Step 7: Where to shop for your used car.

The three most common places to buy a used car are:

• Private parties
• The used car section of new car dealerships
• Independent used car lots

Of these sources, private parties usually have the most reasonable prices. It is also a more relaxed transaction to buy a used car from a private party than to face a salesman at a dealership.

Still, there are advantages to buying a used car from a new car dealership. Many used cars, on new car lots, are trade-ins. Dealerships usually get these cars at rock-bottom prices. If you make a low offer — but one that gives them some profit — you just might get a great deal. Furthermore, many dealerships offer certified used cars that have been thoroughly inspected and are backed by strong warranties.

Search for your car by using sites such as our Edmunds.com used vehicle listings or online classifieds such as Craigslist. Some sites are very flexible and allow you to search specific criteria such as make, model, options and price range. In some cases you can search the used car inventory of new car dealerships through their Web sites.

While the Internet is an amazing resource, you should still try the conventional sources. Ask friends and relatives if they are selling a used car. Keep your eyes peeled for "For Sale" signs in car windows. Scan the bulletin boards at supermarkets or in local schools and colleges. Finally, don't forget old faithful — newspaper classifieds.

Once you find a prospective car, call the seller before you go to see the vehicle. In this way, you can eliminate cars that have problems such as excessive mileage or a salvage title. Use our Used Car Question Sheet when calling to help prompt you to ask key questions. Verify the asking price in the ad.

While talking to the seller, set up an appointment for a test-drive. If possible, make this appointment during the day so you can see the car in the daylight and more accurately determine its condition. Also, ask for the VIN so you can run a vehicle history report.