The Insider’s Used Car Buying Guide

There are many factors to consider when buying a car, and deciding between new and used is usually at the top of the list.

A new car is categorized as one that has never had a previous owner. By contrast, a car is considered used or preowned if it’s had a previous owner and been driven by someone else. While the decision to purchase a new or used vehicle is a personal one, budget is almost always top of mind. Used cars are typically less expensive than new cars for the same make, model and year, but there are other variables to consider, too, such as maintenance and repairs.

Read on to learn what you need to know before buying a used car, questions to ask the dealer and other important information to help you make the best purchase.

Before Buying a Used Car

Researching the history of a used car is an important first step to take before purchasing. Ask the dealer to show you the vehicle history report, which should include ownership, crash and flood history, and a record of repairs.

Vehicle History

If the dealer doesn’t have a vehicle history report, you can also learn a lot about the car by looking up the vehicle identification number (VIN), which is a car’s unique code that can help identify key facts, such as manufacturer and type of engine. The VIN is located in the left corner of the dashboard. Popular sites to consult for a vehicle history report include Carfax and AutoCheck.

It’s also important to consider the cost of depreciation, which is the value a car loses over time. A car typically depreciates each year, through its fifth year. For year one, the depreciation is usually about 20%. By year five, the lost value is typically about 60%. Here are a few factors that can impact a car’s value:

• Make and Model: More-popular cars tend to hold their value longer.
• Condition: If the car has body damage or excessive interior wear and tear, the value will decrease. This is why it’s important to get regular vehicle inspections.
• Mileage: The more miles on the car, the less value it has on the road.

Extended Warranty

If you’re purchasing a used car, it might be beneficial to ask about an extended warranty. An extended warranty is a service contract that covers you for repairs and maintenance beyond the dealer warranty or factory warranty. Purchasing an extended warranty before the dealer or factory warranty expires will guarantee there’s no loss in coverage, but make sure you’re not overlapping the contracts too much so you avoid paying double.

It’s also important to review the extended warranty documentation so you know what is and what isn’t covered. Also be aware of the deductible amount and where you can and can’t go for repairs and maintenance.

Deciding whether to purchase an extended warranty will also depend on how long you think you’ll keep the car. If you’re only going to have the car for a year or two, or if you’re not going to drive the car very often, it might not make financial sense to pay for a warranty you may not use.

What To Ask When Buying a Used Car

After reviewing the vehicle history report, you may still have some questions for the dealer or seller. Here are some questions AAA recommends asking:

• What is the reason for the sale?
• Are there any past crashes or major repairs not accounted for in the vehicle history report?
• Was the car used for anything else (rental car, loaner car, dealer errands, etc.)?
• Where was the car driven (what state/area)?
• How many owners have there been?

Also be sure to take the car on a test drive to see how it handles. Turn the radio off so you can listen for any sounds that could signal that there’s a problem.

What Not To Ask When Buying a Used Car

When you’re in the market for a car, it’s important to brush up on your negotiation skills so you can position yourself for the best deal possible. Don’t ask what the sticker price is—ask what the dealer’s best price is. Keep the amount you want to pay close to the vest until it’s the right time to reveal that information.

Follow these tips to help you succeed at dealmaking:

• Do Your Homework: Come to the table with the right numbers so you have an accurate baseline. Know how much the car is worth and know how much you can spend each month and in total.
• Allow Plenty of Time: If you’re rushed, you may not have time to negotiate the best price.
• Get Preapproved: If you’re going to finance the car, get preapproved for an auto loan so you know what amount you will qualify for.
• Always Make a Counteroffer: Even if the price is in line with what you wanted to pay, always make a counteroffer in your favor. It doesn’t hurt to ask for a lower prince, and you’ll be glad you did if the counteroffer is accepted.
• Know You Can Say No: You don’t have to accept any deal you’re not comfortable with. Walk away if the offer isn’t right for you.

What’s the Best Time To Buy a Used Car?

The best time to buy a used car is typically a holiday weekend or in August, right before the start of a new model year. Memorial Day deals and holiday deals are also common. The end of the month can also be a good time to buy.

How Many Miles Is a Lot for a Used Car?

When buying a used vehicle, the usual rule of thumb is to avoid purchasing one with more than 100,000 miles. The high mileage could mean a lot of wear and tear on the vehicle, even with regular preventive maintenance, and it could also signal that repairs and performance issues will likely be needed in the near future.

Should You Buy a Used Car From a Dealership or an Independent Seller?

Consider the pros and cons of purchasing your car from a dealership or from an individual.

Buying From a Dealer

Pros: More choice in car make, model and color; the ability to purchase a warranty; access to a vehicle history report and maintenance/repair report; and a guarantee of the car’s performance.

Cons: Possibly paying a higher price than you would if you purchased the car from an individual.

Buying From an Individual

Pros: The ability to negotiate a lower price than you would be able to with a dealer.

Cons: Not knowing the full vehicle history, no ability to purchase an extended warranty and no recourse if the car is a lemon.

What If You Have No Credit?

Your credit history and credit score will go a long way in helping you get a favorable interest rate on an auto loan. The better your credit score, the better the interest rate you’re likely to receive on an auto loan. While it is possible to purchase a car without credit, you’ll have to work with the lender to prove you have a steady income in order to get a green light for financing. The lender may also require a substantial down payment.

If you do have enough credit to secure an auto loan or you’ve found a lender who is willing to give you a loan without an established credit history, be diligent about making your payments in full and on time. Successfully paying off an auto loan is one of the best ways to build credit because the scoring agencies, like FICO, place a high value on installment loans and see them as an indicator that you’re creditworthy.

Buying a Used Car? AAA Insurance Has You Covered

Buying a used car can be exciting, especially if you’ve found the right make and model. As with any large purchase, it’s important to have the insurance coverage necessary to assist with repairs or replacement, if needed. AAA Members can enjoy savings on car insurance—and bundling auto and home insurance can also lead to discounts, so speak with your AAA agent to learn more.