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6 Different Types of Used Car Dealers

A closeup of a hand holding keys at a used car dealer is shown.

 

If you are interested in buying a used car, then the good news is that there are a lot of different used car sellers out there for you to choose from. The bad news is that there are a lot of different used car sellers out there for you to choose from, and they are not all equal. Before you make any purchase, it’s useful to look at the different sorts of used car dealers that are out there and see all the options available to you. Before you decide on a make or model that really meets your needs, consider what kind of seller is best for you.

Some of these are old-fashioned and pretty conventional, while others are more modern innovations that turn the car-buying experience on its head. If you’re looking for a simple answer on what sort of used car dealer you should choose, then you’re not really going to find it here. That really depends on what you’re looking for, what you need in terms of financing, and how you can find those things in one package.

What you will find here, however, is a guide on what you’ll see out there when you start looking at different options and where you can buy a used vehicle. Just remember that there are good and bad examples of all of these different types. So always use caution and remember: “buyer beware” – it’s up to you to look out for your own interests.

1 – New Car Dealership

While a dealership that has a connection to a particular manufacturer and sells brand new vehicles might not be the first type of used car dealer you think of, it’s worth keeping in mind. Most dealerships that focus on new cars these days also sell used or pre-owned vehicles on their lots. As you would expect, a lot of these used vehicles are from the same manufacturer that they specialize in for their new vehicles.

There are a few benefits of going with a new car dealership as you look at used vehicles. For one thing, they are likely to have certified pre-owned vehicles, which are inspected and under warranty from the manufacturer even though they are used. These used car dealers are also likely to have service people on-hand to help you with repairs or maintenance needs you may have in the future. Just keep in mind that you’re likely to pay the highest price for a used vehicle at this type of dealership, so it might not be your best option.

2 – Used Car Dealership

Independent used car dealers that have no direct connection to a particular manufacturer might be your first thought when looking for a used vehicle. These are dealerships that focus primarily on used vehicles and typically do not have any brand new models for sale. They might still emphasize one or two particular brands, however, and have service people who specialize in the types of vehicles that they sell.

You will probably pay less at these used car dealers than at lots that specialize in brand new vehicles, but you probably won’t find certified pre-owned models here. These dealerships might offer their own warranties which can help provide you with some protection for your purchase. You’ll probably find a larger selection of used vehicles here than at a new car seller too since that is all they offer.

The rear ends of two lines of sedans are shown in a used car dealer's lot.

3 – Used-Car Superstore

If selection is your primary concern, then a massive used-car superstore can be a great option. These are used car dealers that only sell used vehicles and focus on having the largest selection of them possible. They typically have very big lots that are packed full of used vehicles and can be found near just about any major city in the country.

You’ll often see these kinds of used car dealers located near state lines so that they can attract customers from multiple areas. While they may have the widest selection of any traditional dealership, they also tend to offer little in the way of service or support after the fact. Customer service at these kinds of dealerships can also be inconsistent since their focus is on making a sale rather than building a relationship with the community.

4 – BHPH Dealership

As you look at different used car dealers, watch for phrases like “Buy Here Pay Here” or “We finance” as these indicate a BHPH dealership. These dealerships offer financing themselves, acting as the lender for your vehicle, rather than going through a third-party lender like a bank. This makes these dealers very good options for anyone with little or poor credit, since approval is almost always guaranteed.

Interest rates on these loans are typically quite high, as is common for any kind of high-risk loan, and you may have limits on the kinds of vehicles you can choose from at these used car dealers. If you’re in need of such a loan, due to poor credit, however, then this might be your best choice for getting a vehicle right now. Otherwise, if your credit is good and you can qualify for better financing, then look elsewhere.

5 – Private Seller

Of course, buying a used vehicle from the current owner is always an option available to you. In the past, you were typically limited to only those sellers in your area, either with vehicles posted near you with signs, or who listed what they had to sell in a local trade magazine or newspaper. With the expansion of the internet over the last few decades, however, the number of private sellers you have available to you is larger than ever before.

Keep in mind that a private seller is different from any kind of business you might choose as a used car dealer. A private seller typically is not interested in any kind of financing plan and wants their full asking price for the vehicle up-front. You won’t get any kind of warranty or guarantee of performance and quality from a private seller, of course, so make sure you have a used vehicle inspected by a third-party mechanic before making a purchase.

6 – Online Retailer

Different, perhaps better, than a lot of other used car dealers out there are online retailers that specialize in selling used vehicles over the internet. While buying a car online might seem unusual or risky at first, it’s ultimately just like making any other purchase and should come as no surprise that online retailers have sprung up. Just like other used car dealers, however, not all online retailers are equal, and you should choose carefully.

A reputable online retailer will show off its inventory for you to look at and consider online before making any contact with them. Once you find something you like, they can bring the vehicle to your location at a selected date and time so you can see it for yourself in person. This is like going to a used car dealer to look at their inventory yourself, except the vehicle is brought to you rather than you going out of your way to see what they have. Retailers online typically offer similar financing programs as dealerships, but the specific options can vary between them.

Online used car dealers should provide you with the same kind of information about each vehicle as any other type of dealership. This can include a vehicle history report and information about the car’s electrical and mechanical systems. That way, you know exactly what the car has been through and you can make an informed decision before any type of purchase.

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