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By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


What do I Need to Know Before Buying a Used Car?

 Jan 19, 2024
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Q: I’m in the market for a used car, but I’m a bit nervous about getting the raw end of a deal and ultimately regretting the purchase. What do I need to know before buying a used car?

A: Purchasing a used car can be a daunting task. You want to keep costs down, but at the same time, you don’t want to drive off the lot with a lemon. Here, we’ve compiled a comprehensive guide to buying a used car to ensure a smooth, successful search and purchase. 

Set a budget

Before you start your used car search, it’s important to establish a budget. Review your monthly expenses and income to determine how much you can realistically afford to pay toward your car each month. When researching vehicles that fit within your budget, be sure to include ownership costs like insurance, taxes, registration and ongoing maintenance along with the cost of the vehicle. Shopping with a budget will help you narrow down your options and avoid disappointment later. 

Determine your needs and preferences

Next, identify your personal needs and preferences for a used car. Here are some factors you may want to consider: 

  • Vehicle size. Do you need a compact car, a sedan, an SUV or a truck?
  • Engine type and fuel efficiency. How important is gas mileage to you? Would you prefer an electric vehicle, a gas-powered car or a hybrid?
  • Features. What specific features are deal-breakers for you and what are preferences?
  • Mileage. This is a dual consideration. First, what is an acceptable existing mileage for the type of vehicle you are considering? Second, will you be putting a lot of miles on it during your time of ownership? 
  • Vehicle age. Are you comfortable with an older model, or do you prefer something newer?

Identifying your needs and preferences will help you shop with a more focused approach. 

Secure funding

It’s a good idea to secure funding for your used car before you actually start shopping for a vehicle. Reach out to private lenders, or financial institutions, like a bank or credit union, and start comparing their loan options and interest rates. When you’ve chosen your lender, consider getting a preapproval for your loan. This entails a comprehensive check into your credit history and overall financial health as well as approval for your requested loan amount. Having a preapproval will make the actual car-shopping quicker and smoother.

Shop for a car

You’re ready to start car shopping!

You can find used cars on websites like CarMax, Cragslist and AutoTrader, and at used-car dealerships and the used-car sections of new-car dealerships. Be sure to stick to your budget when looking for a car, preferably going for one that will cost less than you’ve allotted for your monthly car costs. Keep your feature preferences in mind as well.

When you’ve narrowed down your choices to just a few cars, take some time to research the vehicles. Visit Carfax or AutoCheck, where you can obtain a vehicle history report of the cars you’re considering using just the Vehicle Identification Number (VIN). This will provide you with information on the car’s title status, accident history, any recurring maintenance issues, open recalls and more.

Inspect the car

If the car you’ve chosen has passed the vehicle history test, it’s now ready for a physical inspection. If you’re familiar with car mechanics, you can complete this step yourself. Otherwise, consider hiring a professional mechanic to perform the inspection. 

Pay close attention to the following details when inspecting the car:

  • The engine. Look for signs of oil leaks, unusual noises or visible damage.
  • The tires. Check the tread depth and look for uneven wear.
  • The body. Examine the exterior for dents, rust or signs of past accidents.
  • The interior. Inspect the upholstery, dashboard and electronics.
  • The undercarriage. Look for rust and any signs of damage.

If the inspection reveals significant issues or red flags, it may be a sign to walk away from the deal. Alternatively, you can use the findings as leverage to negotiate a lower price.

Take a test drive

A test drive is your opportunity to get a feel for the car’s performance and handling. During the test drive, pay attention to the car’s acceleration, braking, steering and handling, noise levels, visibility and the overall comfort of the seats.

Negotiate the price

One of the best parts of buying a used car is the option to talk down the price. Do some research on the market value of the make and model you’re interested in, and consider any imperfections or necessary repairs that were identified during the inspection. Use this information to make an informed offer. Be prepared to haggle with the seller, and don’t be afraid to walk away if you can’t agree on a price that fits your budget.

Review the title and ownership papers

Before finalizing the deal, carefully review the title and ownership papers. Make sure the seller has a clear title to the vehicle, and there are no liens or legal issues associated with it. Ensure that the VIN on the title matches the one on the car and compare the car’s mileage on the title with the odometer reading.

Complete the necessary paperwork and obtain insurance

You’ll need to sign a lot of paperwork and collect several forms before the car legally becomes yours. This includes a Bill of Sale, the transfer of the vehicle’s title, an odometer disclosure statement and release of liability. At this time, you’ll also want to ensure that your vehicle is properly insured. 

Finalize the sale

You’re ready to complete the sale. Use the funds secured through your auto loan to pay for the purchase and the car is yours! Drive safely and enjoy your new-used car.

If you’re in the market for a used car, consider an auto loan from AgFed our loans consistently offer competitive rates and favorable terms. Call, click or stop by today to learn more. 

Shopping for a used car can be an overwhelming task. Use the tips outlined here for a smooth and stress-free purchase. 

Your Turn: Are you a happy used-car owner? Tell us how you navigated the purchase in the comments.