1. Define a budget before you go shopping for a used car. Whether you are paying cash or financing you need to know how much vehicle you can afford. If you are financing, it is recommended that you don’t take a term longer than 60 months.
2. Don’t get hung up on a particular make or model of used car. Most cars built in the last few years are reliable and will serve you well. Don’t pass up a great buy on a car or SUV because you don’t like the badge.
3. Take a thorough test drive. Make sure you drive your new-used car in a situation like you would drive it in everyday.
4. Know the used car market. This is important not just to make sure you get a good deal but also to save yourself from headaches. Know the wholesale vs retail value of the models you are considering. Keeping in mind that the dealer will need to make a small profit, try to buy your used car of choice at the lower range of retail values.
5. Directly related to #4, make use of wholesale guides. In Canada, Canadian Black Book or in the US Kelley Blue Book whole sale values.
6. Have a realistic understanding of what your trade is worth. Many less experienced buyers fall into the trap of thinking their trade in is worth many times what it is. This can lead to trying to buy a vehicle that is way out of their budget. Using the wholesale guides listed in #5, try to determine the true value of your trade. If the car is older than about 6 model years you may want to consider selling it yourself as it will be worth so little to the dealer. Bear in mind your trade is worth the wholesale value (not what you see on Craigslist) minus any repairs it may need. For example a car that sells for $5000 retail may need $1000 in work, then the dealer will need to make a profit so the real trade value would be $2000-$3000.
7. Get everything in writing. If there are any promises or warranty attached to the purchase of the used car make sure you get the details in writing. Ideally you will buy a car with some left over factory warranty on it. Most manufactures today offer at least a 5 year warranty on the car’s engine and transmission that is transferred from owner to owner.
8. Know the history of the used car you are considering. This is very important. Many of the “great deals” out there are damaged vehicles that have been repaired. It is normal for a car to have a few bumps and scrapes in its life (repairs typically costing $1000-$4000). Where one needs to be careful is when you see a repair for over about $6000. This means there was significant damage done to the car. Even after a good repair the car is never usually the same if there has been frame damage. In short shy away from anything with a rebuilt status or an accident claim exceeding about $6000. In Canada CarProof offers a comprehensive report on the history of a vehicle as does CARFAX in the US.
9. Control your emotions. If you want to get a good deal on a car don’t let wants turn into needs. Remember there are many cars out there, make sure you have covered all the bases before you make a decision.
10. Try to find a good sales person and dealer. Who you buy the used car from is almost as important as the car itself. Try to form a good relationship with a dealer and salesperson who are knowledgeable and trustworthy. This relationship can be of great value during and after the sale.