Where’s the Best Place to Buy Used Cars?

The best place to buy a used car — whether it’s a traditional car dealership, used-car website or private seller — depends on your priorities and needs. When you know the various options for buying a used car, along with the advantages and disadvantages of each, it can help you target those that are best for you.

Buying from a traditional used car dealership

If you want to browse a selection of used cars in person, take a test drive and negotiate price, a traditional car dealership may be a good option for you. You can get financing on site, although it’s always best to come with a preapproved auto loan for comparison. Also, the dealership will handle most of the paperwork for you.

On the downside, you can expect higher prices than you’ll find at other places and possible sales pressure from employees driven by quotas and commissions.

Before you visit a dealership, browse their online auto listings and read customer reviews. Also, be aware that different types of used-car dealerships exist, and one may be a better fit for you than another. Here’s a brief rundown:

Franchise dealerships

Franchise dealerships are affiliated with certain car manufacturers, and they sell both new and used vehicles. New cars in their inventory are limited to makes and models of the affiliated car maker, but used cars could be different brands, usually obtained from customer trade-ins. Franchise dealerships also sell certified pre-owned cars (CPO cars), which are used cars of that dealership’s brand. CPO cars have been inspected, reconditioned with factory parts and typically come with the best warranties, so they’re considered to be among the most reliable used cars.

Pros:

• If you have a specific make and model in mind, you’re likely to find a better selection at a franchise dealership.

• Franchise dealerships with CPO cars are an opportunity to buy a used car in like-new condition.

• This type of dealership usually has a larger network of lending partners to help you find a competitive rate on an auto loan.

Cons:

• If you’re looking for a range of makes and models, the used-car lot at a franchise dealership is less likely to offer that.

• Franchise dealers often have the expense of bigger showrooms and employee teams, which can result in higher car prices.

• If you buy a CPO car, expect it to have a higher price tag than a non-certified pre-owned car. 

Independent dealerships

Independent dealerships aren’t affiliated with a certain car manufacturer and are usually owned and operated locally. They can be a single location on a corner lot or a full-sized dealership with multiple locations around town.

Pros:

• Independent dealerships have a mix of makes and models, since they aren’t affiliated with a specific car manufacturer.

• Independent dealers usually don’t have as much overhead, so they’re able to sell used cars for less.

Cons:

• Smaller independent dealerships may have limited inventory. 

• Independent dealerships often have fewer financing connections and options, so you may be offered a higher loan rate than you could get elsewhere. 

National used car dealerships

National dealerships have many locations across multiple states. They have a big online presence, with car listings searchable by area and an ability to handle the sales process remotely.

One national car dealer is AutoNation, which has more than 300 locations in 20 states and more than 18,000 used vehicles, including CPO cars, listed for sale online. Another is CarMax with 200-plus stores nationwide and an inventory of more than 45,000 cars listed online. If you aren’t near a national dealer’s location, you can pay to have the car you buy shipped to your home.

Pros:

• National dealerships, compared to other types of dealerships, have the largest inventories and variety of makes and models.

• You can easily search their website listings and manage the entire buying process online. 

• National dealerships usually have no-haggle pricing.

• Cars purchased from national chains often come with a limited money-back guarantee and warranty. For example, CarMax allows you to return a car within 10 days of its purchase, and cars come with 90-day or 4,000-mile warranty.

Cons:

• If the car you find is located across the country, test driving can be difficult. You might be able to pay to have the vehicle sent to a nearby location for a test drive, with no obligation to buy.

• If you prefer negotiating on price, that isn’t likely to be an option.

• Money-back guarantees may not apply for cars delivered to customers out of state, so check the fine print.

Car rental agencies

Car rental companies update their fleet of vehicles every year or two, and many of those cars are sold by their sales divisions. Rental companies have a limited number of used-car dealerships, with available cars also listed on their websites.

Pros:

• Used rental cars usually sell for competitive prices.

• Rental cars have a strict maintenance schedule, which isn’t always the case for other used cars.

• Rental cars are often sold with an extended warranty.

Cons:

• Rental cars may have higher mileage or more wear and tear than other used cars.

• Inventory for used rental cars is limited, and you may not be able to find a specific make and model.

» MORE: Is buying a rental car a good idea?

Buying from online-only used-car websites

Many car-buying websites are operated by companies that don’t have their own car lots or showrooms. These sites differ in how they operate and obtain vehicles, so the best websites to buy used cars won’t be the same for everyone. Here are a few examples:

Online-only used car retailers

Online auto retailers, like Carvana, operate much like a dealership but without traditional dealer locations. They have their own inventory to sell, and they may list cars from dealership partners.

Pros:

• Online car retailers have a large inventory and variety of makes and models.

• The retailer can handle all or most of the car-buying process for you, including financing and title transfer/registration if allowed in your state.

• Cars purchased from online retailers usually come with a limited money-back guarantee and warranty. For example, Carvana provides a seven-day money-back guarantee (with a limit of 400 miles) and a warranty covering 100 days or 4,189 miles.

• Prices aren’t typically negotiable, so you can avoid the stress of haggling.

Cons:

• You may have to pay to have a car shipped or delivered to your home or other agreed location. 

• You probably won’t be able to test drive a car until it’s delivered.

• If you like to negotiate on price, that may not be an option.

Online auto marketplaces

Websites like Autotrader and Cars.com aggregate listings for used cars from dealerships and private sellers. Online aggregators may include listings from sites like CarMax and Carvana.

Pros:

• Auto marketplaces provide an easy way to view cars for sale without having to visit multiple websites.

• Because they pull listings from many sources, these sites can have millions of listings from across the country.

• Aggregator sites enable you to connect directly with a seller to ask questions or set up a test drive. An identity check is done for private sellers.

Cons:

• Since you’re not purchasing from the aggregator, many details — like whether you can negotiate or receive a warranty — will depend on the seller.

• If the car you find isn’t located nearby, it may be difficult to test drive it.

• You may have to pay to have a car shipped or delivered to you.

Buying a car from a private seller

Also commonly referred to as a private-party sale, individual car owners are another source for buying a used car. “Cars for sale by owner” can be found through websites like Facebook Marketplace and Craigslist.

Pros:

• When you buy a car from a private party, you’ll usually get a better price than you would at a dealership.

• Negotiating with a private-party seller may be easier than negotiating with a trained salesperson at a dealership.

• If you’re looking for an exact make and model, you may be able to cast a wide net online and find it for sale by owner.

• Private sellers won’t push expensive add-ons, like paint protection packages.

Cons:

• If you need financing, there are fewer lenders that offer private-party auto loans, and the interest rates are usually higher than other types of auto loans.

• Since you’ll be responsible for paperwork typically handled by a dealership, buying from a private party is more time-consuming.

• You’ll need to be cautious to avoid potential scammers.

• Your car won’t have warranty coverage, unless it’s still covered under the original manufacturer’s warranty.

Auto auctions are another place to buy a used car

Auto-auction businesses provide many used cars to dealerships that then resell them, but some auctions are public so anyone can participate. Auctions may be in person, online or a combination of both.

Pros:

• Buying a used car at an auction can be a way to get a good deal.

• Auctions usually have a wide variety of used cars.

• If the auction is nearby, you should be able to inspect the car before bidding.

Cons:

• Fast-paced bidding can run prices up and cause you to overspend.

• Auctions usually sell cars “as-is,” so you have no recourse if the car is defective and in need of costly repairs.

• You typically can’t test drive the vehicle before buying it.

How to find the best place to buy a used car

Ultimately, the best place to buy a used car is wherever you can find the best deal on a reliable vehicle. You can improve your chance of doing that if you follow these basic tips before buying a used car:

• Look at the car’s vehicle history report, such as Carfax or AutoCheck, for information about the car’s past, such as major accidents, maintenance and title information. Most dealerships offer buyers a free vehicle history report, but you may have to pay for one yourself if you buy from an individual.

• Enter the car’s vehicle identification number (VIN) on the National Highway Traffic Safety Administration website to find its recall history and see if any problems still need to be addressed.

• Research the car’s current market value using online pricing guides like Kelley Blue Book or the National Automobile Dealers Association to ensure it’s listed at a fair price. If you’ll be trading in a car, research the trade-in amount you should expect too.

• Test drive the car to see how it accelerates, handles and drives. Driving a car can alert you to potential problems that might not be evident any other way. Test driving is important, so if it isn’t an option at all — for example, if you buy at an auto auction — it could be a reason not to buy a car that way.