7 Steps to Buy a Used Car With Cash

My 2002 Toyota Highlander

This is our 2002 Toyota Highlander that we bought in 2009 when she was a healthy 7 years old.

We bought it from a retired couple who simply didn’t need 2 cars anymore, and this one was getting “too old” for them.

Turns out “too old for them” means 8 more years (so far) of solid driving for us. (Cha-ching!)

So why on earth would we buy a 7-year-old car, and why the heck am I still driving it 8 years later?

Because we value our future more than our cars.

We pay cash for cars. (We haven’t had a car payment since 2006. Thanks Debt Snowball!) How much cash we spend depends on how much we have saved for a car at the time we need our next sweet ride.

'We value our future more than our cars.' Click To TweetIn this case we had about $8,000 saved up.

My 2002 Toyota Highlander

Meet my trusty steed.

(Did you know you can save this kind of cash pretty easily when you live on a budget and destroy all your debt? Nope? Bonus lesson right there. Do a budget and destroy your debt!)

Got Cash? You’re Ready to Spend…Most of It

So with 8 grand saved up, we were ready to drop some cold hard cash on a new-to-us car. But do you think we planned to spend every dime on the car?

No way! That would be foolish.

Something you should know about 7-year-old cars. They need maintenance. Yep. Even really great used cars will need some TLC at the mechanic shop. You’ve got to set aside some money for that or you’ll be setting yourself up for a sadness party real soon.

Now, the reason we were even shopping for a car was that we had our very first baby on the way, and we needed a bigger car to tote all the new baby stuff around.

Oh, and the baby.

So here are the 7 steps we use for buying a used car with cash.

Step 1: Used Car Lots. They’re Great – Just Not for Buying Cars

The first stop was a handful of used car dealers, but not for the reasons you might think.

Car dealerships are a great place to test drive different models to see what you want.

They are also great reminders of what sleazy scammers used car salesmen are.

(Apologies if you sell used cars. I’m sure you’re great, but you really need to help the rest of the people in your industry clean up their act.)

We go to a few used dealers, but we highly recommend hitting up Carmax. They have a great selection of newer model used cars, and their sales staff is shockingly polite and always treat us like intelligent humans.

They let us test drive multiple cars without ever pushing us to buy any of them. (Take note, other sleazy car salesmen! No really. Get a pen and paper and write it down. We’ll wait for you.)

What you'll find in the real world is that some of the nicest cars on the road are driven by some of the poorest people.Click To Tweet

Our only problem with buying from Carmax is that they generally only stock cars that are 3-4 years old and newer, and with a budget of $8,000, we needed something older than that.

But overall our plan worked. We discovered we really liked the Toyota Highlander, and we were creeped out by enough used car salesmen at other dealerships that we ran away as fast as we could.

Step 2: The Internet

Craigslist has been our go-to car-buying site, but Autotrader.com is another good site to use. The nice thing about these sites is you can set alerts including the make and model of the vehicle you’re looking for, the mileage range, and the price range you want. Then it’s just a matter of playing the waiting game.

(It’s best to start shopping months in advance before you need a car. Being in a rush to buy a car is a great way to overspend or buy a terrible car…or both! We’ve done that. Don’t do that.)

When an alert pops up in your inbox, you’ve got to move fast. You may not end up buying this car, but you’ve got to do your research quickly to make sure you don’t miss out on a great used car.

Step 3: CarFax.com

The research starts on CarFax.com. You’ll have to pay to get the full report, but it’s totally worth it.

In fact, we usually buy a 5 report package assuming we’ll end up looking up the reports for a handful of different cars before making a decision.

Type in the VIN number and find out where the car originated, how many owners it has had, if it’s been in any wrecks, etc.

Wrecks are a deal-breaker for us. We’re looking for longevity out of our car and significant repairs with aftermarket parts make that a risky bet.

Lots of owners is a bad sign too.

If a 7-year-old car has had 5 different owners, that looks like everyone keeps trying to get rid of it. Why is that? You may never know, but you probably don’t want to find out.

But if everything looks good, you’re ready to move onto the next step.

Step 4: Contact the Owner to Check Out the Car

Contacting the owner and scheduling a time to check out the car usually involves meeting in a public place and getting to look over the car, and definitely getting to test drive it for a bit to make sure nothing glaring stands out.

But I’m no mechanic, and neither are you. (Unless you are, in which case, good for you. You’re better prepared for this than I am.)

But since I’m not a mechanic, I’m not about to sink my cold, hard cash into a car based simply on my gut feel and how smooth I think it drives.

So if everything passes the gut check, we move on to step 5.

Step 5: Get a Certified Mechanic to do a Pre-Purchase Inspection

We always get a certified mechanic to do a thorough pre-purchase inspection.

This costs money.

Usually about $200 or so, but I would much rather be out a couple hundred bucks and say no to a lemon than saddle myself with a car in need of thousands of dollars in repairs just 5 months into owning it. Ya feel me?

This involves setting up a day and time to have my mechanic give the car a pre-purchase inspection.

Now some sellers don’t like this step. It’s time-consuming. And if there are any mechanical issues with the car, they would rather you not find those.

So if the seller refuses this step, just walk away. It’s no big deal as long as you’re not in a hurry to get a car. (And you’re not, right?)

Again, I’d much rather wait a little longer than be kicking myself as all my money falls out of my pockets at the repair shop.

With the Highlander, we ran into a small issue where the owners lived in New Braunfels, and they didn’t feel comfortable bringing the car all the way down to our preferred mechanic in San Antonio.

So the seller suggested we just take it up to the Toyota dealership in San Marcos a few miles up the highway.

Pro Tip: If you’re on the selling side, never get the pre-purchase inspection done at the manufacturer’s car dealership. They will find every, and I mean every, little thing wrong with the vehicle because their mechanics know these cars inside and out. Also, their suggested price to fix anything they find wrong could be twice as expensive as it would cost to get the work done at a non-dealer related mechanic.

But since I was on the buying end of this deal, I gladly agreed to get the Toyota dealer inspection.

As we waited with the seller and his wife at the dealership during the inspection, I could feel the seller realizing his mistake. But it was too late at that point. Luckily for them, we were just looking for a fair price for the car, not looking to take advantage of them.

Step 6: Negotiate

Now, every used car is going to be in need of some routine maintenance. This was a 7-year-old car so we weren’t expecting it to be perfect. What we were looking for were significant signs of wear or damage that would be extremely costly to fix (think $500 or more) and could potentially shorten the life of the vehicle.

The mechanic finally came back with a laundry list of maintenance items, most of which we completely ignored as being routine for a 7-year-old car.

Then we saw the big one.

The circuit board panel behind the air conditioning knobs had a loose connection. We were told it was a common problem on these model year Highlanders. (Remember, they find everything.) This meant eventually the hot/cold knob wouldn’t work and we wouldn’t be able to get cold or warm air out of the A/C unit.

Cost to replace the circuit board? $900. Ouch!

No A/C in the Texas heat for my pregnant wife? Contrary to popular belief, I’m NOT an idiot.

But this wasn’t a mechanical issue, so it wasn’t an automatic rejection of the vehicle. It just meant we had some negotiating to do with the sellers.

Again, I wasn’t trying to rip them off, and that shouldn’t be your goal either. Finding a fair deal for both you and the seller is the goal.

The total repair bill the dealership provided was several thousand dollars and I wasn’t going to try and skim all that off the asking price. The seller was already asking a few hundred below Blue Book value.

I also told the seller that I wouldn’t get the repairs done at a Toyota Dealership, so I would likely pay less than their estimate to get the repairs done.

The seller appreciated my honesty. (Honesty really is the best policy.)

So I simply suggested taking an additional $400 off the price to help us repair that circuit board, bringing the price down to $7,000. The seller and his wife stepped away to talk it over and finally agreed.

Time to move on to step 7.

Step 7: Swap Cash for the Car Title

The sellers asked us how long it would take us to get the money. To their surprise, we told them we had the cash in our car right now. I suppose we didn’t look like the type of people to have that kind of cash on us, and they were clearly unprepared as they hadn’t brought the car title with them.

That was our fault. We should have reminded them to bring the title with them to the dealership.

Instead, we ended up following them back to their house to get the title and swap it for the cash, which they counted out on their kitchen table – twice.

I didn’t hold that against them. $7,000 is a lot of money.

We ended up having a wonderful talk with them and found out they were retiring from California where it was getting “just too crazy” and they liked the warm Texas weather and beautiful hill country. We easily agreed with them on all those points. They were a really sweet couple.

Eventually, we said our good-byes and drove off with our car $1,000 below budget – more than enough to cover that circuit board repair.


This purchase was back in 2009. Since then, the Highlander has transitioned from my wife’s car to become my daily driver, now 15 years old and still running like a champ.

In 2015 we did the same thing paying cash for a 2009 Toyota Sienna minivan we found on Craigslist prior to welcoming our 3rd child into the world. We ended up getting a great deal on that vehicle as well.

Oh yeah, and that A/C circuit board? We decided to wait to repair it until it completely failed. Today, 7 years after buying the car, it still hasn’t. It turns out some older cars are more reliable than people think.

Remember, living debt-free looks very weird. Paying cash for cars? Who does that?

Rich people. That’s who.

Some are just rich enough to buy a $3,000 car. Others are rich enough to buy a $25,000 car. But both are being smart with their money.

What you’ll find in the “real world” is that some of the nicest cars on the road are driven by some of the poorest people.

You’ll be amazed what you can do when car payments completely disappear from your life.

Remember: Don’t try to look wealthy. Be wealthy.

I’d love to hear about your car buying experiences. Have you ever paid cash? Do you have a preferred website or dealership? Let me know in the comments what has worked best for you.

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