Why used

• Save lots of money.
  Most cars depreciate less and less per year as they get older, and the worst year is the first one. So a low-miles, four year old Honda Accord with basically nothing wrong with it will cost about $10,000 less than a new one. But when you sell or trade that same car over the same time period, it will be worth only a couple thousand less. So between buying and selling you could save $8000 over a few years.
  
  
• Know what you're getting.
  The idea that a new model is "safer" for reliability presumes that the manufacturer actually improved the design. But many cars take a step backward in reliability when they get revamped. The best way to know which model years are to be avoided is to see the history of real cars on the road. An older model year has a proven reliability history, whereas the newest model is by definition always unproven. Take it from an engineer, this is not good.
  
  
• Don't deal with dealers.
  I reject the premise that your risk of getting ripped off is somehow lower if a car dealership is involved. Car dealers are, frankly, evil. If you buy used, you have an opportunity to purchase from a normal person, who will be, on average, more honest and more fair. (This may seem surprising, but see below.)

Why not used

• Time and effort:
  The deciding-what-to-buy part of used car shopping is about the same, but the actual buying is more time consuming, especially if you end up buying from a private party. You have to work around sellers' schedules, you might have to drive further to reach the car you want, and you might have to wait for the car you want to become available at the price you want.
  
  
• Cash:
  Although buying used saves money, it doesn't save cashflow. If you're unlikely to be able to pay cash for the car (which you'll get back when you sell it, but that you have to kiss off in the meantime), then financing a used car is a little more annoying than financing a new car. Your best bet is to get third party financing through a credit union or a bank. The interest rate won't be as good as a new car loan, but it's doable.
  
  
• Selection:
  Used cars are simply not available with the variety that new cars are. So if you're buying a rare car, or if you're picky about certain rare option packages, it will be harder to find a good car in good shape at a good price.
  
  
• Colors:
  This is the same point as above, but it is particularly annoying to shop for a used car if you want a certain color. It's okay to have a few criteria ("not black") but if you're going to be unhappy unless you get this exact shade of blue, you're going to be shopping for a while. Used purchasing works much better if you're not too picky about things like color.
  
  
• Trade-in:
  If you don't buy a car from a dealer, then you'll have to sell your existing car separately. Unless you just indefinitely accumulate cars the way I do. To me this is an advantage, because selling a car myself decouples the two transactions and usually results in much more money. But if you have a special situation (trying to get rid of a dubious car) then you may not like having to sell it separately. (Perhaps I will write a follow-up blog post about how easy it is to sell a car.)
  
  
• Inventory:
  I've never shopped for a used car in a small town, but it probably sucks. You need to be shopping in a large city so that there's a lot of cars out there in the market. If you live more than 50 miles from a major metro area, your used choices may impractically limited.

1. Select some cars

• Read reviews:
  Edmunds, Car & Driver, Consumer Reports and many others routinely write articles about which car you should buy. There's usually special articles written based on your buying criteria--- best family cars, best 4wd cars, best SUVs, best wagons, best vans, best convertibles, best sports cars. It's all there.
  
  
• Ask your friends:
  Looking for a general-purpose commuter car? Do your friends and family also commute? Find out what kinds of cars they have, and if they like them.
  
  
• A renting experience:
  Did you recently rent a car while traveling? Did you like it? Put it in the spreadsheet. (Especially if you use ZipCar, they have a good variety of cars.)
  
  
• Look around town:
  Are you shopping based mostly on aesthetics? Then next time you notice a car that you think is attractive, make a point of reading the make and model off the back of it. It can go in the spreadsheet. Note the color, if you care about colors.
  
  
• Ask me:
  I'm not so well educated on minivans and trucks, but I know a lot about certain types, like sports cars, performance sedans, and AWD cars. Let's talk.
  
  
• Buy a Honda:
  If you have no idea what you want, but you just want a car, buy a Honda Civic or a Honda Accord. They're simple, reliable, and pleasant. Just don't buy a Toyota Camry, for god's sake.

2. Narrow the field

• Price:
  You can approximate the likely used price of a car right away using the Kelly Blue Book "Private Party" price or the Edmunds "True Value" price. Depending on the model, KBB and/or Edmunds offer a reasonable estimate of what you'll end up paying. (With some exceptions; certain cars, especially Porsches and BMWs, suffer from Inflated Value Shared Hallucination on the part of their owners. So there can be types where you go to shop and find that nobody is willing to sell for the KBB price. In these situations Edmunds can be more accurate. But KBB is pretty good for more common, more practical cars.)
  
  
• Reliability:
  I consult Consumer Reports for reliability ratings, and fill in a 1-5 score for each car. (3 is CR's "average" rating.) This is the best place to discover which year of the car you want to own. For example, the Subaru Impreza is well rated in 2007 and 2009, but not 2008. Good to know.
  
  
• Availability:
  One of the disadvantages of buying a used car is that you're at the mercy of what's actually for sale. So before you get your hopes up about owning that Audi A3 Quattro, check Craigslist and Autotrader and see if there are any for sale within 100 miles of your house. If not, then you may be waiting a long time to find your specimen, and when you do, you may not get a good price because it's "hard to find".

3. Drive

• Look at the front and back, up close and from 30 feet away
• Sit in every seat
• Use the stereo
• Open every door
• Use features you care about (sunroof, convertible top)
• Drive on city streets
• Drive on the freeway for at least one exit
• On the entrance ramp, use full throttle. No cheating!
• On the exit ramp, use full braking. (Warn the salesman you're going to do this, but do it.)
• On the freeway, change lanes a couple of times. See what the blind spots are like.
• Go around left turns and right turns
• Back out of a parking space. Can you see well enough?

4. Shop

• No photos:
  If there are no pictures of the car, don't bother. A person who tries to sell a car without showing what it looks like is not a person you want to attempt to do business with. (Note that some dealers will put up a "representative" picture that looks like a magazine product shot, because it is--- it's not the real car. Skip these as well, they're shady.)
  
  
• No clean title:
  The ad should say "clean title" if it's from a private party. If not, ask. A "clean" title means that the car is currently registered to your state in good standing, and has never been totaled. This is a deal-breaker requirement on every specimen you will consider. (In particular you do not want a "salvage title", which indicates that the car was destroyed in a wreck or flood, but then has been repaired on the cheap. These cars usually they have life-long mechanical and electrical problems. Do not want.)
  
  
• Wishful pricing:
  If a seller is asking thousands more than the blue-book private party price, I wouldn't bother with them. Bargaining is only going to get you so far. (Caveat: if all the cars you're finding are way above fair price, then you may be in an Overpriced Market Shared Hallucination situation, and you'll have to recalibrate your idea of what's affordable for this car type.)
  
  
• High mileage:
  It depends on your price range and the reliability of the car in question, but you probably don't want a specimen with more than 80,000 miles on it. (Less for lower-reliability cars; see consumer reports.) If you're willing to spend more to get a newer car, then shooting for 40-60k miles is a nice sweet spot.
  
  
• Distance:
  It will seem tempting to drive out to Modesto to see a promising specimen, but remember that you have to be willing to walk away from it and waste all that time if you get there and there's something wrong with it. If you can find closer specimens, go to them first--- assign a higher-than-you-think penalty to driving way far away, and only do it if you get desperate.
  
  
• Modifications:
  This won't matter for most cars, but for sports cars you almost certainly do not want a car that has modifications such as suspension, brakes, body kits, and especially engine modifications. These modifications erode the car's value and usually also comfort. AND, the car was probably not modified competently. It's not something you want to own long term. Buy it as the factory intended.
  
  
• Damage and malfunctions:
  I recommend you avoid cars that have anything wrong with them that you couldn't tolerate leaving broken forever. Dents are okay, but it's hard to know the true cost of repairing major wreck damage or non-functioning car features, so you risk that you'll under-negotiate the price and end up eating a large repair cost.
  
  

• What is the VIN number?
  You'll need the VIN for CarFax (see below), but you can also run it through a VIN decoder (use Google) to confirm that the car is the make, model, transmission, color, and options that are represented in the ad.
  
  
• Has the smog been done in the last 90 days?
  At least in California, the seller must get the car to pass smog within 90 days of sale. It's typical for private sellers not to have done this, but they are obligated to legally. I have bought cars without the smog cert, and then smogged the car myself, it's no big deal for a newer, trouble-free car. But if it doesn't pass, the DMV recommends that you return to the seller and ask them to cover the costs of making the car smog. If they refuse, you can take them to court. I've never done this.
  
  
• Does the seller have the title in hand, with no liens?
  Sometimes people sell cars that they haven't finished paying off yet. This means that they can't actually sign the title over to you because their bank has it. This isn't a deal-breaker but it is annoying, because it means that you'll have to pay the seller's bank to get them to give you the title. I've done this before but I was at the mercy of the bank's shitty customer service department to finish the transaction, and they bungled it. They ended up paying themselves $200 in late fees which I had to pay and that I couldn't recover from the seller. It was their own incompetence but I ended up eating it. I wouldn't do this again, so unless you're looking for a rare car, pass unless the seller has the title in hand.
  
  
• Is there anything else I should know about the car?
  A good catch-all question to allow the seller's guilt to reveal anything else that they're going to reveal.

• What have you used the car for?
  The answer is usually "commuting", in which case it can be interesting to ask the commute distance and route. If the car has spent the last 5 years in stop-and-go traffic for two hours a day, then it's had a hard life.
  
  
• Who drives the car?
  Wives and dads, good. Sons and daughters, less good for wear parts like brakes and clutch.
  
  
• Has the car ever been modified?
  "Not currently modified" is not the same as "never meddled with". It's good to ask.
  
  
• Has the car been to the track? To autocross? Participated in races?
  Only relevant when shopping for sports cars; these are not automatically bad things, but it's good to know. If you have access to a specimen that was driven by an English teacher and never raced, you might prefer that one.
  
  
• Is all scheduled maintenance completed?
  If the car is overdue for expensive maintenance like the 60k, that lowers its value. It also tells you that the owner has not been good about maintenance, which lowers its value.
  
  
• Has the car been smoked in?
  Unless you're a smoker, you don't want a car that's been smoked in. It's really really hard to get the smell out, a simple detailing job will not remove the smell.
  
  

5. Schedule a purchase

• Run the CarFax report
  You can, and should, buy a CarFax report on the DMV history of the car. You only need to know the VIN. This will tell you many interesting things, like that the title is clean and whether the vehicle was ever part of a rental fleet. I recommend you avoid fleet vehicles. They're not used with care, and their scheduled maintenance was probably not done. And of course, avoid salvage title vehicles.
  
  
• Prepare payment
  You'll likely be expected to pay with a cashier's check drawn on a local bank or credit union in your area. You'll need an account with sufficient funds in such a bank. You can get the actual check made after you've hand-shaked on the price. (If you're financing, you'll probably receive a blank check from the bank issuing you the loan, which you should have at the ready. You buy the car by writing the check, and the amount becomes your loan.)
  
  
• Allow some time
  I'd estimate two to three hours from first meeting to finish the transaction and be on your way. Longer if you're going to a dealer. So don't schedule a purchase for 60 minutes before your important business meeting.
  
  
• Schedule during banking hours
  You should schedule the meeting for two to three hours prior to the close of your bank. If you decide to buy the car, you can't obtain a cashier's check unless the banks are open. Even if you're getting a loan check or a pre-made cashier's check, the seller will still (if he is smart) want to phone the bank to verify funds. This will require that it is open.
  
  
• Schedule a mechanic or "car guy" to inspect the car
  Many people want to take a prospective used car to a mechanic, and you can certainly do this. It will add some hassle because the seller will need to be willing to go with you to a mechanic, which will take even more time. I don't do this, because (a) I know enough about wrenching to trust my own judgement, and (b) you'd be surprised at how little the mechanic can tell you anyway from a visual inspection. It's easier just to borrow a "car guy" friend (like me, hey!) to come do this part for you. If you're feeling brave and you'd like to take a crack at inspecting the car yourself, see below.
  
  

6. Evaluate the car

• To find deal-breakers, which are problems that will stop you from buying the car.
• To find bargaining chips, which are evidence that the price should be lowered to offset problems you discover.

• Pop the hood and:
• Look for cracking / dirt on accessory belts
• Check coolant level (if cold), look for flecks in water
• Check oil level and color
• Check brake fluid level
• Check power steering fluid level
• Check clutch fluid level
• Check transmission fluid (if dipstick)
• Look for aftermarket parts such as hoses, air filters, camber plates
  
  
• Look under the car and:
• Look at bottom of oil pan for oil drips / moisture / grime (will require laying beside the car)
• Poke at inner and outer CV boots, look for goo or cracks
• Look for oil spray from CV joints
• Check the rear differential (if any) for signs of leaks
• Wiggle the wheels, check for bearing play
• Look at the visible brake pads, check for thickness
• Inspect tire wear
• Push down on each corner of the car to check excessive suspension travel
• Inspect rotors for excessive grooving
  
  
• Start the car and:
• Listen for belt noises, valve taps
• Smell for coolant leaks
• Smell for oil burning smells
• Turn the wheel, listen for power steering groan or belt noise

• Read the side of the tires and confirm they're as advertised
• Read the VIN off the plate under the windshield and make sure it matches the car you CarFax'd
• Read the mileage and make sure it's as advertised
• Check that the air conditioner blows cold
• Check that the heater blows hot
• Check that the turn signals work
• Check that the headlights and high beams work
• Check that all the power features work (power seats, power locks, power windows, moon roof, trunk release, fuel tank release)
• Roll up all the windows and check that the cabin does not have any strong smells. No smoke, no pets, no strong chemical cleaners or perfumes. (Perfumes are covering up some other smell that you might have to live with later.)
• Turn on the stereo, use the balance and fader to check all 4 speakers independently
• Check that the stereo features work (FM, AM, CD or whatever)
• Look carefully at the interior (each seat, the ceiling, the door panels, the floor and floor mats) for rips and stains
• Look carefully at the exterior (roof, hood, each door, tail gate, fender panels, bumpers) for dents, scrapes, and damage

• Smoothly shifts into gear (no clunks if automatic transmission)
• No play in steering wheel
• Suspension feels solid / not soft
• Accelerate at full throttle
• Do at least one redline shift
• Use all gears
• Use reverse gear
• Listen for road noise
• Listen for exhaust leaks (will sound like loud engine sounds)
• Apply full braking, activate the ABS (warn passengers that you're going to do this)

7. Agree on a price, shake hands

• If the selling price is above Kelly Blue Book, simply propose to pay exactly the Blue Book value.
• Subtract hundreds ($300-$800 depending on the model) if the tires will need replacing soon
• Subtract hundreds (thousands for an Audi) if the brakes are worn out
• Subtract hundreds or thousands for paint damage, large dents, or interior damage
• Subtract a hundred or two for a registration that's about to expire
• Subtract hundreds for abstract worry about noises and smells
• Point out that the car is overpriced compared to other currently available cars on autotrader / craigslist (even if they're further away than you realistically would go)

About dealers

• You may be asked to purchase an extended warranty. It's up to you, but it is not necessarily a good deal. It is also not necessary to buy from the dealer! It's basically an insurance product, which you can buy from other sources. So even if an extended warranty interests you, you don't have to buy it here, now. Personally I never buy them.
• If you are financing, the loan principle may be higher and the interest rate may be lower than you were verbally quoted. This is the dealer attempting to pay themselves extra using your own credit score, which is better than they told you it was. Do NOT let this happen. Walk away.
• The contract numbers may simply not match the verbal agreement. Read all of the numbers, and especially confirm the "out-the-door" price. Make the money man print the paperwork over and over again, until it's correct. Do not sign it until it matches your understanding.
• You may be sold dealer-added options such as "clear coat". Decline these.
• You may be sold included maintenance. Decline this, because even if it sounds like a good deal, it locks you into the dealer's service department. This is bad. You'll be wanting to go to a more competent independent mechanic.

8. Pay for the car

9. Sign over the title

1. Verify that the name on the title matches the person you are buying from.
2. The seller signs the "1a" box on the title document to give you proof that he released the car to you
3. The seller writes the accurate odometer reading on the title, and then signs the box underneath it to declare that the odometer is correct. (If it turns out not to be, he can face a felony perjury charge.)
4. The seller signs again at the bottom (Line 2.)
5. The seller writes the sale price on the white top part.
6. At this time, you should also write the same sale price on the back of the title in the "price paid" box.
7. You write your name and address on the white top part in the "new owner" box. You don't have to sign.
8. The seller rips off the white top part of the title, which he has to fill out and mail to the DMV within 5 days. This notifies the DMV that the car is not his problem anymore.
9. You fill out the back of the title. You can do this later, when you take the form to the DMV in the next 10 days.

10. Getting home

11. Insurance

12. Registration