1. Introduction
  2. What to Look for in a Used Car
  3. The Inspection and Test Drive
  4. How to Negotiate Prices
  5. How to Finance a Used Vehicle
  6. Conclusion

Making the decision to purchase a used car is the first step. The second is deciding which type of car you want to buy. This is where the used car buying process can hit a road bump.

In 2016 almost 41 million used vehicles were bought, with hundreds of different makes and models of pre-owned vehicles to choose from. Having that much variety is certainly a plus, but it also makes narrowing the field not so easy. Taking the following factors into consideration can help you find the right used car. (See: 5 Ways to Buy a Used Car.)

Evaluating a Used Car: Start with the Features

The first thing you’ll likely want to focus on when narrowing your choices for a used car are its bells and whistles. Before you start comparing vehicles, ask yourself what would you most like to have in a car. For example, your list may include things like:

  • Heated seats
  • A sunroof
  • Rear backup camera
  • Power windows, mirrors, doors and seats
  • Keyless entry
  • All-wheel drive vs. four-wheel drive
  • Extra cup holders
  • Satellite radio capabilities
  • Automatic emergency braking
  • Forward collision warning
  • Extra storage
  • Bluetooth connectivity
  • USB port connections
  • Dual zone automatic climate control
  • Automatic high beams
  • Built-in DVD player
  • Navigation system
  • Fifth-row seating

One potential downside to buying a used car is that you don’t have the option to customize it the way you would a vehicle that you’re purchasing brand-new from the dealer. With that in mind, you need to have some idea going in of which features are most desirable and which ones you’re willing to sacrifice if necessary. Just remember that the more add-ons and upgrades a used car has, the higher the sticker price is likely to be.

Consider the Long-term Maintenance and Repair Costs

The next thing to consider is how much it will cost to maintain the vehicle for the long haul. Making simple (or not so simple) repairs and general upkeep will likely cost more with one type of used vehicle than another.

For example, BMWs (BMW) generally rate as the most expensive cars to maintain, with drivers spending nearly $18,000 on maintenance over a 10-year period. Toyota (TM) drivers, by comparison, are spending $5,500 over that same period to take care of their vehicles. That’s something to consider if you’re thinking about splurging on a luxury used car. (See: 5 Most Overpriced Car Repairs.)

Where you live may also play a part in determining how much money you’ll shell out on repairs for a used vehicle. A study from CarMD found that drivers in California tend to pay the most for "check engine" car repairs, at $435 on average, while drivers in Michigan tend to walk away with the lowest average repair bill, at $354. The older a car gets, the more expensive maintenance may become, with repair costs increasing by $150 on average during the first 10 years of the vehicle’s life.

Don’t Forget About Insurance and Gas

Beyond maintenance and repairs, you also have to think about the insurance. The typical driver pays just over $907 a year in car insurance premiums, but your actual premium can depend on several factors, including the age of the used car, the make and model, your driving record and which state you live in. (See: Top Tips for Cheaper, Better Car Insurance.)

In some cases, you may have to consider purchasing gap insurance for a used vehicle. Gap insurance covers the difference between what you owe on the car and what’s it worth if you have negative equity and you get into an accident. Gap insurance may not add significantly to the cost of your insurance but it’s something you need to think about if you’re taking on a fairly sizable loan to buy a used car. For details, see Do Drivers Really Need Car Gap Insurance.

Fuel efficiency is also something to think about if you’re a cost-conscious used car buyer. Two used cars may look similar but have very different fuel economies, potentially adding up to more money you’re spending at the pump. A 2015 Ford Taurus, for example, has a fuel economy of 20 miles per gallon while a 2015 Honda Civic gets 32 miles to the gallon. Over a five-year period, the Taurus is going to cost you $2,000 more for gas than the average new vehicle, while the Civic will cost $1,250 less. It's vital that you be aware of how fuel efficient a particular used car is.

Assess the Safety Rating and History of the Vehicle

Safety is of the utmost importance with any car you’re buying. Doing some research into a used vehicle’s safety rating is essential for your peace of mind.

There are several resources that can provide information about a used car’s safety ratings. The Insurance Institute for Highway Safety (IIHS) website is a good place to start. You can plug in the car’s make, model and vehicle type to get a detailed safety report. The National Highway Traffic Safety Administration (NHTSA) also offers information on new and used car safety.

If you want specific details for a used car that you’re thinking of buying, you’ll want to do some digging into the vehicle’s history. Pulling a copy of its CARFAX report can shed light on things like how many owners the car has had, whether it’s ever been in an accident and how often the car has been serviced. Just remember that vehicle history reports only show damage that was repaired by a certified mechanic or claimed on insurance. You’ll also need to inspect the vehicle on your own, which we’ll cover in the next chapter of this buying guide. (See: 7 Mistakes to Avoid When Buying a Used Car.)

Doing this kind of independent research is important because you can’t always rely on the dealer’s guarantee that a certified pre-owned vehicle is safe. In some instances, dealers may submit used vehicles to a superficial inspection and deem it a certified vehicle, which falls far short of the dealer standards for certifying used cars. This is essentially a form of fraud and those vehicles may have undetected mechanical or structural issues that could end up being a safety hazard.

If you’d prefer to purchase a certified pre-owned vehicle, it’s best to shop at dealers who specialize in the type of car you’re interested in. For example, if you’d like a certified pre-owned Honda (HMC), head to a Honda dealer. Next, remember that a manufactured certified pre-owned vehicle will always come with either a limited warranty or a limited warranty and a powertrain warranty to cover the engine and transmission. If a dealer tries to sell you a certified pre-owned vehicle but isn’t able to give you the full details of what the warranty covers, that may be a sign that the vehicle isn’t truly certified.

Some dealers may try to substitute their own extended warranty for the limited warranty that's typically associated with a certified pre-owned vehicle or sell you on this additional protection on top of any warranty the vehicle comes with. Before you agree to purchase an extended warranty, be sure you understand what it does and doesn't cover to make sure that it's worth the cost. (See: Extended Warranties: Should You Take the Bait?)

Choose a Car That Fits Your Lifestyle

Besides looking at the mechanics of a used car, the cost of maintaining and insuring it and how safe it is, you also need to think about how it meshes with your lifestyle. If you’re a busy mom with three active children, for example, a minivan is likely to be a better fit than a sedan. If you live in an area that gets heavy snow in the winter, you may want something with all-wheel or four-wheel drive (or at least, factor in the cost of snow tires). Thinking beyond the basics adds another important dimension to your used car search. Next up, we'll look at the ins and outs of inspecting a used car and taking it for a test drive.

The Inspection and Test Drive
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