The used car market is thriving. With the average price of a new car in the United States nearing $29,000, it's no surprise that consumers are three times more likely to purchase a used car than a new one. Consumers have more choices than ever when it comes to buying a used car. Classified ads in the local newspaper are no longer the only way to search for a used automobile. Here are five ways to buy a used car. (For related reading, also take a look at 7 Hot Hybrids: Will They Save You Money On Gas?)


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1. Certified Pre-Owned
A J.D. Power and Associates study recently indicated that the sale of certified cars has increased 46% since 2000. Certified pre-owned (CPO) vehicles are used cars that have been inspected, refurbished and certified by a manufacturer or other authority, thereby providing the consumer with some confidence regarding the vehicle's condition. CPOs usually include an extended warranty and often special financing offers, providing new car benefits at a used car price. Most dealers advertise CPO vehicles and may even devote an entire lot to these types of cars. CPOs are typically more expensive than non-certified used cars, but often the benefits (such as the extended warranty) outweigh the extra costs.

Buyers can search at Edmunds (www.edmunds.com) by clicking on "Certified Cars" and browsing by category, make or zip code; or at www.cars.com by selected the "Certified Used" button under the Used Cars heading, and searching by make, model, price and location. Cars.com also publishes a useful Certified Pre-Owned Users Guide, found under the "Advice" tab.

2. Superstores
Used car superstore CarMax (www.carmax.com) is a Fortune 500 company that offers thousands of vehicles for sale through its 100+ locations nationwide. Consumers can search for vehicles by make, vehicle type, model & price, features and MPG on the CarMax website. Once a search selection has been made, buyers can enter their zip code and search radius (for example, within 50 miles of the zip code) to find local deals. CarMax offers its buyers a five-day money-back guarantee, a limited 30-day warranty, extended service plans and free vehicle history reports. CarMax offers financing, as well as money for trade-ins.

3. Government Auctions
Thousands of seized, surplus and forfeited cars each month are sold at online and live auction venues. These vehicles are the property of the federal government, and due to the high costs associated with storage, they must be sold quickly and at appealing prices. The "Official Site to Buy U.S. Government Property" is www.govsales.gov, and lists government assets for sale along with information specific to each vehicle including the year, make and model, and the auction's closing time. Consumers can search by category (such as "Cars and SUVs or "Trucks") or by state to find local listings.

No financing is offered and buyers must be able to pay for the item using cash, a bank cashier's check, a U.S. Postal Service or commercial money order, Traveler's checks, a personal or company check that is accompanied by a bank letter of guarantee, or by credit card. Bids cannot be lowered or canceled. Other car auction websites such as www.car-auction.com can be found by searching online.

4. eBay
Officials at eBay have indicated that every 52 seconds, a passenger vehicle sells on its website. eBay first launched its Motors area in 2000 and is expected to reach $18 billion in sales this year. When a car is purchased on eBay, it is usually done sight-unseen which can be unsettling for some buyers. Checking the seller's feedback and bidding on an auction that allows buyers to back out of the purchase after inspecting the car are two ways buyers can help protect themselves when purchasing a car through eBay. Sellers usually expect to be paid in cash, and buyers should be wary or entirely avoid sellers asking for upfront money transfers (like Western Union).

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Since the car might be located a considerable distance from the buyer's home, any pick up or delivery costs including gas, hotels, food, missed work and plane tickets should be factored into the price. When a flight is necessary, Edmunds recommends purchasing a round trip plane ticket since they are usually less expensive than one-way tickets, and they provide flexibility in the event that the car does not meet the buyer's expectations. (For more information, see 10 Tips For Buying A Car Online.)

5. Private Sales
Buyers can look for used cars in the classified ads in the local newspaper or at online classified websites such as www.craigslist.com. Unlike the other methods of buying used cars, private sales through classified ads or signs placed on the car match buyers with people who are usually just selling one car (rather than a whole fleet). Care should be taken to ensure that the seller is asking a fair price, and it is a good idea to have an inspection performed by a qualified mechanic prior to purchase. People who list their cars for sale on Craigslist are often the same people who would otherwise advertise locally, but, unfortunately, sometimes they are scammers. A few of the known Craigslist scams include instances where the seller steals the car back from the buyer a few days after purchase and the buyer being robbed of the cash they brought with them to a test-drive.

Buyers can reduce these risks by not disclosing their home addresses, meeting in a public location for test drives, and not carrying cash to a test drive. As with eBay, requests for down payments through money transfers should be a red flag.

The Bottom Line
Regardless of where a new car is purchased, consumers should be cautious and do adequate research to help protect themselves against both a bad car and a bad deal. Services such as CARFAX (www.carfax.com) provide vehicle history reports for a small fee that detail title problems, ownership history, and accident and service records. Kelley Blue Book (www.kbb.com) is a trusted source for finding the current value of a vehicle.

Buyers can also have the car inspected prior to purchase. To help avoid scams, car buyers should be careful when dealing with an "anxious" seller (one who gives an elaborate story explaining why he or she needs to sell the car ASAP); deals that seem too good to be true; or a seller demanding a down payment via Money Transfer such as Western Union or MoneyGram. While buying a used car usually takes a little extra effort and caution than buying a new car, it can save most buyers a considerable amount of money, making it worth the effort. (For additional information, take a look at Car Shopping: New Or Used?)

For the latest financial news, see Water Cooler Finance: Rising Markets And Buffett's Successor.

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