How to buy a used car without going nuts

This post comes from Meg Favreau at partner blog Wise Bread. 

One night about a month ago, I was telling my friend about the brain-frying frustration I was experiencing trying to buy a used car off of Craiglist. "I feel like I can spend infinite time on this," I told her. "And there are infinite options."

"Everyone I know who has tried to buy a used car on Craigslist has gone absolutely crazy," she said. That response was like getting bird poop in your eye and then being told it's happened to other people -- it's nice to know you're not alone, but it really doesn't help the situation.

It was a good reminder of how stressful buying a used car is, though, especially when you're buying from an individual though a classified site like Craigslist like I was. I spent a lot of hours researching vehicles, goings for test drives, and heading to check out cars only to be told they'd just been sold to someone else.

I learned a lot in the process, and I did finally find a car -- one that was in good condition and in my price range. No matter what you do, buying a used car is going to be stressful -- nobody wants to throw thousands of dollars away on a lemon. I can't tell you that you won't be stressed out, but here's some information I wish I had known upfront that will hopefully make your car-buying process easier. (See also: "5 myths about car insurance.")

A few things to consider first

First of all, the suggestions in this article pertain primarily to buying a car from an individual or a dealer that does not provide certified pre-owned vehicles. My budget was $4,000 -- low for a car, I know, but I wanted to avoid car payments at all costs. This meant that certified pre-owned vehicles were out of my price range.

Two of the primary things to check on when you're buying a used car have to do with the title, and you should find out about these before you even look at the car. First of all, make sure that the seller has the physical title, and that the title is in his or her name. If you hand over payment for a car, and that car turns out to have a lien on it (i.e., money is still owed to the bank for the car loan), you might end up not owning the car you just bought.

Also check whether or not the title is a salvage title. A salvage title means that at some point an insurance company deemed the car in question beyond salvageable. While sometimes salvage titles pertain to theft and the car itself is fine, it often means that the car was in an accident. Even if the car was rebuilt, the car's structure is usually left weaker after this type of an event and is generally less safe.

Narrow your options. One of the biggest problems I had with buying my car was getting overwhelmed by choice. My main criterion was that I wanted the car to "run well for at least two years." But that left a huge number of vehicles for me to choose from.

I felt that with my price range, I needed to take what I could get. But with some urging from my boyfriend, I further refined my criterion. I wanted a short car, because I only have street parking, and I wanted it to have less than 100,000 miles on it. I also wanted to buy a car from someone who was moving or changing cars for a good reason -- such as getting a bigger car for an expanding family -- because I figured that'd net vehicles in better condition.

While part of me felt like I might be missing out on a great deal by focusing my search like this, it did make things easier. Post continues below.

Make space in your budget. Remember that the cost of the car itself isn't the only cost. There might be an increase in your insurance, DMV fees, or unexpected mechanic costs. Include funds for these costs in your car-buying budget.

Do your research. I did a LOT of research into the cars I looked at. Here are the big four sites that I used.

• Kelley Blue Book. The Kelley Blue Book is the standard for finding what used cars are worth. Plug in the information on a car you're thinking of buying, and it will tell you how much the suggested selling price of the car is. The site will even provide different price levels based on the car's condition.
• Edmunds. Edmunds provides car reviews and gives suggestions on whether or not a particular used car is generally a good buy. If it isn't, they'll generally give suggestions on similar cars to look at. They didn't have information on a couple of cars I was interested in, but in general it was a very helpful site.
• MSN Autos. MSN Autos has what I found to be one of the most valuable resources in my car search -- reliability charts that show what problems different makes of cars usually have and the cost to fix them. For example, the 2002 VW Cabrio has moderate engine problems, but the repairs are all relatively inexpensive.
• Carfax. Once you have a car you like, enter the vehicle identification number (VIN -- it's at the base of the windshield) and Carfax will give you a report on the history of that car. It steered me away from an otherwise great-seeming car that, it turned out, had failed the California emissions test five times in a row, and it showed me that the car I did eventually buy had no serious problems.

Check the car out. If you see a car you really like, make an appointment to see it as soon as you can. If it really is a good car at a good price, there is an excellent chance that someone else will buy it before you get there. This happened to me several times.

Get someone to go with you. Not only do you probably need the ride, but a second person can provide lots of help. My friend both helped me inspect cars and provided a voice of reason when I wanted to settle for a not-so-great vehicle just to be done with the whole process.

Check the car out carefully. Hopefully, this is a "duh" comment. There are a lot of great resources online about what to look for. For instance, check out About.com's "10 questions to ask when buying a used car from a private seller" or Consumer Reports' test drive checklist.

If you have a trusted mechanic, arrange for him or her to look at the car. If you are buying from a dealer rather than an individual, see what your warranty options are.

Buying the car. Do your research to get as good a grasp as you can on your state's car sale laws. A good scouring of your state DMV's website should give you the information you need about paperwork, when you need to report to the DMV, and fees.

Make sure to get documentation of everything associated with the sale, and pay with a cashier's check, not cash. If you didn't get the car checked by a mechanic before, take it by soon to make sure everything is OK.

Above all, be patient

Remember what I said at the beginning about feeling like there are infinite options? I wanted so many times to give up in some way -- to settle for a vehicle that wasn't really what I wanted, to go out of my price range and get a loan, to break down and whine about the fact that I don't live in a city with good public transportation anymore. But with some patience and research, I purchased a car that was kept in excellent condition and fit all of my criteria.

I'm thrilled about my new used car. I hope you enjoy yours too.

Do you have any other used-car buying advice? Share in the comments below.

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