Buying a Used Car? These 5 Steps Can Save You Time, Money and Headaches

By Yasmin Ghahremani

Follow these five steps to get a reliable, affordable vehicle with minimal hassle.

Buying a used vehicle can save you thousands of dollars when compared to purchasing a new one. Yet the process can feel like driving through an obstacle course that’s littered with duds and fast-talking sales people.

Good news: There are ways to eliminate some of these hazards. USAA member Josh Elledge took advantage of the USAA Car Buying Service to get a pre-negotiated price on a car he wanted. “The tools and assistance that USAA provides couldn’t be better from a consumer point of view,” he says.

Here are a few more tips on maximizing the benefits of USAA’s Car Buying Service, in addition to utilizing other car search tools.  

1. Come up with a budget. USAA recommends not spending more than 15% of your take-home pay on car payments, gas, insurance, maintenance and repairs for your vehicle. Calculate what your old car will fetch if you trade it in or sell it, and factor that into your budget. USAA’s Auto Loan Calculator can help you estimate monthly payments¹.

2. List vehicles to check out. Given your budget and needs, make a list of two or three models that might be a good fit. USAA’s Car Buying Service offers a CARFAX report which identifies potential issues and is free for most used cars. You can also check out reviews on Edmunds.com, Kelley Blue Book or Motor Trend.

3. Consider an off-lease vehicle. “There’s been a record level of new car leases in the industry in the past five years,” explains Ralph Howard, product director for consumer loans at USAA. “That means there’s a bigger supply of used vehicles from expiring leases, which leads to lower prices and good value on two-to-three-year-old cars.”

4. Locate used cars in your area. USAA members get free access to the USAA Car Buying Service, which lets you search for vehicles that come with member discounts from nearby dealers, as well as find and buy cars directly from USAA members. 

In addition, websites such as Cars.com and Autotrader.com list used available vehicles by ZIP code. “There’s a lot of different places you can buy a vehicle, so it’s nice to have some clarity there,” says Elledge, who ended up buying an off-lease Lexus at a dealership he hadn’t considered before. “I saved $7,000 over another used Lexus I was considering at a different dealer.”

5. Get pre-approved for a loan before you go to the dealer. Look for low-interest rates and flexible terms. Keep in mind that used car rates will be higher than those for new cars, and dealers may not have the best rates. USAA interest rates are discounted if you purchase through the car buying service. With rates expected to rise across the lending industry later this year, now is a great time to buy, according to USAA’s Howard.

You may also want to consider more than just the interest rate when deciding upon your loan. Perhaps it’s not important to you to have your car loan with the same provider as your insurance and banking, as long as it’s a lender you trust. After all, a small interest rate difference — such as 0.25% lower — comes out to just a few dollars in monthly payment terms, something to keep in perspective when deciding between lenders.

Elledge got pre-approved for his loan by phone on the way to the dealership, at a better rate than his local bank was offering. “I loved that it wasn’t a hard sale,” he says. “It was like I was working with someone who’s my advocate and not someone who’s just trying to sell me a car loan.”

Get started with the USAA Car Buying Service today.

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This calculator is a self-help tool. This information is provided for illustrative purposes only and is not a rate quote, pre-approval, or commitment to lend. Rates are subject to change. If approved, your loan terms may vary based on your individual circumstances.

USAA Car Buying Service provided by TrueCar, Inc. USAA Bank receives marketing fees in connection with the Car Buying Service.

Use of the term “member” or “membership” refers to membership in USAA Membership Services and does not convey any legal or ownership rights in USAA. Restrictions apply and are subject to change.