There are lots of places to buy used cars and trucks. Of the million used cars, vans and trucks that will be sold at the retail level in the US and Canada this year, about half will move through franchised and independent dealer lots and half by the owner’s themselves, including the rental companies.
You will find pros and cons with each supply channel of used cars. We’ve highlighted the major ones below.
As a regulated business, dealers have to ensure that the vehicles they sell meet certain basic requirements. That means the brakes, lights and emissions systems work properly. The car must also meet all safety requirements. And the dealer is compelled to be truthful about a vehicle and is prohibited from misrepresenting a vehicle. While this does not assure your satisfaction, or even a reliable vehicle, regulations give you and the dealer a set of rules for playing the game. It is easier (though far from easy), to seek remedies if the vehicle you purchase has been misrepresented, intentionally or not.
Unlike a private party who may sell one used car every five years, one factor that all franchised and independent dealers have to consider is their reputation in the community. If they upset or intentionally mislead too many people, they will lose business. Often the most earnest advertisers are the dealers that can’t rely on repeat or word-of-mouth business.
While it doesn’t hurt to look at the many websites with dealer satisfaction indexes or consumer ratings, you have to be careful here, too. Fictional postings (good and bad) are not unheard of!
Franchised New Car Dealers
This is usually the most expensive option. New car dealers make a large portion of their profits from used vehicle sales. And with intense and unprecedented competition in the new vehicle sector depressing margins ever further, their determination to wring as much profit as possible out of used cars, vans and trucks is all that much stronger.
On the other hand, new car dealers have large selections, especially of the make they sell. Often, dealers get first shot at the best cars being auctioned by the manufacturers they represent. These may be one-owner “off-lease” vehicles or returns from rental firms or from other fleet sales.
Independent Used Car Dealers
Like new car dealers, used car dealers (independent dealers not affiliated with a manufacturer) have to ensure the vehicles they sell meet minimum statutory requirements.
Because they do not have the overhead of a new car dealership and generally operate on thinner profit margins, you can often get a better deal from an independent. New car dealers capitalize on the perceived stability and prestige of a new car operation by charging higher prices. Used car dealers cannot.
Of course, there are downsides: First, low overhead means they usually do not have service or repair facilities or expertise in a particular make or model. You may be relying on a service department that does not know your vehicle particularly well. There are exceptions, of course.
Second, the quality of vehicle may be lower. Generally speaking, these dealers get auction leftovers or vehicles that have been wholesaled from another dealer. This doesn’t mean the vehicle is bad, just that you’ll have to keep your guard up. Hard-driven examples are far more likely to end up on these lots. An inspection by an independent mechanic is essential.
You may want to consider the used car dealer that specializes in one or two specific makes. Since they limit their service to one or a few makes, often they have developed a thorough understanding and expertise of the models they sell. Indeed, most have a background at a franchised dealer.
We recommend buying from used car dealers who have been established in your community for at least a few years, preferably at the same location. Ask for references. Be extra careful of transient operators and “Buy Here, Pay Here” or “Tote-the-Note” lots that offer second-rate vehicles and onerous credit terms, usually to people with poor credit histories.
Private Party Sales
Somewhat riskier than purchasing from a licensed dealer, often private parties offer the best deals. Newspapers, auto trader magazines, the internet and even cable TV are full of cars, vans and trucks for sale by individuals. The biggest downside? Limited and often impractical recourse if there is something wrong with the vehicle or it if was misrepresented.
If you are considering this route, start at the least risky source: someone you know. Ask around and see if anyone is considering replacing their vehicle in the near future. You can offer a little more than a dealer would give in trade, so it’s a win for all involved. This is an especially good strategy if you know that they had few problems with the car and took care of it properly.
If you end up hitting the classifieds and don’t know the person, take a look at their house and how they dress. If the outside of their house is a mess and they are not clean in their personal habits, it is unlikely that they took proper care of the vehicle.
Always ask for service records. The ideal private party transaction is buying from the original owner who has maintained the vehicle properly and has the service records to prove it. The records will also give you a great deal of confidence in the odometer reading.
There are downsides: First, it’s a good idea to ensure that you are really dealing with a private individual and not a dealer. There are thousands of front-yard dealers or “curbsiders”. One way of weeding out these dealers is to respond to their advertisement by asking about “the car” without actually saying the model name. If they have multiple cars for sale, they won’t know which car you are calling about and will have to ask. Second, unless you are buying a vehicle still under it’s original warranty, you are not getting any guarantee. Third, in the absence of outright fraud, you have little recourse against a private party.
We don’t want to paint all curbsiders with the same brush. Many are just trying to make a little extra income and do care about their reputation. Because of their extremely low overhead, they can offer good vehicles at prices most dealers can’t meet. The problem for the consumer is that it’s often difficult to weed out the bad ones.
Generally, rental car companies will sell most of their cars at the end of their service period through wholesale auctions. Or they may have an arrangement with the manufacturer to return them. Rental vehicles are also available directly from the rental companies. Check your area yellow pages to find locations and check availability.
Approach them as you would a new car dealer. The cars have likely been well-maintained (although maintenance requirements are quite low for new cars) and many have low mileage. Many also have factory warranties that are still valid. An unknown is that some examples may have been abused — especially high performance models. You never know who’s been behind the wheel.
It’s likely that you can find an auto auction in your area that is targeted at consumers. You can get a good price, but not if the vehicle is in demand on that day. Do not assume that just because you can buy it at an auction that you will get a good deal, because that is absolutely not necessarily true. Often these vehicles are rejects from wholesalers or other dealer auctions.
A problem with any auction is that you may not get a good chance for a thorough inspection or test drive. Also, you may not have the chance to get out of a deal if the car is a lemon or is not what you thought it was. Be sure you understand what your rights are before you make an offer.
As a result, we do not recommend buying at these auctions unless you fully understand the risks, and know what you are doing when it comes to inspecting a vehicle. Bring a mechanic if you can.
Government auctions are held around the country as the federal government renews its Interagency Motor Pool. They are usually driven for six years or 60,000 miles, whichever comes first. Maintenance records are available. The vehicles can be inspected on site and the engines can be started but they cannot be driven, which is a major downside in our opinion. Contact the US General Services Administration in the US government section of the phone book for more information.
Government agencies impound thousands of vehicles each year. Most go to public auction. There are even more variables to consider with these vehicles, but if you’ve got time and knowledge, deals can be found here. Your City of Province’s website will have information on these in your area