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Buying a car is one of the biggest financial decisions you can make. Oftentimes, buyers will opt for used instead of new cars to save money. However, they can come with more variables and uncertainties than new vehicles, so it's worth knowing what questions to ask when buying a used car beforehand.

Why Not Buy New?

Although purchasing a brand new car may be alluring, buying used is sometimes the better financial option. There's some peace of mind that comes with knowing you're the first person to own the vehicle, so you don't have to worry whether the previous owner maintained the car well or drove it with care. However, new cars are more expensive than used vehicles.

Not only is the sticker price higher, but if you finance the car, you'll also pay more interest over the life of the loan than you would with a less expensive, used car. New cars also depreciate much faster than used ones, to the tune of several thousand dollars in the first year of ownership. If you decide you're not as enamored with the vehicle as you initially expected, you may take a significant loss if you choose to sell it within a year or two of buying it. Then there are insurance premiums, taxes, and registration fees — all of which are steeper on new cars than they are on used ones.

Used vs. Certified Pre-Owned

If you've decided to buy a used car, you may decide to search for a certified pre-owned (CPO) vehicle. These cars are certified by either a manufacturer or dealer and have often undergone inspections before being resold. A CPO car may include a warranty, providing a financial buffer if problems crop up after you've taken the car home.

However, buying a CPO car doesn't guarantee a headache-free ownership experience. CPO vehicles tend to be far more expensive than non-CPO used cars, and you should still do your own research before saying "yes" to a certified car. The dealer's inspection may have missed important signs of previous accidents and wear and tear that could create major issues for you.

You can find non-certified cars that are in great shape as well and at far lower prices than new and CPO options. The key is to do your due diligence to ensure that the car is in good working condition and is worth the price you've been offered.

Vetting a Used or CPO Car

Once you've found a car that appears to suit your needs — and ideally, your aesthetics — you may feel compelled to buy right away. However, there are a few steps you should take before making a decision:

  • Examine the Body for Signs of Wear and Tear: Give the car a thorough once-over, looking for rust, major dents, torn or missing seals, and loose hinges. Try opening and closing the trunk and doors several times to make sure nothing seems off its hinges or improperly placed. Gaps or misalignments in the doors or fender can indicate a bad repair job or improper assembly, according to Consumer Reports.
  • Check the Kelley Blue Book Value and VIN Records: Kelley Blue Book allows you to input the car's year, make, model, condition, and features to get an estimate of a fair price. Your prospective vehicle may be priced higher or lower than what you see on the site, but having that ballpark number will help you gauge whether your dealer or seller is offering a good deal. You'll also want to look up the car's vehicle identification number (VIN) to research its history. VIN records may include information about how many previous owners the car has had, as well as registration and accident records, and details about any past insurance records and recalls.
  • Schedule a Pre-Buy Inspection: Even with VIN records in hand, you'll want an expert to inspect the car. A trained mechanic can spot potential problems with major components of the vehicle, and they may see signs that the car was involved in an accident that wasn't listed on the VIN report. Knowing whether you're likely to need new brakes or tires in the next six months is important information to have before buying. You may still go ahead with the purchase, but you'll have a better understanding of the maintenance and repair expenses you're taking on, which will allow you to budget more effectively.

Make an Educated Decision

A used car can serve you and your family well for years, providing not just a reliable vehicle but financial peace of mind as well. Be sure to know the signs of a well-maintained, trustworthy car and one that's been misused, and backing up your own instincts with the opinion of trained experts and hard data. Once you've taken these steps, you can be confident that buying a used car is the right option.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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