By Ronald Montoya and Matt Jones
Edmunds
Shoppers in search of an inexpensive used car often start with the used-car inventory at a new-car dealership. Some go straight to private-party car sellers. But those options don't suit everyone.
Maybe you're leery of handing money to a stranger. Or perhaps the used cars at new-car dealerships are too pricey for you. Perhaps you want to browse a variety of used makes and models in one place.
If any of these describe you, consider visiting an independent used-car dealership, which abound in the U.S. The National Association of Independent Automobile Dealers has 20,000 member dealerships, from small family-owned stores to nationwide chain stores such as CarMax, which has more than 175 locations across the country.
In addition to general-purpose used-car lots, here are some places you might shop, depending on your interests:
- Carmax: This used-car superstore is not connected with an automotive brand. But it's certainly not a corner car lot. Each store has hundreds of cars in inventory and, unlike most dealerships, CarMax has a no-haggle pricing policy.
No-haggle pricing may mean lower stress; it doesn't always mean the lowest price. You're not likely to find a $2,500 sedan, for example. CarMax vehicles will be a little pricier than elsewhere, but they tend to be less than 10 years old and come with 30-day warranties.
- Specialty used-car lots: Some used-car dealers have a preference for a certain brand or type of car and the inventory reflects this. Sometimes the clientele dictates the choice of cars. Examples are used-car lots that sell German cars (Audi, BMW and Mercedes) or only luxury vehicles. Sometimes these lots will narrow the focus even further, selling classic cars of a certain vintage.
While pricing at specialty lots isn't necessarily lower, the variety may be greater. Car collectors and aficionados who are searching for hard-to-find models often buy from such lots.
- Consignment used-car lots: These lots sell vehicles for private-party owners who don't want to handle the transactions themselves. Usually the cars come from local people, so the choice will reflect the local economy and lifestyle.
There's only one real advantage to buying from a consignment lot rather than going directly to the person who owns the car: The lot will be able to finance the purchase. Interest rates, however, usually will be higher. The prices will be higher, too, since there's a middleman involved.
- "Buy here, pay here" car lots: These dealerships directly finance a buyer's purchase, but then often require buyers to make their payments in person. If the owner gets behind on the loan and returns the car to make a payment, the dealer can more easily repossess it.
These dealers are more likely to take a chance on shoppers with poor credit, but they mitigate that risk with significantly higher interest rates. Consumer advocates such as the Center for Responsible Lending urge caution when shopping at such stores because high interest rates can result in default and repossession.
Independent-lot shopping tips
- Do your homework: Because of the varying age and condition of cars, buying a car at an independent dealership requires more work than shopping for a new car or even a used car that's on a new-car dealer's lot.
- Negotiate: If you don't have an appetite for negotiating, it's best to steer clear of an independent car dealership.
Begin by getting a baseline for what a used car should cost. At Edmunds, you can see a specific used car's trade-in value, which approximates what the dealer paid for it, and what's called the dealer retail price, which is what the dealer hopes to get when selling the car. Your opening offer should fall within those two numbers. Keep in mind that the dealership has to recondition the car, so add about $500 to $1,000 to the trade-in value figure. Then factor in about $1,000 for dealer profit. Make your opening offer accordingly and work your way up as the salesperson counters.
- Investigate the car's condition: Remember that most independents offer older cars with higher mileage and often without warranties. The car's condition is key. Before you buy, obtain and study the car's vehicle history report and arrange to have an independent mechanic evaluate the car. A legitimate dealership should have no problem with this request.
- Check for recalls: Never buy until you've checked the car's vehicle identification number (VIN) at the National Highway Traffic Safety Administration site (https://www.nhtsa.gov/recalls). Used-car sellers are not required to fix recalled cars before they sell them, even if they advertise that the cars are "certified" or "inspected." But they must disclose that they have not carried out repairs associated with a recall. If you buy a model that's under recall, make sure you promptly take care of any serious problem.
- Watch out for salvage titles: If the vehicle history report says "salvage title," be prepared to further probe the car's roadworthiness. A salvage title means that an insurance company declared the car a total loss and a body shop has subsequently repaired it.
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This story was provided to The Associated Press by the automotive website Edmunds. Ron Montoya is a senior consumer advice editor at Edmunds. Matt Jones is a senior consumer advice editor at Edmunds.
Published: Fri, Jul 21, 2017
