Tips on Buying a Used Car From a Dealership

Buying a used car from a dealership has its pros and cons if comparing to a private sale purchase. While the dealer can warranty your vehicle, provide financing and offer aftermarket items, everything for sale at a dealership is marked up in price. Ask the right questions and research before you purchase--doing so can put more money in your pocket and less in the dealership's.

Vehicle History Check

Before you agree to price or purchase, ask to see a vehicle history report for the car you're interested in. When buying from a private seller, it's usually a safe bet that the seller was the registered owner of the vehicle and has the title in hand. Dealers have access to auction and rental inventory, which include repossessions, previous rentals or vehicles from other states. If you find out that the vehicle was a rental, you have more room and better cause for negotiations. In fact, if you were to contact a rental agency to purchase a used rental directly, you could probably purchase the vehicle for what the dealer paid. Always ask for a vehicle history report, which should be provided to you for free at a dealership. If the vehicle wasn't traded in by an individual, the dealer probably bought it for less than normal wholesale cost.

Used Car Pricing

Most cars on a dealer lot are marked up, although some are not. Always research the price of a vehicle you intend to buy and never pay suggested retail price. While many dealers offer to show you values of a vehicle so that you can judge pricing yourself, try to leave the dealership to do it on your own. Some dealers put in extra options to increase the retail value, or change the zip code for the same reason. For example, Hollywood, California values are much higher than those anywhere else. If the dealer insists on running the report, make sure you input the information. If researching value on your own, use the NADA Guides or Edmunds website to find your values. Do not use the lowest value; use both and come up with an average number.

Monthly Payment

When you are presented the vehicle cost from a dealership, it is usually in the form of a monthly payment. Of course, monthly affordability looks a lot cheaper than the overall cost. While you should pay special attention to your budget, focus on the overall cost of the vehicle with taxes and fees included. When the dealer is pushing a monthly payment, ask to see the total price before financing. Don't be surprised if there are extra fees included, such as a warranty or paint protection. Any hidden fees are brought to light when discussing total price. Negotiate on price, not on monthly payment.

Dealership Profit

Dealerships make money in ways you wouldn't expect. If you use a dealership for financing, he can mark up your rate to make a profit from the lender. Obtain a loan pre-approval on your own for this reason. Give the dealer a chance to beat your rate, and she probably can. Also, aftermarket items are negotiable, as well. Items offered to you in the finance department, such as vehicle accessories or an extended warranty, are marked up in price. The finance department of a dealership is often the most profitable.