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Buying a used car: Things to consider

At a glance:

  • How to start looking for a used car

  • Buying a used car: Private party or dealer?

  • Getting a good deal on a used car

  • Summary of shopping for a used car

Getting a good deal on a used car involves both negotiating a good price and taking steps to make sure the car is reliable.

Although buying a used car is often a smart financial decision, it's also a transaction full of potential for disaster. Many of us know someone who paid too much for a used car that fell apart soon after.

How to start looking for a used car

Before you start looking

It is a good idea to write down what you want in a used car so that you will not waste time. Otherwise, you could end up with a car you did not want at all.

If you shop at a dealer, the salesperson will want to know your preferences anyway; this saves him or her valuable time.

Write down requirements such as these:

  • The price range you want to spend

  • Type of vehicle (sedan, SUV, minivan, etc.)

  • Make

  • Model

  • Features you want

  • Mileage range

  • Age range

  • How much you can afford to spend each month, if you finance

  • Any other preference, such as color, engine size, luxury options

Keep this list handy when you go shopping.

Sales and leasing consultant Ernie Alvinito, left, assists customer Bill Valasek at Hoskins Chevrolet in Elk Grove Village, Illinois. (Photo: Tim Boyle/Getty Images)
Sales and leasing consultant Ernie Alvinito, left, assists customer Bill Valasek at Hoskins Chevrolet in Elk Grove Village, Illinois. (Photo: Tim Boyle/Getty Images)

Where to research

A simple Google search for a phrase like "used car sites" will bring up a plethora of Websites that list used cars being sold around the country, usually at dealerships.

Sites like,,, and are common. A search on your local Craigslist will bring up used cars from both dealerships and individuals. Of course, there is also your local newspaper, which will advertise available cars and dealer specials.

There are also sites that provide more useful information than just listings. and Consumer Reports are among the most popular.

Compare prices

Compare prices of cars you are interested in. Kelley Blue Book lists both wholesale and retail prices for used cars.

This book will give you a sense of what a particular make and model is worth, on average, so that you can assess what dealers or sellers are asking. You can also go to Kelley's Website and search for cars and get information, reviews, and car value information.

The Consumer Reports Used Car Price Service, which you can find online, provides full reports on used cars.

You may have heard of Carfax, a Web-based service that provides vehicle history reports on used vehicles. Many dealers now offer Carfax reports for their vehicles. You can also get them online by providing some basic information about the vehicle in question. Some services are free, and others must be purchased.

Other places to look

Oftentimes, auto mechanics will buy a used car that the previous owner decided was too expensive to fix, and offer it for sale on the lot. Many new car dealers will also sell used cars on their lots. And it doesn't hurt to ask family or friends if they are interested in selling a vehicle. Some of them are, and they can give you a good deal (and possibly interest-free financing).

If you have a particular make in mind, check out used car dealers who do not specialize in that brand. For example, a Chrysler dealer may have some Chevys or Fords for sale. Dealers sometimes find that they can get good deals on other brands at auctions, and so they buy them for resale, often providing extra incentives to move them off their lots.

Buying a used Car: Private party or dealer?

Some used car buyers swear by the advantages of buying from a private party. Others insist on going with dealers. Each side has its own rationales, and here are some of the advantages they cite:

Why buy from a dealer?

  • Selection. You may have a make and model of car in mind, but a dealer may have several of them for you to look at. And it may have several of similar models.

  • Financing. Dealers usually have more options for financing. Private parties usually demand cash up front.

  • Certified used. Dealers often have certified used cars (which are used cars that are reconditioned, inspected, and given an extended warranty), which have many of the benefits that new cars have.

  • Warranty. You have more options for getting an extended warranty from a dealer.

Why buy from a private party?

  • Negotiations. You might get more wiggle room with a private party because you'd be dealing with an amateur—one who isn't being pressured by the dealership to hold firm on a certain price.

  • Price. Prices are generally lower with private parties because they don't have the overhead that dealers have.

  • Maintenance records. Private parties are more likely to have maintenance records than dealers are.

Used cars are displayed on a sales lot in San Rafael, California. (Photo: Justin Sullivan/Getty Images)
Used cars are displayed on a sales lot in San Rafael, California. (Photo: Justin Sullivan/Getty Images)

Used rental cars

It's worth mentioning that used rental cars can be a bargain, and their warranties may still be in effect. The stereotype of used rentals is that they've been used and abused by their renters, but this isn't always the case.

Other steps to take

  • Get the vehicle inspected by a good, trusted mechanic. Do a visual inspection first.

  • Get the registration and title records. You can get a Carfax report that shows the number of past owners and important mileage information; you can also find this information at your state's motor vehicle department. If the seller is a private party, make sure he or she actually holds the title to the car. Ask to see the title certificate.

  • Read the Buyer's Guide. This guide is posted with every used vehicle.

  • Check the little VIN (vehicle identification number) plate on the lower left corner of the front windshield. Does it appear to be tampered with? If so, the vehicle may have been stolen.

Getting a good deal on a used car

For some people, negotiating for a good price on a used vehicle ranks up there with getting a root canal. For these people, there may be a fear of being taken advantage of.

Many used-car buyers leave the lot with a nagging suspicion that they paid too much for their vehicle. But learning to negotiate can save you a lot of money if you go through with it.

Before you negotiate

It helps to have the preliminaries taken care of first. This means identifying the car you want, arranging financing, and locating some sellers. Also, know what kinds of add-ons, if any, you are open to buying. By the time you get to negotiating, the price should be the only thing that is not settled on.

A point to remember: even if a vehicle is advertised with a "no haggle" price, there is still sometimes room to haggle, so it is worth considering.

Know the value of the vehicle you're negotiating. This can work in your favor if the salesperson is asking a price that's higher. Consult a source such as the Kelley Blue Book for values. Check more than one price guide. Different price guides, such as Kelley's and Edmunds, can quote different prices for the same make and model, so the best you might find is a range rather than a specific value.

The attitude

Cultivating an air of detachment also works for you (in other words, be ready to walk away if need be), because a salesperson who sees that you are attached to a car has a lot of leeway with you. In cases in which you might need to walk away, it is good to be aware of other sellers who are offering the same vehicle. In fact, mentioning that you know of other sellers who are selling your desired car can make the dealer more competitive.


Knowledgeable negotiators recommend not bringing your trade-in into negotiations until you have first agreed on a price for the car.

How it begins

The dealer will likely ask you how much of a monthly payment you can afford to pay for a vehicle. This helps the dealer arrive at a price range, but that price range can rise higher than you are comfortable with. Because dealers have ways of arranging financing, they know how to squeeze extra dollars out of you even while staying within your monthly payment range. This is why some negotiators put off telling the dealer how much of a monthly payment they can make until after they have settled on a price.

The prices involved

When you negotiate, you want to pay close to the wholesale price, which is typically what the dealer paid for it. The dealer will want to stay close to the retail value for maximum profit. There will also be the "blue book value," which will not be listed and which will most likely be somewhere in the middle.

Experienced negotiators wait for the dealer to name the first price; that way, they can go lower, something they probably couldn't do if they were the one to name the first price. They offer a price that is between the wholesale and "blue book value," aiming to stay closer to the wholesale.

The dealer may go along with that price, but if so, will try to sell you various add-ons, such as an extended warranty. Know in advance what add-ons, if any, you are interested in. Alternatively, the dealer may insist on a higher price, and you and the dealer will go back and forth until you reach a compromise.

Bringing in the manager

The dealer may also bring in a manager (also called a "closer") to provide some extra "reasoning" aimed at raising the price. This reasoning may be quite persuasive and economically sound. Buyers often feel intimidated by the manager if they aren't aware of how negotiating works.

Take control

It's important to be the one in control of the negotiations. That might mean telling the dealer you need to go home to think about it. Dealers expect that this will happen. They will likely call you over the next few days to sweeten the deal, either with a lower price or some free add-ons.

Once you have agreed on a price, you will get the sales contract. This contract will list additional costs such as sales tax, document fees, and perhaps service fees. Know about these beforehand so that you will have the full picture of how much you are paying.

Summary of shopping for a used car

Getting a good deal on a used car is a rite of passage for many people, something they like to hold up as proof of their knowledge and control.

The tips in this tutorial are a good starting point for used car buyers, and they also serve as a good starting point for further study in the art of negotiating. Learning to negotiate is not only good for getting great deals, but it's a great help in taking control of the rest of your financial life.

If you are in the market for a used vehicle right now, here is a to-do list to start with.

This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.

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