Get as much information as you can from the current owner and then do your own research. Running the VIN (vehicle identification number) through a paid service like CARFAX will tell you if the car has been in an accident, if there are any liens on it, and if there are any recalls on the model.
Rust or paint damage
Take a walk around the car and keep an eye out for any rusty spots or paint chips. Small, localized rust patches aren't necessarily a deal breaker because they can be fixed fairly easily. If there are places where the metal is totally rusted through, you might want to reconsider the purchase.
While you're walking around the vehicle, you should also look for problems with the frame. Is the car sitting level on the ground? Is there anything hanging from the undercarriage? Pay close attention to the bumpers and look inside the trunk and hood for new bolts or warping that could indicate a recent accident.
Under the hood
The engine is the most important part of any vehicle. With the car turned off, pop the hood and visually inspect the engine for: fluid leaks, corrosion and cracked hoses and belts. Check the oil and transmission dipsticks for discolouration - oil should be light brown, transmission fluid should be pink or red.
The tire tread should be worn evenly and all four should match. Uneven tread or extra wear on a few of the tires often means poor alignment, which can be a symptom of steering, suspension or frame issues. A poorly aligned car will pull to the right or left when driving.
The average car will rack up about 20,000 km each year. To figure out if the car you're looking at has high or low mileage, divide the number on the odometer by the vehicle's age. A car with high mileage with have more wear and tear on its mechanical components.
Blasting the radio when your favorite song comes on is one of the little joys of car ownership. Press some buttons and make sure the stereo and the other electronic components in the cockpit are working properly. Turn on the air conditioning and heat as well.
Seats and interior fabric can take a beating in a vehicle. Watch out for tears, stains and cracked leather on all the front and back seats - upholstery can be a pricey thing to repair.
The test drive is probably the most important part of shopping for a used car. Plan your route and put the car through the paces to test its maneuverability, acceleration, braking and suspension. Take it on the highway, if possible, and try parallel parking to get a feel for any blind spots the car might have.
If you think you've found the used car of your dreams you should take it to a trusted mechanic for an inspection. A mechanic can determine if the vehicle has any underlying issues or areas that might become an issue in the future. It's not a free service, but it could save you from buying a lemon.