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Where's the Best Place To Buy a Used Car?

A Quick Reference Guide to Common Used Car Outlets


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You have a number of options when deciding where to purchase a used car. Is buying from a private party better than buying from 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 and listed the pros and cons of each.

Use this list 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.

CarMax
CarMax is a used-car retailer that has more than 100 stores around the country. It has emerged as one of the better 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, less than 50 percent of the cars it receives are eligible to be sold at its stores. Those that aren't up to its standards are sold at auctions.

Buying from CarMax is a hassle-free process. All of its vehicle prices are fixed (non-negotiable) and its salespeople are paid on a flat-commission basis (except in California). That means that 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 vehicle to sell, CarMax will offer you a fixed price on that, too. All CarMax vehicles come with a 30-day limited warranty (60 days in Connecticut). The company also offers a five-day money-back guarantee in case you change your mind about the vehicle you choose. There are a lot of cars to choose from, and they can be researched online. If you find a car you like at another branch, you can arrange to have it shipped to a location near you for an additional fee.

Certified Pre-Owned at a Dealership
Buying a certified pre-owned (CPO) car is a convenient way to find a used car in excellent condition. Sold from dealerships 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. But just because they come with warranties doesn't mean they are exactly like new cars. Read "Certified Pre-Owned Cars: A Reality Check" to see what expectations you should have for a CPO car.

The coverage and convenience of a CPO car comes at a price. CPO cars are typically the most expensive used-car option. Edmunds.com data indicates that consumers will pay on average a 5.8 percent premium for a 3-year-old CPO vehicle. This adds up to a $1,160 premium on a $20,000 vehicle. If you want a luxury CPO vehicle, expect that premium to jump up a few percentage points. One alternative might be to find a private-party vehicle that is new enough to still be under warranty.

Dealer Non-Certified at a Dealership
When shoppers buy new cars at a dealership, they don't always trade in a vehicle of the same brand (e.g., they trade in a Toyota Camry at a Honda dealership). The dealership can still sell these cars, but they cannot be considered for the certified program. Dealerships also sell their own brand's used vehicles that are too old to certify. These two kinds of 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 the car is 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.

Independent Dealership
An independent dealership isn't associated with any particular automaker. The selection and size can vary wildly, depending on whether you're shopping at a corner lot or a full-size dealership with a service department. Since the quality also can vary from one place to another, we recommend you run Google and Yelp searches and see what kind of reviews that dealer has. The Better Business Bureau is also a good resource.

Independent dealerships are 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.

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 the Edmunds offices in Santa Monica, California, that only sells BMWs. Another specializes in classic cars.

Use your best judgment if you do business with independent dealers and make sure you run a vehicle history report for a vehicle you are seriously considering. We also recommend that you read our "Field Guide to Independent Used-Car Lots."

Private Party
Shopping for a car in the private-party market offers a varied selection and the opportunity to get the best price, though you sacrifice the convenience of seeing many cars side by side, as you do at dealer lots. Negotiating with a private-party seller is usually much easier than negotiating with a salesman at a dealership, since most car owners haven't received formal sales training. 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 the car "as-is." This is a riskier move, but if you bring a mechanic with you or get the car inspected before you buy it, 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 12 percent more at a dealership than it would cost if sold by a private party.

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