In this three-part series, we are going to cover the entire process of buying a second-hand car, from deciding on a model and budget, to dealing with sellers and inspecting a vehicle for wear and tear. In part one; we'll focus on researching your second-hand car purchase, and establishing a budget.

Buying a car is a big commitment. And buying a second-hand car requires even more patience and research, as the possibility always exists to lose a lot of money on a poor quality second-hand car. To avoid this, it is necessary to do your research ahead of time. The following three steps will help you decide upon and prepare to buy a secondhand car, even before you start negotiating with sellers.

Establish a Budget

Before considering specific car makes and models, it is important to establish your budget for buying a second hand car. This will require you to take a hard look at your finances and current expenses to determine what you can afford to spend. And don't forget to factor in interest if you will be financing the second-hand car.

Once you have a good idea of your budget, you can save time by visiting your bank and asking to be "pre-qualified" for a car loan for this amount. This will save you the frustration of possibly finding your ideal car, only to have the bank refuse your loan for that particular vehicle.

Narrow Down Your Choices

Once you have established a budget that is comfortable for you, the next step is to find the best possible second-hand car in that price range. Obviously, you're going to want to get the most car for your money, so magazines like Consumer Reports or JD Powers can be excellent resources.

Once you have a few models in mind, it's time to go online and search for reviews to see what the experts think. You can also search newsgroups and car-related message boards for a specific car model to find out what average buyers really think of the vehicle.

Of course, you'll also want to consider your own personal needs and preferences. If you are a contractor and need a pickup truck, a subcompact is not going to work out, no matter how great the reviews on it are. But in this early stage of second-hand car buying, it also pays to be a little flexible. You may discover an entire range of vehicles you had never considered before.

Get the Facts

After you've narrowed down your choices somewhat, it is important to check the market value of the car for the year models you are considering. To do this, you can buy a copy of the "Blue Book," or even obtain this information online from several popular subscription-based services.

But to ensure that the Blue Book value of the secondhand car accurately represents what it is selling for in your area, you can always search for the make and model online. This will give you an idea of what other buyers are paying for the same year vehicle.

If you have followed these three steps, you will now have narrowed down your choices to one or two vehicles, and you'll have a good idea of the car's current selling price. The next step is to begin shopping for the car model you want. In part two of this series we will weigh the pros and cons of buying a second-hand car from dealers, auctions and private sellers.