The Complete Guide to Buying a Used Car

The Complete Guide to Buying a Used Car

March 24, 2022

Table of Contents


Along with buying a home, buying a used car is one of life’s most significant purchase decisions. With prices in the thousands, it’s no surprise that everyone tries to save as much money as possible.


With that in mind, many will turn toward buying a used car at a discounted price. Buying a used car can add many advantages and savings over a brand new vehicle. We have compiled a used car buying guide using our significant industry experience to answer any questions and help you along the car buying journey.


Why Buy A Used Car?


While a shiny new car can be a nice luxury, it’s hard to ignore the benefits of buying a used car. Savings, reliability, and safety are reasons people may opt for an older vehicle.


  • Lower cost. With most depreciation occurring in the first years of ownership, buying a used car will save you money.
  • Slower depreciation. The average car loses 50% of its value in the first five years. As time goes on, depreciation begins to slow down.
  • Vehicle History. Many new cars will have defects resulting in recalls. Knowing model-wide issues beforehand allows you to save on expected repairs or to avoid problematic models.
  • Lower insurance cost. With a more affordable price, insurance companies allow for lower rates.


Buying Used Saves You Money

The most prominent reason is also the simplest. Buying a used car will cost less money than buying a new car.


While there may be a small selection of collector vehicles that appreciate, the average new car rapidly depreciates in its first few months. With a used car, the depreciation curve has already begun, resulting in a better value.


Depending on the mileage and condition of the used car, the savings could be substantial. Additionally, used car pricing is very fluid, so there is a great opportunity to score a deal on a car priced below its market value.


Less Depreciation

Automobiles are notorious for quickly losing value as soon as they are driven off of the lot. The unfortunate inevitability of dealing with severe depreciation is something that any new car buyer will have to face.


In new cars, depreciation is most extreme within the first year when losing 15% to 25% in value is common. As the years go on, the depreciation curve begins to slow down. Even so, the average vehicle will lose almost 50% of its value in just five years.


While this is bad news for any new car buyer looking to retain some value, it’s excellent for those looking to buy a used car. While continued depreciation is still expected, used car values drop at a much slower rate. This not only allows one to take advantage of lower upfront costs but it also increases the likelihood of positive equity down the line.


Detailed Vehicle History

Even in a new car, problems will exist. Until a vehicle is sold and driven by the masses, widespread issues and manufacturer defects could be lurking. Until thousands of new car buyers voice their concerns, these issues will remain hidden from prospective car buyers.


Waiting to buy a car used allows you to understand the model better as a whole. While some vehicles will work fine regardless of age, others could have model-wide mechanical, interior, or performance issues. Crossing known problematic cars off the list could save you a headache, time, and money.


Additionally, buying a used car allows for a detailed history report. With a CARFAX report, like we include for free with each one of our used cars for sale here at Plano Used Cars, potential buyers can see any issues the vehicle might have had and how well it was maintained.


Lower Insurance

Many factors go into the calculation of your insurance cost. However, one of the largest is easily the car’s value. Simply put, the higher the value of your vehicle, the more insurance companies would have to pay in case of an accident. In turn, the more your car is worth, the more you will be charged.


With the discounted value that goes along with buying a used car, your insurance rate will be lower than if you purchased the exact same vehicle new.

More Car for the Money

Most car buyers today are restricted to a budget. Whether it be a maximum monthly payment or a maximum cash price, there are limits to what you can afford. With cars typically divided between different trim levels, most new cars hold a wide range in pricing.


While many may be able to afford a new Ford F-150 with a base MSRP of $29,990, the same model in the Platinum trim at $61,390 could be unreachable. With used cars selling at discounted prices, opting for a trim with more features and luxuries could be within your budget.


Continued Reliability

Decades ago, buying a used car could have been recognized as risky. When buying a used car today, reliability is less of a concern.


Along with technology and performance, overall vehicle reliability has dramatically increased. In 2018, the average age of a car on the road was almost 12 years old. As reliability continues to improve, the average age is projected to rise.



When buying a new car, you’re limited to the models released that year. When searching for a used car, your options can be considered nearly endless. With years and years of models to look through, you’re sure to find the vehicle of your dreams in the varied pool of available used cars for sale.


In many cases, manufacturers will discontinue certain colors or options. Choosing a used car allows one to buy a vehicle configuration, trim, or model that might no longer exist.


Determine Your Budget


As with any large purchase, it’s important to determine a budget in which you feel comfortable. Buying a used car allows for a more extensive selection of attainable vehicles. While vehicles are available for every budget, the overall market can be broadly split into three categories.



The economy class typically accounts for vehicles under $25,000. With many car companies producing affordable mass-market cars around this price range, there is no shortage of models to look through. Many stalwart workhorses like the Toyota Corolla and Honda Civic are found here. These cars simply work and give owners little issue. We go even further and offer many used cars for sale under $10,000 at our bad credit car dealership in Plano.



Considered to be between $25,000 and $50,000, a mid-range used car can provide universal benefits. With used cars offering discounts over their newer counterparts, many luxurious models could be found in this category.



The luxury bracket encompasses everything over $50,000. With a higher budget comes more flexibility. Whether it be a sports car, a luxury SUV, or a newer car with low miles, this category will hold the dream cars of most.


The Right Vehicle For Your Needs


With a budget in mind, you can now begin to look at vehicles that fit your needs and lifestyle. This used car buying guide will explore some of the broad categories of vehicles and their benefits.


Family Vehicles

Inevitably, many buyers will prioritize a vehicle that can safely and efficiently transport themselves and their loved ones around. Family vehicles will provide plenty of space, easy drivability, and excellent safety.


Large Sedan

For those with only a couple of kids, a large sedan is a great choice that will provide more than enough space for a small family. Large sedans will offer better fuel economy than other larger and heavier family cars. For those who plan to drive in crowded urban cities, the smaller size of a large sedan allows for better maneuverability through precarious situations.


Some of the most ubiquitous cars on the road, such as the Toyota Camry and Honda Accord, occupy this segment. When looking for used cars, there will be no shortage of these two Japanese legends who have built their reputation on reliability.


When a third row or increased cargo space is needed, finding a used SUV can be the better option. If you live in an area with plentiful rain or snowfall, the increased ground clearance and commonly equipped all-wheel drive systems will allow greater peace of mind during daily commutes.


The automotive industry creates an abundance of large SUVs and crossovers annually, so there is no shortage of options when looking for the best large SUV.  Popular choices in this segment include the Toyota RAV4 and Hyundai Santa Fe.


A minivan is recognized as the ultimate vehicle for anyone with a large family. The large sliding door allows for quick and easy entry in and out of the van. Additionally, many minivans will also be offered with flexible seating arrangements. Rail systems enable the seats to slide and fold for easy access. Premium models could include captain chairs for added passenger comfort.


If you plan to go on road trips with the entire family, it would be hard to do better than a used minivan. Popular entries in this segment are the Chrysler Pacifica and Honda Odyssey.


Utility Vehicles

Whether it’s a need for business or recreation, a capable vehicle can enhance your daily workflow.



Acquiring a used SUV is an excellent option for those that need to haul around cargo. The robust build quality of an SUV stands up better to daily abuse and will be sure to serve you for a long time. Combine that with its superior ride height and durable powertrain, and you have a vehicle that will be sure to serve you well.


Popular models in this segment are the Toyota 4Runner and the Ford Explorer.


When the limitation of a roof interferes with your cargo carrying capabilities, a used pickup truck might be the answer. Built to be rugged, most used pickup trucks will have no problems with daily abuse. The large truck beds can haul around even the roughest and dirtiest cargo without fear of messing up an interior. Additionally, these used trucks display great towing capacities when the need arises.


Two of the most popular vehicles in this segment are the Ford F-150 and Chevy Silverado.


Lifestyle Vehicles

Sometimes a vehicle serves no higher purpose than simply adding joy to one’s life. Just because you are buying a used car does not mean that you won’t be able to find one that fits your lifestyle goals.


Luxury Vehicles

The aggressive depreciation curve of a luxury car presents a great discount opportunity. Most used luxury cars will come equipped with premium materials and high-tech features allowing for better value.


With increased tech features, used luxury vehicles tend to encounter more issues. Still, if the opportunity to get something like a Mercedes S-Class for cheap arises then it is worthy of consideration.

Sports Cars

For those who value performance or handling above all, there are plenty of used sports cars worth your attention. Initially made in lower quantities, a used sports car is a rare breed.


Some of the most sought-after used sports cars include the Ford Mustang and Chevrolet Corvette.


Vehicles built for off-road use will come with massive ground clearance, thick tires, and durable cladding to stand up to rocks and other road hazards. These off road vehicles will typically not have as many bells and whistles as other segments and instead are kept simple and reliable.


Even if not used for off-roading, the emphasis on providing excellent traction is perfect in areas with flooding, snow, or other inclement weather. Models that perfectly embody the principles of this class include the Jeep Wrangler and Toyota FJ.




With the prices of used cars for sale today being so fluid, it’s more important than ever to conduct proper research. While a new car will typically start its life in perfect condition, a used car could have any combination of mileage and condition issues. As the miles go up and the condition worsens, the price will also decrease.


The best way to analyze the value of a used car is to look at recently sold examples while factoring in condition and mileage. Online auctions such as eBay allow you to view current asking prices and recently sold listings. Meanwhile, websites like Kelly Blue Book compact all available data to simplify the process allowing users to input basic information about a vehicle for an estimated value.


When looking at various listings for your desired used car, keep its value range in mind. If your buying process is lengthy, stay updated with recently sold examples as values can vary month to month.


Manufacturer Reliability

When looking to buy a used car, the vehicle’s expected reliability should play a significant role in your purchase decision. Since you are purchasing a car with some wear already attached, you want a car that is robust enough to stand up to additional years of use. As a general rule of thumb, more expensive luxury vehicles will be less reliable than their cheaper counterparts due to overcomplicated feature sets.


Using websites such as Consumer Reports and Kelly Blue Book allow you to view a model’s general concerns. With CarCompliants, you can see each model year in an easy to interpret graph, showing you which ones to avoid.



Outlining each form of measurement, vehicle specs are near endless. Basics such as speed and cargo room should be verified to make sure they meet your needs.


A low price car with poor fuel economy could cost you more overall. The fuel efficiency rating for both city and highway driving should be noted in the listing. If they are missing, you can check and input the vehicle’s information. Keep in mind that as vehicles age, their fuel efficiency will slightly drop.


For many, there is no spec more critical than safety ratings. In the research phase, you can turn to both the NHTSA and IIHS, two entities that issue individual safety ratings. Buying a used car with a good crash rating will ensure you and your passenger’s safety.

Vehicle History Report

A well maintained car with no accidents will always be worth more. When buying a used car, it’s essential to access its vehicle history report. There you will find its maintenance history and any reported accidents.


Once you find a particular vehicle you are interested in, simply enter its information in a service like CARFAX. At Plano Used Cars, a CARFAX vehicle history report can be requested at no cost.


Any active manufacture warranties will transfer to the new owner. If you are buying a relatively newer used car, the original warranty can offer peace of mind.


For older vehicles, you may want to seek something certified by the manufacturer. Certified pre-owned cars are inspected by the dealership to confirm their reliability. In some cases, certified pre-owned vehicles offer an extended warranty period.

Vehicle Walk Through/Inspection

Trying to buy a used car sight unseen can be a considerable risk. It’s important to physically see and inspect a used car before purchasing it. Make sure to look thoroughly around, under, and inside the vehicle. If you want to be extra safe, ask a mechanic to come with you to offer an experts opinion.

Test Drive

As part of the inspection process, it’s essential to go on a test drive. This allows you to test out the mechanical components of the vehicle, but it also allows you to see if you actually like the car.


In some cases, looks can be deceiving and a test drive could leave you wanting more. The test drive is crucial to ensure that you don’t regret your purchase decision.


Before buying a used car, it’s important to get your insurance situation squared away. In many cases, you won’t be able to leave the used car dealership lot with your car until proof of insurance has been supplied. Different states will have various regulations, so it is essential not to overlook insurance.

  • Liability coverage is required in every state. If you are found liable for an accident, this coverage helps to pay for damages to the other party.
  • Regardless of whose fault the accident was, collision insurance will help to pay for your damages.
  • If your car is damaged outside of an accident, comprehensive coverage will help to cover the cost.
  • Uninsured/Underinsured. If you get into an accident with an uninsured or underinsured driver then this will help to cover the cost of repairs.
  • If your car is totaled then gap insurance will pay off the total amount of the remaining loan regardless of the value of the car at the time of the accident.


With your used car of choice picked out and inspected, it’s time to begin the actual buying process. While many factors come into play here, it is important to understand the basic principles.

Cash vs. Financing

Depending on the cost of the used car and your financial status, there are merits to both paying for a used car with cash or financing it.

Pros to Buying a Used Car in Cash

  • No Interest. Since you are paying for the used car upfront, there is no interest tied to the purchase.
  • Can’t Be Upside Down. With unpredictable car depreciation, your used car might depreciate faster than you are paying. When deciding to sell the car, you might discover that its value doesn’t cover your remaining loan balance. If you pay with cash up front, you won’t have to worry about such a situation.
  • Less Overspending. Since you are paying with cash, it’s easier to stick to a budget.

Pros to Financing a Used Car

  • Protects Your Savings. Since you are not relying on paying an immediate lump sum, your emergency savings can remain intact.
  • Less Waiting. Saving for a large purchase can take years. With financing, you make the same monthly contributions without having to wait.
  • The Money Could Be Better Used Elsewhere. If your current investments are earning a larger return than the offered interest rate then it could make sense to finance a used car instead.

Bad Credit

While bad credit can limit opportunities for auto financing, it does not prevent you from purchasing a car. Buying a used car with bad credit is possible and we specialize in that here at Plano Used Cars. When financing with one of our bad credit car loans, banks will often require larger down payments and higher interest rates. If you’re working on fixing your credit but need a car fast then most banks will allow for refinancing opportunities later on at better rates.



Given each car’s unique condition, used car pricing can vary. Today, dealerships are split between flexible and no-haggle lots. When possible, savvy buyers can negotiate discounts or even extras like oil changes or free gas.


Ask about Fees

When crunching the final numbers, be sure to ask about dealer fees. Several fees are found under the umbrella of “dealer fees” and some of them can be negotiated.

Tags & Title / Registration

Unlike the previously mentioned fees, these fees are mandated by the local government.


To take legal ownership of a car, proper title and registration need to be filed with your local DMV. While the dealership will handle this, the buyer is responsible for the attached fees. Each state will have a different fee for this service.


If you live in an area with sales tax, said sales tax will be added to the final cost of the car.

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