An Introduction to Used Car Dealers

(Source: Eric Morris)

Used car dealers are the largest source of used cars nationwide since they offer a lot of variety and choices, offer financing deals, and even throw in maintenance services including road-side assistance for free. Aside from all these, it is deemed better to buy from registered car dealers and is even safer for consumers compared to buying from private dealers.

Registered Car Dealers

It is important to check the credibility of used car dealers before being sweet-talked into buying a used car that you do not even need. Registered car dealers may be checked for records of bad deals in consumer welfare government offices. Also, registered car dealers offer extended dealer's warranty which is greatly beneficial to the buyer. The extended warranty stretches long after you have acquired the vehicle. They also protect their business and the consumer by providing title guaranteed against stolen vehicles since the government implements strict laws against the sale of stolen vehicles. Larger used car dealers may also offer financial assistance at low interests and varying time periods. This makes car payments easier on the budget-savvy buyers. Trading in your old car for a newer vehicle is also an option that car dealerships may propose. When planning to sell your car, this may be one of your best options since it takes away the worry of looking for perspective buyers for your car. Further, a dealer's compensation fund that protects consumers from defective vehicles is also provided by car dealerships. Consumers who buy vehicles from registered dealers are also protected by the government through numerous consumer protection and business acts.

Despite all these, consumers must still be aware at the risks of buying used cars from even the most reputable car dealer. Inevitably, used car dealerships are not charitable institutions but in the competitive business of selling used cars, used car dealers are more interested in gaining more satisfied customers rather than earning large profits. Nothing sells better than referrals made by satisfied customers. Before selling a pre-owned car, car dealerships first thoroughly inspect the vehicle then if feasible, repair the car and make it fit to be sold.

More on Used Car Dealers

How Car Dealerships Price their Used Cars

A franchise dealer has a pretty simple model for the way they price used cars. They just pick a percentage over what the car has been estimated to be worth on the wholesale market. That wholesale market value is determined by the cars age, the cars make and model as well as options, the mileage and overall condition of the car.

A dealer determines how much markup they will use on used car based on these factors. The first thing they take into consideration is the price they paid to get the car. They might have taken the car as a trade against buying a new car, which means they did not pay any cash for it, or they bought the car from a private seller, an auction or wholesaler. The second thing they must take into consideration is the cost that they have paid for repairs and reconditioning the car needed. They then finally have to tack on more to the price so that they can make money. This is a business they are running after all.

The markup that a dealer puts on will be influenced by all these factors. As you can see it is clearly more than just one thing that affects how much people have to pay for a used car. If you want to be an educated buyer of used cars your objective should be to find out the cars wholesale price and then how much the dealer has put into the car to get it ready. This will tell you how to plan your negotiations since a dealer is almost never going to go lower than those two things.

When shopping for used cars, everyone knows that you need to bargain. It is for this reason that most dealerships include a "negotiation pad" in what they use as their markups. Many people who come to the used car lots will not buy a car unless they feel they are getting a deal. If dealerships marked cars with the prices they actually wanted to sell them for then people would come in and try and haggle below that level. If they put it at say 1000 above, they can easily let people bargain them down that 1000 and still get a price they feel is fair. If people don't bother to bargain them down then they have made an extra 1000. This is why it is important to know how much the dealership has put into the car. Once you know that, you know how much you can try and bargain off and what is the absolute minimum they will go to.

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