With the average new-vehicle price well into the $30,000 range, buying a used model, rather than a brand-new car or truck, is an option based on sheer necessity for millions of consumers. Unfortunately, shopping for a pre-owned vehicle of any kind can prove to be a far more complex transaction than buying a new one.

For starters, the used vehicle marketplace is larger and far more diverse than the new-car market, ranging from late-model low-mileage rides in like-new condition and with full warranties to older “beaters” with well over 100,000 miles on the odometer and more questions than answers. It can be difficult to find a particular used car from a given year, in the color and with the exact mix of equipment you desire, and in good running condition with reasonable mileage that’s located within a moderate distance from where you live. Perhaps most importantly, unlike a new car’s retail price, which is set by the manufacturer, used car costs are determined exclusively by the marketplace and depend on a wide range of variables.

Here’s a quick overview of the used-vehicle shopping and buying process:

Determine What You Can Afford

As is the case with buying a new vehicle, the starting point in the used-car shopping process is to determine how much car you can afford. Unless you’re paying cash, this will be determined largely on the amount of your down payment and your credit rating (better-qualified borrowers are generally given the most favorable rates). Check with local lenders ahead of time to both help determine what you can afford and to shop around and get pre-approved for the lowest available rates and most amenable loan terms.

You’ll then need to find out which vehicles meet both your needs and your budget. Fortunately, online shopping services, including Motor1, allow users to search for used cars and trucks being offered by local dealers based on their asking prices; if you’re entering the process with specific preferences, searches can be filtered with regard to make, model, trim level, equipment, mileage, and so forth. You can also check local print and online classified ads to get an idea of what you can reasonably afford.

If you’re looking at a used car that’s only a year or two old, be sure to compare the cost against buying a comparable new model.

If you’re looking at a used car that’s only a year or two old, be sure to compare the cost against buying a comparable new model. Automakers are luring buyers with rich sales incentives to help clear their inventories, and dealers are cutting generous deals on top of that. Depending on the make and model, a given new car might cost as much or less than a late-model used version, particularly considering the higher financing rates and shorter loan terms for pre-owned vehicles.

You might also want to consult Motor1's past new-model reviews for our astute opinions, and check the ongoing reliability of models you’re considering via sources like Consumer Reports (subscription required) and J.D. Power that rate used cars and trucks based on the results of owner surveys. Fuel economy ratings for all makes and models sold in the U.S. dating back to the 1984 model year can be found on the Environmental Protection Agency’s fueleconomy.gov website. And don’t forget to call your insurance agent ahead of time to compare premiums for all models under your consideration, which can vary considerably from one make, model, and vehicle type to another.

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Where To Shop

Though the Internet has certainly streamlined the research process, and a few companies are beginning to dabble with direct online pre-owned vehicle sales, for the most part used-car buyers still have the same three familiar alternatives for used-car shopping: new-car dealerships, independent used-car lots, and private parties.

A new-car dealer’s used vehicle department typically offers newer models in top condition and, as such, they tend to command the highest prices. Many are either sold with a used-car warranty and/or still have a portion of the original new-car warranty remaining in effect. Dealerships usually list their current used-model inventories on both used-car shopping sites and their own website, as well as in newspaper print ads and regional used-car classified publications. The best bets here are late-model “factory certified” models that pass a stringent mechanical inspection, carry the most-comprehensive warranty coverage, and often include other services like roadside assistance and low-rate financing programs.

The Federal Bureau of Investigation warns buyers to be wary of both print and online classified ads for cars that are located out of state and require payment via a funds-transfer service.

By contrast, neighborhood used-car lots typically feature older and lower-priced cars, and may offer only a token short-term warranty – if any coverage at all. Used car “superstores” like CarMax generally sell later-model vehicles with warranties and short money-back guarantees.

Generally, those looking for the best bargains, particularly at the low end of the price scale, will find them via private parties, though all sales are usually “as is,” and carry a greater amount of risk. For example, the Federal Bureau of Investigation warns buyers to be wary of both print and online classified ads for cars that are located out of state and require payment via a funds-transfer service. More often than not, the vehicle is never delivered and the “seller” is never heard from again. The FBI has also seen a rise in scammers posing as military personnel who need to sell their vehicles “quickly and cheaply” because they’ve either already been stationed overseas or are awaiting deployment.

The wise move here is to only consider vehicles being sold locally and never buy a car without physically examining it. There are other moves to make to protect oneself that we’ll discuss later.

The Buying Process

Before heading to a dealership or contacting a private party to kick the tires on any used cars or trucks you’re considering, be sure to conduct a second and more specific price search via online used-vehicle guides like Kelley Blue Book and Edmunds.com. Here you’ll find price estimates based on a specific model’s age, mileage, condition, and added options for your particular geographic area (values often vary by zip code based on local supply-and-demand issues).

You’ll find three sets of estimates, the first being a used vehicle’s retail value, which is the average price buyers in your area have recently paid for similar cars at dealerships. A second, much lower figure will be the car’s trade-in value, which is what a new-car dealer in your area can be expected to offer for a used vehicle. The third valuation estimate you’ll find is the “private party value,” which is what you can expect to pay buying the vehicle from an individual on an “as is” basis; it usually lands in between the other two estimates. Use these figures to help guide your later negotiations with a salesperson or seller.

If you’ve found one or more online used car dealers’ listings you’d like to pursue, contact the dealer to assure the model is still in stock and confirm the asking price before heading out the door. If you’re buying a car from a private party and are wary of venturing into unfamiliar territory to check out a car, arrange to meet the seller at a busy and brightly lit public location like a shopping mall parking lot.

Always take a vehicle you’re considering out for a thorough test drive to ensure it meets your needs and expectations. It should start up quickly, run smoothly, brake securely, shift effortlessly, and handle corners crisply. The interior should be clean and without lingering odors. Pay special attention to things that could come to annoy you greatly over time, like uncomfortable seats, difficult-to-operate controls, and so forth.

Always take a vehicle you’re considering out for a thorough test drive to ensure it meets your needs and expectations.

Be sure to check for obvious problems like fluid leaks, strange noises, and uneven tire wear. It’s always prudent to take a used car or truck you’re considering to a trusted mechanic to ensure that it’s in good running order before signing a bill of sale. You’ll also be able to get some idea of what to expect in terms of maintenance work and repairs that may become necessary down the road. This is especially important if you’re buying a car from a private party, and it’s well worth the cost.

Always run a model’s vehicle identification number (VIN) through a title-search service like CarFax or AutoCheck to make sure it hasn’t been previously flood-damaged or salvaged and subsequently rebuilt. Such reports will also give you an idea of when the car was brought in for service, how many times its changed hands, and whether it’s been in an accident. (Some online used car ads will link directly to such reports free of charge.) A car’s VIN is noted on the title and on a plate attached to the dashboard at the bottom of the windshield. Make sure the VIN on the car matches the one on the title.

It’s also a good idea to check the car’s VIN at the safety recalls page on the National Highway Traffic Safety Administration’s website to check whether the vehicle has been recalled. According to CarFax, one out of every five vehicles on the road has yet to be taken in for safety-related recall repairs, and no federal law prevents used-car dealers from selling vehicles that have unresolved recalls. Ask to see documentation that any recall service was completed, as well as to check that scheduled maintenance has been performed and the details of any recent mechanical repairs.  

Sealing The Deal

Unless you’re buying a used car from CarMax or other dealership that doesn’t allow haggling, never pay the asking price. (And even if it is a “one price” dealership, feel free to ask for deal sweeteners like extended warranty coverage.) A dealership’s salesperson will typically negotiate downward from the model’s advertised price, which is typically costlier than the going market rate. Likewise, private sellers will usually advertise a used car at a higher price than they’re ultimately willing to accept. Researching prices ahead of time, as noted above, can go a long way toward enhancing your leverage here. Still, the bottom line will largely depend on the seller’s urgency to sell the car, coupled with your own patience and negotiating skills.

Once you’ve settled on an acceptable transaction price, be sure to read the bill of sale before signing it; if you’re buying from a private seller, this could be as basic as a hand-written document that agrees to convey the vehicle from seller to buyer as is. Always take the time to examine the vehicle’s title before handing over cash or a cashier’s check. Ensure that it’s clear of a lender’s lien and that the person selling you the car is in fact the legal owner. Have him or her sign the title and note the car’s current mileage and/or other required information – having a signature in the wrong place or missing details can delay transferring ownership. Take the title to the nearest state motor vehicle facility as soon as possible to get it registered and licensed in your name.

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