Used car sales totaled over 40 million cars last year. These shoppers knew that buying a used car can save them money and allow them to buy the perfect vehicle for their needs at a budget they can afford.

So, what to do when you buy a used car? The process is similar to shopping for a new car, but there are a couple of extra steps you don’t want to miss.

Follow this guide, and you’ll be used car buying like a pro.

Set a Budget 

The first thing you need to do is set a budget. This will help you stay on track when in search for a used car. First, decide if you’ll pay cash or finance the vehicle.

If you’re paying with cash, then setting a budget is simple, figure out how much money you have on hand to throw down.

If you plan to finance, then you’ll need to use an auto loan calculator to estimate a monthly payment amount. Then use your income and expenses to determine what you can afford every month.

You should plan to put at least 10% of the value of the car down. You shouldn’t plan to spend more than 20% of your monthly budget on your car payment.

Select Your Car 

This is the fun part where you pick out the car that you want to shop for. Think about how you plan to use your new vehicle and what you want to get out of it.

If you plan to tow, you won’t want to get a compact car. If you have a long daily commute, a gas guzzler would be a terrible idea.

Narrow down your options quickly by creating a list of “must-haves.” Then create a second list of “nice to haves.”

Confirm You Can Afford to Own the Car 

Just because you fall in love with a car doesn’t mean that it’s the one you should pick. Look into the cost of operating your new vehicle.

Contact your insurance company and find out what the insurance cost will be on your new vehicle. Then do some calculations to estimate gas costs.

Figure out how many miles you drive in a week. Then factor in how many mpg the car gets. This will help you figure out how often you’ll need to fill up. From there, you can figure out how much you’ll spend on fuel every month.

The third thing you should do is check the reliability of the vehicle. The more you drive, the more wear and tear the car will experience.

Locate Your Car 

You can start looking locally, but don’t limit yourself to this. A specific model can vary greatly in price in different regions of the country. You may be able to score a great deal by looking online.

Price Compare 

Once you find a couple of options, price compare, and determine that they aren’t asking too much. Use Kelly Blue Book to get an estimate of the value of the car. Consider the age, condition, mileage, and options when pricing a vehicle.

Check the History of Your Chosen Car

Never buy a used car without looking into the vehicle’s history. You can use the vehicle’s vehicle identification number (VIN) to get a detailed report.

Make sure that the car has a clean title. You don’t want to buy a vehicle that has been totaled by an insurance company. These cars are declared a total loss, and the title becomes a salvage title.

Steer clear of cars that have been in a severe accident. Check that the mileage is correct for the vehicle.

Contact the Seller 

A short chat with the owner of listed the vehicle will tell you a lot and can save you a lot of time. Verify the listing information by asking questions about the car.  If the owner starts giving you answers that don’t match the car history report, then this is a red flag.

Test Drive 

Give the car a once over, look for anything that might pop out as out of the ordinary. Take the car for a test drive and pay attention to these things:

  • Acceleration and cornering
  • Brakes
  • Ergonomics
  • Mechanical conditions
  • Visibility

Plan on having the vehicle checked out by a mechanic later. They can give the entire car a look and let you know of any potential issues.

Negotiate 

When you buy a used car, you have the freedom to negotiate with the seller. This is especially true if you’re buying from a private seller. You’ll have more negotiating power if you plan to pay for the car in full with cash.

Close the Deal  

Pay for the car with either cash or a cashier’s check. Make sure that you get the title from the seller. Carefully have the seller sign the title.

Be sure that the seller fills out the title correctly; otherwise, the DMV won’t accept it. The time limit varies from state to state, but generally, you have 10 days to register the car.

If there’s a loan on the vehicle, you’ll want to make sure the seller has the loan removed.

You’ll need to add the car to your auto insurance before you take possession and begin driving the vehicle. The last thing you want is to get into an accident on the way home.

Know What to Do When You Buy a Used Car

Now that you know what to do when you buy a used car, you’re ready to get started. So, can you afford your dream car?

Follow these steps, and you’ll end up with the perfect car for your needs at a price you can afford.

Check out our other auto articles for more great advice and guidance.