Auto Loans

How to Buy a Used Car in 10 Simple Steps

It’s surprising how many people discount the idea of buying a used car when there are so many good deals today on well-maintained vehicles. People are mainly concerned about inheriting other owner’s troubles, from strange noises and hidden mechanical issues to funky after-market gizmos but, according to car experts, consumers purchase more than 40 million used vehicles a year from dealers and private parties.

Let’s find out how to buy a used car. Not all of them are lemons! Below are ten simple steps to help you navigate the used car buying process and find your best option.

10 Steps to Buying a Used Car recommends a 10-step process that buyers can use for scouring the list of available used cars to find just the right one, in sound condition, and for sale at the right price:

Create a realistic budget and stick to it

When you set a budget for a buying a used car, remember you’ll need to pay for licensing, insurance, maintenance, and potential repairs. The budget should also include additional funds for repairs if the used car is out of warranty. Edmunds recommends that consumers allot no more than 20 percent of their income to a used vehicle. If the car is to be financed, there are loan and interest costs to consider as well. Use LendingTree’s Auto Loan Calculator to estimate monthly payments based on:

  • Purchase price
  • Credit score
  • Interest rate
  • Down payment
  • Taxes
  • Trade-in value (if applicable)

Assemble a list of used cars in your range

Edmunds recommends that buyers choose the right car in terms of their immediate and long-term needs, resale value, consumer ratings, car reviews and road tests. Look at reliability and maintenance costs. For example, if a fuel-efficient model is known for brake replacements, weigh the plusses and minuses. Shoot for at least three different makes and models to compare within the price range and list of features.

Find out the current prices on years and models

Today’s dealership and private party listings are widely available online and in newspaper auto supplements. According to Edmunds, Certified Used Cars will fetch the highest prices, followed in order by dealerships and used-car lots, and, finally, the lowest prices will often be offered by private third parties. Kelley Blue Book maintains current listings for trade-in value as well as for used-car prices in your zip code.

Shop for used cars nearby

Today consumers can shop digitally to save time. Sites like, AutoTrader, and Edmunds allow potential buyers to find an inventory of cars in their location, with results filtered by year, price, features, gas mileage, and the odometer reading.

Research the vehicle’s history

There are paid and free resources that help consumers to check the history of vehicles on their list of cars. Businesses such as Carfax and AutoCheck will produce a report on a specific vehicle for around $45 – or free to persons purchasing a car through them. You’ll need the 17-digit vehicle identification number (VIN) to pull a report on your own. Find the VIN for any car for free at the National Highway Traffic Safety Administration to research recalls or other major issues with the make and model. Consumer Reports and J.D. Power rate used cars based on owner reports.

Contact the owner or dealer

Edmunds recommends that you contact a dealership or private party directly to get the ball rolling before venturing out to look at the car. When phoning a dealership, determine if the car listed is the car on hand and if it’s still available.

Kick the tires and go for a test dive

When test-driving a car, ask to see the service records. Avoid getting into distracting conversations with a dealer or private seller. Instead, pay attention to:

  • Whether the vehicle is comfortable in front and rear seats
  • The brakes function quietly and effectively
  • If there are unexplainable loud noises
  • If there are warning lights glowing on the instrument panel
  • The tires have lots of tread remaining
  • The engine and transmission operate smoothly
  • The heating/AC system performs well
  • The dip stick shows clean oil and full levels

Order a car inspection

It’s foolish to buy a used car without having it checked out by a certified mechanic. If a private seller won’t agree to an inspection, move on to another car. A dealership typically will release a used car for an inspection by an independent mechanic. The $100 or so spent on an inspection can potentially save thousands of dollars in unexpected repair bills. In some cases, mechanics will also identify minor repairs that make the car affordable as-is. With a private seller, you can ask for a lower price that makes up for the necessary repairs or upgrades. Dealers may agree to fix some deficiencies prior to the sale.

Bargain for the best price

Both sides in a used vehicle transaction are looking to maximize what they can get out of the vehicle. Negotiating is always a good idea. Offer less than you intend to pay and work up from there to a compromise. Perhaps a dealer will offer a good price on an extended warranty. A private party seller may be desperate to get rid of the car and buy a new one. Compare the final price against what the make and model is selling for in your zip code based on Blue Book or Edmunds estimates.

Close the sale and do the paperwork

If buying a used car from a private party, be sure to get the signed title and make photocopies of all the paperwork, odometer reading, checks, bill of sale, and pink slip. Take the title and smog check certificate to the department of motor vehicles and pay the licensing/registration fees.

With a dealership, be sure the final contract details all the terms for extended warranties (if applicable), license fees, sales taxes, and a pertinent smog certificate. Be sure to update your insurance for the purchased vehicle. You may choose to have the dealer provide financing. However, you may do better to get competitive offers on used auto loans for free at LendingTree.

Questions to Ask When Buying Used Cars

  • What is the asking price?
  • How many miles are on the odometer?
  • What is the vehicle’s gas efficiency?
  • Why is the owner selling?
  • Has there been a recall on this make and model?
  • Has the car been modified or been in an accident?
  • How many previous parties owned the vehicle?

Choosing to buy a used car from a dealer vs. individual seller

Now that you how to buy a used car, it’s time to determine whether you are going to buy your car from a dealer or from an individual seller. When it comes to buying a used car, dealerships and private-party sellers both have their share of plusses and minuses. A buyer may find the private-party seller more willing to haggle on price, while the dealership may offer extended warranties and other perks. With the dealer, all the paperwork on title and registration are handled for you. With a private-party, the buyer has a visit to the DMV in their near future.

Dealership plusses and minuses

A dealer can offer extended warranties, certification guarantees on used vehicles, trade-in opportunities and financing, and they handle the paperwork. They may also have several vehicles on the lot in the same make, model, or price range. On the disadvantage side, a dealer may hustle for a top price, offer a different vehicle outside of your budget or list of features, or pressure you to the point of nausea.

Private seller plusses and minuses

With a private party, the buyer can show the Blue Book or Edmunds value on the make and model to justify the price they’re seeking. You may be able to tick down the price by listing all the things that have to be done to bring the vehicle up to Blue Book standards. On the negative side of the ledger, with a private party, you’ll handle the registration and paperwork. The seller may not agree to an inspection from a third-party mechanic. The buyer can also forget about getting credit for a trade-in or have the option of buying an extended warranty. And lastly, the private party won’t have similar vehicles on the lot if their car is unsuitable.

The car search should not be mutually exclusive: A list of potential vehicles that includes dealerships and private-party sellers can cast the widest net possible to find the right car and the best price.


Compare Auto Loan Offers