Search
Close this search box.
Complete guide on what to do after buying a used car

Complete guide on what to do after buying a used car

If you don’t have much experience buying used cars, the whole process likely seems daunting at first. Luckily, though, you can count on solid advice from car experts that will help you avoid the most common pitfalls. Here is our step-by-step, detailed guide on what to do after buying a used car.

The walkthrough covers both the possibility of having bought the car from a dealership as well as from a private seller and addresses all the vital legal and safety-related actions you must take immediately after you buy a used car. So, these are the main steps to take after buying a used car.

Transfer the car title

The first thing you need to do once you buy a used car is to have its title transferred over to you. The process of transferring a car title varies slightly from one state to another but the main points are the same.

Make sure that you’re getting a clean title

A simple step that can save you from lots of problems in the future is checking if the car title is clean – and you do that by reading the physical document. If the car has been involved in a grave accident, stolen, or declared a total loss in the past, then you’ll find these details written on the document itself.

It’s vital that you get a clean title, otherwise, you’ll likely have trouble with registering and insuring the car or you could be overspending on a previously totaled, unsafe vehicle.

Types of titles

Every prospective car buyer should know the main types of car titles:

  1. Clean car title – also referred to as a clear title, indicates that the car isn’t used as collateral for a loan and was never declared a total loss following a major accident or event (such as a flood or a fire). Easiest title to transfer and the only one you should accept unless you were made aware from the beginning that the car had serious problems in its past. 
  2. Lienholder car title – this means that there is an outstanding debt associated with the vehicle. For example, if the previous owned took out a car loan that isn’t paid off yet, then this is the title that you’ll receive. A clean title will be given to you only when you pay off the debt.
  3. Salvage title – one to look out for, as some car sellers buy wrecked vehicles to repair and then sell them as “as good as new”. A salvage title usually means that an insurance company deemed the car a total loss following a major accident, a fire, or a flood. This happens when the damage done to the car is so extensive that its actual cash value is lower than the cost it would take to make it roadworthy again. These vehicles are very difficult to finance and insure.
  4. Rebuilt title – cars that are currently roadworthy but that have been extensively repaired in the past, possibly former salvage vehicles.
  5. Branded car title – an umbrella term that means trouble. Cars with branded titles might have had their odometers rolled back in the past, or they might have been significantly damaged in a flood. Whatever it is, a branded title is bad news and should immediately be investigated with the help of a vehicle history report.

The process of transferring a car title

Even though the exact process of transferring a car title will vary from state to state, they all follow the same pattern in which both the seller and the buyer have a part to play:

  • The seller signs the car title, effectively releasing ownership over to you, the buyer. If there are two owners’ names on the car title, you need both signatures. Be aware that some states require that the signatures get notarized. 
  • It is then the buyer’s responsibility to take the signed title to the DMV (Department of Motor Vehicles). You have between 10 and 30 days to do that after buying the car, depending on your state of residence.
  • The DMV will then release a new title with the new owner’s name on it (it can take up to six weeks). The new title is mailed to either the new owner or to your lending company if you took out a car loan. In certain states, you might be issued an electronic title.

The process is the same when you buy from a dealership and a private seller but dealers usually spare you the trip to the DMV by taking care of all the required second-hand car paperwork for a small fee.

Pro tip: even if your state doesn’t require the notarizing of the seller’s signature, you should consider doing it anyway to guard yourself against future ownership claims.

What to look out for when transferring a car title

If you want to avoid problems and scams when a car title is being transferred to you, make sure to check:

  • If the VIN on the title matches the one inscribed on the car
  • If the person signing the title is the same as the one on the title
  • The lien release (if applicable)
  • The insurance requirements
  • How long you have until you need to bring the released title to the DMV (between 10 and 30 days, depending on your state)

Sign a bill of sale

Even though not all states require a bill of sale when buying a car, you should consider getting one. A bill of sale is a document that can be described as an informative receipt – its primary purpose is to prove the transfer of ownership from the seller to the buyer upon payment. It also includes information about the final price, the date of the sale, both the buyer’s and the seller’s names, plus agreed-upon terms and fees as part of the sale.

A bill of sale effectively gives the buyer control over the car and it releases the seller from any future obligations. Some states mandate you bring a bill of sale when registering the vehicle and calculate the amount of sales tax due. 

Different states have different rules for bills of sale, so you should research what your state requires. That being said, any bill of sale should include:

  • The Vehicle Identification Number (VIN)
  • Transaction info such as the final price, the sale date plus any payment terms, if any, agreed by the seller and the buyer
  • The odometer reading at the time of the sale
  • Contact information for both the seller and the buyer
  • Car details such as model, color, production year, etc
  • Special terms where you either describe the type of warranty the car comes with or you simply write “as is” if there’s no warranty

Get car insurance

Except for New Hampshire, all states require you to have car insurance to legally drive your vehicle on public roads. Most dealerships won’t allow you to drive off their lot if you don’t have proof of having insured the car.

Car insurance is one of the most important aspects of car ownership. And if don’t handle it right, it can either end up costing you too much money or you won’t be covered in the case of an accident.

You should always ask for offers from at least three insurance companies before you visit the dealership. Even if they can’t give you an exact quote, you’ll at least have an estimate of what their premiums are. You’ll likely get a very bad deal if you let the dealer take care of the car insurance for you, without knowing what the market has to offer. Car insurance for used cars is tricky enough as it is, you should make it as easy as possible for yourself to get a good deal, so do some research beforehand.

Register the vehicle

If you’re wondering how to register a used car, but you’re thinking of buying a used car from a dealer, you can skip this section because dealers usually do this for you for a small fee. In case you’re buying from a private seller, then you’ll have to head to your local DMV office to register the car yourself.

Even though procedures vary slightly from state to state, you should bring the following documents with you:

  • The bill of sale
  • The car’s title that was signed over to you by the previous owner
  • Proof of insurance
  • Your driver’s license 
  • Proof of address or residency in the state
  • A document released by an emissions testing center that proves the car meets the state’s emissions requirements (if applicable)
  • Lien documents and information (if applicable)

The DMV will give you your registration papers (make sure to keep these in your car), your new license plates, and your registration tags.

Pay your taxes

This is one of the steps after buying a used car that differs depending on whether you’re buying from a dealership or a private seller. If you buy from a dealership, then the sales tax is already included in the vehicle’s final price. But if you purchase a used car from a private seller, then it’s your responsibility to pay all due taxes.

There is no national consensus on the taxes you owe upon purchasing a car, so you’ll have to check with your local DMV to find out the figure. Examples of taxes that you can expect to pay are sales tax, excise tax, title tax, or a title transfer fee. If you’re lucky, you might not owe the Government anything as some states don’t require you to pay a sales tax when buying from a private seller. 

Do a thorough post-purchase car inspection

Not only should you do a post-purchase car inspection, but it’s advisable to do it even if you had the car looked at prior to purchasing it. Why?

Because if you find something terribly wrong with the car right after you buy it, you can either return it or use the warranty it came with (if applicable) to fix those problems. Even though lemon laws mostly apply to new cars, in some states (California, Connecticut Massachusetts, Minnesota, New Jersey, New Mexico, New York), you’re protected by them in extreme situations even if you bought a second-hand car.

On top of that, some states will only register your car if it passes the state’s safety inspection or if it meets emissions requirements. A check before you schedule those tests will reveal whether your car is in good condition or what you need to fix so that the vehicle gets passing grades. 

Look for recalls

Whenever there’s a safety recall issued, the manufacturer will announce the current owners of all affected models. But they announce the owners just once. If you buy a car with an active safety recall that hasn’t been addressed in the past, you need to identify that recall yourself.

It’s one of the easiest and most important aspects of what to do after buying a used car. You can check for recalls directly on NHTSA’s website, on Kelley Blue Book,  or you can buy a vehicle history report and check its “active recalls” section.

Secure your paperwork

Some of your car’s paperwork needs to stay with the car itself while others should remain at home. Proof of insurance and the vehicle’s registration should stay inside the car, in case you get pulled over. The bill of sale, the car’s title, and any financing papers should stay at home.

Schedule maintenance 

Even if your used car doesn’t need maintenance in theory, you should still bring it in for one and start with a clean slate. Here is a quick used car maintenance checklist that you can go through after buying a second-hand car:

  • Check and change the oil
  • Check other auto fluids
  • Check tire pressure
  • Check the lights
  • Check plug sparks
  • Check battery life

A simple maintenance visit to your mechanic will set you back a couple of hundreds of dollars but it will ensure that your used car is in tip-top shape and ready to hit the road. A classic case of better safe than sorry.

The process of buying a used car is surprisingly easy if you educate yourself on what the dangers are and how to avoid them. The steps described above should help you understand what to do after buying a used car so you can be confident in your ability to keep yourself safe and go through all the legal steps in order. 

FAQs

Can I drive a car without a license plate?

Absolutely not, it is illegal to drive a car on public roads without a license plate. Some states don’t require a front license plate, but a rear one is mandatory across the US.

What are car lemon laws?

In the US, all car manufacturers are obligated to repair your vehicle if it is under warranty and the malfunction is not your fault. Moreso, if the problem persists and the manufacturer can’t solve it, they are then forced to either replace your car or reimburse you for it.

When do I need to register a used car after buying it?

Depending on your state, you have between 10 to 30 days. Make sure to check the maximum time limit with your local DMV.

Share the Post:

Related Posts