The Five Most Important Things to Do When Buying a Used Car

Doing your homework is half the battle

Buying a used car can be a very smart move, especially when there's chokehold on the supply chain these days (and for the foreseeable future). But navigating the used car waters isn't easy, and prices have climbed substantially over the past year largely due to the lack of new car supply. Used car prices are high almost everywhere, but that doesn't mean you can't still find a great deal if you know where to look. But finding the right car is only part of the process. There are a handful of important things to do before you buy that will help you not just get a good deal but also assist in getting a car that's right for you, your finances, and your expectations. Here are our five recommendations for what to do before you plunk down your money on a used car.

Work With a Realistic Budget

You can't just buy what you want. You have to be realistic about how much money you can spend every month by measuring it against your take home pay and your other expenditures. Don't be one of those fools who takes out an 84-month loan and goes upside down on the car halfway through the loan period. Make a budget that's no more than 20 percent of your take-home pay and that also accounts for car insurance and maintenance, too.

Just because you want a nice BMW doesn't mean that's the car you should get. Also, don't just think that low payments are good enough if you stretch out that loan. You have to look at what you're paying in interest over the life of the loan. A 72-month loan could be thousands more in interest than a 48-month loan, so be wise. If you stick to your budget, you should be in good shape.

Get Pre-Approved for an Auto Loan

If you can find a reasonable loan rate, make sure you get pre-approved before you go shopping. First of all, you'll know what your financial limits are. Second, you won't be hoodwinked into getting dealer financing that pressures you to buy the car and settle for an interest rate that's higher than you'd like. Keep in mind that used car loans most often have a higher APR than those for new cars because there's typically more risk with a car that's been driven for years, as opposed to not being driven much at all.

Make sure to hunt for the best rate you can get from numerous lenders (if you do this during a one-month period, it won't ding your credit score for the long-term). Make sure you read the terms of the loan and don't just be happy with the lowest rate. Bring the pre-approval to the dealership so they know you're serious, and you can start negotiating.

Consider Multiple Buying Options

Don't just go to dealerships when searching for a used car. The used car market is massive, and there are plenty of private sellers, as well as other players like Carvana, TrueCar, Vroom, etc. You can search by body style, make/model, number of passengers, price, and numerous other search parameters. You can also search multiple years, as well as by certified used, etc. Certified used is a great way to go because these vehicles are driving for a limited number of years and miles, and they usually come with a manufacturer warranty.

You should always look for private car sales, as well. There's a sea of great used cars out there, but you have to be savvy because they're typically “as-is” sales, which means you can't return the car if you change your mind. Go to places like Facebook Marketplace, Auto Trader, ebay Motors, TRED, etc. There are tens of thousands of listing, and you'll be sure to find something that works for you.

Ask Questions and Research the Vehicle

There's no question that getting a “new” used car in your garage is pretty exciting, but don't rush into things. You'd be best served by asking questions and checking up on the car itself. Don't be shy about asking questions because you're about to spend thousands on a car you will hopefully own for a while. Ask important questions such as:

• How many owners have there been?
• Has the car ever been in an accident?
• Have there been any mechanical issues?
• Do you have service records?
• Do you have a CarFax report?

Of course, a private seller might lie to you when answering some of the questions, which is where the CarFax report comes in handy. If the seller isn't willing to provide one for you, just order one yourself with the vehicle's VIN number, which the seller should provide. This should tell you if there are any issues with the vehicle and should also show maintenance records. Keep in mind that it will only provide tasks or issues that were reported by the service provider or dealer.

Kick the Tires



This term encompasses a lot of details you'll want to check on before you buy. First of all, absolutely test drive the car you're considering. Bring your auto insurance card and your driver's license so you're covered. You'll want to make sure the car accelerates, brakes, turns, and handles properly. If there are errant noises, you'll want to ask about them. Knocking, grinding, squeaking, buzzing, etc. are not acceptable. Also, make sure all of the features in the car work properly: lights, turn signals, power windows/seats, audio, backup camera, navigation, interior lighting, gear shift, etc.

Check the tires to see how much tread depth is left (bring a penny) and put Lincoln's head top down into the tread. If most of his face is exposed, those tires don't have enough tread. Check the paint along the bottom of the doors, the bumper, under the hood, etc. It doesn't mean everything in the car has to be perfect (it won't be because it's used). Just know what you're getting into and what you're willing to accept. If the seller will let you take it to a mechanic to have it inspected, all the better.