Step 1: How Much Car Can You Afford?
A rule of thumb: If you’re taking out a loan to pay for your car, your car payment shouldn’t be more than 20 percent of your take-home pay. If you’re sticking to a tight budget, you may want to spend even less. Used cars will need a little extra attention from time to time: new tires, maintenance and the like. And then there are the other ownership costs shoppers sometimes forget to account for, such as fuel and insurance.
If the car you’re planning to buy is out of warranty, it might be a good idea to set aside a “just-in-case” fund to cover any unexpected repairs.
Step 2: Build a Target List of Used Cars
It’s no secret that the Honda Accord and Toyota Camry make for good used cars. But they might cost a few thousand more than a comparable Ford Fusion or Kia Optima, even though these are good cars, too. So if you’re looking to save money, consider more than one brand. We suggest making a list of three cars that meet your needs and fall within your budget. Edmunds reviews have great information to guide your choices.
If you’re planning to buy a vehicle that is less than 5 years old, consider one that’s certified pre-owned (CPO). CPO vehicles have long-term warranties that are backed by the carmakers, not just the dealership selling it to you. Franchised dealerships that sell that same brand new are the only ones who can sell a CPO car of the same brand. So if you wanted a CPO Chevy Cruze, for example, you’d need to buy it from a Chevy dealer.
Step 3: Check Prices
Prices are driven in part by where you’re shopping. You’ll find used cars in used-car sections of new-car dealerships, independent used-car lots, used-car retailers such as CarMax and websites where private-party sellers list their cars. Of the four, private-party cars will usually have the lowest selling price. CPO cars will usually cost the most, but for the reasons we’ve noted. To see what other people are paying for the models you’ve picked out, Edmunds offers a quick way to see the average price paid for the car in your area.
Step 4: Locate Used Cars for Sale in Your Area
One easy place to start building your target list is the Edmunds used-car inventory page. To find exactly the car you want, you can filter your search by many factors including the miles on the car’s odometer, its price and features, and dealer’s distance from you. Use the websites for other used-car marketplaces mentioned to save time.
Step 5: Check the Vehicle History Report
Unless you’re buying the car from a close friend or family member who can vouch for its history, plan to get a vehicle history report. This is an essential early step. If the car you’re looking at has a bad history report, the sooner you know the better.
AutoCheck and Carfax are the two best-known sources for vehicle history reports, which can reveal vital information about the car, including whether the odometer has been rolled back or if it has a salvage title, which means it has been declared a total loss by the insurance company. You’ll use the car’s vehicle identification number (VIN) to get this information, and in some cases, all you need is the license plate number.