Category: Car Ownership checklist

Buying a Used Car: A Checklist to Help Make it Easier

If you’re shopping for a “new-to-you” vehicle, you’re in good company. In recent years, the used car market has been twice the size of the new car market.1 And for good reason– typically you can get a better price on a vehicle if you buy used. With more inventory often available online (including cars nationwide that can be shipped to you), buying a used car is easier than ever. If you’re not sure of the process, just follow this helpful checklist.

Step 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, auto insurance, repairs and maintenance.

There are a few different theories about how much you should spend on a used car. You can review some of them here. 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.

Step 2: Decide what type of car you’d like.

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 as many as six), 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 non-negotiable for you. Then go looking for them.2

  • Ratings and reviews:

    It’s easy to research consumer reviews online and find out a car’s safety information. You won’t regret learning 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.

Some online car retailers, allow consumers to purchase a car completely online, and they’ll even deliver cars right to your home.5

Step 3: Start shopping (hint: there are a variety of options).

When it comes to finding a place to purchase a used car, the sky’s the limit. 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.3 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.3

    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 non-certified pre-owned car through a dealership

    Many car dealership’s also have other used, non-certified 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.3

    If you find a non-certified 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 pre-certified 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.4

    If you visit another type of independent dealership, chances are, you may be able 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. In fact, in early 2020, online car retailers saw a 36% increase in sales over the previous year.5 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.5

  • Option 5: Buying through a private seller

    Last, but not least, you may 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.

Step 4: Test drive cars and compare models.

No matter where you find a car, take it for a test drive, if possible. This helps you get to know the vehicle and understand “how it feels” on the road. Take this opportunity to evaluate how comfortable you are in the car and how it responds to driving on the highway and bumps in the road. You’ll also want to check the car for scratches, missing parts and damage by walking around it a few times. Cars can be expensive purchases, so it’s wise to make sure you like what you’re buying.

If you use an online retailer or dealer, unfortunately, you probably won’t get the option to test drive a car before buying however, many offer the option to return the car if you are not satisfied.

Step 5: Review the vehicle’s history.

Always try to find out as much information as possible about its history. You can visit the National Motor Vehicle Title Information System (NMVTIS) or CarFax to obtain a detailed vehicle history report, including its title, insurance loss and salvage information. In addition, make sure the car hasn’t been recalled in the past. To find out, go to the National Highway Traffic Safety Administration website or call 888-327-4236. Finally, ensure the car hasn’t been stolen in the past or endured flood damage by entering its Vehicle Identification Number (VIN) on the National Insurance Crime Bureau’s website.6

Step 6: Consider getting an inspection.

Remember, you can always ask to get the car inspected, too. Ask a private seller if you can take the car for an inspection or allow you to review its recent inspection paperwork. However, some dealerships hesitate and say the vehicle has already been inspected. It’s OK to insist for this step; the worst that can happen is a seller declines.5

Step 7: Negotiate a fair price.

Once you’ve settled on a vehicle, it’s time to negotiate a fair price. Fortunately, this step doesn’t have to be a hassle. Here are a few tips to help you get a fair price:6,8 

  • Share your concerns about any flaws or issues with the car.
  • Mention similar cars that you’ve seen that are at lower price points.
  • Show hesitancy when the dealer or seller offers an initial price.
  • Suggest a price that’s lower and see how the dealer or seller responds.
  • Speak slowly and repeat the numbers you hear.
  • Take your time and remain confident.
  • Be OK with walking away from a deal that doesn’t seem right to you.

Again, the worst that can happen is your offer is declined. But in many cases, negotiation is possible.7,8    

Step 8: Check with your auto insurer.

Call your auto insurance company to review your policy’s details and determine what it will cost to add the vehicle. When you do, ask an insurance representative about available discounts. You may be able to lower your premium.

Step 9: Sign the paperwork, pay for your vehicle and head home.

You’re almost ready to take your “new-to-you” car home. If you’re purchasing a car from a private party and there’s still an auto loan, then you’ll need to contact the lender to sign the final paperwork.

If you’re at a dealership, they may offer a loan to you. It’s worth hearing about the loan’s terms and then comparing it to what other lenders can offer.  Once you’ve paid for your car, you should receive the car’s title that’s signed by the seller.8

Finally, if you’re at a dealership, you’ll need to review and sign the dealership’s sales contract. Some dealers will want to upsell to you with additional products, services and warranties.8 The best advice is to take your time reviewing all of the paperwork, so you don’t purchase more than you need—or get into a contract you regret. You’ve done your due diligence up until this point, so it’s best to continue to do so. Once you’ve signed the paperwork and are fully informed, take your vehicle home and enjoy the ride; you deserve it.

 

  • The used car boom is one of the hottest, and trickiest, coronavirus markets for consumers, CNBC, 2020.
  • 8 Guide to Car Safety Features, Consumer Reports, 2016.
  • Where’s the Best Place to Buy a Used Car? Edmunds, 2019.
  • CarMax or a Traditional Dealership: Which is Better for Buying a Used Car? MotorBiscuit, 2020.
  • Covid and a Crowd of Startups Are Forever Changing How Americans Buy Cars, Bloomberg News, 2020.
  • Used Cars, Federal Trade Commission Consumer Information, n.d.
  • How to Negotiate Car Prices, Edmunds, 2021.
  • How to Buy a Used Car, NerdWallet, 2021.

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