That bit around the outside of your thighs

I'm looking to loose fat and not bulk up actually for a woman unless you taking a testosterone supplements you most certainly won't bulk up as you put it. However is your weight training heavy weights and eating at a calorie deficit you will loose fat to reveal those beautiful muscles that's developed beneath.

Squats alone won't be enough to develop legs alone will be building a nice butt and depending on stance quads are almost always more dominant.for hamstrings you need your RDLs ,good mornings glute bridges, lying legs curl etc

To be honest, in my experience it's about diet. Exercise can only tone up what's under the fat.