The best places to find used cars

At the beginning of the COVID-19 pandemic, the automotive industry experienced significant disruption. Economic concerns and car shortages due to supply chain issues led consumers to opt for secondhand cars, eventually leading to a relatively volatile used car market. Despite that, used car sales have continued to climb, making it an attractive option for most Americans.

According to Consumer Affairs, used cars have dominated the auto market over the last decade, accounting for around three-fourths of annual U.S. vehicle sales. The significant price difference is one of this market's greatest driving forces. In the first quarter of 2024, the average price for a new vehicle was $46,992 and the average used vehicle price was $27,113*.

Dealerships are not all created equal, especially when looking for an inexpensive used vehicle.

Many car dealerships will take your old car as a trade-in when you buy a new or used vehicle from them. These trade-ins represent nearly 40% of used vehicles for sale at dealerships. They’ll also source used cars through wholesale car auctions. These vehicles can vary greatly in quality, including former lease vehicles, rental cars, refurbished total losses, or repossessions.

While dealerships offer a wide selection of used vehicles, they can also come with pitfalls. Disreputable salespeople may target low-income or otherwise vulnerable buyers with predatory sales tactics like:

• Using bait-and-switch methods

• Charging hidden or bogus fees

• Selling unneeded or duplicate warranties

• Lying about the car’s history or condition

• Pushing high-interest financing

New car dealerships often offer “newer” pre-owned cars, typically from the last few years. Prices may be higher than at independent used car dealerships, but the additional cost often includes added benefits such as:

• Consumer protection policies like three-day money-back guarantees and specified exchange periods

• Certified pre-owned (CPO) vehicles with manufacturer warranties

• More accountability from franchise and car manufacturers

• In-house service centers for tune ups and repairs

Independent used car dealerships typically sell a wider range of vehicles in terms of price and age. If you’re looking for something specific—like an older pickup or SUV—you may have more luck at an independent auto dealer.

You can often find several used car lots within driving distance of your home. This gives you the opportunity to shop around, research the seller, read customer reviews, and negotiate a price that works for you.

Private sellers are a popular option when looking for a cheap car. You can often find some great deals—and you may have significant bargaining power. Here are some tips when searching for used cars from private sellers:

• See what's available in your area by comparing Craigslist, eBay, and Facebook Marketplace car listings.

• Search popular used-car websites—like cars.com and Autotrader—for more information on the cars you're interested in. Many of these sites feature certified pre-owned vehicles from private sellers and dealers.

• Check the classifieds section in your local newspaper. These ads generally include basic information so you can follow up with any questions and book a viewing.

• Ask friends and family if they're selling any vehicles—they may be relying on word of mouth to sell. Post on your social networks that you're looking for a used car.

Buying a car from a private seller is different than buying from a dealership. While you still want to set a budget and research the types of cars you’re interested in, you’ll be engaging in more personal scheduling and negotiating. You’ll also need to coordinate exchanging paperwork and payment, which may require more planning if you’re getting financing through a bank.

Be aware of potential risks when buying a used vehicle from a private seller:

• Prioritize safety. Meet the private seller in a public place, preferably with a car-savvy friend. This step helps add a layer of security and makes it easier to spot if something seems off during the inspection and test drive.

• Use caution when exchanging money. Never give out your personal banking information, whether it’s in person or online. If you’re looking for a secure payment method, you can make use of for-sale-by-owner marketplaces like Private Seller Exchange.

• Be skeptical of deals that seem too good to be true. Some listings—especially on platforms like Facebook Marketplace—may advertise unrealistically low prices to entice buyers. These popular new scams often try to collect digital payments for cars that may not exist.

• Verify vehicle history reports. Ensure you have the most up-to-date report and compare its details to the actual vehicle during your inspection to avoid vehicle history report scams.

You can obtain an auto loan for a private sale, but planning is essential. Speak with your bank or credit union about potential loan or financing options. Account for all fees and interest rates to stay within your budget. If a seller is motivated to sell quickly to secure a deposit for their next car, consider negotiating for a slightly lower price to help offset any financing costs.

Buying a car has traditionally been an in-person experience, but there are plenty of online car-buying opportunities today. In 2020, the global online car-buying market was valued at $237.93 billion. By 2030, it's projected to reach $722.79 billion*.

Interest in online car shopping is increasing. While fewer than 3% of consumers have purchased a vehicle online, 29% express a preference for an online-only buying experience for their next purchase. In response, 39% of car dealers now offer the ability to complete the entire buying process online*.

Currently, some of the most popular platforms for buying or selling used cars include:

• CarMax

• Carvana

• Auto1

Although many buyers complete this process on computers and laptops, a significant portion (23%) now use mobile apps to purchase cars. For example, the CarMax app offers tools designed for used car shoppers, including the ability to browse inventory and sell vehicles directly through the app.

Like dealerships, many established online retailers offer financing and warranties. Some also offer a test period during which you may be able to return the vehicle under specific conditions. Look for these policies when buying a used car online to help ensure your peace of mind.

Keep in mind that online retailers may charge more than private sellers, and additional transport fees could apply. Research and compare costs across all your options to make an informed decision.

Dairyland^®, a brand of the Sentry Insurance Group, can tailor insurance coverages to fit your needs and budget. Whether you're insuring your first used car or switching vehicles, we’ll guide you through the process. Contact us today to explore your options.