How to Buy a Used Car

Now that you've learned about used car loans, you're ready to buy. Buying a used car can save you a lot of money, but you want to choose wisely. Follow these steps to take the risk out of buying used.

Prepare. Do your homework on the used cars you're considering. The more research you do, the better prepared you will be to buy. Read consumer reports, get fuel economy data, and ask your family and friends about various car types. Be sure to consider maintenance and upkeep costs. Reliability ratings are also especially important when buying used cars. Try to narrow your search down to one or two models based on your findings. If you test drive several cars of the same model, you will have a more accurate basis for comparison.
Check the car's history. Don't even look at a car until you know its history. Get the car's VIN number and look up its records for possible flood damage, serious accidents, outstanding liens, etc. You will be surprised how many cars you can eliminate just by checking the vehicle history.
Get the car inspected. Never buy a car solely based on what the owner/dealer tells you about it. Take a close look at it yourself. If you don't know enough about cars to judge, have a knowledgeable friend help you. Additionally, you should always have the car professionally inspected by a mechanic. Don't give a deposit or sign any agreement before you have the car inspected. Compare the mechanic's findings with what the owner told you and decide if the car is still up to par.
Secure financing. Once you've found the car that's right for you, you'll need to look into used car loans. If you have a general idea of how much your car will cost, you can get pre-approved for that amount before you even start shopping. The rates on used car loans will sometimes depend on if you purchase from a private party or a dealer. Used car loans for private party transactions, such as used cars purchased through eBay or the classifieds, tend to have higher rates than those for dealer purchases. Keep in mind, though, that used cars purchased through private parties also tend to be cheaper than dealership cars.
Fill out paperwork with caution. If you purchase your car through a private party, make sure that you know the car has not been stolen, has no outstanding liens against it, and that the person who signs the Bill of Sale is the car's actual owner. When buying through a dealer, check over the warranty carefully. If the car is "certified," look at what items were approved on the car, as it still might have a history of accidents or poor engine performance.

For the answers to the most commonly asked questions about used car loans, see our FAQ page.