Used Car Buying Guide

Buying a Used Car Quick Tips

• Scoring a good used car at a fair price in today’s market requires research and patience.
• Creating a realistic household budget is the first step in pursuing a used car.
• Elevated insurance costs and interest rates reduce your used-car-buying power.
• Electric vehicles may be the biggest bargains in today’s used car environment.

Buying a used car, particularly in today’s volatile market, is challenging for anyone. Conspiring to create a perfect storm are a shortage of used cars, escalating interest rates, and climbing insurance premiums. Despite the tough market, we believe a used car can still be a good deal if you can find the right one at a good price. We’re here to help in that mission.

Think of this “Ultimate Guide to Buying a Used Car” as a preamble for your used car buying venture. It outlines every aspect of the used car buying experience, along with links to advice from Autotrader experts about how to cope with each aspect. We’ll provide a strong foundation for your used car undertaking from start to finish. It will direct you to solid advice covering topics from establishing a budget to financing and everything in between.

• What to Know About Buying a Used Car
• Affordable Used Cars: How Much Can You Pay?
• Get Prequalified for a Used Car Loan
• What to Look for in a Used Car
• How to Find a Used Car
• Should You Buy an Extended Warranty?
• Name Your Price
• Close the Deal
• Our Take

What to Know About Buying a Used Car

Although used car prices remained steady in early 2025, we believe they are likely to trend upward in the second half of the year. The basis of that forecast is an expected increased impact of the recent tariffs on new car prices, which we have yet to really feel. Historically, used car prices eventually follow new car prices, whether they go up or down. At the beginning of September, the average used car listing price was $25,393, up 1% from a year earlier.

The issue in the coming months is simply a function of supply and demand. If buyers turn away from more expensive new cars, they will flock to the used car market to save some cash. A used car market, we remind you, that was already tight because of depressed new car production during the COVID-19 pandemic. Those millions of new cars that weren’t built will never trickle into the used market. And that’s still negatively affecting used car inventories.

A tight market + increased demand = higher prices.

Pro Tip: Before buying a used car, always check the vehicle’s current value to avoid paying too much.

The other big influencer on today’s used car market is interest rates. The Federal Reserve lowered the benchmark interest rate in September, which likely means that creditworthy borrowers will soon be able to get lower rates for loans. According to the consumer-credit experts at Experian, the average interest rate for a used car loan in the first quarter of 2025 was 11.87%. This was down about 0.5% from the same period the previous year. However, it still exceeds the 8.6% in 2022. In other words, even if used car prices don’t go up in the second half of the year, high interest rates will still discourage some shoppers.

That said, it’s not an optimum environment for purchasing a used car.

Affordable Used Cars: How Much Can You Pay?

There are a lot of moving parts to consider when calculating how much you can afford for a used car. Prepare yourself for some disappointment during this process because what you can comfortably afford is probably less than you estimate. That’s because there is so much more than the purchase price or, if you finance, the monthly car payment that enters the equation.

Many of us believe we are on top of our personal finances as long as we don’t have any past-due payments. As my high school football coach would say, “That’s stinkin’ thinkin’.” Not particularly eloquent, but it does apply brilliantly to this mischaracterization of one’s financial health.

If you are sitting on a mountain of debt, making only the minimum monthly payments on your credit cards, or charging necessities at the grocery store, it indicates you are living above your means. Each of these examples is a clanging alarm bell. It’s time to get serious about your financial future, tighten your belt, and rein in your spending. It also means setting your sights low when shopping for a used car.

Creating a realistic monthly budget is the first step in your quest to buy a used car. Within a few dollars, you must know how much unused monthly income you can direct to car expenses. Never outspend your budget for a vehicle.

What About a Trade-In?

If you have a car to trade in, you need a solid idea of how much the vehicle is worth. If you are still making payments on it, you must also determine the payoff amount. The difference between its value and the payoff is the equity you have in your current car. That equity can go toward the down payment on your next car purchase. You may need to contact your lender for the loan payoff amount. Check your car’s fair market value, and you can also consider an instant cash offer. You may also need to sweeten the pot by adding some cash to the transaction. We recommend that your down payment, including your trade-in and upfront cash, be at least 20% of the purchase price.

MORE: Car Financing Glossary: Finance Terminology Explained

Insuring a Used Car

Auto insurance is another critical piece of information you must have before pulling the trigger on a used car purchase. Unless you pay cash, you must show proof of insurance before a lender will allow you to drive off in your new ride. Consequently, you might as well determine the cost of insurance before getting too far along in the buying process. Choose auto insurance carefully because your insurance premium will be a significant part of your monthly transportation costs.

RELATED: How Do You Add Insurance If You Buy Over the Weekend?

Get Prequalified for a Used Car Loan

If you have the funds to pay cash for your used car purchase, pat yourself on the back and feel free to skip this section. However, for most of us, getting prequalified for a car loan supplies a big piece of the budgeting puzzle if you borrow money to buy a used car. Prequalification may require a little work, but the effort is essential to determine the lowest interest rate you qualify for. Just a reminder, according to Experian, the average used car loan interest rate in the first quarter of 2025 was 11.87%. Car buyers with weak credit and credit scores below 500 may receive an interest rate as high as 21%. Shop around for the best financing interest rates, even if your credit is excellent.

MORE: 5 Tips for Financing a Car With Bad Credit

“Prequalified” is different from “preapproval.” Prequalified means a lender has looked at your creditworthiness and estimated the terms you qualify for based on your information. In other words, it didn’t verify your information. Preapproval means the lender investigated your credit and personal history. Based on that investigation, the lender will lend a specified amount for a predetermined interest rate. A prequalification won’t affect your credit score or credit report; a preapproval may temporarily affect your credit score because it sends a signal to the major credit bureaus that you may add more debt. However, keep in mind that securing a preapproval doesn’t mean you are locked into it. You can still shop around for a better financing deal.

Pro Tip: If you find a car you like and start doing mental gymnastics, trying to fit the expense into your budget, it’s too much car. Step back, get a grip, and find a more affordable vehicle. Remember, your monthly payment depends on the amount borrowed, the number of payments (term), and the interest rate. You can reduce the monthly payment amount by tinkering with any of those — or all three —  elements.

What to Look for in a Used Car

There are many factors to consider when buying a used car, some more important than others. Each used car has different trade-offs. Buyers must decide for themselves where to compromise and where to draw the line. For example, we are convinced that one-owner used cars have a better chance of being well cared for. However, the older the model, the more likely it has had multiple owners, but it may still stand the test of time.

Good Used Car Mileage?

A used car with fewer miles is almost always preferable to a used car with notably more miles. In general, fewer miles mean less wear and tear. However, highway cruising miles cause less wear and tear than stop-and-go city miles. Consequently, a car with a lot of highway miles might be in better shape than one with significantly fewer city miles. Regardless, as a rule of thumb, we still lean toward fewer miles than more miles.

“When buying a used car, miles are typically more important than the age of the vehicle,” said Brian Moody, Autotrader’s executive editor. “This is assuming you’re considering vehicles that are similar in age to begin with, say within five or six years. Once the age gap becomes more like eight to 10 years, there could be important safety features that the newer car will have because those innovations or options simply were not available when the older car was new.”

Pro Tip: Americans average about 12,200 miles of driving per year. Dividing the total miles on the odometer by the car’s age gives you its average annual mileage. If its annual mileage is significantly more than 12,200 miles, take a closer look at its condition and maintenance records before purchasing it.

How Old Should a Used Car Be?

There is no simple answer to the question of how old a used car should be? How old is too old for a car? The primary advantages of a more recent model-year used car are less wear and tear (fewer maintenance and repair costs) and more advanced technology (safety and connectivity). The best advantages of an older model-year used car are a lower purchase price and decelerating depreciation. What we mean by decelerating depreciation is that the greatest amount of depreciation is in the first three years, or as much as 30% to 40% in those first 36 months. Usually, the loss of value begins to taper off in the fourth year, with the percentage of value loss usually decreasing year by year after that.

Most of us don’t seriously consider depreciation. It doesn’t contribute to our monthly car expenses, and we don’t feel the pain of depreciation until we sell a car or trade it in. Still, that loss can be 50% to 60% of the car’s original value in five years. Ouch. However, as a used-car shopper, the good news is that you will pay much less for a 5-year-old version of that car than if you buy it new. Older cars tend to cost less to insure, as well.

Then again, older cars cost more to maintain and keep in good repair. In other words, it’s a trade-off.

Moody says shoppers looking for a reliable used car should be looking for something newer than 15 years old. “Going back further than that will likely mean a car that’s nearing the end of its service life,” he said.

“Also, a 20-year-old car simply won’t have the same number of safety features as a more modern vehicle,” Moody added. “Things like side curtain airbags, rear parking cameras, rear cross-traffic alert, and others will be more common and easier to find on a modern vehicle.”

A car’s age and condition are less critical when it serves as a second or a third family vehicle used for around-town errands. The more a car contributes to a family’s overall transportation requirements, the greater the need for it to be fully operational and in good condition. Consequently, how old is too old depends more on the car’s role and how much car you can afford than on some statistical average point on a graph where repair expenses and depreciation costs meet.

Used Car Reliability

Check out a list of the most reliable cars from nearly any year, and you will find it packed with Toyota and Honda models. Sure, there will be vehicles from other brands too, but more Toyota and Honda models than any other carmaker. Even so, judging the reliability of any specific used car, regardless of the manufacturer, is virtually impossible. Not every used Toyota and used Honda out there is a good buy.

Your best bet is to find a used car that fits your needs and budget, then research its reliability.

Pro Tip: Some carmakers make more reliable cars than others: Toyota and Honda spring to mind. The odds are, you can hold down repair costs, minimize depreciation, and have a vehicle that will last for years with a reliable brand. The key is finding an older model in good condition that you can afford from a carmaker with a reputation for reliability.

Used Electric Cars

If you are itching to dip your toe in the electric vehicle (EV) water, you can probably find a real bargain among used EVs. Recent studies reveal that EVs often depreciate about 30% more than internal combustion engine (ICE) cars. That’s bad news for someone buying a new electric car, but spectacular news for the used EV shopper. For the EV-curious, a used EV is a smart way to see if an all-electric car is for you. A big reservation when buying a new or a used EV is battery life, because replacing an EV battery will set you back several thousand dollars.

Consequently, the question of how long will an EV battery last is a good one. Although an EV battery’s capacity degrades as it ages, it can last 15 to 20 years. Moreover, as battery technology moves ahead, replacement costs will likely go down over the next decade.

How to Find a Used Car

We have two Autotrader avenues for finding the best used cars: Used Cars for Sale and Autotrader’s Private Seller Exchange/Used Cars for Sale by Owner. Shopping for and buying a used car online is the wave of the future, and Autotrader gives you two ways to do it.

What Is “Used Cars for Sale?”

Used Cars for Sale is Autotrader’s online dealer marketplace, with thousands of used cars offered by new and used car dealerships. Easy to use, just input the make and model you are looking for, your ZIP code, and click search. You can refine your search by model year, distance from your home, trim level, and so forth. There is a payment calculator to help determine if the price is within your budget, a trade-in value estimator, and so much more.

What Is Private Seller Exchange/Used Cars for Sale by Owner?

“For sale by owner” is self-explanatory. It’s a marketplace for owners selling personal vehicles. The Private Seller Exchange (PSX) is Autotrader’s tool for facilitating the sale of a personal vehicle between private owners (peer-to-peer or P2P). For sellers, it aids with the online marketing of a car by providing asking-price guidance, preparing the vehicle for showing, writing a description, and so on. It leads potential buyers to the inventory they are considering, vets the seller and the vehicle, suggests inspection professionals, secures payment, ensures a clean title, and so on. Basically, the PSX greases the wheels, enhancing the experience for buyer and seller. Both parties can pick and choose the PSX features they want, yet still get the pricing advantage of for sale by owner.

Certified Pre-Owned Cars

For used car intenders who are a little skittish about buying a used car, Certified Pre-Owned (CPO) bridges the gap between new and used. Although every carmaker has its own unique CPO program specs, they typically require vehicles to be less than 5 years old with fewer than 60,000 miles on the odometer. They must pass a multipoint inspection by a factory-trained technician. Any issues discovered during the inspection are fixed or replaced with factory parts. The original carmaker issues a CPO warranty honored by any franchised dealer. Often, the carmaker offers other value-added benefits like 24/7 roadside assistance and loaner cars during covered repairs.

Here’s Moody’s take on CPO: “Spending extra money on a certified pre-owned car really gets you one thing: peace of mind. Suppose you’re looking for a typically reliable brand of car like an Acura, Chevrolet, Honda, or Toyota. In that case, a certified vehicle might not be worth the extra money, especially if that used car still has some time left on its new car warranty.”

However, Moody says a certified vehicle makes more sense when considering luxury cars or European brands. “Some certified used vehicle programs offer additional perks,” he said, “like free maintenance, a trial period for satellite radio, and other little conveniences. Those things are nice to have, but the shopper will have to do the math and see if it makes monetary sense or not.”

Leasing

Consider buying your leased car if you are searching for a used car because your current lease is about to expire. If you like the vehicle and know it’s in good condition, why not finance it and stick with it? With the inflated prices of used cars today, the chances are that you can come out on top by purchasing the vehicle you’ve been leasing. Somewhere in the lease contract, the leasing company or dealer had to include a sale price at which you can buy the car at the end of the lease. That sale price is probably less than the vehicle’s value in today’s used-car market. In other words, you’ll be getting a deal.

Although some dealers may offer leasing for used cars, we don’t recommend it.

Get a Vehicle History Report

These reports provide a detailed history of the car, including changes of ownership, any reported accidents, odometer readings, unfixed recalls, and much more. If the seller doesn’t provide a vehicle history report, you should order your own. You’ll need the vehicle identification number (VIN) that’s etched on a metal plate where the windshield meets the dashboard on the driver’s side of the car.

If the used vehicle is for sale on the PSX, Autotrader will obtain the vehicle history report for you. If not, you can order a vehicle history report through an online service like AutoCheck.

You can also check for any outstanding recalls using the car’s VIN on the National Highway Traffic Safety Administration’s (NHTSA) website. Simply enter the VIN, and any outstanding recalls will be displayed.

Test Driving a Used Car

Once you’ve found the used car of your choice and checked out the history report, it’s time for that test drive. If you need guidance on how to test drive a car, we have it. The seller will probably insist on accompanying. Unless the owner is a friend or family member, there will likely be a bit of a trust issue. So, make the most of that passenger and use the test drive as an opportunity to ask any questions that have been nagging at you. Make sure you cover all the bases possible during the drive, leaving no stone unturned.

MORE: Top Questions You Should Ask a Private Seller

Get a Used Car Pre-Purchase Inspection

Again, if you use Autotrader’s PSX, we can help you arrange a pre-purchase inspection. This is particularly critical if the vehicle’s location is far away and you can’t personally check it out. It’s also a good idea if no sort of warranty is available. Securing a pre-purchase inspection is a sound idea, even if you test-drive the used vehicle. It’s not guaranteed to catch everything, but when performed by a professional technician, a pre-purchase inspection provides some peace of mind.

Performing Your Own Inspection

You don’t need to be an expert to spot obvious problems with a used car. If the car that grabs your interest is local, you can do a preliminary examination before spending money on a professional mechanic. Some things to look for in a preliminary walk around:

• Exterior body condition: Just about every used car will have some dings and scratches. However, look for signs of neglect, abuse, or major bodywork repairs. Paint that doesn’t quite match or paint on the rubber seals around doors, hood, and trunk can indicate an aftermarket paint job. Obvious rust on the body, door frames, or in the wheel wells can spell trouble. Do all the seams around the doors, hood, trunk, and body panels align?
• Tires: Is the tire wear even? Are the tires bald? Either indicates the vehicle isn’t well maintained.
• Head and taillights: Are the lenses cracked or fogged? Do the headlights and taillights operate properly?
• Suspension: Is the vehicle sitting level? Go to each corner of the vehicle and push down with all your weight. If the suspension is functioning properly, the body should rebound smoothly. If it doesn’t or bounces before settling, there is a suspension issue.
• Glass and windows: Inspect every glass area for cracks and chips. Then climb inside and make sure each door window operates smoothly.
• Interior: Study the upholstery, looking for stains, cracks, or tears. Do the seat adjusters work? Check the carpet for mildew and stains. Does the cabin smell? If the rear seat folds down, does that work properly? Check the trunk mat for mildew and under it for rust. They are indicators of a water leak. Switch on the ignition; do any of the warning lights remain illuminated? Does the audio system work?
• Under the hood: Generally, how does it look? Is there evidence of fluid leaks or corrosion around the battery terminals? With the engine cold, check the oil. Remove the dipstick to ensure there is no grit or water drops in the oil.

Should You Buy an Extended Warranty?

Every new car comes with a limited bumper-to-bumper warranty and a limited powertrain warranty. Varying in duration according to the carmaker, these factory warranties are usually for a minimum of three years or 36,000 miles to five years or 60,000 miles (bumper-to-bumper) and for as long as 10 years or 100,000 miles (powertrain). If you purchase a certified pre-owned car, it often comes with its own separate factory-backed warranty.

In determining if you should buy an extended warranty for a freshly purchased used car, your first order of business is to determine if any of the original factory warranty remains active. The clock begins ticking on the term of a new car warranty on its original purchase date. For example, if the original owner bought a 2023 Nissan Altima on June 1, 2023, the time limit of that three-year warranty began on June 1 and will expire on June 1, 2026. This remains true no matter how many times that Altima may change hands before June 1, 2026. Consequently, if you purchase that Altima within three years of its model year, you need to know precisely when it was originally purchased to calculate how much time may remain on the warranty.

On the other hand, the mileage limit is for total odometer miles, regardless of when they accumulate. If you buy a brand-new car with 100 miles already on the odometer, those 100 miles are included in the mileage total for warranty purposes. Our Altima example comes with a 3-year/36,000-mile limited bumper-to-bumper warranty, good for three years or 36,000 miles, whichever comes first.

Most factory warranties do transfer to subsequent owners because they’re tied to the VIN, but terms can change. Some brands reduce long powertrain coverage for second owners.

What Is an Extended Warranty?

An extended warranty offers some degree of coverage for a car after the new car factory warranties expire. Offering at least a little peace of mind, extended warranties are typically offered by third-party companies. They are expensive and may not cover many of the parts and systems most likely to fail.

If you choose an extended warranty, your best choice is an exclusion warranty. It lists specifically the parts and systems it doesn’t cover. Prices will vary, as well. Most extended warranties are structured so the vehicle owner pays for the repairs, files a claim against the warranty, and then waits for the warranty company to reimburse the claim. This leaves room for all sorts of mischief on the warranty company’s part. There are legitimate extended-warranty companies, but you’ll need to do some serious research to find them.

Do You Need an Extended Warranty?

If you purchased a CPO car, if there is still coverage left on the new car warranty, or if the used car has a solid reliability record and is in good condition, you can probably forgo an extended warranty.

Name Your Price

When you’ve picked the car you want, it’s time to get down to the numbers. Consider the car’s value on KBB.com and weigh that against what you discover during the test drive and inspection. Often, your initial offer will have nothing to do with the seller’s asking price, but you’ll have plenty of concrete information and research to back it up. You want to avoid insulting the seller, but don’t be afraid to make a lower offer. If you have to move up, do so in small increments. You should have a price ceiling and not go over it. However, you also should be willing to make some sacrifices for quality. The car with the lowest sticker price can often cost you much more in the long run, not to mention the headaches of having to make time for numerous trips to the mechanic.

If at any point you don’t have a good feeling about your negotiation, don’t be afraid to walk away. Remember, by this point, the seller has a lot of time tied up in you. It’s better for the seller to drop a few bucks than to go through the entire sales process with someone new. Everybody negotiates in their own way, and bringing along your ample internet research is a huge first step to getting a great deal. Knowledge is power!

Close the Deal

Before you sign anything, get everything you’ve been promised in writing — especially anything related to a money-back guarantee or any other kind of warranty. Even then, sign an “As Is” paper only if you know you’re getting a pristine vehicle because “as is” overrides any verbal promises the seller has made. By this point, you should know just as much about the vehicle as the seller, but you should still leave nothing to chance. And with all the paperwork in order, you can drive away in your new-used car smiling, knowing you’ve maximized your value.

MORE: Can You Return a Car You Just Bought?

Our Take

Buying a used car requires a leap of faith; however, there are several safeguards — many of which we have presented here — to ease the anxiety. Moreover, when taken step by step, the many elements of the used car buying experience aren’t nearly as daunting. Good hunting.

Editor’s Note: This article has been updated since its initial publication.