Used Cars for Dummies: How to Buy a Pre-owned Vehicle

Find out everything you need to know to to find the perfect first used car for you.

Are you buying a used car for the first time? Has it been a while since you shopped for one?


In either case, it’s probably not as difficult as you think to find the ideal car for you at a price you can afford. All you have to do is follow the steps we’ve outlined below and they will lead you to the vehicle of your dreams.


Did you know: It’s a smart move to buy pre-owned rather than new autos? Why? It will save you money on car insurance, registration and taxes. It also makes sense because cars have never been more reliable. Many vehicles perform without significant performance or repair issues for more than 100,000 miles.


1. Determine your budget.

How can you shop for a car unless you know how much you’re able to spend on it? You have to set a price target and figure out how you’ll pay for your vehicle before you can get to the fun part: Shopping for and test driving cars.


There are two ways you can finance a car:

  1. Paying cash. If you choose to pay for your vehicle outright, setting a budget is relatively easy. Don’t spend all your savings on the car itself. Set aside some cash to cover registration costs and insurance, regular maintenance and repairs you may need to make in the future.
  2. Taking out a loan. Getting a car loan allows you to protect your savings and possibly buy a more expensive model. Before you go shopping, get pre-approved for a car loan. It gives you a stronger position at dealerships. As a benchmark, plan to put at least ten percent down on a vehicle and finance it for three years. Your total monthly auto expenses, including loan payments, insurance, fuel and repairs shouldn’t exceed more than 20 percent of your monthly take home pay. If it goes higher than this, it could make it difficult for you to pay for other things like housing, food, clothes and medical care.


2. Think about how you plan to use your vehicle.

Before you go shopping, consider who you are and how you plan to use your car.


  • Do you have a family? If so, you may want to shop for an SUV or sedan that has plenty of room for everyone along with space for cargo.
  • Are you buying the car for a college student? Look for vehicles with superior safety ratings.
  • Are you a successful single professional? A status sports car may be a great option for you.

If you’re not sure what kind of vehicle could be right for you, speak to friends and family members who have lifestyles similar to yours. They may be able to guide you to options you should consider.


3. Figure out which features are important to you.

The more optional features a car comes with, the higher the price will be. It’s important for you to figure out which are really necessary — or not.


  • If you’re a poor parallel parker, you probably need a rear view camera.
  • If you live in a cold climate, a heated steering wheel and seats might make mornings more comfortable.
  • If you depend on your technology, a car that comes with bluetooth connectivity and a virtual assistant like Siri or Alexa built right in, will make driving more enjoyable.

Once you set priorities, you’ll have a better sense of what you can’t live without — and which features you could drop — when it comes time to select a final model that fits within your budget.


4. Create a short list.

This is where things start getting fun. (Finally!) Once you understand how you’re going to use your vehicle and what features are important to you, select three car models that could meet your needs. Do this by comparison shopping online to narrow down your options. Don’t do any actual shopping until you have a short list. It can be overwhelming to hit the car lot unless you’re able to focus on a few models.


5. Do some research.

Most car models look good when you’re comparison shopping online. Research the reliability of the autos on your short list. Don’t allow yourself to be seduced by cool cars that have a history of being lemons, or that could end up costing you a lot in repairs. Having a vehicle that regularly ends up in the shop takes all the fun out of car ownership.


6. Find dealers that are a good match for you.

No two used car dealerships — or sales reps — are alike. Find out about the ones in your area. Ask friends and family members about their experiences. Check out online ratings and reviews. Don’t shop at dealers that have questionable reputations, even if their prices are awesome. Service is a big part of the car buying process. Take time to find dealers who are a good match for you and that you can trust. It’s the only way you’ll have an enjoyable and satisfying shopping experience.


7. Educate yourself on pricing.

Get a solid sense of how much the models you’re considering should cost. It will help you stay in control when making your final decision.


When you research price, consider the following information:

  • Year, make and model. The model is sometimes referred to as the trim level. For example, when researching the 2015 Nissan Sentra, XE is one of several trim levels. Two cars may look similar, but different models within the same car line can have very different prices.
  • Options. These are special add-on features such as a navigation system, automatic parking or reclining seats. The more popular options a car has, the higher the price will be. Some options may not impact cost, or could lower it. If you’re buying a car in Miami, heated seats provide little or no added value to most drivers. They will likely not affect the price, or could lower it.
  • Mileage. As a benchmark, annual car mileage for most drivers is approximately 12,000 miles. If a car has been driven more or less than this, the price will be reduced or increased proportionately.
  • Condition. A car that has received a lot of tender loving care will cost more than one that hasn’t received the same level of love.

Doing some advance research will help you feel more confident that you’re getting a good deal on your preowned auto.


8. Review the vehicle history report.

Before you test drive any car, check it’s vehicle history report. Here are some things to look out for:


  • Does the car have a clean title? If a vehicle has been in a serious accident, fire or flood, it may have been totaled by the insurance company, which means it was declared a total loss. However, in some cases, it could still be drivable. If this is true, the insurer will issue a salvage title for the vehicle. This is done to alert future buyers. Avoid cars with salvage titles because many come with problems that could require costly repairs over time.
  • Has the car been in a serious accident? If so, it should appear on the vehicle history report. Many autos that have been in accidents don’t drive as well afterward.
  • Does the mileage check out? Disreputable car dealers might turn odometers back to increase the price of the autos they sell. A vehicle history report can alert you if this occurred.
  • Has required maintenance been done by a reputable shop? If not, it could be a sign that the auto hasn’t been well cared for.

If anything in a vehicle history report doesn’t check out, don’t take chances. Instead, move on.


9. Go for a test drive.

Once you settle on a car, take it for a test drive. Choose a route that includes a range of driving conditions, such as hills, highways, straightaways, curves and rough pavement. Drive with the radio off so you can listen to the engine. Look out for the following things during your test ride:


  • Acceleration and cornering: Does the car have enough power or does it feel sluggish? Does the steering feel tight and dependable or is it a little shaky?
  • Brakes: Are they responsive and solid when you stop in different conditions?
  • Visibility: Are there any blind spots that could make driving challenging?
  • Comfort: Are you able to reach all the controls while seated in a comfortable position?
  • Condition: Look out for odd noises or vibrations that could indicate issues.

If you feel confident about a vehicle after a test drive, it could be the one for you.


Tip: Before getting into a car for a test drive look for things like puddles under it, damp spots or rust that could be signs it has issues.


10. Get it inspected.

Even if a test drive goes well, it’s still smart to have a vehicle inspected by a reputable mechanic. It may come with a cost, but it’s the only way you’ll know for certain whether a car is in decent condition and what repairs you could face in the years ahead.


11. Double check the price.

Before you make a final buying decision on a car, make sure the price is fair based on all you know about it. Check to see if there are any added fees not already disclosed by the dealer. If you’re not 100 percent convinced that the price is right, you owe it to yourself to shop around until you find a better deal.


12. Buy it.

Here are the steps you need in order to take possession of the car:

  • Add it to your insurance policy before you drive it off the lot.
  • Before the contract is finalized, the dealership’s finance manager or your sales person may offer you the opportunity to purchase additional products and services, such as an extended warrantee or maintenance plan. Only buy these things if they seem to add value and will provide you with peace of mind.
  • If you have a pre-approved loan, the dealership may offer to beat it. It’s probably worth it to see if you can get a better interest rate and more favorable terms from them.
  • Review the contract for accuracy and sign it if it documents what you’ve agreed to.
  • Pay for the car or the down payment on it.
  • Once you sign the contract and pay your bill, the vehicle is yours.
  • Make sure you receive the title.
  • Register the car with your state in your name. Some dealerships may be able to register the car for you, which is convenient.

Once all these steps are complete, you can drive the car off the lot and take it home. Sure, it takes twelve steps to finish the preowned car buying process, but handling each one carefully and thoughtfully will help you feel more confident about your vehicle.

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