Where's the Best Place To Buy a Used Car?
We Rank the Most Common Outlets for Used Car Purchases
You have options when deciding where to purchase a used vehicle. Is buying from a private party better than a certified pre-owned dealership? Would you ever hit a used car lot before CarMax? We've noted the most common outlets for used car purchases, ranking each venue's car-buying criteria on a scale from 1 (worst) to 5 (best).
These rankings can be used as a quick reference guide to point you in the right direction when buying a used car. Each used car resource has its strengths and weaknesses, so depending on your priority (price? selection? warranty?), several outlets may fit your needs.
An independent dealer chain with 100 stores around the country, CarMax has emerged in recent years as one of the best alternatives to buying a certified pre-owned car at a dealership. CarMax puts its vehicles through a rigorous testing process, and according to the company's Web site, fewer than 50 percent of the cars it receives are eligible to be sold at its dealers. Those that aren't up to its standards are sold at auctions.
Buying from CarMax is a hassle-free process. All of its vehicles prices are fixed (non-negotiable) and its sales staff is paid on a flat-commission basis (except in California). So whether they sell you a BMW or a Ford, they'll get paid the same. CarMax spokesman, Chris Wilmore, says this pay system allows salespeople to focus on helping customers find a car that best fits their needs.
If you bring a trade-in vehicle, they'll offer you a fixed price on that, too. All CarMax vehicles come with a 30-day limited warranty (60 days if you live in Connecticut). The company also offers a five-day money-back guarantee in case you change your mind about the vehicle you choose. Its selection offers a great variety and can be researched online. If you find a car you like at another branch, you can arrange to have it shipped to your location for an additional fee.
Buying Experience: 4
Quality of Car/Inspection: 4
CPO — Certified Pre-Owned
Buying a certified pre-owned (CPO) car is a great way to eliminate doubts about the condition of the vehicle. Sold from a dealership of the same brand, CPO vehicles go through extensive inspections and are reconditioned with factory parts. They also come with the best warranties. General Motors, for example, offers a one-year/12,000-mile bumper-to-bumper warranty and a five-year/100,000-mile powertrain warranty on all its CPO cars. Our certified program comparison tool can help you see the differences in coverage.
This coverage and peace of mind comes at a price, however, as CPO cars are typically the most expensive used car option. Our data indicates that consumers will pay on average a $1,900 premium for a 2006 CPO vehicle. If you want a luxury CPO vehicle, expect to pay a premium of almost $3,000 for a 2006 model. One alternative might be to find a private-party vehicle that is new enough to still be under warranty.
Buying Experience: 4
Quality of Car/Inspection: 5
When a person buys a new car at a dealer, they don't always trade in a vehicle of the same brand (e.g., a used Toyota Camry at a Honda dealership). These cars are still sold at that dealership, but cannot be considered certified. Vehicles of the brand sold by the dealer that are too old to certify are also in this category. These vehicles don't typically get the same attention that a CPO car would receive, but are still given a reasonable inspection, and any major issues are usually fixed before they are put up for sale. Since dealerships accept trade-ins on a daily basis, you'll have an easy time finding these vehicles at a dealer.
Buying Experience: 2
Quality of Car/Inspection: 3
An independent dealership isn't associated with any particular automaker. The inspection process may not be as comprehensive, and can vary wildly from one place to another. These dealers are typically smaller, and their selection will be limited. You're more likely to find older, less expensive vehicles.
Some independent used car lots may specialize in a certain type of car, which can make your selection process easier if you have that one in mind. For example, there is an independent dealer near our office that only sells BMWs and another that specializes in classic cars.
Independent dealerships can be useful if you're trying to find a really inexpensive vehicle. If you have poor credit, you'll have a better chance of getting a vehicle financed at these dealerships. But keep in mind that their interest rates may not be as favorable. Use your best judgment if you do business with independent dealers and make sure to do a Carfax check. The risk of fraudulent activity (odometer rollback, lemons and title-washed cars) runs higher at these dealers.
Buying Experience: 1
Quality of Car/Inspection: 1
Buying a car through a private party (vehicles sold by their owners) offers the most varied selection and the opportunity to get the best price. Negotiating with a private seller is much easier than with a salesman at a dealership. There are numerous ways to find private-party vehicles. Some of the more popular places to go on the Web are Auto Trader, Craigslist and eBay.
Unless a vehicle you purchase from a private party is still under warranty, you'll be buying this car "as-is." This is a riskier move, but if you bring a mechanic with you or get the car inspected, you can offset this risk. With private-party sales, you'll find that the prices are lower across the board. Our pricing analysts calculate that a used vehicle will typically cost about 11 percent more at a dealership. A private seller is also easier to negotiate with, and less likely to inflate the price.
Buying Experience: 3
Quality of Car/Inspection: 1