How to Buy a Used Car: A Step-by-Step Process

Buying a used car can seem like a daunting task. There are plenty of slick used car salesmen out there who are more than happy to rip us off with a lemon and have the audacity to say “buyer beware.” Guys (and gals) like that have a well-deserved reputation, so it’s understandable that many people are wary of buying anything used.

However, it is certainly not impossible to get a good deal on a reliable used car. My wife and I bought a used car recently and applied a specific formula for finding something affordable and reliable. This process will help you find a used car that gets the job done and doesn’t break the bank.

1. Determine your budget. This is the first critical step in buying a used car. As a Ramsey Solutions Master Financial Coach, I will never advise a client to finance a vehicle, especially not a brand new vehicle. Cars are the most expensive things we buy that go down in value. For a brand new vehicle, a buyer can lose 20% or more in value as soon as the car leaves the lot. Imagine anything else we buy, like an investment, that loses 20% immediately and only continues to go down in value; hardly anyone would buy an investment like that! But alas, cars are a necessary part of most of our lives, and we have to have some form of transportation. The key here will be to determine how much you are willing to save, and how long it will take you to get to that point (tip: set a SMART goal).

2. Determine what make and model you want. Some people’s lifestyles will demand a truck, or SUV, or minivan, or fuel-efficient sedan. It’s up to you to determine what you need for your lifestyle. Look for a make and model that you aesthetically like, but also one that has a good track record in its reliability, and will fit your needs.

3. Determine the vehicle’s value using Kelley Blue Book. To have enough information about your chosen vehicle, use Kelley Blue Book to find out a vehicle’s value based on various factors like its year, trim, mileage, and condition. Use this as a metric for pricing when looking around whether online or at a dealership.

4. Start shopping! This here is the fun part. There are several places you can look online for the vehicle you’ve chosen: Facebook Marketplace, Craigslist, Car Gurus, Carvana, Kelley Blue Book, and Carmax are just a few options. Of course, you can always go to a dealership directly if you so choose, but often these cars will be listed online as well.

5. Visit and test drive your prospective car. When looking for a used car to buy, it is ALWAYS a good practice to see a car in person before making a decision about purchasing. A car that may look nice in pictures may have some hidden issues that only become apparent upon inspecting the car in-person. For example: I saw a car online that looked to be in great shape at a great price. So we go to take a look and test drive. Lo and behold, it had scrapes on the bumper, a dent in the hood, and a big scratch from being keyed. Plus, I looked at the undercarriage and there was already rust forming (a problem we have on the car we previously owned). So that was out of the running, and all we had to do was go see it in-person to make that determination.

how to buy a used car

6. Find a reliable mechanic to do a thorough and rigorous inspection. Let’s say you get to step 5 and it passes your initial sniff test. The next step is taking the car to a mechanic that you completely trust and have them look at every major component on the vehicle. My mechanic in Virginia Beach charges $85 for this service. Last time I bought a vehicle, I had them perform their inspection, and they found several things that needed addressing. I brought these issues back to the dealership, said that they would need to take care of these things before any deal was made, and they agreed to do so. I saved about $600 with this step. I’d say $600 worth of savings for $85 is a pretty good return on investment!

7. Negotiate. Once your mechanic inspects the vehicle and determines that there is nothing wrong with the vehicle (or that there is), it’s time to go back to the seller and bring that paperwork with you. If there’s nothing wrong, maybe the price point is fair. But if some repairs need to be done, you can bring this up with the seller and make one of two offers: either the seller pays for the repairs and the price point stays where it is, or they knock off the repair cost from the final sales price. Additionally, if there is cosmetic damage or some feature that is not properly functioning, you can use these issues to lower the price point. This is your time to shine! If the seller won’t budge, feel free to walk away; you are in the driver’s seat here. If you can’t get the price you want, use that power and wait just a bit longer for something that you want at a price that you are willing to pay.

8. Get your title! If you find your desired used car, get it inspected, and can negotiate a price you are willing to pay, congratulations! You’ve got yourself a new (to you) vehicle, and have no payments going forward. This means you can continue on the Baby Steps by investing 15% of your income into retirement, saving for kids’ college, and paying off your mortgage early. And, of course, all this comes after paying off any existing non-mortgage debt. If you are trying to do that (Baby Step 2), I can help.

Need help with this process, or unsure how you can even save enough to buy a used car for cash? Reach out today to get started with a free Discovery Session!

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