There are several options to get the best buy on a used car. Rarely do they involve just getting "lucky". All of them are going to take a little extra work on your part as a buyer. But of course, the payoff in savings is usually well worth it.
So, let's get right into it and you can pick the option(s) that's best for you.
What Is A "Best Buy" Price, Anyway?
Okay, this is the starting point. You first have to have an understanding of what is a "cheap price" to begin with.
Cars are not like clothing or other products that are retail valued at twice their wholesale cost. The average used car profit at a Dealer is right around $2,000. You can probably add another $1,000 to this figure by eliminating avoidable Dealer costs such as sales commissions, advertising costs, rent and other Dealer overhead items.
This is accomplished, of course, by not buying your car from a Dealer.
The wholesale price is a car's trade-in value. That's what cars sell for at Dealer-Only car auctions. For a consumer, this would be a "great price" for a car. In my opinion, getting this price would make a car purchase "cheap".
Getting even a better price than trade-in would be an "outstanding" buy. This also is possible, but again, it will take some work and patience.
So, a somewhat simplistic approach would be to target roughly $3,000 off of the going retail price. However, for a more detailed explanation of trade-in and wholesale car values, please see this article on used car cash values.
The Best Alternatives For Finding Cheap Cars:
Like us on our Facebook page for more car shopping news, insights and fun.
Public Car Auctions:
This is probably the best outlet for getting a car below it's trade-in value, and often far below. There really are "cheap cars" at auctions. And anyone can go ... no license is required.
These are bank repo, government and police seized car auctions and there are definitely some deals to be had. While learning "how" to buy a car at an auction isn't difficult, actually locating them in your area can be. Also, finding the exact car you want may take more than going to a single auction.
While many cars at these auctions are high mileage vehicles, some in need of repair, I'd estimate that 15% to 20% are of the low-mileage, late-model variety that were simply brand new cars a few months ago. And due to the current financial crisis, this is a fast growing segment. There's some real bargains here.
To learn more, you can take a look at this more extensive article on using and locating open-to-the-public car auctions.
Next, there are Car Brokers like us. But you should understand what we are capable of and what are our limitations.
Most of us purchase vehicles primarily at Dealer-Only auctions. This means we pay the going "trade-in value" for a car. And then, because brokers should have much lower costs than a traditional Dealership, they can then put a small markup on the car.
The result for the consumer, depending on the actual price paid by the broker, will be a price very near the actual trade-in value for the car.
Using a broker, however, is actually an "easy" method for the car buyer. It takes very little effort because the broker does the work. But if you do the work, there are even better deals.
Cars Sold By Owner:
This is another option where some patient shopping should pay dividends. Search for your car at websites such as AutoTrader.com and Cars.com. Also check your local newspaper classifieds section.
Individuals know they can't sell their cars at the same prices as Dealers because there are no services provided and there is very little recourse available for buyers. At the same time, individuals also don't have any Dealership costs to markup for.
And with good negotiating and persistent shopping, you can find those sellers who just have to sell for financial reasons and a great deal is the outcome.
Know The "Inside" Techniques:
Have you seen this yet? It's about an Auto Dealer Executive (a Dealership General Manager, actually) who quit the industry and then "broke the code of silence" by spilling all the inside tricks and techniques. If you're buying from a Dealership, this is strongly recommended for getting the cheapest price on either new or used cars.
But nomatter what source you use to get your car purchased at the wholesale price ... or better ... always be a smart, informed buyer. Always, and I mean ALWAYS, get the CarFax or AutoCheck History Report of the vehicle. And always have the vehicle mechanically inspected prior to purchase.
The bottom line: Getting a "cheap car" or the absolute "best buy" on a car is indeed within your control. You can try to get "lucky" by going through the usual car buying routine. But if you make the time and put in some extra effort, there are definitely some outstanding car savings out there.
Best of luck. And happy car hunting! - Josh