How To Buy A Used Car
Buying a used car can be exciting, but if done poorly, can lead to financial ruin. Follow these steps to decrease the risk of making a bad decision during your next used-car purchase. And if you don’t feel capable of following these steps, consider hiring a buyer’s agent who will do the research for you and help you find an excellent vehicle.
1. Decide on your budget and needs
Determine how much you can responsibly spend in both cash and credit before shopping for a vehicle. Too many people buy more car than they can afford because they shop first and set their hearts on too nice of a vehicle. Don’t allow the excitement of the shopping moment push you beyond the amount you have set, or you could end up regretting this purchase for years to come. If you will buy on credit, use a loan payment calculator such as this one from Cars.com to determine how much car you could afford based on down payment, interest rate, and length of loan.
2. Research vehicle years, makes, and models
Begin your shopping experience online, seeing what vehicles for sale in your area could meet your needs and budget. For each vehicle that interests you, research the year, make, and model on websites such as Kelley Blue Book, Edmunds, and Consumer Reports (subscription required). These sites will help you establish a fair market value based on trim, miles, and condition. They can also surface known reliability issues. Some vehicles are much cheaper to maintain than others. Generally speaking, the more complex the vehicle, the more luxurious, or the higher the performance, the more it will cost you to maintain. Finally, run the vehicle information through the NHTSA SafeCar site to check for open recalls on the vehicle that could be serious safety concerns if not already corrected.
3. Run a VIN# check
Once you have narrowed your search to a particular vehicle offered for sale, run the vehicle’s VIN# through a service such as Carfax. This costs a small fee, but is well worth the price. A Carfax report won’t catch everything, but will show title status (clean, salvage, rebuilt, lien), ownership history, some maintenance history, and will list any accidents that were reported to insurance. Avoid any vehicles without a clean title. If accidents are reported, make sure that a mechanic inspects the quality of the repairs (see pre-purchase inspection below). Be cautious of vehicles that have unusual ownership histories, especially if they include time in other states, or vehicles that went unregistered or un-inspected for a period of time. Try to find a vehicle with a good recorded history of preventative maintenance.
4. Research the seller
If you’re buying from a business, check the Better Business Bureau for complaints. Read reviews on Facebook, Google, and Yelp. If it’s a local business, ask friends, coworkers, or family for reviews. If you are, instead, buying from an individual, be extremely careful as you will have less recourse if the sale goes badly. Try to find out what you can about the person from social media or mutual acquaintances. If the person seems shady, walk away. And finally, remember that buying local will always be safer. If you are misled or scammed, it will be harder to get justice if it occurred out of town or, even harder, out of state.
5. Inspect and test-drive the car
Meet the seller in a safe location during daylight and look over the car extensively. Ask lots of questions. If anything seems out of place or in poor condition, ask about it. Look in the engine bay and trunk for any signs of missing parts, poor repairs, or unexpected dirtiness. Check to ensure that the spare tire and tools are present. Get in the car and test all switches, electronics, climate controls, lights, and the radio, and note anything that’s not working. Go for a test-drive that includes low-speed driving with tight turns both directions, highway driving, and light and hard braking. Your goal is to test the vehicle in all conditions and note anything that doesn’t feel correct. Finally, because of recent hurricanes on the Gulf Coast, check for unreported flood damage by doing the following: (1) note any smell of mildew when the door is first opened, (2) look for mud or stains on floor mats and carpets and in the trunk and engine bay, (3) look under the dash if possible for signs of mud, sand, or damaged wiring, and (4) note any unusual electrical problems (water often causes electrical systems to malfunction). If you suspect flood damage, walk away.
**6. Pay for a Pre-Purchase Inspection
THIS IS THE MOST IMPORTANT STEP! Unless you are buying a Certified Preowned Vehicle from a brand-named dealership, insist on a pre-purchase inspection from an ASE-certified repair shop that is not associated with the seller. It will cost $100-200, but will be the best money you’ll spend. If there’s anything that your Carfax report or test drive has surfaced, such as past accident history or odd noises on the highway, ask the mechanic to check that out carefully. When the mechanic has completed a full inspection, walk away from the vehicle if either serious undisclosed issues are reported or if you get the sense that the seller was trying to hide something from you. If the inspection indicates that the vehicle is in decent shape, you can use any smaller issues to try to negotiate a better price.
7. Ensure that all paperwork is correct before paying
Do not pay for the vehicle until the seller provides you a clean title properly signed as well as a signed form 130U and a signed Bill of Sale or Buyer’s Order. We have seen numerous cases of documentary fraud in the used car market. Do not hand over any money until all paperwork is complete and correct! Here’s a guide to how a Texas Title should be signed during a sale.
A final caution: BE PATIENT
So many people get taken advantage of simply because they get in a hurry and buy on impulse. Until you hand over your money, you are in the driver’s seat! So take your time to do your research and have the vehicle thoroughly inspected. If ANYTHING makes you feel uncomfortable or worried, walk away. It is far better to take Uber for an extra week than to make a hasty decision and blow your savings on a lemon.