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Where to Buy Pre-owned Vehicles – An Introduction to the Different Sources of Used Cars

Posted on February 14th, 2014

Phoenix 10Planning to buy a used car but don’t know where to buy? You have a number of options here in Phoenix. Learn about the different used-car sources available to you before you start shopping.


New-car dealerships

Despite the name, these dealers also have a pre-owned inventory. Among the used vehicles they sell are the certified pre-owned (CPO) variety. CPO vehicles are used low-mileage vehicles that were reconditioned to automaker standards and are sold with a warranty. These are generally in better condition than non-certified used vehicles. New-car dealerships that sell CPO autos usually have its own service department that did the reconditioning and will do future repairs covered by the warranty.


Independent used-car lots

Unlike new-car dealerships, these used-car lots are not affiliated with the automakers. If they offer warranties, the repairs will be done by local garages they partner with. The inventory in these lots usually come from auctions and private party sales. Cars are bought at wholesale prices, transported to the lot, and then refurbished.

Independent used-car dealers come in many forms: while some look similar to new-car dealerships, others consist of just a piece of land for car storage and a trailer for an office. There are four types of independent used-car lots. These are the following:


Used-car superstores

This source of used cars is called a superstore for a reason—it has a huge inventory of used vehicles. Among all types of independent used-car lots, superstores have the biggest selection of automobiles. One such company is CarMax, one of the well-known used-car retailers in the country. Used-car superstores like CarMax typically offer longer warranties as well as no-haggle pricing.


Buy Here Pay Here dealers

This type of independent used-car dealer is given such a name because the dealer finances the purchase and the buyer is required to give car payments in person. Requiring the buyer to pay in person is the dealer’s strategy to make repossession easier: in the event the owner misses a payment and he/she visits the lot to finally pay, the car can be taken. Buy Here Pay Here lots are very strict when it comes to repayment schedules. One missed payment can mean immediate repossession.

This source of used cars is most notorious not only because of the aforementioned practice but also because of exorbitant rates. Owners of Buy Here Pay Here lots justify the rates, which are often twice or triple the average auto loan rate, by saying that they take on more risk by lending to the least creditworthy of borrowers.


Specialty used-car lots

This type of used car lot caters to a specific type of car buyer and the inventory reflects the particular taste and preference of its target market. The dealer may only sell vintage or classic automobiles, luxury cars or vehicles of a particular brand or type.


Consignment used-car lots

A consignment used-car dealer finances the purchase but doesn’t sell autos for themselves. The dealer only serves as a middleman for the private seller and buyer. Consignment dealers are approached by individuals who want to sell their cars but don’t want to do the selling themselves. Because there is a middleman involved in the transaction, prices and interest rates are higher. As for the vehicle selection, it reflects the local lifestyle and economy since the sellers are often locals.

Photo credit: JOHN LLOYD/ Flickr/ CC BY 2.0

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