A the first accepted automobile was seen in Germany

Comparative Guide to Purchasing Cheap & Good, Used Cars in the USA


The United States used
car market has grown at a tremendous pace since the start of the twentieth century.
Reaching an annual sale of over $350 billion, the used car industry represents almost
half of the United States auto retail market segment of its economy.  

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According to Statista.com,
in 2017, about 6.3 million used auto vehicles were sold in the United States of
America, representing a plunge from the 7.1 million and 7.7 million used cars
sold in years 2016 and 2015 also in the United States. Today, the United States
prides itself as the second largest manufacturing economy in the world.

A used car, also called a
second-hand car is a pre- owned vehicle that has been driven more than the
limited mileage, or moved from one site to another or added on consumer test
drives. Used cars dealership are vehicle outlets that deal with the sale of
only used cars at a retail level. The Used Car Industry is slightly different
from the conventional franchise dealership, hence the need for a detailed
breakdown of the American used cars industry.


of The American Automobile Industry

Although the first
accepted automobile was seen in Germany and France as early as the year 1800,
enormous growth in the industry was seen in the United States at the break of
the twentieth century and rapidly evolved into being the widest automobile
industry in the world. American automobile companies emerged with Chrysler,
General Motors and Ford dominating the market. This followed the mass production
and an influx of cars by Ransom Olds and Thomas Jeffery.

By the 1920s the American
automobile industry became the backbone of the American economy, producing more
than three quarter of the total number of vehicles produced in the world. The
American petroleum industry as many other industries were dependent on it for survival.
Same was the case with the steel and industrial industries.

The Automobile industry brought
rural migration and isolation to a halt as it altered the composition of the
urban neighbourhood also freeing homemakers from the confines of their homes,
revolutionizing the idea of working. Soon after, American homes had to their
name one, two or more vehicles with about 51.5 percent owning more than one
vehicle. The growth of the industry has remained unwavering since then.


Concept of the “Used Car” Industry

The history of the
concept of the Used-Car industry dates back to 1898 with the opening on the
first American used car outlet called the Empire State Motor Wagon Company. According
to Wikipedia, the used vehicle market is substantially larger than other large
retail sectors, such as the school and office products market which has an
estimate of $206 billion in annual sale and the home improvement market that
contributes as much as $291 billion annual rates.

The industry is however
said to embody as much as half of the United States auto retail market, into
eventually being the largest retail retail segment in the American economy.

The advent of technology
has played a major role in the advancement of the Used Car Industry just as in
every other business as now dealers can easily can easily make sales online. This
was formerly not so when dealers could only reveal prices in daily, weekly or
monthly trade publications. The internet has also played a major role in used
car pricing, hence, the multiplicity of used car pricing.

Used Car Pricing differ depending
on who the buyer is dealing with, revealing pricing details in three different
ways namely; Dealer or retail Price, Dealer trade-in price of whole sale price
and private party price.

Dealer or retail price is
the amount paid if the buyer purchases the car from an authorised used-car seller
and Dealer trade in-price is the pricing cost the buyer pays at the wholesale public
sale, while Private-party price is the price a buyer pays when purchasing a car
from a private individual.


& Worst American Cities to Buy Used Cars

According to Thestreet.com,
depending on location, the price of a used car on the dealer’s lot can be
considerably higher or lesser depending on the level of supply, demand and the
overall state of an economy. The research listed Ohio, Stanford, New York City,
Cleveland and Miami as the best cities to buy used cars.

New York, according to
the report provides a 5.65% discount from the national average cost of a used
car. In the same vein, Miami offers a discount of 8%, with “insanely cheap used
cars, compared with the rest of the nation”. Cleveland, Stamford and Ohio
offering discounts of 5.75%, 5.55% and 4.96% respectively.

On the other hand, the
worst cities to buy used cars, the report revealed are Fresno, Seattle, El Paso,
Albuquerque and Jackson as they have a premium above the national average


Step by Step Guide to Buying a Used Car in America

With diverse choices and
numerous deals, buying a car in America can somewhat be a herculean task. The
Bank of America has however lessened the burden of planning with the following



1.      Budgeting

 This the stage where an income outline should
be mapped out, including the cost of gas, the demands of insurance and the cost
of maintaining a vehicle. This determines how much a person can afford to part
with for a car. 

2.      Is buying a used car or any car of

you are buying a brand new or used car, the next step is the question of
whether it is appropriate for you. Most people would rather by a used car
because of the decreased cost and more value for their money.


According to the Bank,
the positives of buying a used car are as follows;

Less cost prices

Lower depreciation

Potential for lower insurance premiums

Less registration and license fees

On the other hand, the
positives of buying a used car are;

The likelihood of higher maintenance cost
e.g. replacement of car parts

Little or no manufacturer’s warranty

Potential for reduced reliability

High chances of increased interest rate on
your lease


3.      Engage in an in-depth research

need for a deep research cannot be over emphasised. There is need to compare
and contrast deals by visiting dealerships and by surfing the internet.

visiting dealerships is of great importance when buying a car as you are
granted the chance to test drive before purchase. Surfing the internet also
provides the buyer a chance to read an unending list of reviews on safety and


4.      Buying a used car from a dealer vs buying
from a private individual

used cars have either had one of more previous users, it can be gotten either
from a registered automobile dealer of a private individual.

when buying from a private individual, there is no United States of America
Federal Trade Commission Used Car Rule backing the purchase unlike the case of
buying from a registered dealer. This law demands that a dealer puts a copy of
detailed information regarding the car. The likely information to be revealed
are as follows;

The warranty of the car

The terms and condition backing the
warranty offered

Details on the vehicle systems backed up by
the warranty

The percentage of repair cost the dealer
will handle.


5.      Examine, text drive and check vehicle

a used car determines extreme examination, leaving no stones unturned. Be sure

Check or demand to know the car’s history

Hire a mechanic to examine the vehicle

Inspect the car using an inspection

Test drive the car under unfavourable
weather conditions, paying close attention to every detail.


American Consumer Protection Laws Backing the Used-Car Industry

Without adequate laws,
rules and regulations there is there would be chaos and no uniformity. It is in
view this that the Federal Trade Commission (FTC) of the United States of
America have as well as individual states offering legal backing for used-car
buyers. These laws include;

1.      Federal Used Car Law;

Federal Used-Car law is binding on any used-car buyer or seller in the United
States whom sells up to or more than six cars in a space of one year. However,
Wisconsin and Maine are the two states not bound by the Federal Used Car-law as
residents of these states have a comprehensive used car purchaser protection.
Lawbreakers of the Federal used car law is subject to civil suit. According to


Used Car law, the following must be adhered to;

Buyer’s Guide:

The law demands the presentation of the
buyer’s guide which is a document containing all warranty and guarantee
information and information on the buyer’s guide supersedes any verbal
agreement the buyer has with the seller. The buyer’s guide must have the

a.       Mandatory
Disclosure: The mandatory disclosures o me made are as follows;

-The 14 major systems of the car to be
sold and their faults, if any.

-A suggestion to the consumer regarding
asking the dealer if pre-purchase inspections are allowed.

-A forewarning to the buyer to ensure all
agreements are put down in writing.

Standard Format:

The standard format is a document that
must reveal the Vehicle Identification Number (VIN), model and the
manufacturing year of the car.

Warranty Information:

All warranty agreements whether verbal or
not must be compiled in the buyer’s guide. It should tell if the manufacturer
warranty still covers the vehicle. The following are warranty information that
must be divulged;

-Warranty duration.

-The name, address and every information
of the person who is in charge of affairs regarding the seller’s warranties.

-The exact system that covers the

-The kind of warranty that is available.


Used Car Laws:

Under the state laws,
some states demand a more detailed warranty that reveals a time on the
warranties coverage. Here, the major warranties are;

“As Is”

An “As Is” warranty is one of the four
major state used car warranties use by states that do not have their own
consumer protection law. For states where the “As Is” car warranty law is used
to prevent consumer abuse if a case of breakdown of the car happens shortly
after purchase. Hence, the law demands that the seller provides the buyer with
disclosure documents stating the lack of warranty if that is the case. States
that do not practice the “As If” warranty law are Washington D.C, Minnesota,
Vermont, New York, Massachusetts, Vermont, Maine, Connecticut, Hawaii,
Maryland, Rohde Island, West Virginia, Kansas, New Jersey, New Mexico,
Mississippi and Maine.


Implied Warranty

Implied warranty on the other hand is
divided into two; Warranty of fitness for particular purpose and Warranty of

a.       Warranty
of Fitness for Particular Purpose

This is a form of implied warranty where
the seller gives his word that the vehicle to be bought is right for the
purpose that it was purchased for.

b.      Warranty
of Merchantability

This other type of implied warranty is an
assurance by the seller to the buyer that the automobile will be able to
perform what is promised.

Specific Warranty

Warranties can either be full or partial,
hence the need to state the kind that is binding. Partial warranty covers certain
parts, aspects of the car while full warranty covers every aspect of the



3.      Specific State Consumer Protection

are laws by states have their own consumer state laws. Their consumer laws are
different from the law general State Consumer Protection Laws. In this
category, some states practice what is called “Lemon Law”. However, Lemon laws
are only used when a brand-new car is being purchased. Lemon law is binding in
states such as New York, Connecticut, New Jersey, Massachusetts, New Mexico and

4.      Usury Laws

of importance when purchasing a used-car in the United States is the agreement
on the interest rate the buyer will be charged by the seller. Usury limits are
the highest amount of interest that a finance house can charge to a loan.
However. Usury limits differ state by state.


Used-Car Dealers- How Do They Work?

Used-Car dealers operate
slightly differently from the conventional automobile dealers. Most times,
brand new car dealers are affiliated with automobile manufacturers, giving
their outlet an indirect connection with the manufacturer, hence having a
universally accepted price, hence, giving the public an idea of what the cost
of a car should be.

Meanwhile, Used-car
dealers do not have an affiliation with any automobile manufacturers and obtain
their inventory from used car auctions and from wholesalers. This gives the Used-Car
dealer the right to put a price tag on a car depending on how they deem it.
However, there are many variables at play that does it make is easy to for
properly gauge the cost of the vehicle.

In the same vein, most
used-car dealers are reluctant to reveal the initial cost paid for a car while
automobile dealers of brand new cars might have no issues with disclosing the
invoice for a new car. This is regarding the fact that invoice prices of brand
new cars are publicly available online, made available by the automobile
manufacturers. Hence, the cost of a used-car is known only by the used-car
dealer and the dealership he acquired the vehicle from; the former owner,
giving the seller an upper hand over the buyer.

Furthermore, Used-car
dealers often times than not advertise their special deals on the pages of the
local newspaper or on their individual websites. The special deals have
attractive prices, less than the regular price the car would be sold for.
Because used-car dealership cannot depend on factory bonuses for selling cars,
they would want to still make all th profit they can from the individual sales.
Hence, Used-car dealers are more interested about their market returns other
than the selling price. However, these days, used-car dealership are to a large
extent trustworthy with the binding of the United States of America Consumer
protection laws.


21st Century Reality of The American Used-Car Industry

Research by the
Automotive News Data Centre has proven that in recent times, the demand for
used car grow stronger among American nationals as the rate of demand for brand
new cars appears to be dropping.

Revenue generated from
used vehicle retail sales hit $57.79 billion at the largest dealership groups
in 2016, up 6.6 percent from $54.23 billion in 2015. These gains in the used
vehicle industry at the largest dealership groups mirror larger market trends.

For over eight
consecutive years, since the global financial crisis of 2009, the industry grew
by 68% with the demand for used cars increasing. Used vehicles have
metamorphosed into having better quality, off-lease vehicles are sold, giving
consumers a more affordable deal, compared with the total cost of a brand-new
car and has its average price for a used car stood between $18,838 and $20,000.


Car vs Used car- A Comparison

According to the American
National Automobile Dealers Association, a person owns as many aa 13 cars in a
lifetime with each costing as high as $30,000. It further added that if those
cars were probably three years older, the buyer could have saved as much as
$130,000 in his lifetime. Based on the aforementioned, the following comparisons
were arrived at;


is often said that a car loses as much as 20% of its value immediately after purchase.
Buying a new car at $30,000 and probably selling it three years later for $15,000,
the used car depreciation would cost the owner $15,000. On the other hand, buying
a used car at $15,000 and selling it for $10,000 after three years, the used
car deprecation would cost the owner only $5,000.


a new car breaks down, the owner can have it fixed without as it comes as a
part of the warranty which covers it for as long as the first 36,000 miles i.e.
for about three years. On the other hand, this might not be the case with a
used car.


new car will probably be more reliable than a used one although used cars are
definitely more dependable as registry payments are cheaper, insurance rates
are lower and used cars are cost effective leading to increased savings.

Advanced Technology

manufacturers put in extra efforts to incorporating newer features in their newer
productions. These newer features could enhance safety, total performance as
well as comfort the buyer gets to have. This is definitely enjoyed in new cars
rather than used ones.

Stress level

and maintaining a new car is easier than doing a used car. This is so because psychologically,
new cars are seen as problem free and perfect and therefore making a choice of
the car to buy might not be as energy and time consuming as buying a used car

Financing options

and dealers of new cars make available a high level of mouth-watering
incentives to increase buyers. These incentives include offers such as
attractive interest rates, cash rebates and the likes. This is not exactly
common with dealers of used cars.



is not uncommon to a person brag over or show off a new car. This is seldom the
case with buying a used car.



In summary, the American used car market
has risen tremendously over the past years with people opting for fairly used
vehicles other than brand new cars.
Accessing the used-car deal or a pocket friendly
deal can be a not so easy task, however with the gumption and drive towards
taking the right steps and having the backing of Federal and state laws, it is

When buying, bear
in mind that there are a few effective used car warranties. Most cars are sold “As
is” with a warranty that demands that the buyer and seller split the repair