The BEST way to buy a used car with zero regrets

I’ve had the opportunity to help many people inspect, negotiate and finalize used car purchases after learning from a bad experience myself in the past. The first place a person turns to buy a car is generally a car dealership and I want to help you avoid getting scammed, fooled or mislead into making a bad purchase.

Step 1: Know your budget

A good rule of thumb to not be upside down on a car even before buying it is to stay under 35% of your gross annual income. But I am not just referring to the price of the car. The total cost of the car, the annualized insurance and maintenance should all lie within than 35% range.

So, if your salary is $70,000/year (before tax), your maximum budget including insurance, maintenance and fuel is $24,500.

If you must absolutely have a car, the delta should not be more than 10% over that budget so your range has an upper limit of $26,950.

Step 2: Identify the right car for you

While I’ve covered this in part in my previous articles: Car Buying Guide I and Car Buying Guide II, it is important to identify which car will fit all costs within that one year range that I mentioned earlier.

Step 3: Inspecting the car

My main focus with this article is this step. It is the most time consuming step but also the most important. I can assure you car dealers will absolutely hate you for this.

Dealerships and sellers try to hide flaws and damages in their vehicles. To an unsuspecting or novice buyer, these problems/issues will never pop up during a 15 minute test drive.

In my case, before I even test drive a car, I do a series of checks which may take up to 1hr but will give me the peace of mind I need to make a purchase.

Cold Start the Car

It is extremely important for you to observe every aspect of a used car in a cold start. A cold start means the car has been off for many hours (generally overnight or the whole day) and the engine is at ambient temperature.

When you first see the car, pop the hood, get behind the car (where the exhaust is) and ask the dealership to start the car. You’re looking for the color of the exhaust and the sound of the engine when it starts.

Light or Thin White Exhaust Smoke

This is considered normal when the exhaust coming from your vehicle is light or thin white. This type of smoke is usually just water vapor. You will notice it when you first start your vehicle, especially on cold days. The reason for this form of exhaust is that condensation collects naturally in the exhaust system. This exhaust is common in all gasoline engine vehicles.

Blue/Gray Exhaust Smoke

This is not normal and is an immediate red flag. This type of exhaust usually indicates that you have an oil leak and that the engine is burning oil. There are multiple issues that can cause an oil leak, such as worn cylinder walls, leaking valve seals, or damaged piston rings. When there is blue smoke at acceleration, the problem is most likely with the piston rings.

If it’s during deceleration, the blue smoke likely indicates that the cylinder head valve guides are damaged. In either case, that vehicle needs to be worked on which means additional costs to you as a buyer.

Black Exhaust Smoke

Another red flag – indicating that the vehicle is burning too much fuel inefficiently. Several things could cause this to happen, like a blocked manifold, a clogged air filter, a malfunctioning fuel injection system, amongst other possible problems.

Continual, Thick White/Gray Exhaust Smoke

A continual stream of thick white/gray colored exhaust smoke coming from the vehicle is not normal, and likely means you have a leaking head gasket. It could be that the coolant (that keeps your engine cool) is being heated in the combustion chambers and blown out the exhaust as the engine is running. In the summer, this could quickly lead to an overheated engine.

Another possibility could be a cracked cylinder head or block, both of which are serious problems that need correcting right away.

Engine sound

Before checking out any car, go on YouTube and try to find a start-up engine and exhaust sound of that very car. This will help you understand if either sound different than they should and you’ll know the difference rather quickly. Mind you, results may vary on extremely cold days.

Engine bay inspection

Grab as bright a torch as you can (preferably bright white light – NOT a cellphone torch) and make sure to check the bay thoroughly before and after starting the car. You’re checking to see if everything is how it should be and isn’t shaking too violently or leaking anything.

Body Panel examination

While Carfax will give you a background to the car, it cannot show you the actual condition of the vehicle. Even though the carfax might say the car is accident/damage free, I’m going to share ways you can find out otherwise.

Look at the image above – see how the grey/silver color seems different in the back half of the car as opposed to the front? This is a great indicator that the car has been repainted. The best way to see this is in bright sunlight on a clear day at various angles.

Notice how (in Case 2), the silver boundaries do not properly align? This indicates the car has been in an accident and the door is now misaligned. While it may not seem major at first, its always best to further examine the body of the car for similar tell tale signs of damage.

Always rub your finger along any adjoining pieces of metal/plastic along the length/width of the car. In some cases the trunk may be higher on one side than the other or the front bumper may be angled in and angled out on the opposite side. None of these mean the vehicle is bad, but it should serve as a sign for closer inspection.

Case 3 is a great example of work being done to the damaged body of a car and the car-fax says it has no damage. While the damage may not be severe – the fact that the dealership is hiding it may be a cause for concern. See here how the reflection isn’t smooth above the gas cap? This is a classic example of repair-work done to the car – which doesn’t always mean its a lemon (bad car).

Get Under the car

ALWAYS inspect a car’s underside as it is often the most overlooked aspect when buying a car. I don’t want you to lay down and go under the car (do so at your own risk – I generally ask the dealer to lift the car) but I do want you to use that shiny torch of yours to inspect the frame, the CV boot, the axles, the connections, the wiring (if exposed), the plastic under-body and the pins holding it up (many times some are missing and can be expensive if the plastic rips off).

Turn the front wheels to check out all the joints and also the tread of the wheels. Wear on tire will tell you if there are alignment issues and also if you need to replace the tires soon (an additional expense).

Once you’re down here, if you see any rust in the frame – walk away. Rust is more common in flood prone regions as well as parts where it snows a lot.

Make sure to shake all attached body panels to ensure they’re properly and tightly fastened (very expensive to fix if loose/get damaged while driving). Check all the wheel well linings and ensure there are no tears or rips as then water/dirt can enter the engine bay area and cause a whole bunch of problems.

Scan the car

When you first have the seller start the car, make sure to locate the OBD Port and connect a scan tool to the car to capture all the data. In most cases, the port is located on the underside of the driver’s side dash near the door.

I always carry a scanner tool with me ($40-$100) so that I can monitor all the basics of the car. A fancy industrial scan tool can cost over $4000 but you won’t need that. I personally use this scan tool which I got off of Amazon. (click picture to go to the page)

Never buy ANY car without this tool. I’ve had dealers lie to my face about the condition of a car and then I get misfire codes which means a problem in either the engine coil, spark plug or the connections (more money to fix). If you see a major error code pop up, WALK AWAY. You can also see past codes which the dealer may have wiped.

Do all your scans before and after the test-drive (atleast 30mins apart).

Step 4: Test Driving the Car/examining the interiors

There are plenty of videos online out there of test drives of various cars and you can use the sounds in them as a reference. In general, you don’t want to be hearing groaning, rattling, creaking and crackling sounds coming from when the car did a cold start – all the way through the test drive.

Check all the buttons work in the car, they feel like they should (no mushiness) and also ensure the AC/Heater, wiper blades, music system, door locks, windows, shades, usb ports, 12V power ports, etc… all work as they should. This is also a good time for you to examine the seat-belts yank at them really hard, pull them all the way out and let go – they should be clean and fully go back. A slacking seat-belt is an indicator of a prior accident. A burnt like looking/badly rubbed seat-belt is also an indicator of a prior accident (most likely frontal).

Check to see if all the interior body panels align properly, a lose horn may indicate airbags deployed in the past. Same goes for loose front passenger dash or upper curtain/roof panels.

The center console should not move too much (between driver and passenger seats) – if it does, that is also an indicator of either flooding/accident/repair.

Check all carpets and smell them – if they look nasty/discolored or smell bad – it means the car was flooded. Smell the door stereo speakers and look for discoloration in plastic for similar signs.

Once you have thoroughly inspected all of this, switch off the car, pop the hood and use that torch again – this time to look for leaks or any foul/burnt smell in the engine bay/underside of the car.

I hope this gives you a good idea of the things to do when inspecting a used car. When you look at a car in pictures – it doesn’t give you a true representation and even tilting your head to look at the reflection in the paint can tell you so much about the car.

In my next article, I’ll explain ways to negotiate a deal on a decent-good car that has cleared your touch inspection standards that you learnt here!