Used Car Buying Guide

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In the market for a used ca? Whether you’ve purchased a used car in the past or this is your very first time, following our handy guide will help you make sure you have all the necessary used car requirements before registering at the DMV.

Guide to Buying a Used Car

Before you start shopping for a used car, you’ll need to make a list of the features you want, the features you need and set a budget. With so many options available to drivers today including buying from a private seller, going with a dealership and even buying online, it can be tough to know where to start.

Types of Used Cars

Once you know that you’re interested in buying a used car, you’ll need to determine which type of used car fits your needs and budget. Some of the main types of used cars you can purchase include:

  • Certified Pre-Owned – These cars have gone through a comprehensive inspection, refurbishment, and certification process that has been signed off on by the manufacturer or dealership.
  • Demon, Fleet or Rental – These cars have been previously used in a variety of different roles and may have some wear and tear. However, you can potentially save thousands of dollars if you find a good option.
  • Auction Car – Typically, auction cars are sold as-is. The vehicles included in auctions are usually either surplus, used or confiscated vehicles.
  • Salvage Title – While they may sound risky, if you do the research a salvage title car can also be an affordable option. A car falls under this category when the cost of repairing a vehicle is more expensive than the value of the car after an accident.

Setting a Budget

When deciding on a budget, be sure to consider not how much you can spend but how much you should spend on a used car. As a good rule of thumb, most drivers should spend no more than 20 percent of their monthly take-home pay on their monthly car payment.

When creating a budget, keep these key factors in mind:

  • Your average monthly expenses
  • Car insurance rates
  • Vehicle depreciation rates
  • Taxes and fees (dealership, documentation, trade-in, warranty, shipping costs, etc.)
  • Make, model and mileage

If you plan on trading in your current vehicle, you may be able to save a bit on your down payment. However, it is important to know the value of your trade-in before you buy because most dealerships offer less than what your trade-in may be worth.

Paperwork Requirements

When purchasing a used car, there are a wide variety of DMV paperwork requirements to consider. Depending on your state, DMV services may be available to help you complete the proper forms and make sure everything is in order before you head out on the open.

Common paperwork requirements include:

  • Bill of Sale
  • Certificate of Title
  • Odometer Disclosure
  • Vehicle Registration
  • VIN inspection (out-of-state sales)
  • Motor Vehicle Affidavit (out-of-state sales)
  • Certificate of Exemption (out-of-state sales)

Purchasing a Car Out-of-State

In most US states, registering a vehicle that was purchased out-of-state usually requires extra paperwork to be completed. Be sure to check with your local DMV to get accurate information on the used car requirements for any vehicle purchased out-of-state. Keep in mind that your state may require a smog and emissions test, safety inspection and sales tax in your home state.

Vehicle History Report

A vehicle history report or VIN number check is the best way to get the full history on a used car. With a VHR you can find the following detailed information:

  • Previous driver history
  • Mileage
  • Accident reports
  • Lemon status
  • Lien and ownership history
  • Warranty information
  • Service records
  • and More!

A VHR is a great tool for avoiding purchasing a “lemon.” While most states have Lemon Laws that will protect buyers in the event that they are sold a car that does not follow state guidelines, a VHR can prevent you from getting swindled.

Bill of Sale

While some states don’t require a bill of sale, they offer many benefits to both buyers and sellers. They are ideal for completing a smooth transaction can help relieve a seller of liability in the event of an accident before the car is registered to the new owner. However, because a bill of sale only documents a transaction between 2 parties, it does not prove ownership.

Used Car Buying Scams

Whether you buy from a dealership or a private party, you may be at risk of falling victim to a used car scam. Some commonly used car buying scams include:

  • Title Washing – This scam is designed to get rid of a car’s previous “salvaged title” status
  • Odometer Fraud – With a vehicle history report, you can verify the odometer reading on any vehicle.
  • Fake “Certified Pre-Owned” – Some dealers will simply put a “certified” sticker on used cars and try to sell them without proper certification.

Additional Resources

Want more information before buying a used car? Check out other helpful resources like the Kelley Blue Book, Edmunds and your local DMV for information about helpful DMV services.