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Used Car Buying Guide

Too often, the typical drill for a used-car purchase process is to write down the addresses of local dealerships and to put a lot of effort into visiting them, tracking vehicles that they have, and making a decision based on things like price, financing options and car preferences. That tactic is good, but in the modern-day economy, you should take more advantage of the Internet and its tools, such as online auto loan calculators, to search, check and purchase your second-hand automobile – or any car, for that matter.

Why Should I Purchase a Used Car?

Except the technological obsolescence that wear and tear produces – and other detriments specific to each vehicle – a used car can provide you with many positives. For example, you will pay lower insurance premiums if you buy a second-hand automobile. You also can get some good deals while shopping, especially if the car owner is in financial straits and needs to sell quickly, or if you buy during a promotional period. Other benefits you can reap with a used car include:

  • The factory warranty that may still be in-force at the time of purchase.
  • The technological and structural integrity of the vehicle may still be intact – especially if you buy a used low-mileage car.
  • The Vehicle Identification Number (VIN) can give you relevant information about the vehicle's history, accident reports and prior owners' data.
  • The ability to quickly reach an agreement, especially if you buy from a private party, say, your uncle Peter.
Used Car Buying Guide

How Can I Select the Right Used Vehicle?

Use online resources to figure out what constitutes your favorite second-tier car, but don't forget that your economic situation is an integral part of the vehicle identification equation. For example, you must know how much the new car will cost and whether your budget can accommodate the monthly loan payment. Many sites provide the same features, so you can just use two or three – for example,, and CarMax (which also happen to be my favorites).

How Do I Research My Prospective Second-Hand Vehicle?

You can cull helpful data from various sources, most of which are Web-based. Visit an online car resource like and start with its used-car inventory page. From there, nail down the list of automobiles you are interested in, specifying whether you want to shop dealer listings or build your own offer. You can sort dealer listings by best match, lowest mileage, lowest price and distance. The site, like many others, typically indicates the dealer's information and sales rating, so you can reach out directly to the dealership's manager and ask the further questions.

When car shopping, you also should not forget an important concept: true cost to own (TCO). TCO may be higher than the listed price because it includes other expenses you would incur before getting the keys and driving off the dealer's lot. TCO includes a hodgepodge of elements, running the gamut from depreciation and fuel to repairs, interest charges, registration costs and other fees, taxes and insurance.

A vehicle history report also can provide insight into your prospective second-tier vehicle's background, so I recommend you purchase a report at – both of which provide the most comprehensive reporting on used cars.

Can I Afford the Used-Car Loan Payments?

Check out our auto payments calculator to figure out how much you can afford in monthly loan payments, assuming, of course, that you would finance the purchase and don't have money to make an all-cash purchase. In essence, you want to determine the monthly payment by setting a desired purchase price and down payment amount. For example, the affordability calculator would indicate that you can buy a secondhand car whose value does not exceed $14,868 if you enter the below criteria:

  • Monthly payment: $250
  • Interest rate: 3.66%
  • Down payment: $1,500
  • Loan term: 60 months
  • Trade-in value: $1,000
  • ZIP code: 10019

How Do I Pay for my Used Vehicle?

You can pay for your second-tier automobile by paying outright, getting a bank loan or apply for credit at the dealership.

Option 1 – You just fork over the total amount by writing a check or initiating a wire transfer to the dealer's account. Need I say more?

Option 2 – You can apply for a car loan to fund the purchase. Talk to your banker to see options that are available to someone with your economic profile. You also can reach out to other lenders, including credit card companies, some of which gradually are entering the consumer loan market and providing credit on everything from studies and cars to special-purpose events like weddings and anniversaries. Note that standard credit procedures apply, irrespective of the institution you contact. So have your paperwork ready and show proof of income, employment and fiscal returns for the last two or three years, among other requirements.

Option 3 – You can apply for credit at the dealership – but this is my least favorite option. The annual percentage rate you would pay for a dealer-arranged loan typically is much higher than what a bank, online lender or credit union would charge on a car loan.

Should I Test-Drive a Used Car Before Purchasing It?

Of course! You should test-drive the automobile to check amorphous elements like comfort and sense of well-being as well as more tangible elements like engine noise, hill-climbing power, braking and visibility – especially those blind spots that could cost you dearly if you don't know them. Other elements to check while test-driving a used car range from suspension and cargo space to acceleration and cornering.


To purchase a second-tier car that meets your mechanical criteria and fits within your budget, you should read online reviews about the specific vehicle or similar automobiles. Other things you can do include touring dealerships in your residence area, using Web-based loan calculators to determine how much you can afford, and checking the history of your prospective used car before buying it.

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