If you’re looking for a good deal on a vehicle, you may be wondering how to buy a used car. Purchasing a pre-owned car over a new one may save you money, especially now with vehicle prices and interest rates on the rise. The used car market is more popular than ever, but how do you go about navigating it?
Remember that car insurance is mandatory in almost every state. Before driving a car you’ve purchased, it’s important to choose a policy that adjusts to your budget and needs. Infinity Insurance Agency, Inc. (IIA) works with drivers to help them find affordable, top-notch auto insurance options.
From setting a budget to inspecting the car, to finalizing a purchase, let’s go over some helpful steps to keep in mind when buying a used car.
1. Start with a realistic budget
Before going to a dealership or reaching out to private sellers, it’s probably wise to decide what your budget will be. Keep in mind that your used car budget should include more than just the purchase price. You may factor in expenses such as:
- Taxes
- Dealership fees if you buy from a dealer
- A professional mechanic inspection
- Registration
- Any potential repairs or immediate maintenance, such as tire or brake replacements, or fluid refills
- An extended warranty, if you choose to purchase it
- Insurance: Depending on the car’s age, model, and make, auto insurance premiums may vary
Once you’ve factored in these added expenses, you may want to set a range for your purchase budget. You’ll want to reference it as you shop around for vehicles or negotiate with a private seller.
2. Decide where you’ll buy a used car
Once you’ve set a budget, you may want to consider whether to purchase a pre-owned vehicle from a dealership or a private seller. Each of these options has its pros and cons, so let’s see how they differ:
Dealership pros
A dealership is a licensed business that sells new or used cars. They often handle the whole purchasing process, including financing and paperwork. Here are some benefits of buying from a dealership:
- A dealership may offer certified pre-owned (CPO) vehicles with warranties. A CPO is a car that has undergone a thorough inspection and often comes with an additional manufacturer's warranty.
- Dealers may offer financing and warranty options. Additionally, some states require dealers to give buyers the right to cancel the purchase. Some states, like California, also ask dealers to adhere to “Lemon Laws,” which protect buyers when they buy a vehicle that can’t be repaired.
- They may let you trade in your pre-owned vehicle and use it as part of the payment.
- They often offer more vehicle options, including various makes, years, and models.
Private seller pros:
On the other hand, buying from a private seller means purchasing the vehicle from an individual, often its previous owner. Private sellers may list their vehicle on online marketplaces or advertise through word of mouth. Here’s how you may benefit from buying a used car from a private seller:
- You may get lower prices. A private seller is often the owner of the used car. They most likely don’t have business costs and usually don’t charge the fees that dealerships do.
- You often have more room to negotiate. Private sellers may want to sell their vehicle quickly, making them more amenable to lower prices.
- You may get a more detailed car history. Buying from an owner lets you ask them all sorts of questions about the car’s history, including any accidents, repairs, or modifications. You should ask the seller for any relevant vehicle records.
Keep in mind that a private seller may also choose not to disclose certain information. Whether you buy from a dealer or a private seller, you can look up the car’s Blue Book Value. This is a trusted standard that shows the estimated car price based on its make, model, age, mileage, and condition.
3. Research the vehicle’s history
You may run a vehicle history report by using the car’s vehicle identification number (VIN) through your trusted report service. The VIN is a number located usually at the bottom of the driver’s side windshield or inside the driver’s side door jamb, according to the Texas Department of Motor Vehicles. This number is like a 17-character code that you can use to see the car’s details and history. Just like a Social Security number would give you a person’s information, the VIN holds several details for a car.
Besides any history report provider of your choice, you may use:
- The National Highway Traffic Safety Administration’s SaferCar website to see if a vehicle has any unresolved issues corresponding to safety recalls in the last 15 years.
- The National Insurance Crime Bureau lets you use a VIN to see if a vehicle was reported stolen and never found or declared a total loss. You can also see whether it has open recalls.
Once you have a vehicle history report, keep in mind the following potential red flags:
- Its accident history
- Flood or salvage titles: These mean the car has a history of being badly damaged.
- Odometer rollbacks: These show if someone tampered with the car’s odometer to reduce its actual mileage.
- Multiple owners in a short period
- Any listed recalls may affect the car’s resale value and lead to more expensive insurance premiums.
A clean car history may also mean lower insurance premiums. If you wish to buy and insure a used vehicle, a friendly IIA agent can help you find a policy option that fits your budget.
4. Inspect the vehicle thoroughly
Exterior and interior inspection
It’s well worth checking the vehicle’s exterior and interior. Unless you have some mechanical experience, it’s probably best to have your trusted mechanic run a thorough check of the vehicle you want to purchase. While this is an extra expense, it may prevent future costly repairs.
Some details a professional may want to look over include:
- Dents, rust, or mismatched paint
- If the tires show an uneven tread (This may suggest alignment issues)
- Cracks in the windows or lights, which may expand, leading to costly replacements
- Any advanced interior cracks, stains, odors, or signs of flooding
- Fluid levels such as the oil, coolant, and transmission fluid
- Signs of leaks or rust
- If the battery is older than three or four years, it may need replacement soon
- Any squealing sounds when running the engine, which may indicate a loose belt
A professional mechanic may also catch any safety issues with the vehicle that you might miss and give you suggestions for potential repairs the car may need. You can use this information to negotiate the price when buying from a private seller.
Take it for a test drive
Some drivers may want to take their potential purchase on a test drive through local roads and on the highway. Checking how the brakes, acceleration, alignment, and suspension work might give them a better idea of the vehicle’s condition before buying.
Any unusual sounds may be an indication of a more complex mechanical issue.
5. Review the title and paperwork
When finalizing paperwork, you may want to confirm that the car’s title is clean, legible, and has the seller’s name listed on it. If you’re buying from a private seller, you may ask them if the car is fully paid for. You can check if any lender information is listed on the title. If a lender is listed as the owner, the car has not been paid in full yet.
When you are ready to purchase, you can ask the seller to provide a Bill of Sale. This is a document that proves you bought the car. It should state all the important details such as:
- Buyer’s and seller’s names and addresses
- VIN (vehicle identification number)
- License plates
- Model and make
- Year
- Date of purchase
- Price
Some states, such as California and Arizona, have downloadable Bills of Sale online. You may also get a template from your preferred trusted legal site or government site.
6. Consider the total cost of ownership
Car ownership isn’t just the cost of the purchase. Consider how much you’ll have to pay for personal auto insurance. Insurance rates vary by model, safety ratings, and the vehicle’s history. Some brands are also more expensive to maintain or repair.
Additionally, if the vehicle needs repairs and if its EPA rating (how many miles per gallon your car gets) is low, your out-of-pocket expenses may increase.
7. Why insurance matters before you drive off
Before you complete a title transfer with the seller at your local DMV, you’ll most likely need proof of insurance. Dealers often require you to get car insurance before you can complete a transaction.
Infinity Insurance Agency offers affordable auto insurance for used cars, hard-to-insure drivers, and those needing SR-22 coverage. Call 1-855-478-3705 or get a free quote online.