Tips for Buying a Used Car Without the Headache

September 29, 2014

I’ve been a driver for about half my life now, and I’m either fortunate (or unfortunate, depending on your perspective) enough to still only be on my second car. My first car, a 1997 Nissan Altima, eventually wound up in my brother’s possession because my parents decided he needed it more than I did when I went off to college. I’m not sure what happened to it, but I do remember him telling me at one point the transmission died when he was trying to peel out by revving the engine in neutral and putting it in drive. Needless to say, my folks regretted their decision.

My current car, which I’ve driven for 11 years now, is a 1998 Ford Escort. I got incredibly lucky in that it was the proverbial “little old lady only drove it on Sundays” vehicle people often joke about. The family I bought the car from had originally purchased it from a car rental place, and didn’t rack up many miles. Although I’ve managed to keep it in pretty good condition, and I don’t plan on buying a new one until the odometer rolls its last mile, I’m cognizant of the fact that this vehicle will eventually need to return to the Great Ford Motors Factory in the Sky.

If you’ve read the subtext in my stories above, you now know I’ve never actually been through the used car lot experience. So, I thought, why not take the discerning, intelligent, and dare I say beautiful (do you feel like you’re on a used car lot yet?) readers of The Dime on a metaphorical road trip through some of the “fun” of buying a new-to-me automobile.

Why buy used?

For most of us, buying a new car just doesn’t fit into our financial plan (check out this recent Dime post for a breakdown on leasing vs. buying a car) and used cars are the best way to get the most value for your money when you’re on a budget according to this post. What you lose in giving up the flexibility to choose things like sunroof, color, and other features, you gain back in the form of thousands of dollars in your pocket.

One of the biggest sacrifices you make when buying used is the warranty coverage many car makers offer on new vehicles. That being said, many times you can buy a used car with a portion of the original warranty still in effect. (For instance, my wife’s 2007 Kia Sorento still had about 20,000 miles of warranty left on it when she bought it in 2011.) Ultimately if you plan on taking out a car loan to pay for the vehicle, it makes sense to have less debt instead of more and the cheaper the car you’re buying, the quicker you can pay it off.

And on that note...

Get pre-approved before you go shopping

Just like buying a house, if you know what your budget is when you go shopping, it gives you an advantage. And before you go to the bank, make sure you know your credit worthiness, including your credit score. You might be able to get a lower interest rate from the manufacturer, but at least you’ll have something to compare it to. Whatever you do, don’t fall into the trap of negotiating a monthly payment instead of the price of the car. At the bare minimum, having the confidence of knowing that you’re already approved takes some of the uncertainty and heartburn away from the buying process.

Do your research

How did people buy cars before the internet? Well, they call it the “Blue Book” value for a reason. Another source is Consumer Reports magazine, which still makes a lot of their research available online, although you may need a subscription to access some of the features. Technology has made the research process much less time consuming -- but maybe not less confusing. If you know exactly what you want going in, it will make your life much easier. Websites like, Edmunds, TrueCar, and others can help give buyers an advantage well before they even step foot on the dreaded car lot.

Go on a test drive

You never know if you actually like a car until you take it for a spin. My wife thought she was going to love the Subaru Outback she was originally planning on buying when we ended up getting a Kia. As soon as she took it for a test drive, she knew it wasn’t the car she wanted.

Every car is different, so even if you like a particular model, if the one that the dealer has available doesn’t feel right then you shouldn’t buy it and hope you’ll feel better about it after you drive it off the lot. Instead of letting the salesperson tell you where to drive, ask them to let you do a variety of things that you’ll be doing if you buy. Make sure you drive it around the city, as well as on the highway so you get a good feel before. (Of course, don’t let the test drive get out of control.)

Negotiate, negotiate, negotiate

Haggling, negotiating -- whatever you want to call it -- is incredibly critical to getting a good deal on a car. If you have your budget, your research, and your confidence built up, it shouldn’t be too difficult. According to ABC News, it can save you as much as 15%. Here are some important negotiating tips:

  • It’s a game of chicken. Whoever blinks first loses, so let the salesman do the talking. If you can, avoid quoting any prices at all -- at least to start.
  • Never tell them your budget. As soon as they know how much you’re willing to spend, it gives them an advantage.
  • Shop around. If you can start a bidding war for your business, it makes it a lot easier on you. Don’t be afraid to play each salesman against each other.
  • Never be afraid to walk away. Even if you’ve been at the dealership for the better part of a day, if you’re not afraid to say thanks but no thanks, it will put you in the best bargaining position. In fact, if you leave your number, don’t be surprised if the salesman calls you with a better number trying to get you to come back and close the deal.
  • Dig in for the long haul. If you don’t have the stamina to spend all day, and maybe part of the night, dealing for that car, then you might end up paying thousands more than you need to.

Before signing any agreement...

The biggest risk with buying a used vehicle is there’s very little protection once the sale is final. In Colorado, the so-called “lemon law” only covers new vehicle purchases. The Colorado Department of Revenue’s website reminds buyers that most used vehicles are sold as-is and sales are final, with no right to cancel a purchase within three days. (Some dealers do offer this, but make sure you read the fine print or ask a salesperson. Don’t assume it’s offered.) Most importantly, they recommend you get the car checked out by a qualified mechanic prior to the sale being final. If a salesperson tries to convince you it’s not necessary, that should send up a serious red flag. Finally, always get everything in writing, especially if the seller has promised something in order to close the deal.