Your goal is to find "creme puffs". These are cars that are priced lower than their value, not salvaged, not smoked in, garage kept, etc.
Use online classifieds to find cars of interest.
Search between 30,000 and 90,000 miles. Dealerships think anything with more than 70,000 miles is high mileage but note that Honda and Toyota's will last for 250,000 miles if serviced regularly.
Search between 1994 and the current year. Most mechanics cannot service air conditioners before 1994.
Search for sale by owner (dealers rarely offer creme puffs for good prices).
Ask the owner if the vehicle has a clean title. Make sure it is not rebuilt/restored (salvaged) -- If so, forget it and move on.
with that type of title you can deduct at leat $1,000 off the car's blue book value for good reason—The airbags may have been snipped or stuffed back in. The body or frame may have been straightened which means it may be structurally weakened. Most accidents are in the front. Ask to see the police report. Ask if the airbags were deployed. Inspect it for potential structural weakness (ask to see pictures of the wreck, pound the sheet metal to find the Bondo and painted rust, run your fingers over every seam to detect unevenness, and see if the engine and frame bolts have been removed since it was new).
Look up the car's value. Check values at Kelly Blue Book and NADA Guides. You can also watch craigslist for sale by owner listings. Where I live, I watch Provo and Salt Lake listings:
Provo CraigsList Cars by Owner (notice the o at the end of the URL)
Salt Lake City CraigsList Cars by Owner
Do not pay more than the KBB Private Party Good Value
Banks use NADAGuides.com and will loan up to the retail value, which is much higher than what you want to pay.
Trade-in Values are meaningless. Dealerships use Manheim.com to determine what vehicles sell for at auctions. They do not want to pay you more than they would pay at an auction.
Call the seller. If they speak with an accent, forget it. They are probably in the business and are reselling a car they've purchased or bought at an auction.
The best values are often because of hardship situations, people who inherit vehicles, people who do not check the blue book values, etc.
To find a creme puff, often you'll be the first caller or the first person to come see the car. You have to be ready to make an appointment, and it is better to have cash on hand.
I find one or two creme puffs a week. They are worth finding.
Have a mechanic look it over. Before the seller gets bombarded with calls, they are most likely to agree to let you have a mechanic look it over. In Utah, Kent Coster at Big O Tires in Murray will do it for $35. Doug at Doug's Auto in Orem will do it for $80.
Price the car yourself. While you have the seller on the phone, go through the KBB.com year, make model wizard at http://www.kbb.com/used-cars
Ask them for the details (trim, engine size, features, mileage). If you think you've found a creme puff, confirm each item with the seller on the phone. Sometimes they mistype information and you don't realize it until you see the car. Again, ask them if the car's title is clean and that it is not rebulit/restored.
Ask yourself, "Is it a creme puff?" If not, don't buy it.
Check the car's oil for a blown head gasket. Pull the oil dip stick. Put some oil on your finger. If it is milky it could have radiator coolant in it which is a sure sign the head gasket is blown and will require a new engine.
Smell the transmission fluid. If it smells burnt it may have problems.
Drive the car in town and on the freeway. Make sure it goes into high gear, every gear and reverse as expected.
Using your fist, midly pound every part of the sheet metal to look for rust or body work. You can tell by the sound. Another trick is to put a magnet on all the sheet metal. If the magnet does not stick there is bondo under the paint.
Bondo repairs must not be more than 1/8 to 1/4" thick or the repair will eventually crack, water will leak in and rust the sheet metal underneath.
Look under the car. Check for rust. Check to see if it leaks oil or fluids. Check to see if the mufflers and exhaust system is good or rusted out.
Be ready to say you will buy the car (even if you are not sure) and ask them to hold it for you until you confirm all they have said, or to get your bank loan.
Negotiate. If while inspecting the car you find things that were not mentioned or properly represented, estimate their cost, point them out to the seller and ask for a lower price.
Buy only safe and reliable cars. If you are uncertain about the reliability of the car or how it holds up in crash tests, check ConsumerReports.org -- it is worth a month's subscription.
Buy only cars made within the last ten years unless you find a creme puff with low miles. Cars older than 2000 are difficult to find parts for. Honda Civics and Accords, Toyota Corolla and Camrys, and Ford Mustangs will have affordable after market parts for much older cars.
Most cars before 1996 cannot be electronically scanned. In order to scan your car for codes, you must first locate the diagnostic connector. It will be under the drivers side dash.
Buy only the best. Personally I like Lincolns. They are almost always owned by old men. They are of high quality and you can find them with low miles for a good price. However, the price of any service or part can be more than you would expect to pay.
Consider the cost of major service maintenance. People often sell cars before major service maintenance which often occur at 30k, 60k, and 90k miles. Expect to spend an additional $500 for a major service (spark plugs, replacing fluids, timing belt, etc.) or ask them to reduce the price if they have not had it done for you.
Print out your state's Bill of Sale when buying a used car. Have the seller fill it out completely as well as sign it:
http://www.google.com/search?q=utah+dmv+bill+of+sale&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
Although the title acts as a Bill of Sale too, this document provides you further protection. If you go register your car and find it was stolen, this will give you a legal document to go after the owner.
Make sure the seller fills out and signs the title (date of sale, odometer mileage, etc.)
Again, make sure the title doesn't say "Rebuilt/Restored" or Salvaged.
You must drive a car for thirty minutes before buying it because it is possible the seller unplugged the battery terminal to turn off the check engine light. If the check engine light turns on, there may be one or more problems. Using an engine diagnostic analyzer, the vechicle's computer will report the problems it knows about. Checker Auto will diagnose your car for free.
Fill out two copies of the Bill of Sale yourself
This way you can avoid the seller forgetting to fill out any fields, forgetting to sign, or signing in the wrong place. Have the seller sign just the same name, in the same way, as shown on the title.
Leave the amount empty on the title in case you want to resell the car
The DMV doesn't require an amount. They already know how much to charge for sales tax.
If you want to buy a new car, get a Costco membership and find participating dealerships Costco Auto.
Contact those dealers and tell them what you want to purchase. They must comply with set Costco pricing.
