We’ve all heard horror stories about buying used cars, and some of you may have even had a bad used car experience yourself. However, new car prices are steadily increasing, making the used car market look ever more appealing. For those of you considering a trip to the used car dealership, the good news is that finding a trustworthy used car isn’t even that difficult. As long as you stick to the large, reputable dealerships and carefully consider any deal that seems too good to be true, you are virtually guaranteed to find a used car that you can count on for the long run.
Now that’s all advice you have probably heard before, so we thought we would go into a little more detail as to why you should avoid shopping at small used car lots or hunting for deals on craigslist. While both of those options might inherently seem risky to you, we have the facts to back up that gut feeling. When we’re done, you’ll know exactly what to avoid when shopping for your next used car.
The Truth About Small Used Car Lots
If you’ve ever wondered where the used car salesman stereotype comes from, it’s the small used car lots you’ll find on the side of the road. We’re not talking about the new car dealerships that sell used cars on the side or even the large used car dealerships that have hundreds of vehicles to choose from. We’re talking about the small lots with a dozen or two older used models and maybe one or two people on their staff. The ones that often have a dirt parking lot and that prefer you pay in cash.
These used car lots tend to be the dumping ground for cars that no other business wants to sell. Their collection is usually a combination of less than desirable vehicles picked up at auction and even older and higher mileage models that previous customers traded-in. Every used car dealership, large and small, gets some of their stock from previous customers – but they don’t all put everything they get in trade back out on the lot.
A large and reputable dealership will take in nearly anything as a trade-in to get you to buy one of their new (or lightly used) cars. However, every used car they take in will be given a thorough inspection and overhaul before they attempt to sell it – and not every car will pass that inspection. A top dealership isn’t going to sell a used car with over 200,000 miles on it and a bunch of questionable repairs. The tiny profit they would make isn’t worth the potential damage to their reputation. So they send it on down the line, and guess where it ends up? That’s right – at your small-time used car dealership seeking to make a quick buck.
Another thing to watch out for at small lots is the dreaded salvage title. If any used car dealership doesn’t offer you a free vehicle history report from CARFAX or another third-party provider, there is a good chance the car in question was salvaged. What does that mean? In short, the car was in an accident or other disaster, and the insurance company totaled it after calculating that the necessary repairs would cost more than the value of the car. However, instead of scrapping the car, someone fixed it up and got it a new title.
While it is theoretically possible to return a totaled car to roadworthy condition, the issue is that the insurance company totaled the vehicle for a reason. If the insurance company considered the fixes too expensive to be worth paying for, but now the car is being sold for under market value, how is the used car lot making money? The answer is that they likely cheaped out on the repairs, using substandard parts or only repairing the obvious damage so that it runs okay for a short test drive. In short, avoid anything that doesn’t come with a clean title.
Private Party Sales Come With Potential Risks
Let’s face it, we all love hunting down and snagging a great bargain. This is almost always the motivation behind shopping for a used car on classified ad sites like craigslist. We’ve all heard a buddy’s compelling story about finding that low mileage vintage Mustang in someone’s grandma’s garage. Unfortunately, that’s a unicorn: it’s not the norm.
What is typical? Uncomfortable haggling, questionable vehicle lineage, and a potentially unsafe test drive. Oddly, many private sellers overvalue their vehicles, a fact that debunks the notion that buying private will net you a great deal. Also, unless either the buyer or seller is familiar with the paperwork involved (e.g., bill of sale, receipt for money received, and properly handling the title), you could end up with a problem when it comes time to register the vehicle.
Another popular scam perpetrated via online classified sites is curbstoning. This is when professional vehicle flippers (a.k.a. unlicensed dealers) post ads posing as private sellers and push inventory that, frankly, no one else wants. It’s not uncommon for these sellers to list salvage title cars without disclosing prior damage and sell them casually curbside.
If you unknowingly buy a vehicle from a curbstoner, it’s likely you’ll end up with a lemon. These scammers intend to dump the vehicle, collect your money, and disappear. There is no recourse and no buyer protection, which means it’s up to you to screen sellers before committing to a private party purchase. The problem is, these sellers are skilled at high-pressure tactics, so unless you’re comfortable with confrontation, you may submit to the pressure just to escape the situation faster.
Bottom Line: The Latin term caveat emptor – let the buyer beware – applies to buying a car from a private party. You never know what you’re getting, and the odds of finding that unicorn low mileage, mint condition vintage pony car are slim to none, no matter how long you scroll the online classifieds.
Avoiding Pitfalls and Buying a Quality Used Car
Whenever we write about used car buying, our default is to recommend that you work with a large, licensed dealer. This decision eliminates the vast majority of the potential problems that arise from buying outside traditional channels. The entire transaction, from test driving and valuing a trade to securing financing, all happens under one roof and with the aid of qualified professionals.
For those concerned about high prices, take note: dealers are like any other business – they adapt their processes to accommodate demand and buyer needs. Gone are the days of slick, fast-talking sales guys trying to move inventory with the highest profit margin. Instead, dealers offer surprisingly aggressive pricing and a plethora of financing options.
If you insist on buying from a private party or a “seamless” online retailer, know that doing your due diligence is going to be more intense. You’ll need to insist on taking a test drive (and figure out how to do so safely, perhaps by bringing a friend), ask to see the title to verify the car isn’t a salvage title vehicle, and – in the case of a private party sale – verify the person selling the car is actually the titleholder.
We didn’t mention securing financing ahead of time from a bank or credit union, facilitating a cashier’s check or getting cash, and taking the time to have a mechanic thoroughly inspect the vehicle before signing on the (homemade) bill of sale’s signature line. That’s a lot of steps to remember, which begs the question: is it worth it? Your time is valuable. If it saves you a couple of hundred dollars, is it really worth it?
Make Sure to Shop Smart
Where you buy and who you buy from matters, especially in the early ownership days. A certified, licensed dealer will offer a clear path to resolution for any issues and also provide surprisingly competitive pricing. A quick google search will net plenty of disturbing stories about used car buying. Unfortunately, the repercussions of buying a lemon or trusting that a questionable seller is honestly portraying the vehicle’s condition can run into the thousands.
Next to your home, your vehicle is probably the most expensive product you’ll ever buy or own. It makes sense, then, to do your homework, and vetting the seller is a big factor. You can save time, money, and your sanity by trusting your business to a professional automotive dealer. It’s a shortcut to finding a high-quality vehicle at a fair price that you can enjoy and rely on for years.