The Most Important Things You Need to Know When Buying Used Cars

In the market for a used car? It can be an excellent option. However, in order to make your secondhand car purchase as best as can be, it is necessary to take a few steps and precautions. Read on to find out what to do to avoid being a victim of fraud, to get the best possible price and to ensure that the car you buy won't create problems further down the line.

Before Buying a Used Car 

In the market for a used car? Excellent! Whether this is your first time buying one, or you have already purchased used cars before, you have to consider some basic information to make sure this is the right move for you. 

When you start a process like buying a used car, you will surely have a series of questions such as: 

  • Where can I buy used cars? 
  • Is it better to buy from a private seller or from a used car dealer? 
  • Can I trade in my current car? 
  • How do I know if the car I’m interested in is in good condition? 

Asking yourself questions like these will help you feel confident and reassured that your purchase will be satisfying. Read on to find out how to answer them.

Before you start looking for used cars, check your finances

Before you start looking at used car options, it's important to take an honest look at your current financial possibilities to make this purchase. Whether you are planning to pay for the car in cash or credit, you should set a budget for your purchase as your first step. Once you have set your budget, selecting the payment option that suits you best will be easier.

Cash vs. Financing

Paying in cash means that you will be paying the full price of the car in one installment. This, of course, only an option if you have enough liquidity to back this purchase immediately.

If you decide to finance your car, in addition to paying the value of the vehicle, you will also be paying an extra amount for the loan you were given to finance the purchase. This includes, for example, interest accrued over the loan term, as well as other financing management costs. The two most important figures to keep in mind are: how much you can pay as down payment, and the amount you can pay month-to-month during the payment term (12 months or 24 months, for example). 

Selecting a Used Car 

One of the first things you should look at when evaluating used cars is the ownership history of the vehicle. Ideally, the car should have only one previous owner. This reduces the chances of encountering hidden problems in the future. If you’re buying the car from someone that you know and trust, such as a family member, ask them about the car’s service history and any issues they might have had with it. If you’re buying from an unknown private seller or a dealership,you can consult your local consumer protection agency for advice.

Buying Used Cars: Dealership vs. Private Sellers

You can buy used cars from many sources, but the safest options are: 

  • To purchase it from a dealership which will provide you with the vehicle's comprehensive history and documentation.
  • To purchase it from a trusted friend, family member or acquaintance, who will also have to give you all the relevant documentation for the car. 

Whether you are making the purchase from an established car dealership or from a private seller, make sure to do some research about them. You can search the Internet for phrases such as: 

“Name of the seller/dealership + complaint/review/scam” 

On the other hand, you should familiarize yourself with the Federal Trade Commission's (FTC) Used Car Rule. This rule requires dealers to post a Buyers Guide on all the used cars that they offer for sale and to deliver this document to the buyer after the sale. This Buyers Guide contains the most relevant information about the vehicle in question.

Ready to Buy? Tips For Buying Used Cars

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This might sound obvious, but you need to check the market prices of the car model or models you're interested in. A good reference point is the Kelley Blue Book or the National Automobile Dealers Association Guide. Consider that the make, model, year, condition, and mileage of the used car will have an impact on its fair price. Use this information in your negotiations with the seller. 

On the other hand, when choosing a used car to buy, check that all of the vehicle's documents are complete and in order. Most importantly, check the Vehicle Identification Number (VIN) to make sure the car has not been reported as stolen. You can do this at the National Insurance Crime Bureau's website

In addition, it is important to perform a mechanical vehicle inspection. These inspections usually cost around $100 and they will give you a clearer picture of the current conditions of the used car you are interested in buying. You can also consider a safety inspection to check if the car is safe to drive.

15 Things to Consider in a Mechanical Vehicle Inspection

Another important step while choosing a used car is driving the vehicle for a period of at least 15 minutes. This will allow you to check how the vehicle runs. While you can verify all of the points listed below on your own, it is recommended that you be accompanied by an expert, such as a mechanic. The main things to check are the following:

  • That the car has no mechanical or structural damage.  
  • That the engine runs properly. 
  • That it doesn't let out smoke from the exhaust. If you notice white smoke coming from the exhaust, this can indicate serious mechanical problems. The same happens if the color of the smoke coming out of the exhaust is gray, bluish, or black.
  • That the gears change smoothly without jerking or stuttering, both when the car starts moving and when the gears change once it’s running.  
  • That the engine oil is not black or contains metal shavings. The oil should be yellowish but clear. 
  • That the brakes don't squeak when braking. Check the condition of the discs, pads and the behavior of the entire braking system while driving.
  • That the car’s suspension doesn’t make noises.  
  • That the body of the card does not have dents or scratches and that the paint is in good condition.
  • That the interiors are in good condition.
  • That all of the lights work properly; including dash lights, high beams, low beams, fog lights, turn signals, brake lights, reverse indicators, etc.
  • That the doors close properly.  
  • That the AC system works. Make sure to turn the AC on in your test drive and check if the air is being cooled. 
  • That the tires are in good condition, which includes having no punctures or patches, as well as having at least half of the original tread depth. 
  • That the car moves in a straight line without alignment issues.  
  • That the car has working airbags. 


When buying a used car, make sure to check the warranty that comes with it. Warranty options include:

  • Implied warranties of merchantability
  • Implied warranty of fitness
  • Full and limited warranties
  • Manufacturer’s warranties

Learn more about each type of warranty here, and make sure you feel satisfied that you are receiving the appropriate warranties for your car.

Service Contracts for Used Cars 

In addition to the warranties included in your purchase of a used car, you might want to buy an auto service contract. The difference between a service contract and a warranty is that service contracts have an additional cost, while warranties are usually included in the sale price. Having a service contract can be helpful if you feel that your current warranty does not provide the coverage you need and you want to have a higher level of protection so that your car lasts longer. The downside is that it may increase the overall cost beyod your budget.

Warning Signs

You should be very careful if you notice any of the following red flags while buying a used car:

  • The price of the car seems too good to be true
  • The seller won’t show you or doesn’t have the certificate of title or “pink slip”
  • There are signs of wear and tear, oxidation or paint shedding, among others
  • A private seller only accepts cash
  • A private seller won’t give you their contact information

Problems With Your Car? Know Your Rights

Once you've bought a used car and you're behind the wheel, you'll probably think that the process is done and you're good to go, but you might encounter problems that were impossible to predict even if you followed this guide. If you encounter any of these problems, you still have several options. First, check to see if your warranty or service contract coverage is sufficient to obtain the service that your car requires. If that's not enough, we suggest that you contact the seller directly —either the dealer or the private seller from whom you bought the used car— to try to resolve the situation.

If these options don't work for you and you need to consider further alternatives, you can contact your car's manufacturer to see what options may work for you according to their policies. On the other hand, you can also rely on a dispute resolution service that can help you mediate any dispute between you and the dealer or seller to try to find a resolution without requiring a lawsuit. As a last resort, you can file suit in a small claims court. They will be able to give you guidance on what steps to take next.  

Let’s Go!

For more information on financing and tips on buying used cars, go to the FTC's website. Now let’s go for a drive!