10 Things to Do When Buying a Used Car

How to buy a used car

Shopping for a used car can be a taxing experience. Buying a new-to-you vehicle is likely one of the largest purchases you’ll make, and there are many factors to consider. You don’t want to get ripped off on the initial investment and you want to be sure you don’t get stuck with a lemon and have to spend thousands on repairs in the coming years.

There are smart ways to approach used car shopping and below are ten tips to help you along the way.

1. Research The Market

It’s important to do your research before purchasing a car. Narrow in on several specific models that work well for you or your family and start to compare different trim packages, see how mileage affects price, and test drive the cars.

2. Ask About the Fees

Whether you purchase your car from an individual or a dealership, you may have to pay more than just the sticker price. On top of the price of the car, you may need to pay sales tax, documentation fees, and registration fees. Although the specific amount may vary based on the selling price and vehicle, you should be able to get an approximation of the cost by researching with your state’s DMV.

3. Research Financing Options

When buying a used car, you’ll also want to compare financing options. Auto loans for used cars may have a higher interest rate than for a new car, especially if you’re purchasing the vehicle from an individual rather than a dealership. Compare options from big banks, credit unions, and online lenders to find the lowest rate

4. Get a Car History Report

On first site you can’t always tell if a vehicle was in an accident or got caught in a flood, which is why a vehicle report, such as the ones available from CARFAX, can be helpful. The report shows you whether or not the airbags were deployed, how many owners the car has had, past maintenance checkups and oil changes, and an estimated retail value. You’ll also learn if the vehicle has a salvage title, its accident history, and if a previous owner changed the odometer.

5. Do a Test Drive

It’s always wise to do a test drive before buying a vehicle to check if you like the legroom, visibility, and the feel when you are driving the car. Test drives can be especially important when shopping for used cars as even if two vehicles are identical in terms of make and model they may drive differently. Also, you can listen for problematic noises or try to detect strange smells while inside the car that may indicate issues that your seller isn’t sharing.

6. Have the Car Inspected by a Mechanic

If you’ve done a test drive and are ready to make a purchase, take one step back and have a mechanic look at the vehicle first. Although you’ve looked closely at the car and the vehicle report can help inform you of potential problems, having a trained eye take a thorough look can save you from a headache in the future. The mechanic can both tell you about signs of past damage and share upcoming services that you’ll need to pay for if you buy the car.

7. Be Informed and Then Negotiate

One of the most important ways to save money, and the one step that many car buyers fear, is negotiating the price of the car. One of the reasons this isn’t step number one is that you want to have as much information as possible about the vehicle and the current market before you sit down to negotiate. If there are similar vehicles available for less, or you’ve uncovered that the car was in an accident or missed an oil change, you can use this information to try and get the seller to drop the price.

8. Look for a Warranty

If you’re looking at used cars sold by dealerships, you may be able to buy a “certified” used cars. Many dealers perform multi-point checks and repairs on vehicles before certifying. Depending on the dealer and vehicle, the car might be under warranty from the manufacturer, a third party, or you may have to buy an extended warranty from the dealer if you want warranty coverage.

Even if you buy a used car from a private seller it may be covered by a warranty. Some manufacturers allow warranties to transfer between owners. However, that’s not always the case so it’s best to research the manufacturer’s policy.

9. Transferring the Car Title

Vehicle titles, also known as the car titles or pink slips, are issued by the DMV and record who owns the vehicle. When you buy a car, you’ll need to get the title transferred to you to establish you as the new owner. One exception may be if you finance the purchase, in which case the lender may hold the title until you pay off your loan.

If you’re buying a car from a dealer, they can help walk you through the title transfer. If you’re buying from a private seller make sure they have a copy of the title. Depending on the state, there may be an area on the title itself where the seller and buy can record the sale. Alternatively, you may need to create and sign a bill of sale that lists the vehicle’s basic information as well as information about the seller and the sale amount. There are printable bill of sale templates available online. You may need to sign these forms in front of a notary and get them notarized.

After you fill out the transfer paperwork, you need to register the transfer of the vehicle with the state. You may need to go to the DMV and bring the completed paperwork, proof of insurance, and proof that the vehicle passed safety and emissions tests.

When private sellers don’t have the car’s title things get more complicated. If the paper was lost or damaged the seller can request a new copy from the DMV, but in some cases the seller doesn’t have a title because they still owe money on the vehicle. You may have to visit the lender with the seller, pay the lender directly, and work with them to transfer the title. Another option is to pay the seller, have the seller pay off the loan, and then transfer the title from the seller. The latter can be complicated and take a little longer, and you’ll want to protect yourself by getting the bill of sale notarized and consider using an escrow service for the payments.

10. Don’t Forget Insurance

Before you can legally drive a vehicle, you’ll need to buy an insurance policy. You’ll also need to show proof of insurance to register the vehicle. Compare rates from different insurance providers to find the best rates. If you have a homeowners or renters insurance policy, you may be able to get a discount by using the same insurer for your auto policy.