Where Do Car Dealers Buy Their Used Cars?

Everybody shopping for a used car wants the best deal at the lowest price. This is how dealers do it.

bySteven Lang|
Where Do Car Dealers Buy Their Used Cars?

There is cheap, dirt cheap, and "Hot damn! You bought that thing for less than a Whopper!"

The prices for used cars usually don't dip into the Whopper levels unless they have been flame broiled at 450 degrees. But you would be surprised where car dealers usually get their inventory at prices that are substantially lower than retail.

First off, a licensed car dealer has access to a market that sells more vehicles in a week than Ebay does in a year. Wholesale dealer auctions. 

Steven Lang

This is where most cars that are traded-in, rented out, off-lease, repossessed or wrecked will go to be sold and bought. Over 97% of dealers go to these auctions according to the National Independent Auto Dealers Association and typically the discount over retail ranges between 5% to 50% depending on what you buy. 

Wholesale dealer auctions were responsible for well over 9 million used cars last year. Guess what was second?

Other dealers. There are plenty of new car stores that will offer up their trade-ins to other dealerships before bringing them out to the wholesale auctions. Those older rides are usually a bit more rough. But every once in a while you can find a pearl amongst the swine (and old used car smells) that come with buying from other dealers.

47% of car dealers buy directly from other dealers,  It usually saves both parties from the enormous buyer and seller fees most auctions charge dealers these days which can be upwards of $300 for a $2000 car. 

The top five are rounded out with online purchases (30%), wholesalers (23%), and other (3.2%). The 'other' ranking primarily consists of banks, credit unions, and title pawns.