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Buying a used car can be stressful, but knowing what to do after you buy makes it easier.
Finding the perfect vehicle for your needs, completing a test drive, and handing over a check is often top of mind during a used car search.
However, before you even consider shopping for a used car, know that you’ll need to take care of some important formalities in order to legally drive the vehicle. Let’s go over some of the things that should be top of your to-do list immediately after buying a used car.
The first thing you need to do after buying a used car is transfer the title. Even if you give a third-party seller a check, or sign a financing agreement, you don’t legally own the car unless you’ve transferred the title from the previous owner.
The car title is a legal document stating who legally owns the vehicle so this is a crucial step to complete. If you buy a car from a private party, make sure the title is in their name so it can be transferred to you.
The old car owner should be able to sign the title and release their ownership. Then, you can get a new title issued in your name. Each state has its own fee requirements for transferring the title. Also, the name of the office handling title transfers may be different depending on your state.
If you borrowed money from a lender to buy your used car, you may have to transfer the title to your lender instead of your name. This is also known as a lien holder. Once you’ve paid off your auto loan, then your lender or lien holder can transfer the title to your name.
After you’ve transferred the title, be sure to register the vehicle. Each state has its own vehicle registration process and it basically involves filing the right paperwork required by the state’s tax office to correctly catalog the vehicle in the system.
Usually, registration paperwork and the title transfer can be done all at once if you’re buying from a car dealership or lot. Otherwise, you can check with your local Department of Motor Sales or DMV to complete the vehicle registration process.
All vehicles deemed eligible to drive on the road need to be registered. Most states require annual registration and charge a fee. This can be a flat-rate fee or a variable fee based on factors such as the vehicle’s weight, age, or fuel-efficiency.
You’ll need a new license plate when you buy a used car. When you register your vehicle, you should be able to get a temporary license plate and the state will mail permanent tags to you within a few weeks.
Again, if you buy a used car at a dealership, they will handle this process and you should be able to drive your car off the lot with temporary tags. When you buy from a private seller, your state’s department of motor vehicles (DMV office) can help you get your license plates.
Most states require car insurance by law. In order to register your vehicle, you might need to already have proof of insurance. Shop around to get estimates from different auto insurance companies and decide how much coverage you want.
Insurance rates will vary by state and policy details. According to the Insurance Information Institute, the average annual cost for auto insurance is around $1,070.47.
When you finance a car, the dealer may even require you to get full coverage or comprehensive coverage. That way, insurance would help pay for damage to your vehicle or the other person’s car if an accident occurs. While liability insurance typically only helps to cover the other driver’s expenses if you’re at fault.
Another option to consider if you’re financing is gap insurance. Gap insurance is also known as loan or lease payoff insurance that can be used to help cover the remaining balance on your vehicle if it gets stolen or totaled in an accident.
It’s always a good idea to get a vehicle history report before buying a used vehicle. Even if you miss this step before buying the car, it will be helpful to get a report after your purchase, as well. This is especially true if you have a set window of time to return your car if an issue comes up.
Visit the National Motor Vehicle Title Information System (NMVTIS) website to get a vehicle history report on a car. This report can show you information such as previous maintenance, accidents, repairs, and more. Other NMVTIS-approved sites you can use to access a vehicle history report include Autocheck.com, Carfax.com, and Vinaudit.com.
Another thing you may want to check before buying a used vehicle is if the car has been recalled. The NMVTIS has a free resource to check if cars have been recalled or have safety issues. Just type in the vehicle identification number (VIN number) or the make, model, and year of the car. You can see a list of recalls (with dates), open investigations, owner complaints, and manufacturer communication in regards to these issues.
A test drive is a great place to start when considering a new used car. However, it’s always best to get a certified and trusted mechanic to thoroughly examine a car before buying it. If you’ve had a mechanic look at the car and they point out minor issues that didn’t deter you from buying the car, you’ll want to plan for regular maintenance and repairs early on.
Nothing is worse than having your car break down on you or malfunction unexpectedly. So start planning and budgeting for car maintenance by familiarizing yourself with a regular maintenance schedule.
This is also a great time to read the service manual for your vehicle since this book often details to help you keep up with maintenance schedules. If you don’t receive an owner’s manual after buying your used car, you can try looking up a digital PDF version online by searching for the make, model, and year of your car.
If you get the car inspected before buying it, you may be able to negotiate the price of the car in exchange for making the repairs. Or, in some cases, car dealers may allow you to drive the car for a few weeks and return it if an issue comes up.
A vehicle service contract, or VSC, is a type of plan that pays for unexpected mechanical repairs or failures. It’s not a warranty, but you can buy it from the manufacturer when you purchase your car. Or, you can buy it from your dealer or a third-party company at any time.
A VSC typically covers mechanical failures and issues that aren’t caused by lack of maintenance, such as not getting new brakes at the appropriate time. Instead, it might cover transmission, navigation, and air conditioning issues. Each policy is different, so you’ll need to read the fine print to understand what’s covered, what’s not covered, and any exceptions.
The main thing to anticipate is your vehicle service contract is usually set to expire once your car reaches a certain mileage. Pricing will vary depending on the model, make, and year of your used car. You should also check to make sure you’re not obtaining duplicate coverage by adding a vehicle service contract. If your used car already comes with a warranty or extended warranty that covers similar issues, you may want to stick with that for the time being.
If you use financing to purchase your used car, know that you can refinance your auto loan at any time. Rates are always subject to change. If rates drop and your credit score increases, it may be a good idea to explore your refinancing options. Refinancing can also help lower your monthly payments.
Sometimes, it’s easy to get caught in the routine of making monthly payments without realizing the potential for immediate and long-term savings. Shop around for the best refinancing rates from multiple lenders and run the numbers and see how much you could potentially save.
Buying a used car isn’t always easy. But knowing what to do after buying a used car can help make the process less stressful. You can even do most of this research before agreeing to purchase a used car.
Set yourself up for success by planning to take these steps immediately after buying your car, or talk to your dealer about how they can help. Remember if you finance a used car and don’t get the best loan terms, refinancing is always an option even if you haven’t had the car for long.
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