Buying a used car can be a great way to get a vehicle that fits your budget and your lifestyle. If shopping for new cars has given you sticker shock, it doesn’t mean you’re stuck with your current vehicle. Whether your current car is worn out, or you just want a new set of wheels, a used car can be an affordable way to make an upgrade.
If you’re shopping for a used car, truck, or SUV, here’s what you need to know about how to buy a used car.
Figure Out Your Budget
Before you even shop around for your next ride, you need to determine a budget. If you window shop first, you may find the perfect car that you can’t live without is not within your means. If you set your budget first, you will start your car shopping journey with reasonable expectations. It’s also a great way to avoid a car payment that you can’t afford.
Paying for your next car with cash is a good strategy when shopping for a used car. It’s a lot easier to save up $10,000 for a used Honda Accord compared to a new one that costs triple that amount. Sure, you won’t get all of the bells and whistles that come with the new model. However, you’ll be saving so much cash that it probably won’t bother you.
That said, if you prefer to take out a loan, you can get a used car paid off in less time with a lower monthly payment compared to a new car.
The downside is that automakers rarely offer zero-percent financing like you can find on a new car. Also, keep in mind that interest rates on used car loans are generally higher than those for a new car. Despite that, going with used instead of new is still a significant discount.
As for what a good monthly payment would be, that depends on your budget. A good rule of thumb is to spend no more than about 15 percent of your monthly take-home pay on transportation.
By that, we mean your car payment, gas, insurance, maintenance and any other expenses associated with your car ownership. If you’re shopping for a used car, you might be surprised by how nice of a car you can afford while keeping your monthly car expenses within that range.
Get the Trade-In Value For Your Current Car
If you’re planning on trading in your current car, this value works as a down payment on your new wheels. However, if you buy your used car from a private seller, then trade isn’t really an option. Regardless, you can get an Instant Cash Offer through our friends at Kelley Blue Book. All you need to get started is your VIN or your license plate number.
If you use the Instant Cash Offer tool, you can get an idea of what to expect for your trade-in value even if you don’t go through with the cash offer. Equipped with this number, you can factor it into your down payment when you’re doing the math on how much car you can afford.
Get Pre-Approved For Financing (If Applicable)
If you do decide to take out a loan for your used car, you’ll want to get pre-approved once you’ve determined the amount you’re going to borrow. To find that figure, you can use our Car Payment Calculator or our Affordability Calculator as a guide.
Getting pre-approved early on in the car shopping process provides many advantages. It gives you an idea of how much car you can afford, what your monthly payment might look like and how long it will take to pay it off. Getting pre-approved won’t hurt your credit score. That’s a good thing since you’ll want a strong number to get the best interest rate.
You don’t even need to visit a dealership or a bank to get pre-approved. The whole process can be done right from your desk or your couch. Let us help you get pre-qualified today.
Find the Right Car
Now that you’ve figured out your budget and have pre-qualified for a loan, it’s time to get into the nitty-gritty of researching which car is right for you. If there’s already a specific make and model that you have your heart set on, then you can research which trim levels, options, colors and wheel designs you like.
If you nothing strikes your fancy, start by thinking of the basics. Is this car just for you or will you be hauling passengers regularly? What about cargo space — do you need more of it? Is it your preference to drive an SUV or minivan? Would all-wheel-drive be beneficial in your climate?
Asking yourself questions like these can help you narrow down which class of car is right for you. From there, you can research popular models by reading our reviews, lists and comparisons to refine your search.
Consider Certified Pre-Owned
If you don’t want to pay full price for a new car, but you like the idea of a manufacturer’s warranty, then consider shopping Certified Pre-Owned (CPO). Buying CPO compared to a non-certified used car has a lot of advantages.
For starters, there’s the aforementioned manufacturer’s warranty (the length of which depends on the manufacturer). Warranties give you extra peace of mind.
Another perk is the fact that the car has gone through a thorough inspection before the sale. When this happens, you can be sure you’re getting a car in great condition with any important service items already addressed. A CPO car is generally a little more expensive than a non-certified used car, but the benefits usually outweigh the extra cost.
Each automaker has its own CPO program with its own set of criteria and coverage. Use our tool to compare certified pre-owned programs and find the one that works best for you.
Search Your Local Area
Now that you figured out financing, completed your homework to narrow your criteria and compared CPO programs, you’re ready to search. Starting the search with Autotrader for the car that checks all of your boxes is a great place to begin.
You can search by make and model, of course. But you can also narrow down the choices by certain trims, features, colors and price ranges. Tailoring the search means you won’t spend hours combing through listings trying to find the perfect car. The more specifically you can narrow it down, the better your chances of finding a car you love.
Look at the Vehicle History Report
Many used cars offered by dealerships come with a free vehicle history report such as AutoCheck or CarFax. These reports show important details such as accidents, past owners and service history. It will also share details on any open recalls.
If you notice an accident on a vehicle history report, you should definitely ask the private seller or dealership about the details. For example, if the accident was a fender bender that was professionally repaired, it may be no big deal. But it could be something more serious that would make you want to avoid the car.
Contact the Seller
If you’re looking at buying from a dealership, it’s easy to contact them through Autotrader to set up a time to come look at the car. If you’re buying from a private party, it’s a bit of a mixed bag in terms of how easy it will be to reach the seller.
Some are better at communicating than others. Others might be evasive. Still, there are many private sellers who are transparent, take great care of their cars and will give you a good car-buying experience.
Take a Test Drive
The test drive is critical to the buying decision. You can get a lot of information about a car online. But there’s no replacement for seeing it in person, sitting in it and taking it for a spin. Make sure you drive it both around town and on the highway to get a feel for both driving experiences.
Play with all of the infotainment controls (while parked), push every button and open every cubby. You want to gather as much information about the car as you can in a short period of time. If you have a family, bring everyone along and load up the car seats to see how well everyone fits.
You might test drive a car that checks all your boxes. But you might find that you just don’t like how it drives. On the flip-side, you could drive a car you were on the fence about and like it more than you expected. If you’re at a dealership, don’t be afraid to test drive many different models and trims. It will build confidence that you’re making the right choice.
Get a Pre-Purchase Inspection
Unless you’re buying a CPO car that has already gone through an inspection, it’s a good idea to get a pre-purchase inspection (PPI) on a used car. This is an especially good idea if you’re buying from a private seller. As a general rule, the PPI is paid for by the buyer and it’s worth every penny. You can buy a car on the condition of the results of a PPI. If something nasty comes up as a result of the PPI, then it can save you the expense of fixing a major problem.
Paying for a PPI and getting it scheduled might be a bit of a pain, but trust us, you’ll be glad you did it.
Close the Deal
By the time you get to this step, you can buy your used car, truck, SUV, or van with confidence. Car buying can be an intimidating process. However, when you do your homework and follow the steps above, then you’ll be sure you’re getting a good deal on a used car that’s right for you.