Guide to Buying a Used Car

Used cars
Sometimes dealers sublet space on their lot to other sellers. Photo:

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In the market for a used car? Buying a new vehicle can seem like a pain, but it can be an enjoyable and worthwhile process when you approach it with confidence and a bit of advanced planning. Focus on the key points in this used-car buying guide to make the process less stressful, and walk away knowing you got the best car for your money.

How Much Should I Spend on a Used Car?

The cardinal rule of car budgets is the 20/4/10 rule. It’s simple: First, you should make a down payment of at least 20%. Second, try and find a car that is no more than 4 years old. And most importantly, you should not let the total costs of owning that car exceed 10% of your pre-tax income.

For Example...

Max and Sara are both working professionals and make $100,000 combined. They have saved up $3,000 so far for their next shared vehicle. Ideally, Max and Sara should look for a 2016 model or newer that costs less than $833 per month, including insurance and maintenance costs. If they take out a 36-month loan of $25,000 or less, they can reasonably expect to stay under $833 per month with insurance and maintenance costs. If they’d like to look for a car in this price range, they should probably save a bit more money if they can since $3,000 only follows the 20/4/10 rule if they purchased a vehicle costing $15,000 or less.

What Should I Reasonably Expect To Pay for a Used Car?

Because of the plethora of cars on the market, that’s the wrong question to ask. You need to figure out a few makes and models of vehicles you are interested in purchasing first. After you do, you can look up the Kelley Blue Book value for those vehicles and see what they’re going for in your area.

Please note that U.S. car prices surged by 40% year-over-year from Jan. 2021 to Jan. 2022 due to rising inflation and supply chain disruptions as a result of COVID-19. The delays in obtaining new cars due to semiconductor chip shortages also added to the demand for used cars.

How Can I Look Up a Car’s History?

When you’re buying a used car, it’s vitally important to look up the vehicle history report, also known as the CARFAX report. You want to be sure you aren’t getting a vehicle that’s been in a serious accident or that has been stolen.

How Can I Find the Most Efficient and Reliable Car?

You have plenty of good options for efficient and reliable used cars. In general, you should look for vehicles and car brands that have good reputations for not breaking down, and you should consider the needs of your family: A minivan isn’t a great option if you don’t have a massive gang of kids, and a pickup truck is not practical if you mostly want to do city driving.

How To Find Used Cars in Your Area

A quick Google search should reveal local dealerships that have used cars available. For many, this is safer and easier than trying to buy a car from an individual seller. It will save you time and money on paperwork, too.

How To Request a Test Drive

It's important to test drive a used car, especially one that's no longer under factory warranty, since test driving a used car is different than test driving a new car. Call the car dealership and let them know the vehicles you're interested in purchasing, and the best day and time for you. It’s worth calling ahead to make your visit as efficient as possible; you don’t want to show up to a dealership only to realize it no longer has a particular car available.

When test driving a used car, plan on spending at least 20 minutes driving the car, so it's fully warmed up and not just make the "loop around the block" that the dealership will want you to do. Instead, you should be driving to push the vehicle to determine if there are any mechanical issues. Turn the car hard, full circles, brake hard, keep the windows down, and check for odd smells. Bring someone with you who knows something about cars and can be a second set of eyes and ears to avoid making emotional decisions.


If possible, you should schedule all of your test drives on the same day; that way, you’ll have an easy point of comparison, and each vehicle will be fresh in your mind.

You will also have a convenient way to postpone deciding if an agent is pressuring you. You can say, “I need more time to think this over. In the meantime, I have another test drive appointment to catch!”

How To Close the Deal

It might sound silly, but it’s a good idea to practice your negotiating skills before you negotiate with a car dealership or an individual seller. If you’re not feeling particularly assertive, you can always bring a more aggressive or confident friend, or focus on how much money you can save over time by standing your ground.

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