Buying a Used Car: 7 Things to Avoid

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Buying a used car can be a smart investment when you need a replacement vehicle. While new car purchases tend to increase with a rising economy, used cars can provide a great alternative as long as you know how to shop for one.

You can get the most bang for your buck with a used car. While this provides an opportunity to live more economically, a used car, by definition, has issues from regular wear and tear. Therefore, it’s important to avoid making these costly mistakes when you’re in the market for a second-hand car.


  • Buying a used car can often be one of the smartest buying decisions.
  • Line up financing before you shop for your car.
  • Remember to test drive the car before you take it home.
  • Having the car checked by a certified mechanic is a step that should never be skipped.
  • If you don’t like the deal, there is nothing wrong with walking away.

Failing to Line up Financing Before Shopping

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Image by andreas160578 from Pixabay

Before you purchase your used car, whether that’s through a dealer or from a private owner on a website such as Craigslist, you’ll have to figure out how you’re going to pay for it. Not everyone is able to lay down the cash for a car in full—even for a used one. Those who can’t have to consider financing.

Financing allows you to understand the upper limit of your price range. Knowing your budget makes negotiating prices easier. If you’re buying a car from a dealership, you can certainly take their offer. But remember, dealer financing is built like a wholesale insurance offer, often adding in additional interest rates.

Can you avoid this? Sure you can. The way you can do this is to shop around because different lenders offer different rates. Make sure you have your approval in hand even before you shop for your car—it’ll help keep you in line and within your budget. An auto loan calculator can also help you determine what kind of loan term and interest rate will fit your budget.

One thing to remember is that used car financing rates are generally higher than those for new cars. That’s because lenders want borrowers to buy new vehicles. The reason? It’s simple. If you default on your loan and the lender has to repossess the car, it can get a better resale value on a new car than it ever could on a used one.

Shopping Based on Monthly Payments Alone

You can save a lot over the long term if you have enough money to buy your used car outright. If you don’t fall into this category, you’ll have to make up a budget and determine how much you can afford.

When people look for a new car, they often think about the monthly payments they’ll have to make. While a lower monthly payment is good for your monthly budget, a longer payment period means you end up paying back more money in the long run. Due to compounding interest, it could make more sense for you to take on a higher monthly payment since it’s possible to pay back the principle in a shorter period.

A cheaper way to get yourself into a used car is to lease one. And yes, you can lease a used car. But not all dealerships offer used car leases and there are certain conditions. According to Edmunds, it must be certified pre-owned. The mileage must be under 48,000 miles and the vehicle must be less than four years old.

But remember, while your monthly lease payments can be lower than your monthly loan payments, you may have to return a leased car at the end of your lease. If you bought your used car, you can sell it or trade it in at your discretion. One bonus is that the residual value at the end of the lease for your used car will be much more affordable than a new car, making it more attractive to purchase at the end.

Foregoing the Test Drive

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As many as 16% of buyers of used cars don’t test drive the car before making the purchase. On the other hand, first-time buyers of new cars test drive as many as seven new cars, on average, before making a purchase.2

This disparity in statistics might be why there are many third- and fourth-owner-used cars on the streets. When you don’t test the asset you’re purchasing, you run the risk of experiencing a bout of buyer’s remorse. In the case of used cars, it’s imperative to test drive a few before making a purchase decision. This protects against buyer’s remorse and also ensures that the car is running properly.

Not Having the Car Checked by a Mechanic

While many people test drive cars before purchasing, few have used cars checked out by mechanics before finalizing the deal. Even if you have to pay for the inspection yourself, it could save you a lot of money in the long run. However, it’s possible to have the seller pay for the inspection. If the seller is a car dealer, chances are it’s already an offer, but make sure it is. If it’s a private seller, they probably won’t offer, so it’s important to ask.

Making Initial Negotiations in Person

If you are purchasing a used car from a dealership, it’s going to be the salesman’s main goal to get you down to the dealership. Once you’re on the dealership property, you are much more likely to leave with the car you’re interested in—it’s an easier sell for the salesman.

To combat this, ensure you’ve done all of your research and comparisons at home, and try to negotiate over the phone or by email. It’s much easier to walk away when the car isn’t there, which gives you the upper hand in negotiations.

If you’re purchasing a used car from a private seller, chances are the seller isn’t a professional salesman. By mentioning a few used car statistics over the phone, it’s possible to gain the upper hand before seeing the car in person.

Buying Based on Looks

Before you even begin looking for a car, whether online or face-to-face, it’s important to assess exactly what you need from your car. If you’re looking for a commuter car, don’t waste your time looking at trucks. If you’re looking for a vehicle that can tow a trailer, don’t bother to look at sports cars.

By understanding what your needs are first, you mitigate the risk of making an impulse purchase based on what you want instead of what you need.

Not Running a Vehicle History Report

In addition to performing a test drive and having the car inspected by a mechanic, it’s important to run a vehicle history report. With a vehicle history report, it’s possible to check for any prior accidents, problems with the car, and the number of previous owners.

Dealers usually pay for this third-party service. But if the sale is through a private seller, the purchaser will most likely have to foot the bill. Whether you use CARFAX, AutoCheck, or another service, it’s always important to check the history of the car and the stories of its owners.