What to consider when buying a used car

There are many questions to ask when buying a used car if you want to find the best fit for your lifestyle and budget. Find out more about how to buy a used car and what to look for when you shop. You can also consult our used car checklists for inspecting and buying a used car to make sure you have all the information you need before you settle on the right vehicle for you.

How to buy a used car in 6 steps

Follow these 6 steps to buy a used car from a dealer, private seller or online broker.

1. Figure out your budget

Make a list of your income and expenses to figure out how much you can reasonably afford to spend before buying a used car. You should also factor in the total cost of car ownership before committing to a vehicle since this cost may be much higher than the baseline price of a used car with a private seller or dealership.

As a general rule of thumb, you should aim to spend only 10% to 15% of your net income on buying a used car.

Expenses to consider when buying a used car

Consult the table below to make sure you can afford the total cost of buying a used car:

Actual costs will vary based on factors such as the type of car you drive, your driving record and your province of residence.

2. Settle on where to buy your car

Think about whether you want to buy a used car from a dealership, a private seller or an online broker. The route you decide to take will affect the process you go through when buying a used car. It’s usually more expensive to shop with a dealer because it’s safer and more convenient. You may save money with a private seller or online car broker, but you’ll usually take on more risk.

Buying a used car with a dealership vs private seller vs online broker

Best places to buy a car

3. Decide how to pay for your used car

Think about whether you want to buy a used car with your savings or by applying for a used car loan. There are several different forms of used car financing you can choose from if you don’t have enough money to cover the full cost of your vehicle. However, you should aim to at least put a down payment on your vehicle to offset your expenses.

It could also help to get pre-approved for car financing so you know how much you’ll have to spend on your used car before you start shopping.

There are several ways to pay when buying a used car, depending on your circumstances.

• Pay with your own savings. Use money from your bank account or borrow from family or friends to avoid taking out a loan.
• Take out an auto loan. Apply for a used car loan from a private lender and secure your repayments with the vehicle you buy.
• Apply for dealership financing. Get financing directly from the dealership when buying a used car to save yourself time and energy (but expect to pay higher rates).

Compare used car loans

1 - 5 of 5

Name	Product CAFCL	Ratings	APR Range	Loan Amount	Loan Term	Requirements	Broker Compliance
CarsFast Car Loans CarsFast Car Loans		Customer Survey: ★★★★★	3.90% - 29.90%	$500 - $75,000	12 - 96 months	Requirements: Min. income of $2,000 /month, 3+ months employed	CarsFast will connect you with a dealership near you to help you find the right financing.	Go to siteMore Info Compare	loading Fetching your data...
Loans Canada Car Loans Loans Canada Car Loans		Customer Survey: ★★★★★	0% - 46.96%	$500 - $50,000	3 - 60 months	Requirements: Min. income of $1,800 /month, 3+ months employed	Loans Canada is a loan search platform. Get matched with a suitable dealer based on your credit history and borrowing requirements.	Go to siteMore Info Compare	loading Fetching your data...
Approval Genie Car Loans Approval Genie Car Loans		Not yet rated	3.90% - 29.90%	$500 - $75,000	12 - 96 months	Requirements: Min. income of $2,000 /month, 3+ months employed, Ontario only	Get customized car loan and auto financing solutions for a used vehicle that fits your budget and lifestyle.	Go to siteMore Info Compare	loading Fetching your data...
Clutch Car Loans Clutch Car Loans		Customer Survey: ★★★★★	From 8.99%	$7,500 - No max.	24 - 96 months	Requirements: 3+ months employed, Max.1 bankruptcy, Ontario & Nova Scotia only	Apply for financing with online dealer Clutch, who partners with some of Canada’s largest financial institutions to get you competitive interest rates.	Go to siteMore Info Compare	loading Fetching your data...
Dealerhop Car Loans Dealerhop Car Loans		Not yet rated	0% - 29.99%	$7,000 - $50,000	12 - 96 months	Requirements: Min. income of $1,800 /month, 3+ months employed	Dealerhop matches you with a dealer partner to get you financing.	Go to siteMore Info Compare	loading Fetching your data...

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4. Compare your options and negotiate prices

Compare car listings online to find the best deal and reach out to sellers to see if they can bring the advertised price down for the used car you want. Many may be willing to negotiate on price to clear out inventory or get rid of a car that’s not getting much interest. You can ask your seller to price match with similar cars (same mileage/condition) by sending them ads you find online.

Check out our used car checklist for what to look for when buying a used car to make sure you find a car that suits your needs.

• Tips to negotiate used car prices

  • Get pre-approved for financing. Apply for financing before you go shopping and get pre-approved so that you know how much you have to spend.
  • Price match in advance. Look online for similar vehicles to the one you want to buy and use ads from other sellers to negotiate the price of your vehicle down.
  • Make a reasonable offer. Make sure you know what a fair market price is and try not to low ball with your offer.
  • Remember the sales tax. Figure out how much sales tax you’ll need to pay and add that to your car price to make sure it still fits your budget.
  • Know when to walk away. Decide what the maximum amount is that you can spend and don’t go over that amount under any circumstances.

5. Schedule test drives and inspections

Test drive your used car before you buy to make sure that essential components such as the engine, brakes, steering and gear shifting systems are working properly. You should also look for visible signs of wear and tear or damage. As a last step, you may want to schedule an inspection with a licensed mechanic for added peace of mind.

It’s also a good idea to check the vehicle identification number (VIN) with a company like CARFAX to make sure the car hasn’t been stolen or involved in a crash. You can usually find this number on the driver’s side dash or door jamb.

Used car checklist: What to look for when inspecting a used car

Learn what to look for when buying a used car by consulting this used car checklist for inspecting a vehicle.

6. Sign your contract and organize the paperwork

When you find a car you want to buy, you’ll need to pay the seller and sign all of the paperwork. You should ask the seller to come with you to get your registration and insurance documents processed so that they can sign the title of the vehicle over to you. All you need to do then is pay your fees and hit the road (provided you have a valid licence!). If you’ve borrowed money to pay for your used car, you’ll also need to begin to repay your loan.

• Used car checklist: Documents needed to register a used car

  Consult this used car checklist for what documents you need to facilitate a car transfer in most provinces.

  • Government issued ID. Show your licence or some other form of government issued ID to register a used vehicle.
  • Transfer form. Complete a transfer form and pay sales tax on the vehicle sale, depending on which province you’re based in.
  • Original vehicle registration. Provide a signed copy of the vehicle registration from the previous owner.
  • Bill of sale. Complete a bill of sale to verify your purchase of the vehicle if required by your province.

Used car checklist: What to look for when buying a used car

You can consult this used car checklist to figure out what to look for when buying a used car to get the best fit for your circumstances.

• Low mileage. Look for low mileage (anything below 120,000kms) to avoid dealing with wear and tear repairs after buying a used car.
• No issues on vehicle inspection. Get an inspection and price out what repairs might be needed if any issues are identified.
• Has maintenance records. Ask if the last owner kept maintenance records so that you can assess whether the vehicle was well taken care of or neglected.
• Listed at market price or lower. Check sites like Kelley Blue Book and Canadian Black Book to find out how much your vehicle should cost and avoid paying more than the market price.
• No short-term owners. Avoid buying a used car that has had several short-term owners as this could indicate a serious issue with the engine or other integral systems.
• Passes a VIN check. Use a site like CarMax to check the vehicle identification number for the car you want to buy to make sure the sale is legitimate.
• Performs well in test drive. Take the car for a test drive and reference our used car checklist for inspecting the vehicle to make sure it’s in good working order.
• Eligible for financing. Make sure the car you want to buy is eligible for financing if you plan to borrow money for buying a used car.

Questions to ask when buying a used car

There are several questions to ask when buying a used car, including the following:

1. Can you tell me more about the accident/ownership history of the car?

   Find out how long the seller has owned the car and ask if they’re the first owner. If you’re buying a used car with a dealer, ask for more information about how the previous owner maintained the car and whether it’s been in any accidents.

2. Does everything work or are there any issues I should be aware of?

   This is one of the most important questions to ask when buying a used car. Most people will answer you honestly and give you a rundown of any issues you should be aware of. Make sure to consider how much repairs could cost before buying a vehicle that may need work.

3. Can I have the car checked by a mechanic?

   It can be a red flag if a private seller or dealership isn’t willing to let you get the car inspected by your own mechanic. This is true even for a dealership that has its own in-house mechanic. Look for another vehicle if the seller won’t let you do an inspection.

4. Can I take a test drive?

   If the seller is unwilling to let you test drive the car, don’t buy it. The test drive is one of the most critical components of buying a used car because it allows you to make sure the vehicle works properly before you put money down.

5. Does the vehicle have service records?

   Ask if the dealership or seller has service records for you to browse. Not only does this show that the car has been serviced and maintained, but you’ll also be able to note if there have been any mechanical issues in the past.

6. Is the car still under warranty?

   If you’re picking up a newer used car, ask the seller if it’s still under warranty. Some manufacturers will allow you to transfer a warranty to a new owner. If you’re buying a Certified Pre-owned (CPO) car, it will likely come with its own warranty.

7. Are you willing to go to the registration office with me?

   Your seller’s name should match the car title, and it’s best if they accompany you to the registration office or let you take documents there prior to payment to make sure ownership can be transferred. A dealer will usually be able to help you with registering your vehicle on the spot.

Bottom line

Learn more about how to buy a used car and what steps you can follow to lock in the deal. Find out what to look for when buying a used car and get the low down on what questions to ask before you buy. You can also consult our used car checklists to tick all the boxes you need to find the used vehicle that best suits your budget and lifestyle.

Frequently asked questions

• How will I know how much money I should spend?

  You can use resources such as the Canadian Black Book and AutoTrader.ca to see how much you should spend when buying a used car. Checking prices at dealerships and in online forums can also help you to figure out a fair price for the used car you want to buy.

• Should I make a down payment?

  It depends. Lenders may expect you to show that you have a certain portion of the purchase price saved up to spend on a used car. This shows them that you’re committed to buying a used car and paying down a sizable loan. That said, you may be able to take advantage of a zero-down promotion on certain cars with a dealership.

• What is the best time of year to buy a used car?

  It depends on where you live, but you’ll find good deals on used cars at the end of the year, on Black Friday and around May long weekend. You could also have better luck negotiating at a dealership if you go in towards the end of the day, preferably on a weekday at the end of the month.

• What's the difference between a certified pre-owned and used car?

  Some authorized dealerships run Certified Pre-Owned (CPO) programs that allow buyers to purchase used cars that have been inspected and refurbished by the manufacturer. Many also come with their own warranty that protects your car against mechanical faults. You can learn more with our guide to buying a certified pre-owned car.

Written by

Claire Horwood

Associate editor

Claire Horwood was a writer at Finder, specializing in credit cards, loans and other financial products. She has a Bachelor of Arts in Gender Studies from the University of Victoria, and an Associate’s Degree in Science from Camosun College. Much of Claire’s coursework has focused on writing and statistics, with a healthy dose of social and cultural analysis mixed in for good measure. In her spare time, Claire enjoys rock climbing, travelling and drinking inordinate amounts of coffee. See full bio