Do's and Don'ts of Buying a Used Car

1. Do Know Your Needs

Because there's such a variety of available features, amenities and body styles, it can be difficult to know where to start in the car-buying process. We suggest narrowing down your specific needs as a driver. For example, do you need more cargo space, better towing capacity or more seating? Asking yourself these kinds of questions will help you begin to determine which type of vehicle is right for you.

2. Do Research

After you've decided which type of vehicle meets your needs or wants, it's a good idea to make a list of deal-breakers in a used vehicle, like not having specific amenities. You can then research different makes and models that come with all the features you want.

3. Do Know How Much You Can Afford

Sometimes, creating a budget is the hardest part of buying any car. You may have found a vehicle that meets every need and want on your list, but finding one that fits your budget can be more difficult. When buying a vehicle, you'll typically hear that it's good to put down 20 percent, limit the term of the loan to no more than 60 months and keep the monthly payment below 10 percent of your income. It's also important to take the cost of maintenance into consideration; some cars (such as some luxury brands) cost more to maintain than others.

4. Don't Trade In A Car That's Worth Less Than You Owe On It

When you owe more on a vehicle than what it's worth, it's called negative equity. If you trade in a car that you still owe money on, the old loan may be consolidated into the new loan, making one huge loan. We suggest being ahead of the game by researching what your trade may be worth.