How to buy a used car.

Purchasing a Used Car from a Private Party

by Monty Hawkins

Purchasing a used car allows you to have a quality automobile without paying for all of the depreciation. I choose not to buy from the dealership as they are professional salesmen and make their money by negotiating the highest price possible. The private seller is looking to get fair market value.

Anyone can follow the steps below and purchase a quality vehicle while saving money.

1. Start with plenty of time.

One of the most important things when purchasing a car is to start with plenty of time. Having time on your side puts you in a much better position all throughout the buying process. You are not rushed and can avoid making a decision you may regret later.

2. Determine your budget, and then stick to it.

You must determine is how much money you want to spend. Honestly assess your budget. Paying with cash is ideal, however if you are going to take out a loan you must determine how much money you can afford. For a loan I recommend getting pre-approved for a 3-4 year loan at a local credit union. Doing this helps you know upfront what the monthly payments will be. You can calculate the cost of monthly payments by using a simple loan calculator. Do not focus in on monthly payments, but on the total cost of the car.

3. Decide on a car in your price range.

Sometimes people don't know where to start and that is okay. If you don't have a specific year/make/model you are looking for ask friends, family, and coworkers what they enjoy. You can read opinions from real owners at the Edmunds.com. Enter the make model and year at the top of the webpage and then scroll to ‘What Others are Saying’ and click on ‘See All 213 reviews’. Read many reviews to get a fair representation.

Once you find a car you are interested in you can check car values at Kelly Blue Book to find what you can expect to pay. If the car you are looking for is out of your price range, you may have to look for an older model to stay within budget. Don’t be afraid to look at other cars which fall in the same class (i.e. Honda Accord, expand to include Toyota Camry and the Nissan Altima). The total mileage the car has can affect the price. The fewer the miles the more the car is going to cost.

Before you move on to the next step, decide on a car which will fit in your price range. This will protect you from purchasing outside of your budget.

4. Start looking through online classifieds.

Once you have decided on a specific year make and model combination which fits your budget it is time to start looking. This step takes me the longest, be patient. Craigslist is one of the more well known websites for used cars.  Choose 'Car and Trucks by Owner' to avoid looking through dealers ads. Regional online classifieds can be helpful. For example in the state of Utah, almost everyone uses KSLCars.com. The first time you go online to look you will not find the exact car which is right for you. Be patient and be willing to check back periodically.

I have two caveats about online classifieds. The first is to be wary of deals which are too good to be true. If it is too good to be true, it is a scam. The second is to avoid a car with a restored/salvage title. If the ad doesn’t say if it is a restored/salvage title, ask the seller. In my experience most sellers are upfront and honest about this.

When you find a car which interests you, email or call the seller to ask some questions. My standard questions include why are they selling the car, what is their favorite aspect about the car, is there anything wrong with the car, does it have a clean title, how many miles does it have, what is the asking price, and any other pertinent questions.

5. Set up an appointment to test drive the car.

Bring a friend with you to test drive the car. They will provide a second opinion and a voice of reason. Meet the seller and ask about the car. Find out what they like and don’t like about it. Ask if the car was driven by a smoker or if someone transported a pet inside of it. The smell may be masked for a few days, but when the true odor comes out you will regret your purchase. If you have any concerns about the seller don’t buy a car from them.

If you are initially interested by what you see, take the car for a test drive to see if you like how it handles. Test it on the freeway. Test it on a winding hilly road. Drive it for at least fifteen minutes. Remember you will be driving this car for a while. Listen for abnormal engine noise, rattles, and squeaks.

6. Have the car mechanically inspected by the dealership.

This is one of my favorite steps. When you find a car you are seriously considering, have it inspected at the dealership. For around $60 you can get the same inspection the dealership gives to the used cars they sell. Often the dealer will provide you with a copy of the vehicle history report if you ask. It includes negative history on the car (accidents/stolen/floods).

The dealer will also tell you which repairs need to be done. This will help you determine any repair costs. You can use this to get the seller to lower the price of the vehicle or to arrange for the repairs. This avoids discovering defects after the vehicle is your full responsibility.

7. Negotiate a price and seal the deal.

If you want to buy the car let the seller know you like the car, but you need a day or two to talk it over with your spouse/significant other/parents. This will buy you some time and let you think clearly about the deal at hand. Base your offer on the asking price, fair market value, and any necessary repairs. Once you come up with a counter offer and agree on a price you can sign the contract.

Once you have signed a contract you own the car. Congratulations. I hope this helps when it comes time for you to purchase your next car. If you have any feedback, feel free to comment below.