Credit to the BBB website for the below article. 

Note: These tips are meant to provide general, broad information, but there are some details that are specific to U.S. users. We are gathering comparable information for Canadian users and will add more as we can.

It’s time to buy a car and you’ve decided to buy used (or pre-owned) rather than new. There are some things to do before buying any car: make sure you set a budget, research models, compare prices, choose a warranty, and know how you will pay for the car. Better Business Bureau has more information on those tips, and others, here. This page will focus on specific information for buying a used car.

Where to Buy Your Car

One of the big differences between buying a new car and buying a used car is there are many more options for where to buy your used car.

New and Used Car Dealers
Both new and used car dealers can be excellent sources for finding a quality used vehicle. They provide you with carefully inspected vehicles and may include warranties. Check out your dealer's reputation and reliability first. Ask friends for recommendations, read business profiles at bbb.org, and search online for complaints or reviews of the dealer you are considering.

Dealers may also offer a “certified” used car program. These feature vehicles that have been previously leased or traded in. Different dealerships offer different certification programs with different qualifications and details about inspection and other steps they take. You can learn more by contacting your local dealerships.

Superstores
Superstores offer a high-tech, no-haggling way of buying used cars with in-store computers and websites.

Car Rental Agencies
Car rental companies will often sell cars from their fleets. They may provide the car's maintenance and repair records and offer limited warranties. Mileage on rental cars is often high on a per-year basis and the cars may suffer from the wear and tear that comes from use by a variety of drivers. On the other hand, car rental companies are diligent about upkeep for the cars in their fleet.

Bank and Loan Companies
Bank and loan companies sometimes sell repossessed cars to pay off defaulted loans. Quality varies from car to car, but because the vehicle is being sold to recover the amount due on a loan, you may get a good deal.

Vehicle Auctions
Government, private, and online vehicle auctions are becoming increasingly popular. If you are buying at auction, remember that you may need on-the-spot payment, warranties are rare, and you probably will not be able to take the car for inspection before you buy it.

Private Owners
Private owners sell their used cars through websites, newspaper classifieds, and word-of-mouth. You may find a well-maintained car selling for less money than you would pay a dealer. You may also face less pressure than you would from a dealership salesperson. If you buy a used car from a private owner, ask for the car's maintenance and repair records. If the seller is the first owner, you should also ask for records of the original purchase. Check the title to make sure the person selling the car is the legal owner.

You also need to be extra careful when dealing with a personal seller as it may be easier for an individual to be running a con. Fraudulent dealers may disguise themselves as individual sellers and offer cars that are stolen or damaged or have had their odometers rolled back to hide mileage.

One major difference between a private seller and other sellers is the Buyer’s Guide. The Federal Trade Commission’s Used Car Rule states that dealers must post a Buyer’s Guide for every used car that is for sale. Sellers who sell more than five used cars in a year must provide the Buyer’s Guide. Banks and financial institutions are exempt. Businesses that sell vehicles to their employees and lessors selling leased vehicles to certain buyers are also exempt.

The Buyer’s Guide includes information on any major problems of the mechanical and electrical systems and suggests getting the vehicle inspected by your mechanic before purchasing. The Buyer’s Guide also tells you if the car is being sold “as-is” or comes with a warranty (and the conditions of that warranty). If the "as is" box is checked on the "Buyers Guide", you have no warranty. If the warranty box is checked, ask for a copy of the warranty and review it before you agree to buy the car.

Under some state laws, if the car does not come with a written warranty, but is also not specifically considered “as is," it is covered by an implied warranty. Depending on your state's particular laws, the implied warranty may guarantee that the car will run, or that it will live up to the seller's assurance that it is fit for a particular purpose, such as pulling a trailer. Your state consumer protection office can provide more information about the specifics of implied warranty coverage.

Do Your Homework

Before you head out to buy your car, do your homework. There are many online resources to check average retail prices of different makes and models of used cars depending on the year they came out and the number of miles they were driven. Keep these prices in mind as you shop and negotiate. Online resources and publications can also give you information on the reliability records of various models.

Inspections and Test Drives

When a car is sold “as-is,” there is no warranty and once you sign papers and drive away the seller has no more responsibility. This makes it especially important to know as much as you can about the condition of the car before you buy it. Don’t expect perfection in a used car, but don’t overlook serious defects. Be alert: some sellers are adept at masking problems, and a steam-cleaned engine and gleaming paint job are no indication of the quality of the automobile. Check the car in daylight and bring someone along to help you make a thorough inspection.

• EXTERIOR: Be sure the body appears even, with no irregular spacing between the body joints. Check for rust, especially at the bottoms of fenders, around lights and bumpers, on splash panels, under doors, and in the wheel wells. Check the tires for uneven wear or signs of brake fluid leakage on the inside. Also, check the spare tire and make sure the correct jack is in the trunk and in working order. Check for paint that does not quite match, gritty surfaces, and paint overspray on chrome – a new paint job could be masking body problems. Look for warning signs of a past accident, like cracks, heat-discolored areas, and loose bumpers. Look for welded seams, which may indicate the car is "rebuilt" from salvaged parts. Look for hairline cracks and tiny holes in the windows. If the vehicle is dirty, have it washed for a better inspection. 
• DOORS, WINDOWS, AND TRUNK: Look for a close fit and easy opening and closing of doors. A door that fits unevenly may mean the car was involved in a collision.

• FRAME AND ALIGNMENT: If you suspect a car’s structural condition, have it checked by a local tire alignment dealer. A car with a bent frame can be dangerous.
• TAILPIPE: Look for black gummy soot in the tailpipe. This may indicate worn rings or bad valves.
• INTERIOR: Check for badly worn carpeting or upholstery, which may be a sign of heavy use. Check the adjustability of the seats and make sure all seat belts work. If the seats have covers, look underneath. Turn on the ignition to check the warning lights, and check the brake pedal. Ask about the working order of the airbags and if they have ever been deployed. Take a sniff! A musty smell inside the car could mean the car was damaged in a flood or that rain leaked in.
• FLUIDS: Pull out the oil dipstick. If it is dark and dirty, the engine may not be well maintained. If the oil is whitish or has white bubbles, it may mean there is water in the system, which can be a sign of major mechanical problems. If the transmission is automatic, check the transmission fluid to see if it is dark or has a burned odor. Check for leaks and stains under the car, on the underside of the engine, and around hoses and valve covers. 
• BATTERY: Look at the sticker on the battery for the guarantee date. You generally need to replace a battery after 25,000 miles.
• ELECTRICAL SYSTEM: Check all electrical accessories, such as the lights, wipers, radio, and horn, one at a time. 
• SPRINGS AND SHOCKS: Push down on the front and rear corners of the car. If the car bounces several times, the shock absorbers are worn.

After going through these visual inspections, take the car for a test drive. If a dealer will not let you go for a drive, you should consider walking away. Here are things to consider on your drive:

• The car should start easily and without excessive noise. Once it has warmed up, listen for engine noises as you drive. Unusual sounds may be signs of trouble. Any noise that sounds strange should be a warning sign.
• Drive on a variety of terrains: highway, back roads, through traffic.
• Does the car idle and accelerate smoothly, or does there seem to be some hesitation? 
• Drive down a straight and level stretch of road while holding the steering wheel lightly. Does the car consistently pull in one direction? Try turning at various speeds. Too much sway or stiffness can mean bad shocks or front-end problems. Turn the wheel all the way from one side to the other. The power steering should feel smooth with little or no squealing.
• Pay attention to how the brakes are working. Does the car pull to the left or right while you are braking? Are the brakes responsive, or does the car seem to require an unusual amount of time to stop?

You also want to pay special attention to the odometer, which tracks the miles the car has been driven. The National Highway Traffic Safety Administration (NHTSA) estimates that consumers lose billions of dollars a year to odometer fraud. Odometer readings can be rolled back or documents can be forged. Making miles disappear helps increase the car's value to the seller and can mean increased maintenance and repair costs to the buyer. Here are some things to think about when checking the mileage on a used car:

• Do the math. The average vehicle accumulates about 12,000 miles per year. If the mileage seems excessively high or low in comparison, find out why. 
• Ask the seller if you can see the maintenance records and compare them with the mileage on the odometer itself. 
• Examine the car for telltale signs. Is the wear on the car's pedals, tires, and seats consistent with the miles on the odometer? A car with fewer than 25,000 miles on the odometer and new tires may be suspicious.

Once you have found a car you are considering buying and you have tested it yourself, have a mechanic check the car thoroughly before you sign anything. You will have to pay for this, but it is crucial, as there could still be problems you did not find.

Ask for a written estimate of the costs to repair any problems the mechanic finds, and use that estimate as a bargaining chip when you make your offer for the car. In some states, an official state inspection may be legally required. Check with your Department of Motor Vehicles for specific laws in your locality and to learn what you need to register the car.

Get Your Car’s History and Investigate Recalls

Ask the seller for a copy of the service records for the car. Find out if it is possible to talk to the previous owner about any accidents or issues.

Once you have chosen the car you want to buy, you should get a history report. Copy down the Vehicle Identification Number (VIN), which is located on the driver’s side dashboard near the window or on the driver’s side door. Make sure all VINs are identical. The VIN provides an AutoCheck Vehicle History Report and allows the buyer to check the title of the used car. For a small fee, the Department of Justice’s National Motor Vehicle Title Information System (NMVTIS) offers information about a vehicle’s title, odometer data, and certain damage history.

You also want to watch out for salvage and rebuilt titles. These titles are issued by states when the car has sustained damage because of one or more incidents. Salvage titles are issued by the state when an insurance company takes possession of a vehicle because of a claim. This usually occurs when a vehicle has been declared a total loss. A rebuilt title may be issued if a vehicle sustained damage and was rebuilt or reconstructed, then placed back on the road. Junk titles are issued when a vehicle is not road worthy and cannot be titled again in that state.

The National Insurance Crime Bureau (NICB) maintains a free database that includes flood damage and other vehicular information. You can also search online for companies that sell vehicle history reports, such as CarFax, but be sure to verify the report with the reporting company if you suspect it is incomplete or fraudulent.

The Department of Transportation operates a toll-free Vehicle Safety hotline (800-424-9393) and a webpage where you can find out if a particular vehicle has ever been recalled for safety defects.

Closing the Deal

Unless it is specified in the contract, you do not have a cancellation period to get out of the sale, so it’s important to read and understand everything before signing.

• Ask questions. Do not sign unless you are satisfied with the answers. 
• Be sure that all blank spaces are filled in, that all of the salesperson's verbal promises are included, and that any warranty that comes with the car is spelled out.
• If the seller has agreed to take care of any repairs as a condition of purchase, make sure these commitment are in the contract. Get the timeframe for completion of the repairs in writing and make sure you understand who to contact about the work. Remember that repairs on a used vehicle can take longer than expected when parts need to ordered or repairs under warranty need to be approved.
• If you are required to make a deposit, ask whether it is refundable, and under what circumstances, and make sure the information is also included in the contract. 
• Be sure to get a signed statement verifying the mileage at the time of sale. Most state laws require dealers of used cars to provide the buyer with this information in writing. 
• Know your state's requirements concerning emissions inspections, child safety, seat belt, and airbag requirements, and title transfers.
• Make sure you understand what will happen if you fall behind on payments and how the seller will communicate with you about that.