You might have heard the rumor about how used car prices have shot through the roof. Here’s the thing about that rumor—it’s 100% true.
By the end of 2021, the average price paid for preowned vehicles hit an all-time high of about $29,000.1 That’s the first time the price for used cars has cracked the $29K mark. And things aren’t going to slow down anytime soon. Word on the street is that in 2022 we’ll see the average price of a used car cross the $30,000 mark for the first time ever.2 That’s a lot of dough.
But before you start thinking about giving up cars altogether and walking everywhere on foot, hear us out. Not every used car is going to cost you an arm and a leg. There are still plenty of good deals on used cars out there. You just have to do your homework, know where to shop, understand what you’re looking for, and—of course—stick to your budget.
Dave's easiest money-saving tip: See if you're over paying for car insurance.
On top of all that, it’s even more important that you’re asking the right questions these days. What kinds of questions? We’re glad you asked. Here’s a list you can ask the seller (and yourself) before you decide whether or not to buy their used car. Then, you can drive off knowing you’ve found a reliable set of wheels instead of a lemon.
1. Why are they selling the car?
This one will get you plenty of answers from the seller. Sometimes the best thing you can do is ask the seller your question and let them do the talking. This lets you scope things out, get to know the seller, and understand the reason why they’re selling the car. Maybe their family just welcomed their first child and they need an SUV instead of that two-door coupe—their car loss is your gain!
But if they break out in a sweat or quickly change the subject, little red flags should start waving around in your head. The owner might be trying to cut their losses with a car that’s been giving them headaches, and their lack of a poker face is giving it away.
2. How old is the car?
Thanks to depreciation, most new cars lose 60% of their value after five years.3 So, if you bought a new car for $30,000 five years ago, it’s only worth about $12,000 now. You can use the car’s age—and how that make and model loses value over time—to your advantage when you’re negotiating for a better price.
So, do your homework before you drive up to the dealership or meet with that seller from Craigslist. That way, you’ll know if their sticker price is legit or just straight-up crazy.
3. What’s the car’s mileage?
Mileage matters. The U.S. Department of Transportation Federal Highway Administration reports that the average person drives 14,263 miles each year.4 All of that adds up to wear and tear on the car. Keep that in mind when you’re making your decision. Some vehicles can pack on a crazy amount of miles without skipping a beat (what’s up, Honda). Others? Not so much. So once you know how old the car is and how many miles are on it, you can figure out pretty quickly if the seller’s been running their car into the ground or only drove it on Sundays.
4. How long have they owned the car?
The longer someone owns a car, the more they can tell you about it. If someone’s been driving their car for a while without too many problems, it might be a sign that the car is pretty reliable. But if someone is trying to sell a car after owning it for only a year or less, they’re probably not happy with the car for some reason.
That’s not always the case, but you need to dig a little deeper to make sure the seller isn’t just trying to unload their clunker on you.
5. Are they selling the car as is, or is it under warranty?
When a dealership or private seller is selling a vehicle “as is,” that just means there’s no warranty on the car. Once you drive it off the lot (or their front lawn), dealing with any flaws or defects that need fixing is on you.
Here’s some good news: Some used cars are still under the manufacturer’s warranty. That means the manufacturer or dealer is still on the hook for at least some of the repairs and replacement parts your car might need. Either way, you’ll want to know what you’re getting yourself into.
6. Is there any damage to the exterior of the car?
We know looks aren’t everything, but they still count for something! Here are a few things to keep an eye out for:
- Bodywork, paint job, car frame: Look out for scratches, dents and rust on the surface of the car.
- Windshield, lights, rearview and sideview mirrors: Are there cracks on the windshield? Do the headlights seem foggy or discolored? Are the rearview and sideview mirrors clear and working?
- Wheels and tires: Check each wheel for dents, and make sure they’re not bent. Take a look at the tires, too, to make sure they don’t need to be replaced before you buy the car.
While it’s more important to buy a car that’s in good shape under the hood, serious problems on the outside—like a rear bumper held together by duct tape or massive rust stains on the car door—can tell you a lot about how the owner treated the car.
For even more tips on what to keep your eyes peeled for when buying a car, check out our Ramsey Car Guide.
7. What does the interior of the car look like?
Now it’s time to climb in and take a look around. After all, you’re going to be spending a lot of time behind the wheel! Are there rips and tears from the family dog or coffee stains on the seats? Does it smell like a giant ash tray? Are there burger wrappers littering the floor? These are all things to think about and will tell you how well (or how little) the car has been taken care of.
8. Are there any mechanical problems?
Let’s take a look under the hood—even if you don’t really know what you’re looking at. Here’s a pro tip: The engine is the main thing you want to check out. Make sure the engine compartment is clean with no leaking fluids (yikes). You’ll also want to be sure the car will pass a smog and safety inspection that a lot of states require.
P.S. If you’re not sure of all the ins and outs under the hood, bring along a friend or family member who knows those things. Chances are, they’d be happy to help you out, and you’ll feel better knowing you’ve got an extra set of eyes there.
9. Has the car been in any accidents?
A fender bender here or there or some dings from that narrow parking spot at the grocery store aren’t the end of the world. But if the car has been in a major wreck that required a new engine or a lot of bodywork, you might want to tread lightly here.
Sometimes, cars that’ve been through major repairs will still have problems long after the car’s been “fixed.” You’ll want to have the car looked at by a trusted mechanic before moving forward with buying it (more on that later).
10. Is there a vehicle history report available?
A vehicle history report will give you some need-to-know info that’ll help you decide whether this car is for you—including accidents, open recalls, the car’s previous owners and service history. All of that can give you the upper hand when it comes to getting a better price too.
You can look up a report online (it just takes a few minutes) or get one for free from most used-car dealers—all you need is the vehicle identification number (VIN) or license plate number.
11. Can I take the car to my mechanic for an independent inspection?
Yes! If you do one thing before buying a used car, it should be this: Take the car to a trusted mechanic to make sure everything checks out. Having a mechanic look for any problems before they’re yours to deal with will give you peace of mind about the car.
And if the seller gives you trouble about it—or just flat out says no—chances are, they’re trying to hide something pretty serious. Drive away from that deal as fast as you can!
12. Do they have the title in hand?
Whether you’re buying from a private seller or a dealership, never drive off the lot or pay a single dime without having the car’s title in hand. No title, no deal!
Be sure to actually look at the title, too, before agreeing to buy the car. It’ll show if the car has been in an accident and marked as a total loss (aka a “salvage” vehicle). If that’s the case, you can ask for a price to reflect that.
13. How would this car impact my car insurance premiums?
When you change cars, don’t forget about how it might impact your car insurance bill. If you’re turning in your hooptie for a much newer model, your insurance premiums will probably go up. Ask the seller if they’re willing to share how much they’re paying for car insurance so you can get a general idea of how much it’ll cost to insure the car.
But honestly, the best way to get a true estimate is to get in touch with an independent insurance agent before buying a used car. Our insurance Endorsed Local Providers (ELPs) can shop tons of companies to help you find the best deal on insurance for your new-to-you wheels. Reach out to one of our trusted insurance agents today.
The only way to know if you’re really ready to buy is by doing a regular budget. EveryDollar is the world’s best budgeting app, and better yet—it’s free! Download it today and start saving for your next new-to-you car!
14-Day Money Finder
Need some extra money to put toward your car? Learn how to find more money each month with this 14-day challenge.Find More Money