Learn about Buying a Used Car from Retailers and Private Sellers
In part one of this series on buying used cars at dealerships, you learned a car is considered “used” the moment it is registered in an owner’s name. This could mean it has very few or very many miles on it. You may have also been surprised to learn in the first part of this series that used cars are more profitable to dealers than new vehicles, making the used car selling business very competitive.
What this means for the consumer is that they have to be smart when buying a used car. Here are two more sources for used cars and the facts you need to know about each.
CarMax (or “Big Box” Retailers)
CarMax is a “big box” used-car retailer that has expanded to 150 locations on the strength of a simple business model: Sell high-quality used vehicles at fixed prices with a customer-friendly, hassle-free, haggle-free process. Every vehicle is thoroughly inspected and reconditioned and a vehicle history report is available upon request. Finally, if you buy a vehicle from CarMax and then decide you don’t like it, you can bring it back within five days for a full refund, no questions asked.
If that sounds too good to be true, there’s a reason: You will very likely pay more at CarMax than you would for the same vehicle just about anywhere else.
The most affordable option for a used-car purchase is a private-party sale. You can search locally (newspaper classifieds, Craigslist, Pennysaver) or nationally (via sites such as Autotrader and Cars.com). Of course, the cheapest price is also the riskiest. Private-party sales are “as-is,” so you are responsible for obtaining a vehicle history report, arranging for your own inspection and, ultimately, taking a chance on a vehicle that could have hidden mechanical issues. VSAs for used vehicles are available to private-party car buyers, but payment for the entire agreement will typically be required upfront.
Used Car Loans
When it comes to financing, buying a used vehicle from a new-car dealership or from certain retailers gives you all the resources of the F&I department, including a long list of lenders and the option to finance the purchase of an extended factory warranty or a VSA.
But when you purchase a used car from a private seller, in many cases, you may be forced to secure financing on your own, making the process more complicated. Read our guide to finding and securing auto loans to take control of the used car financing process.
PART ONE: Where to Buy a Used Car: Dealerships.
If you are embarking on your first car purchase, take charge of the purchase process by reading our guide to purchasing your first vehicle.
Are you looking to reduce the cost of your current car loan? Refinancing your car loan may help you lower your payments and interest rates.