Jean Chatzky: How to buy a used car

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If you’re in the market for a car, now may be the time to consider buying used again: After a record year for used car prices in 2014 — with a 6 percent year-over-year increase and an average of close to $17,000 — prices are beginning to trend down, says Ron Montoya,’s consumer advice editor.

“We saw prices for used cars spike around 2009-2010 because there was a shortage of preowned vehicles on the market,” Montoya says. “People didn’t want to take a chance on buying a new car. Now that the economy is better, we’re seeing more cars on the market with better prices.”

Still, it will take a bit of legwork to score a good deal — and avoid a lemon. Here’s how to go about it.

Get preapproved. Just like shopping for a home, you want to be preapproved for a used car loan before you hit the lot. That way, you know how much you can spend and at what interest rate — which also allows you to negotiate with the dealer for a better rate, if you decide to buy off a lot.

Rates on the typical 48-month used car loan are 5.38 percent, but consumers with good credit can expect to land a loan at closer to 3 percent, says Greg McBride, CFA, Bankrate’s chief financial analyst.

Research your options. If you want to find the diamond in the rough — and get the best price possible — you have to do your research. Once you settle on a make and model, check price comparison tools online. ( has one specifically for the used car market.)

Don’t forget to factor in maintenance costs on any car you’re considering, particularly if the car doesn’t come with a warranty. Sometimes the maintenance costs for a used car can push you outside of your budget — Edmunds has a “True Cost to Own” calculator that can help you estimate what you’ll pay.

Take extra precautions with private sellers. You’ll pay about $1,500 more for a car that is “certified preowned” by the manufacturer, but that money also typically buys you a decent warranty. On the other hand, buying from a private party rather than a dealer can mean a lower price and more room for negotiation, but you’re taking a bigger risk when it comes to the condition of the vehicle.

If you decide to go private party, have the vehicle’s owner meet you at a mechanic for what’s called a pre-purchase inspection. (It’ll cost around $150.) And always test-drive the used car before you buy it — no matter where you’re shopping.

Do a little digging. Once you know the price range for the car you want, start researching the local listings in your area — private-party sellers, dealerships or independent used car lots — and compare their offers. When you have a few prospective vehicles, take out their history reports. You can do this at or (Montoya recommends a one-month subscription, which should cover the time you spend looking.) You’ll get a good picture of the car: owner history, accident history and maintenance history.