How to Buy a Used Car

How not to get stuck with a lemon when you buy a used car.

ByABC News
January 30, 2013, 5:02 PM

  — -- If buying a new car doesn't fit in your budget, there are plenty of decent used cars on the market. Here's how to get the best deal possible on a used car:First, always pay cash if you can. If you can't pay cash, shop around for your own financing at your bank or credit union. That way you'll avoid the surprises that can occur during the financing process at a dealership.

Finding your own financing also gives you a realistic idea of what you can afford.

Which Model Car Should I Buy?

Do your research by checking out resources such as Consumer Reports' best cars under $20,000. That will narrow down your search before you start to shop.

If you buy from an individual seller rather than a dealer, insist on seeing the seller's ID and the car's title, and make sure the names and addresses match.

I Found a Car. How Do I Know It's Not a Lemon?

Do some sleuthing. Ask to review the car's past service records, and contact the repair shop to see if they know of any major work that needs to be done.

Check out the car's history by plugging its VIN into, the official government registry. There is a search fee of $2.95 to $12.99. You will not get a repair history, but it will note whether the car's title was ever branded as "salvage" or something similar. Note: the registry is not complete due to gaps in state-provided information, but it's a good start.

Inspect the car thoroughly -- during daylight – and make sure you drive it. Look for the following:

If a car is labeled "as-is," that's exactly what it means.

Next, hire a trusted, independent mechanic to examine the car thoroughly. If the mechanic finds a small problem, use that to try to bargain down the price of the car. Ask the mechanic to check for any safety recalls for that model.

Ask the mechanic what he or she thinks the car is worth. Check the value at Kelly Blue Book ( or True Car (

Never tell a car dealer how much you can afford to pay, or what sort of monthly car payments you can make. Also, don't include a trade-in vehicle in the price negotiations. Focus on only one thing: getting a fair cash price for the car.

A note about trade-ins: If the amount that you owe on your old car is greater than what it's worth, you have negative equity. You should pay down that loan before attempting to trade it in to a dealer.

If you need financing, carefully consider the length of the loan and the interest rate. If the car gets wrecked or if you need to sell it before the loan has been paid off, you could be on the hook for the difference. If that's the case, consider a less expensive model.

And remember – there is no three-day right to cancel an automobile purchase contract, despite what many consumers believe. When you sign a contract, you have purchased that car.

(Sources: Federal Trade Commission, Consumer Federation of America, Consumers for Auto Reliability and Safety)

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