How to Buy a Used Car: A Definitive Guide

By Julie Blackley

15 Tips to Help Buy a Used Car From a Dealership or a Private Seller

New car prices have reached record highs, with the average new car exceeding a $37,000 price tag. For car shoppers on a budget, buying a used car presents an attractive buying option. In fact, purchasing just a one-year-old used car can save a consumer an average of 23 percent off the car’s new version. Those who are willing to purchase a slightly older three-year-old car can save an average of 38.2 percent, and consumers who purchase a five-year-old vehicle can save nearly 50 percent. 

Despite the cost savings, some consumers are wary of buying a used vehicle because of the uncertainty of the vehicle’s history and the difficulty of the buying process. However, being a well-informed shopper can help you navigate the used car buying process and find the right car at the right price. 

Here are 17 tips to help you buy a used car:

1.  Set Your Used Car Budget

While used cars are cheaper than new cars, they are still a major expense. That’s why it’s important for car buyers to set a realistic budget and determine how much you want to pay for your vehicle. You don’t want to go through the trouble of finding your ideal car only to learn that it’s more expensive than what you can comfortably afford. Setting a budget will also provide you with a good starting point for your car search. If you plan on financing, examine your monthly expenses to see how much money you can spend on a car payment. It’s wise to pay as high of a monthly payment as you can afford in order to shorten the term of your loan and save on interest. One helpful rule of thumb is that your car payment and related car expenses such as gas and insurance should not exceed 15 percent of your monthly take-home pay. If you plan on paying cash, determine how much money you are willing to put down. If you’re trading in a vehicle, do your research to see how much you will get for the trade-in as this will go toward your down payment. Be familiar with its Kelley Blue Book value and how much similar cars sell for so you can determine if the valuation is fair.

2. Beware Of Extra Costs

Make sure that you budget for more than the advertised price of the car. While each state has different taxes and associated fees, you can expect to pay an extra 10% on the purchase price. If you’re financing the vehicle, it’s important to understand that you’ll also be paying interest on that additional amount. You should also do your research beforehand to estimate the car’s ownership costs. A big part of this is insurance, which will be more expensive on a later-model vehicle. Talk to your insurance agent before you purchase the vehicle to get an idea of what your new rate will be. Be aware that insurance rates are also higher on sports cars and performance vehicles. You can also shop around with other insurance companies to get the best rate. If you’re purchasing an SUV or a less fuel-efficient vehicle, you should also factor in your additional fuel costs to make sure there is room in your budget.

3. Anticipate Your Ownership Needs

Before you begin your used car buying process, you should determine your ownership needs to help ensure that you make the right vehicle purchase. Some important things to consider include:
    • Why are you buying a car?: Do you need a spacious family hauler, or a fuel-efficient car for commuting?  
    • How long do you plan on keeping the car?: If longevity is important to you, you should consider vehicles that have proven to be among the longest-lasting cars
    • How important is fuel efficiency to you?: Should you consider a hybrid or electric vehicle to cut down on fuel costs?
    • What kind of features are most important to you?  Do you want the latest safety features like automatic braking and lane-departure warnings? Or comforts like ventilated seats or a heated steering wheel?

4. Go Window Shopping 

If you’re unsure of what kind of vehicle you’re interested in, visit some local dealerships to research different models, makes, and years of cars to help guide your decision. Even if you think you know which specific car you want, you should still check out some competitors since you might change your mind. Narrowing down your car search to a few models will simplify your search. By focusing on a few models, you can begin researching the different trims and model years of these vehicles to see which one is right for you.

5. Research Cars Online

Helpful used car websites and search engines have made it easier and more convenient than ever to find the right used carUsed car search engine uses data to objectively rank millions of cars and thousands of dealers, providing helpful insights and guidance to users to find a good car at a good price from a trustworthy seller. Other popular sites include Autotrader,, and AutoTempest. Used car search engines and research sites allow you to easily compare prices and features like warranties, vehicle histories, and condition. Doing some research online will help limit the number of dealerships you have to visit and will allow you to better streamline your search.

6. Should You Buy From a Dealer or Private Seller?

When you’re shopping for a used car, you have the option of buying a car through a dealer or through a private party. Private sellers can be found on car search engines or through sites like Craigslist. Here are some pros and cons of each:
  • Car Dealership Pros
    • Dealers Take Care of The Paperwork: If you buy from a dealership, they will handle all the paperwork. This includes the title transfer, the bill of sale, and the registration. 
    • Easy Financing: Dealerships have a finance department that allow you to get an auto loan directly through the dealer. While you can also get a loan through a bank or credit union, going through the dealer will save you some legwork. 
    • Warranty Options: Dealerships provide the option for sellers to purchase an extended warranty for added peace of mind
    • They Handle Your Trade-In: If you are trading in a vehicle, a dealership will take care of it for you and apply it toward the down payment of your new vehicle. Just make sure you do your research so you can get the best price
  • Car Dealership Cons:
    • Higher Prices: When comparing prices of dealerships and private sellers, dealers are likely to have a higher price. This is because of the overhead they have to pay like employee salaries and for the space of their showroom and lot. Dealers are profit-driven, so they will have higher prices to cover their costs. 
    • Commissioned Salespeople: It’s no surprise that car salespeople work on commission. They may pull out all the stops to try to get you to buy a vehicle, which can be uncomfortable if you know it isn’t the car for you.   
  • Private Seller Pros:
    • Lower Prices: Private sellers can sell their car for a lower price because they don’t have the overhead of a car dealership
    • Room for Negotiation: While some used car dealers have a “no-haggle” pricing model, you can often negotiate with a private seller. They might be in a rush to sell their car so they can purchase a new one and might accept a lower offer as a result. 
  • Private Seller Cons: 
    • No Warranty: Private sellers typically sell their car “as is.” If you have any issues after you purchase the car, you likely can’t take it back. 
    • Lack of Accountability: Private used car sellers aren’t subject to regulations, which means you aren’t protected if you purchase a lemon. They also don’t rely on word-of-mouth and online reviews like dealerships do, so they aren’t subject to the same repercussions if they scam a buyer.
    • They Don’t Handle Vehicle Registration and Other Paperwork: Unlike the dealership, you need to visit the DMV to handle the registration and title transfer

7. Shop Around

It’s important that you provide yourself with several options. You might have your heart set on just one vehicle, only to find a potential problem or learn that it’s already been sold. Ask the dealers or private sellers to tell you more about the cars and schedule appointments to test drive. Let them know that you are also interested in other vehicles as it could provide you with the power to negotiate.  

8. Get a Vehicle History Report and Conduct a VIN check. 

Knowing a vehicle’s history can help you anticipate issues you may have in the future. That’s why it’s important to ask the dealer for a car’s vehicle history report. A history report such as CARFAX or AutoCheck will provide important information about a vehicle’s history like if it's been in an accident, its number of previous owners, maintenance records, and if it has a salvage title. Understanding a vehicle’s history will help shoppers better understand the condition of the vehicle to help decide if it’s a smart purchase. 

Going through a car dealer isn’t the only way to obtain a vehicle history report. Online research tools like the iSeeCars VIN report can provide a free CARFAX report as part of its comprehensive VIN check tool. While a vehicle history report is critically important, it gives just some of the important information about a used car. A comprehensive VIN check will complement the vehicle history report to provide all the important information a shopper should know before making a used car purchase.

So what is a VIN check and how do you perform one? The seller of the vehicle should be able to provide you with the vehicle identification number (VIN)  from the car title or from under the windshield. Checking the VIN through the iSeeCars VIN Report will provide a comprehensive analysis to answer all the important questions car shoppers should ask before making their purchase.  You can download the VIN Report App, which will allow you to scan a vehicle’s VIN and get instant access to the report. The iSeeCars VIN Report will provide:

  • Odometer Reading
  • Price Analysis
  • Selling History
  • Condition 
  • Dealer Scorecard
  • Projected Depreciation 
  • Supply Analysis 
  • Best Time to Buy (and Sell) 
  • Theft Record 
  • Open Recall 
  • Title/Lien Info
  • Free Vehicle Report (When Provided by Dealer)

9. Thoroughly Inspect the Used Vehicle

You can conduct minor maintenance checks on your own when you see the vehicle for the first time. You should be able to catch any glaring problems, like rust, mismatched paint colors, and cracks or leaks under the hood. Also keep an eye out for signs of poor alignment like uneven tire wear. This could indicate a problem with suspension. If the vehicle passes your first examination, take it for a test drive and bring it to a trusted mechanic for a more thorough examination to ensure its in good condition

10. Make the Most of Your Test Drive

Before deciding on a vehicle when car shopping, it’s important to take it for a test drive to decide if it’s the right car for you. Since you will be spending so much time in your car, it’s important that you enjoy being behind the wheel and to make sure there are no noticeable defects that would become your problem after you make the purchase.

In order to make the most of your test drive, you should select a route that has all the terrains you will be driving on. You should also keep the radio off and limit your discussion with anyone in the car so you can hear the noises the car makes. For example, you should experience neighborhood driving, rough pavement, hills, tight curves, and a stretch of highway. 

As you are making the test drive, pay attention to the following: This will make it easier to diagnose any potential problems or issues a car might have like: does it shake at highway speeds, can it handle tight turns, does it provide a smooth ride, and does it make any concerning noises. 

  • Visibility: Do blind spots prevent you from safely driving the vehicle?
  • Acceleration: Do you feel that the car has enough power? 
  • Brakes: Are you able to break easily? 
  • User-friendliness: Do you feel comfortable with the controls and infotainment? Can you reach all necessary controls?
  • Steering: Are you able to easily and comfortably steer? How does it handle turns and corners?
  • Are there noises or vibrations?: Make sure you listen for any unusual noises or vibrations.
  • Test the Heat and Air Conditioning: If you are test driving in the winter, you might not think to test the air conditioning, but it is important to do so. Make sure all temperature controls are in working order.

11. Get An Inspection

Along with your own inspection, it’s important to get the car inspected by a trusted professional before you purchase. While a pre-purchase inspection can cost you $100-$200, it is a wise investment and can end up saving you a lot of money in the long run. It can also provide you with peace of mind that is well worth the added cost. If you’re buying a certified pre-owned vehicle, an inspection isn’t necessary because the vehicle has already undergone a rigorous inspection and is covered by a warranty.

An inspection can uncover any potential problems and let you know if a vehicle has been in an accident. Some accidents go unreported and will not show up on vehicle history reports, but a mechanic will be able to tell if any body work has been performed after an accident. 

12. Consider a Certified Pre-Owned Car

If you are purchasing through a franchise dealer, you will have the option to buy a manufacturer certified pre-owned (CPO) car. CPO cars are typically late model cars that are either off-lease cars or have been used as a loaner vehicle.  To qualify as a CPO vehicle, it must be under five years old and have less than 75,000 miles on the odometer. However, this will vary by manufacturer. CPO cars provide the best of both worlds by having the price of a used car and the peace of mind of a new car thanks to a good warranty and special financing offers. They can even provide added perks such as roadside assistance. These offers can only be found on their own franchised dealer lots. For example, you won’t find a manufacturer certified Honda at a Toyota dealer.

The downside to CPO vehicles is that they are more expensive than non-certified used cars. However, some cars tend to have lower CPO premiums than others. To see if its worth buying a CPO vehicle, you should check out the car’s predicted reliability rating to determine future repair costs. You can then outweigh those costs with the added premium that comes with purchasing a CPO car

13. Weigh Your Financing Options

Go to a bank or credit union to get pre-approved for a loan before you go to the dealership. You might get pre-approved for a higher amount than what you can comfortably afford, so make sure you stick to your budget. Even if you plan on securing an auto loan through the dealer, having a pre-approval can help you negotiate your rate. Because dealers make more money on vehicles they finance, they are likely to try and beat their rate. It’s important to note that most banks will not provide a loan on a vehicle that is older than five years old, so if you are relying on financing, you should consider newer vehicles. Be aware that your credit score directly impacts your interest rate, so you should try to have your credit score above a 680. If you don’t have favorable credit, you should do your best to repair it before you purchase a vehicle. 

When selecting the terms of your car loan, you should take out a loan for as short a term as possible. While stretching it out can provide you with lower monthly payments, you’ll also be paying a higher interest rate. For example, if you purchase a $25,000 used car and put $4,000 down with an interest rate of 4.5 percent, your monthly payment will be roughly $625 and you will pay $1,488 in interest over the duration of the car loan. If you spread the loan out over five years with a higher interest rate of 5 percent, you will pay roughly $396 per month and $2,778 in interest. While a smaller monthly payment might seem appealing, it will cost you a lot more in the long run.

14. Negotiate

As with new cars, the sticker price is the dealer’s asking price. Unless the seller has a no-haggle price guarantee, you’re likely to be able to get the car for less. Even if it’s untrue, let the seller know that you are still shopping for other vehicles and that you will walk away from the deal if they don’t meet your terms. If you think the price is fair based on your research of comparable vehicles, you can give them a bid of $500-1,000 below asking price. Let them know that you’ve done your research and you think this is a fair price. The worst they can do is say “no,” and you will still be able to accept the original asking price. The seller may take your price—or at least provide a counter-offer to get the car sold.  Even if they can’t bring the price down on the car, they may be able to provide you with more money on your trade in.

15. Know the Best Time to Buy 

If your situation allows, you should be aware that certain times of the year are more likely to result in savings on a used car. The best time to buy a used car is at the end of the year in November and December due to a high volume of trade-ins as buyers take advantage of end-of-year sales and incentives. This is also after new model year vehicles come out, so dealers want to move their older inventory to make room on their car lots. Holiday weekends such as Thanksgiving and Veterans Day provide a lot of savings opportunities. However, just because more deals can typically be found during this time of year, you can still find great deals all year round. You might just have to look harder for them. 

Ready to begin your used car search? The used car search engine is the perfect place to start. With millions of listings that rank the best deals first and 59 user-friendly search filters, it can help you find the best at the best price. And be sure to check out the comprehensive iSeeCars VIN check report to further help guide you through the used car buying process and help you get the best deal possible.