​A 10,000-Word Guide on How to Buy a Used Car in US for Car Novices

A 10,000-Word Guide on How to Buy a Used Car in US for Car Novices



Introduction: In recent discussions on internet, many car novices are seeking guidance on buying used cars. This guide aims to assist those individuals by offering universal advice. Regardless of your familiarity with cars, you can learn the methods for purchasing a used car without needing complex technical knowledge. Let's start by understanding that buying a used car requires "fishing" skills, not just knowing specific car models. The focus should be on understanding the process of buying a used car, rather than obsessing over which particular used car to buy. Often, articles like "The Four Myths of North American Value Retention" or "W's Top 10 Best Used Cars to Buy in 2014" can lead us astray. Below, we will present essential knowledge in a categorized manner. Please note that my expertise is limited, and any oversight or mistake should be pointed out for corrections. 

Abbreviations used in this guide correspond to the following terms:

1. Kbb: Refers to the well-known used car appraisal website www.kbb.com, which provides specific year, mileage, and reference prices for cars.
2. Craigslist (CL): Refers to the well-known online platform for buying and selling used items, often referred to as the "top 1 of the United States."
3. Sedan/SUV/coupe, etc.: Refers to the types or structures of cars, such as a coupe specifically referring to a two-door or three-door sports/sporty sedan. Further subdivisions include full-size, medium-size, compact sedans.
4. MPG (Miles per Gallon): Represents the fuel efficiency of a vehicle, indicating how many miles it can travel per gallon of gasoline.
5. Make/model: "Make" refers to the manufacturer of the car, such as Honda/Toyota/BMW/Mercedes/Audi, etc. "Model" refers to the specific model of the car, such as Mustang/3 Series/A6/CTS, etc. Combining them would be, for example, Audi A6 or Ford Mustang.
6. DFBB: Refers to the "Four Great Cars of North America," namely Toyota Camry, Toyota Corolla, Honda Civic, and Honda Accord. These four cars were very popular around the year 2000 on North American Chinese forums, and they are still highly regarded for their value retention and reliability.
7. Vin: Each car has a unique identification number, similar to a car's ID number or ID card. Checking a car's history is done through its VIN, and there are only two reliable companies that provide reports: Carfax and Autocheck.
8. DMV: Stands for the Department of Motor Vehicles, where vehicle registration, buying and selling, and driver's licenses are handled.
9. Title: Refers to the ownership status of the vehicle. There are various types of titles, including clean/clear title, salvage title, duplicate title, etc. Salvage title indicates that the car has been in a major accident and was declared a total loss, meaning that the estimated cost of repairs exceeded the car's value. Cars that have been in accidents may still have clean/clear titles. There is also a type of title that indicates the car still has an outstanding loan that hasn't been fully paid off; I can't recall its name. In any case, when buying a car, it's best to look for one with a clean/clear title, especially if you're not knowledgeable about cars.
10. Registration: Refers to the vehicle's registration. On the license plate, there will be a small sticker indicating the expiration year and month, such as 08/15. If the registration is expired, you'll need to go to the DMV to renew it. It's not a big deal if it's expired, but if you drive with an expired registration, you might get pulled over by the police. If the car you want to buy has an expired registration, you can simply go renew it; it's not a big issue.
11. Smog check/emission test: Refers to the annual vehicle inspection. If the car doesn't pass the test, you can't renew its registration. The laws vary by state, but generally, cars older than ten years need to undergo this test. In California, selling a car without passing the smog check is illegal.

 
Principles of Buying a Used Car:

1. The car must have a Clean Title, indicating that it is not a salvaged vehicle and that the ownership rights are clear without any outstanding loans.
2. The car can tolerate a history of major repairs, accidents, or previous leasing, although it's preferable to avoid such histories.
3. When purchasing, exchange payment and title simultaneously, and ensure the title is signed by the current owner.
4. Avoid transactions between friends, acquaintances, teachers, students, or romantic partners – you know the reasons.

Basic Process of Buying a Used Car: (Here, we'll focus on the Craigslist approach, while other situations can be referenced.)

1. Find a suitable post and contact the seller via phone.
2. Obtain the VIN# and check the car's history using Carfax or AutoCheck accounts.
3. Schedule a meeting to inspect and test drive the car at the agreed time and location.
4. Get a mechanic from a repair shop to conduct an inspection.
5. Complete the transaction, exchanging payment and title simultaneously.
6. Visit the DMV to handle the paperwork, or let an Auto Registration Company take care of it for around $40.
7. After some hassle, you finally receive the title with your name on it, and you may feel emotional and overwhelmed. Share your experience on the forum and request points, apart from discussing the car price.

Costs of Owning a Car (in addition to the car's price):

• DMV registration fees and sales tax, which usually can't be reduced. It's advisable not to understate the transaction value, as it may not be in your best interest. Note that the situation varies between states; for instance, in CA, there is a registration fee of approximately $100, and the sales tax is around 8%.
• Insurance expenses, which can be calculated based on the car's MPG and your typical driving distance. The minimum insurance coverage in rural areas costs around $300 for six months, but it varies among individuals.
• Fuel costs, which can be estimated conservatively using your car's MPG and typical driving distances.
• Maintenance and repairs, many of which can be DIY, saving significant costs. For example, replacing eight brake pads with mid-range brands would cost around $80 if done by yourself, compared to over $1000 at a dealer. Dealerships can be ruthless, so be cautious.
• Parking fees, depending on the rates at your school's parking lot.
• Parking tickets – I receive one about every six months on average. Recently, I got one for parking in Downtown LA without properly displaying the meter receipt on the windshield. The ticket arrived at my home two months later. Remember to learn from my experience and display the payment receipt conspicuously on your windshield if you park at metered spaces.

 
 
II. Clearly Define the Purpose of Buying a Car (WHY should you buy a used car in US): 
 
Firstly, the first step is to determine what you are buying the car for. Below, I have listed several common options for your consideration:

1. Commuting, including going to school or work, with a daily round trip of at least 10 miles. Key features: You rely on the car every day, and if it breaks down, it significantly impacts your daily life (>80%). The annual mileage should be around 5000 miles, although in large cities like LA, commuting 20,000 miles a year is quite normal. The average annual mileage for cars in the United States is around 10,000 miles. If you are buying a car for commuting, it's essential to consider the reliability since the car will be used daily. Additionally, if your round trip exceeds 30 miles, you should also consider the car's MPG (Miles Per Gallon).
2. Comfort, including convenience for grocery shopping, outings, and living not too far from your usual destinations (a round trip of 5 miles or with access to public transportation). Key features: You use the car 2-3 times a week, not every day. If the car breaks down, it slightly affects your life (<30%). The annual mileage should be around 3000 miles, mainly for trips to Chinese supermarkets or short-distance excursions (round trips of around 500 miles). In this case, a higher-mileage car with a newer model year might suit you better. When it comes time to resell the car, although it might have had higher mileage when you purchased it, since you didn't drive it much, the age and mileage will balance out.
3. Work, including delivering food or providing transportation services (assuming you are an F-1 student working part-time for a Chinese restaurant). Key features: You use the car every day for work, and if it breaks down, you might lose your job. The impact on your life depends on the situation (>80%). It's challenging to estimate the annual mileage because I've never done food delivery, but it probably won't be much less than commuting.
4. Entertainment, including convenience for dating, showing off, etc. If you fit one or more of these conditions, consider combining them to choose the car that suits your preferences.

 
III. Determine the Budget 
 
Based on the purpose of buying the car, determine your budget or let your budget determine the type of car you can buy (All prices mentioned below are in USD).

Tier 1: Above $110,000
Tier 2: $28,000 - $10,000
Tier 3: $6,000 - $8,000
Tier 4: $4,000 - $6,000
Tier 5: Below $4,000

An essential premise here is that your budget determines the type of sellers you will interact with. Always remember: if the car owner is not a good person, then the car they are selling is definitely not worth buying. Society consists of various social classes, and people with different social statuses have varying income levels, which reflect in the cars they drive. Here is a rough breakdown into five tiers:

1. The top-tier individuals sell cars above $10,000. Generally, such people are not short of money, making bargaining more effective. They also have good income and won't waste too much effort on selling their used cars, so most of these cars end up being traded-in to dealers. There are few cars left for sale on Craigslist (CL) in this category. Usually, the owners are young professionals who have just finished four years of college, and after their new cars become older, they sell them and move on. It's worth noting that due to the high prices, there aren't many buyers on CL for this category of cars, so many owners opt for trade-ins. If you want to buy this type of car, as long as your offer is $2,000 above the dealer's trade-in price to the owner, you should have a good chance.
2. The lowest-tier individuals sell cars for no more than $4,000. This group comprises a mix of fishy characters, and there is a high chance of encountering curb dealers who engage in shady car businesses to earn ill-gotten money. They are generally ruthless and would deceive inexperienced buyers who lack knowledge about cars. More experienced buyers have pointed out ways to identify curb dealers. The simplest method is to ask about the car condition without mentioning its make and model. If the seller responds with "which one" it is 99% likely to be a curb dealer. Another sign is if the title is not in the seller's name, but it's already signed. In such cases, it's 90% likely to be a curb dealer. The rest of the sellers in this category are mostly low-income individuals, minorities, or students in financial need. People looking to buy cars in this category must have a strong understanding of car mechanics and be proficient in driving to find a suitable car among the junk sold by the remaining sellers. While there are good cars in this category, buying one is challenging, much like gambling. If you can't drive well and lack the budget, it's best to avoid this tier.
3. Other Tiers: The rest of the people fall into the category of ordinary individuals, including middle-class individuals, pseudo rich people raised in affluent families, or rural folks. There is nothing special to note about these sellers, but they generally won't easily lower the price by a significant amount. Don't expect to bargain down by $1,000 or more.

 
IV Choosing the Right Location to buy a used car (where to buy a used car in US)

1. Used car dealerships have a wide selection of cars and offer convenience, as well as warranties. Negotiating the price is possible, but don't expect a significant reduction. Salespeople are skilled at pressuring customers, so dealing with them can be challenging. Buying from a dealership implies that you have enough money to spare.
2. Rental car companies like Enterprise and Hertz offer newer cars, usually from 2012 or 2013, with high mileage (around 30,000 miles per year). The prices for used cars from rental companies are fixed and not negotiable, except for transportation fees. For example, if you want to buy a red Camry in LA but can only find one in San Diego, the rental company will charge you for transportation. However, Hertz offers a three-day test drive period, and if you decide to return the car within that time, you will only be charged for the three days of rental. It's worth noting that rental car companies are profit-oriented and will not sell you a car for $15,000 if it's worth $1,500,001. Their prices are slightly lower than KBB's "good" value. 
3. Special organizations, such as schools, churches, etc., sometimes sell used cars. For example, a campus police department may sell retired police cars at fixed prices or through auctions or best offer arrangements. The prices may vary depending on the organization. Churches often sell donated cars at lower prices for convenience. These opportunities to buy cars are rare and not easily found.
4. Auctions are the main source for acquiring a large number of used cars. Auction houses have many private dealers or local, lesser-known medium-sized dealers, but few private buyers. For example, the Long Beach, CA government holds auctions where all available government-owned cars are listed with their VIN numbers. Volunteers can bid on these cars, but most of them are not new and may have been repossessed from individuals who couldn't repay their loans. There are many cars with a 20-year or even 80s model year, but there are also some good cars from 2005. Since these cars are generally not inspected, buying from auctions carries a higher risk compared to dealerships, where repairs can be made. Auctions usually have a monthly or multiple times per month cycle.
5. Buying from the classifieds website Craigslist is the method advocated and emphasized in this article.

 
In summary, if you want to buy a luxury or very new used car, you can try dealerships, rental car companies, or other channels mentioned in North America Saving Fast Report. In 90% of cases, these channels may not have the car you are looking for, so it may not be necessary to read this article. For other situations, it is recommended to go to Craigslist.