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How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

What to Look for When Buying a Used Car

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Content was accurate at the time of publication.

You can save thousands by buying a used car instead of a brand-new car at a dealership, but these savings come at a price: your time. You’ll have to do some legwork to make sure that you’re not buying a car in need of expensive repairs.

When you buy a secondhand car, it’s up to you to determine that the car has been well maintained and is accident free. Any used car purchase comes with the risk that your car will require unexpected maintenance, but doing your homework will give you peace of mind that you likely won’t be on the hook for repairs in the near future.

When deciding how much to spend on a used car, you should look beyond the sticker price and at the actual cost of owning the car. Monthly payments are only part of the total cost of ownership. Here’s what you’ll need to fit in your budget:

  1. A down payment and monthly car loan payments. The more money you put toward your down payment, the better — your monthly payment will be lower, and you’ll be less likely to owe more on your loan than your car is worth. You can use a car affordability calculator to decide how much you can comfortably set aside for monthly and down payments.
  2. Taxes and fees. Most states charge sales tax for secondhand cars, and you’ll also need to pay a registration fee and title transfer fee to register your used car in your name.
  3. Insurance. You’ll need to set aside money each month to insure your car. If you’re already a car owner, it can be tempting to skip the research and go with your former insurance provider. But we recommend getting new car insurance quotes so that you can be sure you’re getting the best deal.
  4. Fuel, maintenance and repairs. Whether you’re buying a car that uses gas or springing for an electric model, you’ll need to factor in the cost of fuel maintenance and one-off repairs. AAA has a driving costs calculator that can help you estimate these costs based on the year, make and model of the used car you plan to purchase.

Ideally, you should determine how much you want to pay for your used car before you start window shopping. If you start browsing online before you’ve decided on a budget, you run the risk of falling in love with a car that costs more than you can comfortably pay. Your car should fit your budget, not the other way around.

Before you step foot in a dealership or meet with a private seller, consider getting a preapproved car loan. This might sound backwards, but spending time getting quotes up front will help you negotiate the lowest rates possible, even if you do end up financing your car through a dealership.

The process of getting a loan for a used car is simple. You can apply for quotes directly from lenders, who will tell you what rates you qualify for based on factors like your credit score and your desired down payment, loan term and monthly payment. You can also fill out one form with LendingTree and get car loan offers from several lenders.

These days, buying used cars typically starts on the internet. Once you’ve decided what car to buy, you can search for a car on a manufacturer’s website, on car-buying sites like CarMax or in online marketplaces like Craigslist. Your experience will vary depending on what kind of vendor you choose, and we’ve outlined the pros and cons of each below.

Dealerships

Once you’ve chosen your ideal used car model(s), finding used cars for sale at all of your local dealerships is a matter of doing a quick search on the manufacturer’s website.

You’ll likely pay a higher markup if you’re buying a used car from a dealership, but there are some benefits. Car dealers typically give you a vehicle history report for free, and they must display a Buyers Guide to the vehicle, which will contain important information like the car’s vehicle identification number, or VIN. Plus, dealerships are the only place you can find certified pre-owned cars that have been refurbished to the manufacturer’s standards.

Car-buying sites and no-haggle dealerships

When looking for the best website to shop for used cars, many people start with CarMax or Carvana. CarMax has brick-and-mortar dealerships in addition to its online presence, while Carvana conducts their sales entirely online. Buying a used car on any of these sites is typically more convenient than heading to your local dealership or meeting up with a private seller.

Online car retailers like Carvana and CarMax also offer a no-haggle car-buying experience, meaning the prices you see are what you’ll pay to purchase the vehicle. For some used car buyers, this is a relief — negotiating a car deal can be a stressful part of an already complicated process. But you may pay more for a car when you can’t negotiate its price, and these higher list prices can be a dealbreaker.

Private sellers

You’ll likely pay less for your used car when you buy from a private seller, but you’ll also miss the federally mandated consumer protections and any warranties that you’ll get at a dealership. In short? If you’re buying your car on Craigslist or from someone you know, you’ll need to do more research to make sure the car is in proper working condition and you won’t be stuck paying for repairs. At the very least, you should get a vehicle history report and pay for an inspection from an independent mechanic to ensure that the car is reliable and road ready.

Once you’ve identified a specific car that you’re interested in, your job as a used car buyer is to gather as much information about the car’s history as possible in order to avoid buying a lemon. There are four primary tools that can help you with your research: a VIN check, a conversation with the seller, a test drive and an inspection from an independent mechanic.

VIN check

Your first step in researching a car’s history should be to get a VIN check. You’ll uncover a vehicle history report that outlines the car’s maintenance, ownership, recalls and accidents. Scour this report for red flags like multiple accidents or a lien that hasn’t been paid off.

Conversation with the seller

One of the best ways to gather information about a car is to have a conversation with the person who’s selling it. Of course, you’re likely to get more thorough answers if the seller is the car’s owner, but it’s worth compiling your list of questions to ask when buying a used car before you meet up with any seller, even a salesperson at a dealership. If you have any concerns about the car after doing the VIN check — like if the car’s maintenance records weren’t listed — be sure to include them in your list of questions. It’s possible that the seller will be able to provide additional records.

Test drive

Whenever possible, you should test drive a car before you buy it. (Some online car-buying sites don’t offer test drives.)

Check out the interior and exterior of the car for signs of damage, neglect or undisclosed collisions. Make sure that all of the car’s parts (lights, knobs, doors, etc.) are in working condition. And when you take the car on the road, be sure to drive on surface streets and highways to determine that the car can handle different driving conditions.

Inspection from an independent mechanic

One of our best tips for buying a used car is to get an inspection from an independent mechanic. A pre-purchase inspection — and an all-clear — from a professional will give you the peace of mind that all of the car’s parts are in proper working order, and the money you’ll spend on a fee for the mechanic’s time is a fraction of what you’d pay if you ended up with a car in need of serious repairs.

Whether you’re buying a used car from a dealer or from a private seller, you should come to any negotiation armed with information that will help you get the best price possible. Bring an estimate of the car’s value from Kelley Blue Book or Edmunds, along with any relevant information from the vehicle history report. For instance, if the car has water damage or has been in an accident, it’s reasonable to use this information to negotiate a lower price.

More importantly, if the private party seller or dealership isn’t willing to bring down the listing price to one that fits your budget, be willing to walk away. There are plenty of websites where you can find a used car that fits your needs, and it’s never a good idea to spend more on a car than you can afford.

  Want to know what comes next? Here’s what to do after buying a used car.