U.S. News' used car listings offer a wide range of car-buying options, along with our rankings and advice. However, there are a number of new online used car buying tools that are entering the market and offering a unique buying experience. It's worth taking a look at these new tools.
Everybody loves driving home in a new car, but everybody hates the traditional process of buying one. That goes double for a used car. If you're lucky, you get 20 minutes and 15 miles to test drive a car and figure out whether any of the myriad noises you hear are unusual for that model, whether the seat will continue to fit you after a six-hour trip, and whether you even like the way it drives.
That's a tall order, and it's why a number of new websites have cropped up to try to make the process of buying a used car a little easier. Some offer fixed prices so you don’t have to negotiate, and most offer the standard, legally required three months of warranty coverage.
Buying through one of these websites can be its own leap of faith. Most have a limited selection and do business only in some parts of the country. Forget about a test drive; most don't even give you a way to see the car before you buy it.
All of the choices facing a used car shopper can be overwhelming. It helps to start by distinguishing a few basic types of used car websites:
First, there are classified sites, essentially Craigslist on digital steroids. These may list cars for sale by car dealers or private sellers. They tend have a wide reach and selection – both in quality and price. Then there are car dealer’s websites, which will list ads by those individual dealerships. They will have a narrower selection of cars and prices, though a few, such as CarMax, are larger.
Aggregators show you the greatest number of ads from the greatest number of sellers. You can sort them all by price, mileage, or distance from your home – whatever works best for you.
This site has a few major flaws, but it still makes sense as a place to start. It lists ads from Cars.com, Carsdirect.com, eBay, and Oodle (a general classifieds site similar to Craigslist.) At one time, it also included ads from the biggest auto advertising sites, AutoTrader.com and Craigslist. Now, you have to follow separate links out to listings from those sites, although AutoTempest at least transmits your search parameters in the process, so you don't have to start over.
New Types of Classifieds
Advertising and selling your car privately can be a pain – taking pictures, scheduling visits, and trying to answer questions that may not have good answers.
Even buying a car from a private seller can be more difficult and riskier than using a dealership. The car and its owner could be hiding problems, and even a knowledgeable and honest owner won't be able to provide the financing, registration, and warranty services that a dealership does.
So, several automotive intermediaries have cropped up on the web to make used-car buying easier:
Beepi.com is one of the more innovative used-car start-up websites. It offers mainly late-model used cars and mainly lists classified ads from other owners. Owners list their own cars for sale, and Beepi sends out an inspector who takes pictures and videos for the ad, catalogs every bump and bruise, and sets the price.
The car's vehicle history report has to come back showing no accidents and a clean title for Beepi to accept the ad, and Beepi provides the history report to buyers.
Buyers can buy the car with a credit card, use financing, or even lease from Beepi's website. They never come for a test drive, because Beepi offers a 10-day/1,000-mile money-back guarantee. That serves as the test drive.
If the buyer doesn't keep the car, Beepi buys it and relists it, so not all the cars in the ads are privately owned. Sellers also get a guarantee that their car will sell in 30 days or the company will buy it. The company claims on its website that its lack of overhead for showrooms and inventory allows it to set prices lower than other sellers while giving sellers more for their cars.
Most of Beepi's listings, however, seem to be on the West Coast, and the company charges shipping to deliver them – which can run over $1,000 if it's all the way across the country. So you need to factor that into your purchase decision.
Beepi does business in eight states (California, Washington, Arizona, Texas, Florida, Virginia, Maryland, and New York), where it provides full registration services. You can also buy Beepi cars in six neighboring states, where it offers most of its services, short of registration. It offers a 90-day/3,000-mile bumper-to-bumper warranty, and you can buy additional coverage.
Shift is a classifieds site like Beepi. They don’t keep an inventory of cars other than those that haven’t sold after the sales contract expires, which is typically after 60 to 90 days, depending on the market.
A “car enthusiast” delivers the car for a test drive, as long as you live in the San Francisco, Los Angeles, or Washington D.C. areas. They bring along a vehicle history report and any maintenance records from the seller.
You can buy it on the spot, or put a $95 deposit down to hold the car for a week. Like a traditional car dealership, Shift has relationships with banks that can provide financing for the cars. Shift charges a fee for the transaction and will do all the registration paperwork, but it doesn’t offer any warranty on the cars it sells.
Online dealerships have been popping up all over the internet as of late. Tesla's direct sales are a prime example of the future of car buying.
For buyers, Carvana works similarly to Beepi, except that its money-back guarantee lasts only seven days and 300 miles.
Carvana buys the cars and keeps its own inventory. The company says it only accepts the top 10 percent of all the cars it appraises. The website shows price curves for every make and model of car and shows where its listing lands on the price curve to give buyers assurance that they're getting a good price.
Buyers get a seven-day money-back guarantee and a 100-day warranty good for a (strangely specific) 4,189 miles.
You can get financing through Carvana. Shipping is free, but only between cities where the company does business: Atlanta; Nashville; Birmingham; Richmond, WA; Washington, DC; Miami; Jacksonville; Orlando; Tampa; Dallas; Austin; Houston; and San Antonio. You can also pick up your car at one of two “car vending machines” in Atlanta and Nashville (a third is being built in Houston), where you can fly in to pick up your car and Carvana will reimburse up to $200 of your airfare.
Vroom is an online used-car dealership that buys cars from auctions, private ads, and other dealerships and reconditions them in its own workshop, just as many large used-car dealerships do. The difference is, it sells them only online, and at fixed prices. Like Beepi, you can't take a test drive, but you do get a seven-day/250-mile money-back guarantee.
Vroom offers free delivery and DMV services anywhere in the continental United States, and three months or 6,000 miles of warranty coverage. With a product as large and heavy as a car, that can make a big difference in price, and dramatically widen your selection geographically.
You can also sell your car to Vroom, even if you buy a car elsewhere. Vroom will give you a voucher for your trade-in amount that you can take to another dealership where you can trade in your old car to save on sales taxes. Vroom will then guarantee the dealership that they will buy your old car from them for the price on the voucher.
New Car Dealers
Wherever you decide to buy a used car, it's helpful to know where the best ones are most likely to end up. All these websites may do a good job of vetting, or at least fairly representing the cars that they list. It's unlikely, though, that they get first dibs on the best used cars on the market.
If that's the type of used car you're looking for, your best bet is to buy it from a new-car dealership. It's no guarantee of getting a cream-puff, but it dramatically increases your odds, because new-car dealers are at the top of the used-car sales funnel.
It works that way because most one-owner, low-mileage used cars are traded in on newer models at new car dealerships. Once that dealership takes them in on trade, they have the option to sell the car themselves on their lots, or to send it on to an auction house. It’s good business sense to keep the best ones for themselves so they can resell for the highest profit, the least amount of additional reconditioning, and with the lowest risk of something going wrong later. These are generally late-model used cars that can be sold for top dollar as certified used cars.
The cars that are sent to auction are a mixed bag. Auctions have a pecking order, too. After the dealership skims off the crème-de-la-crème, the next-best cars will go to a manufacturer auction. Cadillacs will go to an auction only open to Cadillac dealers, for example, where, again, the best will be sold to other new-car dealerships, and the rest will move on to broader auctions.
Used Car Dealerships
There, they're purchased by used-car dealerships, from super-stores such as CarMax to corner lots – shady and otherwise. If there's a reason that used-car dealerships have a poor reputation, it may be this: They only have access to cars in mediocre condition or worse at the auctions they frequent. Some may have high mileage, hail damage, or putrid dog smells. The best of these dealers will do their best to recondition these cars and pass the cost on to whoever buys them (read, “you.”). Some will try to keep the final prices down by cutting corners on these repairs. Some problems also may not be repairable, or may cost too much to repair. And some cars may have other problems that the selling dealer honestly knows nothing about, especially since the auctions give them very little or no time to inspect the cars before bidding.
The worst cars – those with major accident damage, major rust, or extremely high mileage – consumers like you don't want for any price. Those will move on to yet another auction tier: the salvage auction, where they will be bought by junk-yards or body shops. Shopping for a car there may get you a good price, but it's almost a guarantee of buying damaged goods.
Private-party sales are a mixed bag: Some may be low-mileage, one-owner cars, but most aren't. Private sales have a few things in common, however: The seller is trying to get a little more money than they could by trading it in to a dealership. At best, they may wash and vacuum the car, and even give it a wax job. Expecting any more reconditioning than that is wishful thinking. And private sellers are not in a position to offer any kind of financing that might make a more expensive car affordable to buyers who can't pay cash. Also, private sellers are usually not subject to the disclosure laws that businesses are and won't be in a position to offer any kind of warranty. For all those reasons, buying from a private buyer is riskier than buying from any type of dealership, and the car's price should reflect that.
A good rule of thumb is that dealers expect to charge about $3,000 more for a used car than they paid for it. Half to two-thirds of that may cover reconditioning, warranty costs, and advertising. The other half goes to profit and overhead (certified cars may command even higher profit margins). So, if you're buying a car from an individual seller, you shouldn't pay more than $1,500 to $2,000 less than what you'd pay for the same car at a dealership.
Sites like Beepi or Carvana may take some of the mystery and risk out of private party sales and shore up prices by broadening the audience with financing options and shipping, especially compared with classified sales on sites like Craigslist and AutoTrader.
Your Best Bet
Your best bet to find a like-new car for used-car money is still to pay a little more and shop at a new-car dealership, like the ones we feature in our used car listings. If you hate facing the plaid-coated used-car salesman, though, and want a more affordable ride, some of these new used-car sites could be worth a look.