Procedure to Buy a Used Car

You can purchase a used car from a dealership or private party, but each requires different actions on your part for registration, titling and tax payment, if your state charges taxes. Learn which procedures you should follow during your purchase to ensure you choose a reliable vehicle you can comfortably afford.

Budgeting

Before shopping, create a budget and stick to it. If you plan to finance, consider your monthly payment in addition to a full-coverage insurance policy (necessary for lending purposes) and maintenance items. Use an auto loan calculator to figure out how much you can borrow for an affordable monthly payment. Or consider your cash on hand in addition to taxes and motor vehicle fees, which are due at the time of purchase at a dealership or when you register your car if buying privately. Call a same-make dealership to inquire about the car's maintenance schedule and the price of upcoming services. Contact your insurance provider and discuss any policy charges and costs associated with the vehicles you are considering.

Inspection

Once you find a car you like, have it inspected by a mechanic. Doing so can save thousands of dollars in unexpected expenses. Test drive the car and ensure it drives and brakes smoothly before proceeding. If it does, run a vehicle history report to ensure the vehicle hasn't sustained major damage, such fire, flood or hail damage. Ask the owner or the dealership for the car's service history. If buying privately, the owner should let you know where the car was serviced -- you can call the shop to confirm if you have the vehicle identification number (VIN). If buying from a dealership, ask to see the vehicle's inspection report. Cars often go through the shop for repairs and fluid changes before being displayed for sale. The dealer should be able to provide you a free history report, as well. Make an appointment with a mechanic to take the car for a proper inspection before you decide on a purchase.

Payment

If you plan to finance, have a pre-approval in place before setting out to shop for a used car. This allows you to confirm your budget by knowing your interest rate and monthly payment. A pre-approval can take as long as a week, during which time you can lose out on the purchase if a better prepared buyer comes along. Once you have a pre-approval, you can provide the bank the vehicle information to receive payment for the buyer. If buying from a dealership, financing can be arranged for you. However, having a pre-approval in hand can prevent a dealer's profit from your interest rate, which is one way a dealership makes money. If you need to transfer money or request money from an account you plan to pay from, do so before you set out to shop.

Motor Vehicle Procedures

A dealership can handle all the motor vehicle paperwork for you. This includes transferring plates or supplying new plates. The dealership will collect all state-required fees, such as inspection, emissions inspection, plate and title fees. If you plan to purchase privately, call your state's motor vehicle department to find out which forms and paperwork are needed. While some states require only a title signed by the buyer, others require notarized signatures or additional forms, such as a bill of sale. Finding out which forms are needed ahead of time can better prepare you when you go to register your vehicle and prevent you from having to return to the seller to obtain more information or signatures.