Buying used cars at dealers vs. alternatives?

I realize you're possibly taking chances with a private seller but what about reputable used car lots? I was looking at Saturns tonight online at a couple of used car lots and the prices were much better then what a couple of dealers quoted me today. It's tough to tell from conversations on a phone with a dealer and only looking at cars online as opposed to actually viewing/driving but in one case, it seemed like a similar car and mileage and type of car was only $6500 at the lot vs. a quote of $8000 at the dealer, although not all differences were quite that great. Both cars were slightly out of manufacturers warranty and I know the dealer may give a small satisfaction warranty but are there any compelling reasons to pay that much extra at a dealer?

BTW, great deals on Chevy Malibus that I saw online. I saw a '03 for $9500 and only like 32k miles and with a nice V6. Aren't these like $20k cars when new?

Depending on the car lot can detrmine the "quality" of the car. Main dealers generally keep the good trade in's for themselves. Those that are not up to their standards will be auctioned off and generally bought by the smaller car lots.

I would also invest the $20.00 and go to Carfax.com and get a vehicle history report on any used vehicle I was considering purchasing.

Mike

Many dealers have Carfax's with the car. We have one on all 600 used vehicles we have. You must sign it to prove it was shown to you and it's kept with the deal.

We keep all vehicles that don't have a problem and we are a very large dealership. Many if not most dealerships and when I say dealerships I mean franchises like, Ford, Chevy and so on do an inspection on the vehicle before selling it. It's mandatory for our extended warr. Company so it must be qualified. I mention this because we average spending over $300 per unit during the inspection. If the inspection turns up a lot of repairs we just wholesale the vehicle to a pot lot. This doesn't mean the small lots only have junk. We also wholesale many vehicles that have been through our inspection and are problem free cars other than they have been on the lot too long.

More times than not I will sell a vehicle cheaper than a private owner would sell it. The reason is: The most common reason an individual sells their own car is because they didn't think the dealer was giving them enough on trade-in even after they factored in the sales tax savings of trading verses buying out right. If the car was worth $10,000 on trade-in then they lost $675 in sales tax savings. This puts them in a $675 hole to start the sale. More times than not they think they car was undervalued during the appraisal by $2,000-$3,000. Here's where the problem starts. They think their car is worth $12,000 to $13,000 wholesale and worth $13,000 and $14,000 retail. They decide to pick the low end and settle on a min sell price of $12,000 to sell it quick. Problem is I am selling the same car for $11,500 and mine's been inspected. After a month or two they lower their price to $11,500 so they can match my advertised price. Another month goes by and they see the car has depreciated and to match my newer reduced price they drop down to $11,000 but they still have a tough time because their car isn't inspected and they can't provide financing. They finally sell it out of frustration for $10,675. They spent 3-4 months trying to sell it and who knows how much in ads and aggravation of no show buyers. This $10,675 is the same amount they would have realized when you include the tax savings back when the deal first started. We are normally tickled pink when a customer decides to sell his/her care himself or herself.

Check the ads. We mark our cars down for advertising. These cars sell quick so check the paper every day or call and ask your favorite dealership what day of the week their new ads come out. When you walk on a lot you generally get list prices. When you see an ad they will honor the discounted price.

Some great advice so far. I would just add that there are a couple more alternatives. One is that you can go to the wholesale car auctions yourself in many cases and buy a car that would otherwise go to one of the corner car lots. You have to know what you are looking for and you will be taking a chance on mechanical problems, but you may save money buying at the auction price vs. retail.

Another alternative is CarMax or maybe one of the rental fleet resale lots. You may not get the super-discounted clearance price that you might be lucky enough to find elsewhere, but you get a good inspected car at a very fair price (below Blue Book) with no hassles and no haggling at CarMax. I like that method of car buying.

eBay. See of there are any cars on eBay near enough to you that you can inspect in person, then if you like the car, bid! That's how we purchased my sisters Volvo. Even though we didn't meet reserve, we contacted the seller and he was willing to sell to us for a slightly higher price.

That way you can get the nice pricing of Wholesale lots, but you can inspect before hand.

We almost purchased, and had shipped cross country, a Saab. Since we would obviously be unable to inspect the car , I eMailed the seller and ask him if it would be alright to make our actual purchase of the car dependent on a full inspection, which we would pay for. He never contacted me and we never bid.

I just went through the same process when I bought my "new to me" Cadillac STS a few weeks ago. ( Pictures and Info here. ) I looked at private party cars, but ended up buying from a Cadillac dealer.

One big advantage a dealer can offer, that I recommend you strongly consider, is the "Certified Pre-Owned", or "CPO" program. This program is only offered by the franchised new car dealers on their used cars of the same make. (i.e. a Cadillac dealer is the only one that can offer a "Certified Pre-Owned" Cadillac). A CPO car will cost more, but they have been through an extensive inspection (which the dealer should provide you with the report and the repair order for any corrective work done). My car had brand new tires and brake pads installed as part of CPO. The best part is that the FULL, NO DEDUCTIBLE bumper-to-bumper warranty is in effect until 6 years, 100,000 miles from original in-service date! And this warranty is backed by GM, not some fly-by-nite warranty company (several have gone belly up, leaving warranty holders with worthless paper). How's that for no worries of being nickel and dimed!! With how complex these cars are, that's just huge peace of mind for me. Again, it does cost more (the salesman told me that Cadillac charges the dealer about $1,500 to CPO a car). But for me it was well worth it.

Additionally, a GM dealer should be willing to go into their GM online system and print you out the full history of the car you are considering. You can get the build sheet, and you can see if it was orginally a fleet or rental car (vs. private individual or a leasing co.) and what sort of warranty repairs were performed. I learned that my car was purchased brand new at retail, by a couple in their 60's who then traded it in on a newer Cadillac with only 34,000 miles on it. It sincerely looks BRAND NEW and I can see that the warranty work done on it has been only a few very minor glitches since new. Again, peace of mind.

Speak to the former owners of the car if you can, and if you can get (or see) their maintenance / oil change records, all the better. The prior owners of my car were happy to talk by phone and gave me a lot of comfort that the car truly was well cared for.

There are a fair number of low mileage cream puffs out there. If you are not in a big hurry, you'll find a nice car eventually. If you develop a relationship with a good salesman at a dealership he can steer you to a nice trade-in before it goes on the lot. Again, buying CPO from a dealer will cost a bit more, but will bring very significant risk reduction in your car.

Good luck, enjoy the hunt, and most importantly, enjoy your car when you find it!!

We got our at an auction, through a broker, at *significantly* lower market value (even after adding broker fees).

My advice,

Find a used early or mid nineties Mercedes with around 100k miles on it (mileage depends on your price range) and have it checked out thoroughly by a Merc mechanic. Buy it from a private party, preferably an old grandma or somesuch. You will have a rock solid car that should go another 100k miles with minimal maintenance, and another 100-300k after that if you are willing to replace components as they wear down.