How to Buy a Used Car and Save Money

Always Test Drive It

Used car buyer’s guide that will help you save money when buying a used car, truck or SUV.

Buying a used car instead of a new car has its advantages. First off, someone has already taken the huge initial depreciation loss on the vehicle when it was purchased new. Second, you can buy a used car just a couple of years old, with a lot more bells and whistles, for a lot less money.

There is not a factory invoice associated with a used car so you will have to estimate what a dealer paid for the vehicle. Other than that, there are only a couple of additional steps you should take to ensure you don’t end up buying an unreliable vehicle or someone else’s problem.

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How to buy a used car and avoid dealer scams

If you went used car shopping back in the day, you started with the local newspaper or drove from lot to lot, ultimately having to decide between a handful of vehicles. Once you found the one you liked, you had to make a snap decision to spend several thousand dollars. All while trusting you didn’t get ripped off and hoping the car you’re buying is reliable…Talk about STRESSFUL!

“INFORMATION IS POWER”

Today’s consumer has so much information available to them. This information, used correctly, makes the used car buying experience fun and far less stressful. For well over a decade I’ve helped friends, family, and thousands of readers save money buying a used car. My step-by-step used car buying guide is a combination of this modern-day information and my years of experience in the car business to guarantee you get the best deal possible and avoid car dealer scams. Let’s get started.

1. Begin the used car shopping process online

Today you can do 95% of your used car shopping online. You will still need to visit the dealer to visually inspect and test drive the vehicle. However, most of your pre-shopping can be done right from the comfort of your computer, tablet, or smartphone.

Car dealers know smart car buyers shop online, they also understand if they’re going to compete with other dealers in the area, they must post their used car inventory online for sale.

There are several million used cars for sale online. Used car listing sites make it easy to cast your net far and wide and then narrow down your search parameters to find the exact vehicle you’re looking for within minutes.

Recommended Used Car Shopping Sites

Ryde Shopper – has everything you need to find a used or certified pre-owned car. They focus more on finding you the lowest price instead of providing other additional information that can be distracting and deter you off your goal of buying a nice reliable used vehicle.
Edmunds - is one of the oldest used car research and review sites on the Internet. You're guaranteed to find a great deal on a used car within their hundreds of thousands of vehicles listed online.
Cars Direct – CarsDirect has been providing new car, used car, and auto finance related services and information to car buyers online since 1998. With well over a million used cars listed on their site, you are guaranteed to find the vehicle you’re looking for.
Motor Trend – is one of the best kept secrets on the Internet. Best known for their automobile magazine, MotorTrend’s referral service is 100% free and there’s no obligation to purchase. Just pick the used car you’re interested in, select all your local dealers, and receive deep discount Internet pricing.
Peddle – Is the fastest way to sell an old car online. Tell them a little about your ride, receive an offer instantly and they’ll even come to you to pick it up.
View all car buying tools

2. Check a used car’s past history

In my opinion, this is the most important thing you can do when buying a used car. There is an added cost, but I promise you, it’s well worth it. While you’re shopping online, for any vehicle you’re interested in, check its history by its VIN before spending any more time on it.

I’ve seen many people buy a used car only to bring it back a few days later after finding out it’s been in an accident or flood. Good luck talking a dealer into letting you out of the deal, you agreed to buy the car “as-is where-is.” It’s your responsibility to do your due diligence first, after you sign the paperwork it’s too late.

Completely avoid this nightmare by reviewing a vehicle’s history upfront as you’re shopping and comparing vehicles. All you need is the 17 digit vehicle identification number to get a vehicle history report. Dealers are aware people will pull their own vehicle history reports and will post the VIN on the used car listing online. If the VIN is not posted with the vehicle the seller is hiding something, do not buy the car and move on to the next one.

More history report tips

There are several fly-by-night vehicle history report companies on the web, some are better than others. I’ve personally used several of these companies and have pulled thousands of vehicle history reports in my career, and I have always preferred using AutoCheck.
For consumer use, I recommend the AutoCheck Multiple Report Plan, it allows you to run 25 reports by VIN for 21 days, making it the best value for the money. This gives you plenty of time to research and inspect the history of as many cars as needed before making a final decision. Most major auto auctions and lenders use AutoCheck over their competitors because of how accurate they are in disclosing vehicles that have been rebuilt or branded with frame damage.
It doesn’t matter if you’re looking at a used car or a certified pre-owned vehicle. I highly recommend you spend a little money and thoroughly inspect any used vehicle you’re considering. By doing so, you’re decreasing your chances of buying an unreliable car. Keep in mind a dealer doesn’t want to be stuck with a bad car any more than you do.
Read my vehicle history report guide to learn more about the information they provide.

Recommended vehicle history reports

AutoCheck Vehicle History Reports - will let you know if a vehicle has been reported in an accident, branded a lemon, damaged in a flood, reported repossessed or stolen, and more. Be confident in your purchase and enjoy access to benefits such as free Buyback Protection for registered, qualified vehicles.
View all car buying tools

3. Arrange used car financing

During the car buying process, most people are more worried about getting the “lowest price” than on the financing portion of the deal. As with buying a new car, you should have a pre-approved used car loan in place before visiting a dealership.

There are differences between new and used car loans. Interest rates for a used car loan normally run anywhere from 1-2% higher than what the rate would be for a new car. Depending on the age and mileage of the vehicle, a lender will raise the interest rate and/or shorten the loan term to decrease their risk. To make matters worse, most banks will not finance a used car over 5 years old.

You can check rates with your local bank or credit union. If you want to get the best rates and terms you will want to apply with well-known online companies that specialize and understand the used car market.

Recommended online auto loan sites

MyAutoloan - will shop the best loan rates for you. You submit one free, no-obligation car loan quote through their secure web site and within seconds you'll receive up to 4 loan offers from their auto lending partners. You can select the one that provides you with the most benefits and savings.
Light Stream - is a division of SunTrust Bank. They believe borrowers with good to excellent credit ratings should be rewarded with low rates and excellent loan products. Once approved with LightStream, you can negotiate like a cash buyer with the funds in your account.
Auto Credit Express - was founded June 1, 1999. They are one of the leading bad credit auto loan providers in the US and Canada. If you have bad credit, no credit or been turned down for an auto loan because of a low credit rating in the past, chances are Auto Credit Express can help.
My Free Score Now - will allow you to receive all of your personal credit reports and scores from all three bureaus (Experian, Equifax, and Transunion) by signing up for their free trial.
View all car buying tools

4. Negotiate a used car’s price

Most people get discouraged during the negotiation part of the car buying process. As long as you are prepared and have the information upfront you’ll have nothing to worry about.

Used cars do not have an invoice. This makes it almost impossible for someone to know what a dealer paid for a car. On top of not knowing how much a dealer has in a car, the used car market fluctuates up or down almost daily. So what can you do? You can calculate how much money a dealer should have in the vehicle and negotiate from there.

Once you receive the information on the car you want to buy from the listing sites above, you will next want to estimate what the dealer paid for the used car.

When negotiating the price of a used car, your goal is to purchase the vehicle below or as close to trade-in value as possible. Buying the car within this range will keep you from overpaying for the vehicle and allow you to rest easy knowing you got a good deal.

5. Get an extended warranty for your used car

When you buy a used car, you typically buy it “as-is where-is” unless the vehicle has any remaining manufacturer’s warranty left. If the vehicle doesn’t have any warranty left, you will be responsible for any repairs the vehicle incurs. Always check the age of the vehicle and the mileage to see if the manufacturer’s warranty is expired.

Dealers have huge mark-ups on the extended warranties they offer. I suggest getting a couple of free quotes from reputable online warranty companies to compare against the dealer. You can use these quotes as leverage when negotiating the price of a warranty with the dealership’s finance department.

More auto warranty tips

Some dealerships will promote high mileage long-term warranties at a cheap price. Beware of this type of coverage, they may be “Powertrain Only” warranties and only cover items that do not commonly wear out.
No matter where you purchase an extended warranty, make sure you read the fine print and understand what’s covered and more importantly, what’s not covered.
Always get a copy of the warranty paperwork.
Not all auto warranties are created equal.
Read more about auto warranties, what they cover and how to buy coverage in my extended warranty buyer’s guide.

Recommended Auto Warranty Sites

Complete Car Warranty - provides you with an instant quote, unlimited repairs and is accepted by all dealers and mechanics.
Endurance Vehicle Protection - offers a 30-day money-back guarantee and there’s no middleman involved.
Olive Mechanical Breakdown Insurance - offers free 60 second quotes easy monthly payments, cancel anytime, quote, and buy 100% online.
View all car buying tools

Additional used car buying tips

Various tips and useful advice about the used car buying process.

Don’t be afraid to walk

Don’t be afraid to walk away from the deal

Don’t let your emotions take over, I’ve seen people make some pretty dumb purchase decisions based on emotions. Just so you know, a dealer knows when you become emotionally involved and they will hold their ground. If the dealer is not willing to deal or negotiate, kindly thank them for their time and walk away. I promise you will find another car you’ll want to drive.

Certified used cars

Buying a certified used car

The word “certified” or “certified pre-owned” really doesn’t mean that much. It was created by the all mighty car gods to stimulate the used car market to sell more cars. What it does mean is the dealer can mark up the vehicle’s price and entice you with a cheap powertrain warranty that’s honored by the manufacturer.

Most dealers use the same standard Used Car Inspection (UCI) checklist if they certify them or not. There are only three manufactures that take the word “certified” seriously, and that’s Mercedes, Toyota, and Honda. They will spend crazy money to bring one of their cars up to certification levels.

My advice is to not fall for the “certified pre-owned” BS. A car is a car no matter what designation is assigned to it. You should check the history and have a mechanic inspect any vehicle before you buy it. It’s better to know you’re safe than be sorry.

Research first

Research different used car makes and models

I’m not talking about the history of the specific car you’re looking to buy, I’m talking about researching the actual make and model of the vehicle. Check past reviews, check recalls, check and research everything. What are the typical repairs, known weak points, price points, and cost intervals. A great source for finding good information is using forums or fan blogs when possible.

Used program cars

Should you buy a program car?

I get this question from readers all the time. So much, I wrote an entire blog post about it. If you have the same question, go give it a read – “Should I Buy a Rental Car.”

Program car is just a fancy name for “off-lease” or “previous rental vehicle.” In actuality, that’s where most program cars come from, previous rentals. What sounds better to you? I have this “program car” for sale, or, I have this “previous rental car” for sale?

Think about the last car you rented. How well did you treat it? How many people drove it like they stole it and just ragged it out, you’ve heard the famous quote, “Oh, it’s just a rental.”

At my dealership we would tell customers that previous rentals, I mean program cars, are well maintained because they must keep them running so the rental company can make money. The truth is these cars go well over the recommended preventative maintenance schedules, especially oil and filter changes because they get re-rented as fast as they hit the lot.

I’ve sold thousands of program cars in my dealerships over my career. Many of the low mileage used cars you see on a dealer’s lot are previous rentals. You will ultimately have to decide if you want to buy a program car.

Program cars normally have some minor interior and exterior nicks and scratches along with marks in and around the trunk area from people tossing luggage into the trunk. An AutoCheck used car vehicle history report will notify you if a vehicle was previously a rental.

As long as you review the history report and have the vehicle inspected you will increase your odds greatly from buying a bad vehicle. So if you’re in the market to buy a used car, a program car may be the right choice for you.

My recommended used car sites

Ryde Shopper, Edmunds and Motor Trend are the quickest way to compare used car clearance prices in your local area. These online sites will provide you with free, no-obligation price quotes and the discounts you receive will give you confidence on your next used car purchase. Walk away from the dealership knowing you received a good deal, not hoping you did.

How to Buy a Used Car and Save Money

How to buy a used car and avoid dealer scams

1. Begin the used car shopping process online

2. Check a used car’s past history

3. Arrange used car financing

4. Negotiate a used car’s price

5. Get an extended warranty for your used car

Additional used car buying tips

New Car Buying

Buying Used Cars

Car Trade-In Tips

Car Buying Guides

Extended Warranties

Auto Tool Reviews

Auto Cheat Sheet Insider