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Where do dealerships buy their used vehicles?

On Behalf of | Mar 5, 2022 | Consumer Protection |

Dealerships love to advertise that they have the best selection of both new and used vehicles. When you go car shopping, the used vehicles are also frequently a better value for the investment you make. As experts often say, new vehicles lose value the moment you drive them off the lot.

Buying a used vehicle that is relatively new and has few miles on it can be a great option for some people. However, the history of the vehicle might make it less of a bargain than you imagine. When you understand where dealerships get their vehicles, you may be more careful about selecting a used vehicle for yourself or a family member. 

Trade-ins are a big source of used vehicles

There is a dealership in almost every town that advertises their willingness to take even non-running vehicles. They’ll tell you to push or tow the vehicle into the lot, and they promise to give above the fair market value for that vehicle.

The only way dealerships can make such promises is if they can sell that clunker for a profit after they accept it as a trade-in. Often, the worst trade-in vehicles will get sold to other dealerships, possibly in another state. Dealerships frequently trade used vehicles with one another, meaning you could drive off with a poorly maintained vehicle even if the dealership you buy from doesn’t advertise taking trade-ins.

Auctions are also a major vehicle source

Used car auctions account for thousands of vehicle sales every month. Dealerships can buy individual vehicles or bulk lots. Some of these vehicles may have salvage titles. Others may have previously been rental vehicles.

The dealership selling the vehicle should tell you honestly about its known history and any known defects. However, if they avoid doing an in-depth review of the vehicle’s condition, they can sell it to you in as-is condition with major issues.

Dealerships need to disclose information

It’s important to know there are a number of “material particulars” that must be disclosed by a dealership, such as if the vehicle has been stolen, the vehicle has been considered a “total loss” by an insurance company or the vehicle has sustained certain damage types.

When shopping for a vehicle, it’s important to remember dealerships have a job to drive the trade-in value lower by researching the history and visual damage.

Buyers can protect themselves by investing in a vehicle report to check for issues like salvage or rebuilt title, meaning that the vehicle has suffered significant damage previously. They can also have a mechanic inspect the vehicle before they make a commitment to purchase it. Those who purchased a vehicle that turned out to have major defects may have rights as well.

Recognizing non-disclosure as a form of dealership fraud could help you take action after buying a vehicle that wasn’t worth the price you paid.