle to ensure it suits your needs.

If considering a car from a private seller, use common sense. We can’t stress this enough when buying a car from a stranger. Ask the seller to meet at a safe, third-party location. This can be at a police station, a busy shopping center, or even the DMV parking lot. Meet only during the daytime, not at night. We also recommend bringing a family member, friend, and mechanic. This is another reason why it’s good to talk to the seller over the phone first and get a feel for them as a person. Trust your gut.

9. Negotiate a Price

Since you’ve already done your homework and you know the Kelley Blue Book value of the vehicle you want to purchase, you can use this as an advantage.

If you like to haggle, by all means, you can try. But also be respectful and understand nobody wants a complete lowball offer, especially in this tighter market for older, used cars. If you hate dealing, you might be more comfortable buying from a dealer whose prices are pretty much set.

Before negotiations, a dealer may try to ask you about your budget or if you plan to finance the car. The salesperson may even phrase it as what you hope to pay monthly for the vehicle. Some car buyers are what’s known to car salespeople as “payment shoppers” that look for low monthly payments.

Just don’t answer any questions until you see the price of the car with all the fees and taxes. The dealership can usually meet your monthly payment demands, but it will quite often be at the expense of extending those payments for a longer duration. 

This is where it helps if you lined up financing with your own lender before walking in the door. Getting pre-approved for a loan from your bank or credit union gives you the power to take it or leave it when it comes to the dealer’s finance offerings.

Another important point to remember is if you trade in your old car to the same dealership, treat it as a separate transaction. Determine the deal on the car you want to buy first. When a dealer tries to incorporate their offer on your old car into the new one you are buying, it adds another level of complexity.

It takes your eyes off hitting the goal of getting the right car within the budget you set. So, treat the sale of your existing car as a separate transaction. Also, shop your car around at other dealerships to get the best price. It’s possible to use the other offers as leverage.

Once you land on the price you can agree to, you can negotiate any other terms, including any financing, to see what the dealership can offer.

Before signing anything, remember to look for any extra fees on the bottom line. We hear many stories about buyers at dealerships getting charged for extras like “VIN etching” or “vehicle reconditioning fees.” Question all fees and know that VIN etching isn’t necessary unless you want or ask for the service. As for reconditioning, anyone buying a used car expects the vehicle to be cleaned up. However, the price on the sticker reflects that before the fees, so remind the salesperson of that fact.

10. Do the Paperwork

No doubt you’re eager to get behind the wheel of this new-to-you used car. The final step is the paperwork. You’ll sign the sales contract and loan documents or pay for the car outright, possibly with a cashier’s check from your bank. 

You’ll need a bill of sale if you buy the car from an individual in a private party transaction. Such a form can often be found online or at your state’s Department of Motor Vehicles. You can also use this bill of sale form from DMV.org, a company that helps you navigate the sometimes complex DMV process.

You’ll also want to take possession of the vehicle’s car title and registration (and ensure they are legitimate and correct). Car emissions and registration can vary by state, so make sure you check what is needed in yours, especially if this is a private-party transaction. Before you drive away in the car, make sure you add the vehicle to your insurance policy.

With paperwork done and keys in hand, you can now enjoy your new ride.

Editor’s Note: This article has been updated for accuracy since it was originally published.