9 Steps to Buying a Used Car (Our 1st in 17 Years)

Buying a used car can be exciting but also a bit daunting.  We just went through the process of purchasing a new (to us) vehicle for the first time in 17 years.

Having driven the same car for so long, we found ourselves a bit out of practice when it came to buying a used car.  But after some research, several test drives, and a few missteps here and there, we finally figured out what we were doing.

Greta the Jetta (2002 - 2019)

When we bought our VW Jetta (nicknamed Greta) back in 2002, we never would have thought that she would still be with us seventeen years later.  But we took good care of her, didn’t drive much, and never felt the need to upgrade to something newer.

We put some heavy mileage on Greta at the beginning.  She loyally transported Allison back and forth from San Francisco to eBay in San Jose (50 miles each way) for her first 3 years.  But after Allison transitioned to Stubhub (an eBay company) in SF, our vehicle usage went way down.

Sure, we did the occasional weekend trip to Tahoe, Napa, or SoCal, but nothing too crazy.  We mainly used Greta to go to the grocery store and the gym. 

Enter Lola the Corolla

When we finally said “Auf Wiedersehen” to Greta last month, she only had 110K miles on her, which is pretty low for a 17 year old car. Why did we sell her? Well, she started having a few issues that would end up costing more to fix than she was worth (sorry, Greta!).

Fortunately, we found what we hope will be the perfect vehicle for us. Lola (as we’ve dubbed her) is a 2017 Toyota Corolla with 43K miles. At our current level of driving, it will probably take Lola 10 years to get to 100K miles, so we plan on keeping her for quite awhile.

Here are the 9 steps we went through for successfully buying a used car (illustrated by popular song titles)...

1. Anyway You Want It

The very first step in the car buying process is to figure out which vehicles will best suit your needs.  What is most important to you: gas mileage, reliability, price, safety, roominess, features, etc?

If you know us (or have read our blogs), then you know we’re pretty conservative when it comes to spending.  I got my frugality from Allison, and those lessons have helped us survive the very high cost of living in the Bay Area for over 20 years.  We even did an analysis to see if we could go carless, but the convenience of having a vehicle outweighed the savings.

So for us, the two things that mattered most were fuel economy (both for saving money and being easy on the environment) and reliability (we want low maintenance and few repairs). Secondarily, we wanted something safe and relatively inexpensive.

You also need to decide what your budget is and whether to buy new or used. New cars are enticing, but you’re paying a premium for that “new car smell.” We preferred to let someone else take the depreciation hit of buying a new car. Ideally, we wanted something 2-5 years old in the $10K - $13K price range.

Some of the resources we used to find the right make, model, and year were Consumer Reports, US News, UsedCars.com, and Edmunds.      

After doing the research, we decided to focus on Toyotas and Hondas.

2. (You Better) Shop Around  

These days you have access to a multitude of online and offline resources to help you find your ideal vehicle.

But where do you start? Since we knew we wanted a Toyota or Honda, we started by visiting our local Toyota and Honda dealerships. Some were better than others, in terms of inventory, prices, sales pressure, and overall vibe.

We also looked on Yelp for used car dealerships, and found a reputable, privately-owned dealer just a few blocks from us.  We liked him, but his inventory was very small, and he didn’t have the right car for us.

Another option is CarMax, which is the nation’s largest used car retailer.  They have a few locations in the Bay Area, but none were very close to us, so we passed on them.  However, they typically have a huge inventory and can be a great resource if you have one close by.

The most useful online resource we used was CarGurus. You plug in what you’re looking for (location, make, model, etc.), and they provide a list of all matching vehicles in your area.  Additionally, they give each used car a rating from great to overpriced.  

We also checked out the Costco Auto program, which can provide additional savings if you buy from one of their preferred dealerships.  Fortunately, they had a partnership with the Berkeley Honda dealership, so that’s where we ended up buying our Toyota.

3. Drive My Car  

You definitely want to make sure you get a chance to test drive all the vehicles on your wish list.  We made sure to try all six of the makes and models we found in our research.

On our test drives, we always tried to do some highway driving to test acceleration and handling at higher speeds.  We also would drive around city streets to test braking and overall feel.

During your drive, test all the controls and features, like cruise control, bluetooth, radio, temperature controls, etc. (since Allison learned how to drive in NYC, the horn was one of the most important features in a new car for her). And if you have two drivers in your household, make sure they both get to drive it.

Usually the salesperson will accompany you and sit in the backseat.  It’s tempting to have a conversation with him or her, but that can distract you from focusing on the car.  Try to limit your discussions to questions about the vehicle, features, pricing, the dealership, etc.

If you happen to live in California, there is an interesting company called Shift that will bring cars directly to you to test drive.  We were going to try them, but we ended up finding Lola before we had a chance.

One note of caution: after our very first test drive, we made the rookie mistake of meeting with the sales manager and letting him run our credit.  Even though we were planning on buying in cash, we were curious to see what finance rates we could get. But the whole thing became a strong arm sales tactic to try to get us to buy at that moment, so that was a major turnoff.

4. When the Deal Goes Down   

After test driving the cars on your list, it’s time to evaluate and flesh out the best deals.

As I mentioned, we found CarGurus to be a great resource. They look at a variety of criteria like dealer reviews, market value, number of owners, accidents reported, price drops, and days on lot. From this information they then rate every used car based on how good of a deal the car is.

Another good tool for evaluating the price is to look at the Kelly Blue Book value (KBB.com).  While perhaps not as precise as CarGurus, which evaluates a specific car, KBB does provide another benchmark to make sure your pricing is in line with overall averages.

I like data, so I tracked key facts about the vehicles we were considering in a spreadsheet:

The two most important data points for us were mileage and price.  We wanted to minimize the number of miles and price as much as possible. The mileage on the Honda Fit and the Toyota Priuses were higher than we preferred, so we zeroed in the Scions and Corollas in the spreadsheet.

You can also look at more qualitative factors.  How roomy and comfortable is the car (I’m 6’3” so this is important for me)?  Are there enough compartments and storage areas (for your drinks, groceries, bikes, etc)?  Can you see and access all the indicators and controls easily? Do you like the exterior and interior colors?

We ended up choosing the Corolla because it felt more like an “adult grown-up car” to us.  The Scion seemed like a fun sporty car you would drive in your 20s.

5. Finish What Ya Started

Once you narrow down your decision, you will want to make sure there are no hidden surprises.  Take a look at the CarFax to see the history of the vehicle:  number of owners, how it was used (was it a rental?), accident indicators (e.g. airbag deployments), state emission inspection results, etc.

The second course of action if you’re buying a used vehicle is to take it to a trusted mechanic to give it a complete examination. Lola was just two years old with relatively high mileage, and we were buying her from a reputable Costco-approved dealership. But we figured the $120 for the mechanic’s review was well worth the peace of mind.

Fortunately, Lola came back with a clean bill of health, except for one issue -- there was a small leak from the oil pan.  It could either be something minor, like a faulty gasket / seal, or it could be something bigger like a crack.

This was good information for us to be able to bargain with the dealer.

6. (Get Outta My Dreams) Get into My Car  

You’ve now found your dream car, gotten it inspected by a mechanic, and you’re ready to plunk down your cash.  Before you whip out your checkbook, make sure you’re getting the best deal possible.

Since we found the dealership through the Costco Auto program, they knocked $500 off the price.  According to Costco, each participating dealer offers prearranged pricing to ensure value and a haggle-free experience.

Next, we showed the dealer the report from our mechanic with the leaky oil pan.  Fortunately, since the dealer did the vehicle’s last oil change, they were willing to have their mechanics take a look.  It turned out the plug was tightened a little too hard and they forgot to add a washer, which caused the small leak. They fixed the issue and gave us a free oil change in the process.

Finally, check to see if there’s anything else they can do to sweeten the deal (e.g. extended warranties, better financing terms, etc).  Every little bit helps. Here are some additional tips for negotiating the final price from Edmunds.

7. Sell Sell Sell

Typically when you buy a new (used) car, you need to figure out what to do with your old car.  The two main options are to sell it yourself privately or trade it in to the dealer.

If you sell it yourself, you will likely get a higher price, but you have to put in the time and effort.  You will have to advertise it (posting it on Craigslist or other online networks), meet with prospective buyers, go on test drives with them, haggle / negotiate pricing, get payment, and transfer everything over (title, keys, and vehicle).

An easier, but less lucrative, solution is to trade it in to the dealer. For us, that was the better option. Greta, bless her metallic heart, was only valued at about $900 on KBB. We also had just learned that we would need to spend over $400 for some repairs. So, when the dealer offered us $500, we grabbed it (fortunately Lola was behaving properly the day that they evaluated her).

Another option is to use the site Peddle, which will give you a guaranteed price for your vehicle and even come to pick it up from your home.  Tip: if you do decide to use Peddle, don’t take their first offer. They came back to us a few times with better prices after we ignored their initial requests.

And finally, you can donate your car, which may provide someone less fortunate with a vehicle to get around in (and give you a nice tax write-off).

8. The Price You Pay

It’s now time to make the actual payment for your new (used) car.  Unfortunately, the days of 0% financing are largely gone, especially for a used car.  We knew we didn’t want to take on a loan, so we were ready to pay in cash.

Many dealerships will require a certified check, but our dealer was willing to take a personal check. Also, ask how much you can put on a credit card. We were able to put $3000 on a credit card (and get 2% cash back), and then we paid the balance via personal check.

Oh, and don’t forget to call your insurance company and switch over your coverage. We had contacted our insurance agent prior to the car purchase, and he explained that our current car coverage would carry over to the new car for two weeks. (In fact, this might be a good time to evaluate your auto insurance rates and shop around for a better deal, which is what we’re doing now.)

9. Brand New Car

As we were waiting for the mechanics to finish the oil change, Allison and I thought about some names for our new chariot. We knew it would be a female name, keeping with the tradition for boats.

Since Toyota is a Japanese company, we tried to come up with a cool Japanese name, but nothing clicked. Finally, the name Lola came to me, as in Lola the Corolla. If you’re of a certain age, the classic Barry Manilow song, “Copacabana” may run through your head.

When we got her home, we put up our Golden State Warriors flags (this was during the NBA playoffs), and hung our good luck and good parking karma crystals from the rear-view mirror.

It’s now time to enjoy our new ride, which will hopefully last us many happy years.