Blog Used Car Dealerships That Are Trustworthy (and How to Find Them)

Used Car Dealerships That Are Trustworthy (and How to Find Them)

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Honest used car dealership do exist, here’s how to find them and what to watch out for. If you’re starting to shop for a used car you’re probably wondering about how to find used car dealerships that are trustworthy.  Trust is hard to come by nowadays. The public relations company Edelman has a  “trust barometer” that they use to measure our trust in government, business and media companies. In 2018 the barometer fell nine points, which broke a record. It can be hard to trust anybody in business–especially the used car business. The used car business has a reputation of sometimes using sketchy ways of doing business including selling bad cars, charging high finance rates, and employing high pressure sales pitches. It’s not impossible to buy a pre-owned car without losing your shirt but you must be on guard and well informed.

How do used car dealerships work?

Used car dealerships work by buying used cars from auctions or wholesalers and reselling them for more money. They also take customer trade-ins and resell them. Used car dealerships advertise the cars they are selling on their website and in printed publications. Some used cars are sold as certified which usually means they’ve been inspected and repaired before being put back on the market. Keep in mind that “specials” in the used car business on an Acura, Chrysler, Dodge or any other make are not the same thing as certified. Used car dealers use guides to figure out what they will pay for a used car and how much to sell them for. You can use these same guides to find out if the price they are charging is fair and if the dealer is being trustworthy. Once you know how used car dealerships work, it will be easier to find out if they are trustworthy. These tips can be used while you are shopping for Kia, Nissan, or a Cadillac.

How used car dealerships make money

Used car dealerships make money by selling vehicles for more than they paid for them, financing deals, extended warranties, and service contracts. These are the same ways new car dealers make money. The big difference is there is less transparency about knowing how much the dealer paid for the car you’re interested in. Some used car dealers may tell you how much they paid while others will not. Like a new car dealer, a used car dealer may also offer to finance the car. The dealer makes money on financing a car by getting a lower interest rate on the loan than the one they are offering you. You can also get your own loan from a bank or credit union, which may give you a better rate. Be careful about financing a used car through a dealer, do your homework and get a quote from another lender before signing the papers. The used car dealer may also offer to sell you an extended warranty. Warranties can come from the manufacturer, meaning Ford, Chevrolet, Chrysler, Toyota or any other carmaker. You can also buy an extended warranty through the dealer or a third party. If the cost of the extended warranty is higher than any repairs the manufacturer, dealer, or third party make money. Extended warranties are typically designed for the seller to make money by not covering expensive repairs or damage that happens through “normal wear and tear.” However a strong warranty, especially if it’s backed by a carmaker, including GMC, BMW, Lexus, etc., can save you money and time spent on the sale in the long run. The dealer may also offer to sell you a service contract that works very similar to an extended warranty. Service contracts typically cover normal maintenance like oil changes. Figuring out how used car dealerships make money can help you find a used car dealership that is trustworthy. Whether your next car is a Lincoln, Buick or Subaru, the bottom line is used car dealerships make money using many of the same methods used by new car dealers.

How to deal with used car dealerships

The best way to deal with used car dealerships is to do your homework about the car you want to buy. You should know the approximate market value of the car you want to buy and what similar models sell for. It may help to start things off with a phone call to see how you are treated. You can also drive by the lot for a grand view of the sales center. If you have a car to trade in, you should know how much it’s worth. You can find this out online by doing an internet search on the year, make, and model of the car you may be trading in. You usually do better selling the car on your own. You will typically see a set of numbers showing a wholesale price range and a retail price range for the car. A dealer will offer you something in the wholesale range, depending on condition. The dealer will then try to resell the car for somewhere in the retail range. You can also talk to your bank or credit union before you visit the dealer and find out if they offer loans on used cars. Find out what rate they charge, how long the loan lasts and if they require an inspection of the car. The dealer may also offer loans on used cars so you should have something to compare it to. Used car dealers have a limited inventory. They have to sell what is on the lot. They cannot order a specific model car from the manufacturer and it is harder for them to find a specific used car that you are interested in on another dealer’s lot. They want to sell you what they have on the lot today. You should have a basic idea of what kind of a car you want to buy when you visit the used car dealership. Are you looking at cars or trucks? Do you want an SUV, sedan, crossover, compact, sub compact, coupe, luxury or a sports car? Do you want to be a domestic car or something imported? Do you like Dodge, Honda, Mercedes, Volkswagen, Hyundai, or Audi? How about fuel? Are you interested in gasoline, diesel, electric, or a hybrid? Before you start shopping decide if the color of the car and body style are important.  Are you looking for something with low mileage? Do you need easy credit terms? What kind of a payment are you comfortable making? These are important questions because the dealer is going to try and talk you into buying a car they have in stock. Don’t let yourself be pressured into buying something you don’t really want. Be prepared to walk away if you are feeling uncomfortable. Here are some other things to check out when trying to find used car dealerships that are trustworthy.

  1. Quality of Inventory – Take a look at the cars on the lot. Do they look fairly new and in good condition? If the cars look old and in poor shape you may want to shop elsewhere.
  2. Repair Shop – Does the used car dealership have its own shop? If the dealer has their own shop, they are set up to do their own inspections for cars they are trading in. They should also be able to take care of any warranty repair issues easily.
  3. Warranty – Does the used car dealership offer a standard warranty? Some states require dealers to offer 30-day warranties on used cars. A 60, 90-day or a one-year warranty is way better.
  4. Inspections – Getting an inspection before buying a used car is very important. If the dealer you are talking to doesn’t want the car to be inspected before you buy it, that’s a danger sign.
  5. Reviews – It doesn’t hurt to check the dealer Yelp or the local Better Business Bureau, the Chamber of Commerce, and social media. Are there positive reviews or a lot of complaints against the dealer? These are warning signs.

Knowing how to deal with used car dealers will help you find one that’s trustworthy. To get a history on a particular car you are interested in you can check CARFAX or AutoCheck.

Where do used car dealerships buy cars?

Used car dealerships buy their cars from car auctions, wholesalers, other dealers and by taking cars that are traded in. Some auto auctions are only for car dealers but others are open to the public.

Car wholesalers buy cars at auctions and from dealers and then resell them to other dealers, or resell them at auctions. Cars get traded in to used car dealerships by customers looking for something newer with less mileage or for a model that fits their needs better. When thinking about where used car dealerships buy their cars, keep in mind that none of the cars are in perfect condition. They have all been sold or traded by somebody else. They may be old, prone to problems of have high mileage on them, which makes them more likely to break down. Because of that it’s important to deal with a used car dealership that is trustworthy.

What fees do used car dealerships charge?

Fees that a used car dealership charge may include title, registration, and sales tax. The dealer may also want to charge you fees for documentation and GAP insurance if the vehicle is leased. Watch out for extra fees like destination charges, delivery fees, advertising charges, and extended warranties. Fees like title, tax, and registration are required by the state. There is no way around them but other fees can be negotiated.  Ask the dealer to give you a listing of fees before sitting down to sign all the paperwork so you won’t feel pressured. Understanding what fees are charged by used car dealerships can help you find a used car dealership that is trustworthy.

Who are the most honest used car dealerships?

To find the most honest used car dealerships you should do some research by looking online and by talking to other people who have bought used cars.  Do a search on AutoGravity based on where you live and what kind of car you are looking for. There are numerous online rating services to check out including Yelp and the used car dealership’s social media accounts. Most new car dealerships also sell used cars. A new car dealership has better access to newer used cars that are being traded in. They also have their own shops, finance people, and a staff of mechanics.

How many used car dealerships are there in the US?

IBIS is a business intelligence company with offices in the U.S., Asia and Europe. According to the IBIS World Report, there were 139,278 used car dealerships in the U.S. in 2017