Here’s Why Buying a Used Car is So Expensive in the United States

Here’s Why Buying a Used Car is So Expensive in the United States


rev up your engines, today I’m gonna talk
about why use cars in the United States are getting to be so expensive, now
recently I took a trip to England, and I knew from research and emailing people
in England that used cars in England are much cheaper than used cars in the
United States years ago I used to have customers that
took advantage of that, they would go to England they’d buy used cars cheap, send them
to the United States sell them at a big profit, but they can’t really do that
anymore they changed the laws the EPA for pollution control and stuff, but
people used to do that make a lot of money, even though it costs a lot of
money to ship a car from England to the United States, so I asked him used car
dealers in England, what’s the deal how come yours is so much cheaper, and they
said well people are only gonna pay so much money for a used car, and now when I
was a young mechanic in the 1960s that was true in the United States too, but
then something happened in the 1960s there was a company called Kelly’s Blue
Book that gave values of cars in the United States, and back in the 60s it was
a pretty fair valuation, but later Kelly Blue Book that makes the valuation of
cars got bought by autotrader.com, a big used car dealing corporation, now let’s
just think logically, now do you want a company that has a business of selling
used cars giving you the value of those used cars,
it’s just patently absurd to think that the value is going to be fair, of course
they’re gonna say cars are worth more than they really are, because that’s how
they make money, and then later even auto trader got bought by Cox enterprises,
which is another mega corporation that has to do with buying and selling cars
amongst other things, so really you can’t believe what these books are telling you
in evaluations anymore, and another of the big guides NADAguides hey they’re now
owned by JD Powers & Associates and that’s even more patently absurd, do you
want a giant PR advertising company telling you the value of cars, I mean
come on it’s just absurd what has happened in our society, that people are
believing what PR firms are telling you about stuff, I
can’t help but laugh, when I see an advertisement that says, JD Powers picked
this as truck of the year, I mean come on now they’re a PR firm, why would you
believe anything they say about anything and the fact that they advertise through
an advertising company, it makes it even more patently absurd, but since they own
the NADAguide to car prices, they’re the ones that are setting these book
value on used cars, it’s crazy but it’s true,
now when I confronted these English used-car guys with all this information
about the states, they laughed too and they said, gee I wish we could get away
with charging those kinds of prices for our used cars, we’d make a lot more money,
things have gotten even more absurd here in the United States, you can go to many
use car dealerships in the United States like Carmax, and they say they give
you the best price, well what do they mean by that, well my son was recently
looking at a used Toyota at a Carmax and he said, hey I like that Toyota but
that’s too high I want to pay less, to which they just responded, no that’s the
best price if you want to pay less we got another car over there you can
buy, but he said, hey no I want this one I don’t want that one and they said no
that’s the price there’s no negotiating on the price, so it certainly was the
best price, the best price for the people selling the car not the people buying it,
now when I told this to these English used-car salesmen, they said oh
Scotty you’re pull our leg, you know we don’t believe you, your just making all this
stuff up, to which I responded no that’s what they’re doing in a bunch of these
places, and they said oh wow you know that’s part of buying a used car, but we
wish we could just say this car is ten thousand pounds, but it doesn’t work that
way in England, so with the pricing in these supposedly neutral books that give
values of cars, when somebody’s selling a car these days, a lot of times they’ll
look at it and say, aha that’s what the car is worth that’s what I’m gonna get
for my car when I sell it to somebody but I explain to them, now a used-car lot
can get away with a lot of stuff, because generally they’re loaning money to
somebody, somebody doesn’t come in and pay ten thousand dollars for a used car,
they pay $199 a month, then I say to the person selling their car,
well are you gonna take $199 a month for your car, no I need the whole thing at
once they don’t understand, if you pay the
whole thing at once, you’re gonna get a better price then if you’re financing a
thing, the people our finances are taking a chance, you might not pay, they might
have to repo the car, so the value is actually much lower if you’re doing cash
and these stupid books just knock a little bit down not much,
they’re just patently absurd, because in the real world, the one I inhabit in,
here’s an example few years ago a customer of mine bought a used Toyota for $3500
it was eight years old and it had a hundred thousand miles on it, but another
customer of mine bought the same exact year Toyota, but she had bad credit, so
she went to this used-car lot and even though she bought the same year car and it
had fifty thousand more miles on it than the previous customers had, she paid
ninety five hundred dollars for the same exact car, so in the real world where I
live cash means something, but a lot of these
places now they say, oh same price cash or credit we don’t care, so not only do they
have an artificially high price of the cars, they don’t care whether you pay
cash your credit because a lot of times they get bonus points for selling a loan
to somebody, now the valuation itself is much akin to let’s say a diamond ring,
take a diamond ring to a jeweler to have it appraised for its value, and then
after it’s appraised, let’s say it’s appraised for ten thousand dollars, ask
that same jeweler what will you pay me cash for this diamond ring right now, and
your jaw is gonna drop, it’s supposed to be the same way with cars, cash should be
king, I mean look at this beautiful car I saw in England and look how cheap it was,
though I guess something of the English cars being cheaper is because gas is so
expensive there, I mean it’s the equivalent of seven dollars something
a gallon, that they got to spend all their money on gasoline and not on the
car itself, but really here in the United States, one of the biggest reasons that
used car prices are going so high, is because of this ridiculous collusion
between the people who give the value of the cars, and the fact that they’re owned
by corporations that have a lot to do with selling used cars, but I found there
still is a real world out there, such as things like Craigslist, where there’s a
bunch of cars for sale and their private individual sell them, and get a good deal
because of somebody’s selling a car there’s often a very good reason, they’re
financially strapped, they need money, or they’re moving, and they have to take
money that they get right away and if you want to compare this value,
just say take a car you’re thinking about selling, take it to Carmax,
they buy cars too, see what a low price they’ll give you for that car and then
see what they sell that same car for once they buy it from you by looking at
comparables, and you’ll see that the actual value of a car cash is a lot less
than what these stupid books are telling you, so if you never want to miss
another one of my new car repair videos, remember to ring that Bell!

About the Author: Michael Flood

100 Comments

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  2. That’s why for me
    CARMAX is a NO NO
    And AUTO NATION is another NO NO
    They don’t negotiate a penny
    They are in my BLACK LIST
    When I need a car.

  3. Wow! I did not know that about the vehicle rater entities being linked to (ex) autotrader, JD Powers, Cox…! Sheese! Thank you, Scotty for your information!!!

  4. Hey Scotty I would like to address why i belive used cars are cheap here in the uk.
    1. RHD we are a fairly rich country and very small the rest of europe has LHD cars so theres less demand for our RHD models
    2. Very keen financing most car financing is set up in a way that you only really keep a car for 3-5 years then you trade in and get a new one meanimg plenty of 3-5 cars on the market
    3. Company perks companys get tax perks for buyimg cars for there employees and these tend to get renewd in the same 3-5 year cycle
    4. Our inspection laws (MOT) these cost £80 a year and your car must pass these very strict tests to be road legal a new car doesnt have to be inspected for 3yrs most 10 yo 100k mile cars struggle to pass emissions tests (side not diesels just have a visual smog test)
    5 most of the cost of repairs here is labour a local garage will easly charge £30 an hour pluse tax around $60 rising to $150usd an hour for a main dealer
    6 climate we get lots of rain and if we get 1inch of snow the goverment will think its a good idea to put doen 2inchs of salt and this salt rusts up nuts bolts exhausts springs springs as well as deteriorating rubber bushings the cars are well rust proofed nowadays but suspensions axles any thing that really bolts on under the car is prone to corrosion. Couple with that are lack of decent sized garages in our homes and undercover parking a 10yo car is commonly kept outside in all conditions every day in all weather's.

    And withs crudded up nuts and bolts means it takes longer for a relatively simple task like a brake pad and rotor change as you struggle to get it undone and then struggle more to undo the bleed nipple, which means it takes longer and at 60usd an hour taking longer isnt a good thing.
    So yeah hope that explains a little of our second hand car market

  5. There are other reasons why used cars are cheaper in England :
    1. Every year they have to pass the MOT test. This is a very strict government test that checks everything, not just emissions, but brakes, suspension, tyre tread, everything. It is very tough and repairs can be expensive. The government want to get older cars off the roads.
    2. Many people do not have a driveway let alone a garage and it rains a lot so doing your own repairs is more difficult
    3. Most driving is in town which puts more wear on a car than highway miles
    4. In most of England you don’t NEED a car, you can get the train, bus or even walk to the store, work, pub etc
    But in most of the most of the US :
    – you NEED a car, no car means you can not get to work
    – you only have to pass emissions so can drive on bald tires, worn out shocks etc
    – most people have access to a driveway so you can do your own repairs
    So this is why i think used cars are more expensive in the US

  6. Their price is their price and they own it so move on. Cash means nothing. They would rather sell it on finance and take all the money up front and the bank takes all the risk.

  7. When you combine everything Scotty says coupled with Cash for Clunkers (pulled a lot of the low end stuff out of the market) Used car buying/selling these days sucks compared to a decade ago.

  8. Scotty what do you recommend to use when you want to come up with an actual price for a used car from a private seller

  9. I don't give a rat's patootie about KBB price. When I have decided on a make, model, and trim I look at what price everybody is advertising it at. I calculate different mileage at 15¢ a mile, or $1500 per 10,000 mile difference.

    For example, with 2016 CR-V Touring I started at $26K 40K miles. Another car at 50K miles should be $24.5K, so if they ask for $22K then it's cheaper by $2500.

  10. Cash for clunkers reduced the used car market under Obama. The price of the remaining cars went up accordingly.

  11. places like CARMAX take advantage of people who are hurting for money. They will never offer you fair market value for your used car

  12. Also scotty, you are talking about market manipulation which is highly illegal in the US. how do they get away with this?

  13. Im in Canada and was looking for a new truck.. Brand new 2019 zr2 colorado is 60k.. My brother just bought a house for 63k…. Something is fucked.. its not just used cars.. I am not paying 60k for a truck that was built in mexico at 1/8 the actual cost. And I don't know if you know this but just before the 2008 crisis, all the auto parts makers moved to mexico and asia.. So they might be slapping some of the vehicles together in u.s factories, but they are made elsewhere…

  14. But the British drive on the other side of the road, the steering wheel is on the wrong side!

  15. After moving to Thailand from the UK I was shocked at the ridiculously high price of used cars. Cars that would go to the breakers' yard in the UK were being sold for lots of money. Car dealers were making a lot of money, my wife's brother sells cars and back then he was making around US$3,000 per sale. A few years ago the Thai government offered big discounts on eco cars for first-time car buyers. This was very popular and the car market was flooded. The price of used cars came down as a result, but prices are still way too high. For the price of a very average used family car in Thailand I could buy a good used Boxster or SLK in the UK, but these cars are way beyond my budget in Thailand. Not only are used cars in the UK a lot cheaper but there is a huge variety of cars for sale, which there isn't in Thailand. On the flip side, fuel and labor costs for repairs are cheap in Thailand (comparatively), but parts for my Ford are extremely expensive. Americans would be shocked at what I pay for Ford parts. Wherever you live, it is swings and roundabouts.

  16. I've been hearing over and over from Scotty and Steve Lehto and others that you should never buy a used car from a dealer. You should always buy from a private party. That's nice, but out of curiosity, I looked for private car sales on the Internet, and they are virtually IMPOSSIBLE to find, especially if you have a particular car in mind. You are essentially STUCK buying from a dealer. So the reality does not match the recommendation.

  17. Scotty, you say that KBB is essentially worthless, but what other guideline is there for determining the worth of a used car? You can't go by what other people paid, because a lot of them overpaid. So what's the alternative?

  18. What you are saying reminds me the politicians that ask the lobbyist what to do or decide and they get to "rule" for the private lobbyist and against the people. Lobbyist are nothing by a disgrace even to have them and the amount of them have increase tremendously in the last years.

  19. LOL is crazy here in the UK for example i can buy a 4 year old used car with less than 30 thousand miles on the clock for $4000 if i bought the same said car in the USA the price would be near double that lol

  20. Also here in the UK we use diesel cars to save on Gas prices for example i can get 65 miles for my $7 gallon of fuel where as if i used a petrol car i would have to pay double that price.

  21. Scotty it's called the UK or Britain. Not so long ago, you could have put great Infront.
    England ceased to be a political entity in 1707 or 1603, depending whether your a republican or monarchist.
    NB fuel is much cheaper in N America than in the UK.

  22. Been in FL for 15 yrs. Five gr8 used cars for me and my kids. Craigslist works well. I simply ignore idiots who try to refer to Kelly re value.

  23. But I've also heard tons of horror stories buying cars from craigslist, so who the hell can you believe or trust???

  24. Scotty you're putting all these folks out of business LOL LOL thank you for your truth and honesty it's helped me so much!

  25. I'm in Australia and was hoping to buy a car in the US to store there for holidays rather than renting. I expected the USA would be cheaper than the Australian market but to my surprise it's significantly more expensive. The cars also have higher mileage and are actually harder to find. The dealers are also dodgy as hell, selling a lot of salvaged cars and concentrating on finance. Something is very wrong with the American market. Even new cars aren't great value desipite it being one of the biggest car markets in the world.

  26. Hey Scotty, you know what that Blue Book reminds me of … the little stupid book you mechanics use to figure how long it took you to fix something. Fixed in 15 minutes but the little book says it should take 90 minutes. The perfect book for you guys.

  27. The biggest reasons US cars either new or used are so expensive…..Auto workers unions driving up the cost of manufacturing new vehicles and Dealership greed driving up the cost of used vehicles.

  28. I got really lucky, and bought a custom made car that was leased by the previous owner and had all it’s work done at a Dodge Dealership in Tennessee. They went over their leasing miles and had the car for 1 year and 11 months. The car was sold at a private overflow auction by another Dodge dealership. The car was in pristine condition, and still had the factory warranty on it, and after they certified the vehicle and put all new part on it, I got a $50,000 car for under $39,000 with no issues! Also the previous owner had buyers remorse because the car was too fast, and the insurance was too high to pay, and car sucked gas! Oh well, one man’s headache, is another man’s toy!

  29. In the UK used cars are cheap for 2 reasons:
    1. No one in Europe wants right hand drive, so UK is very chermetic and not very big market.
    2. Car repairs cost fortune so often makes more sense to buy new car rather than worrying, that used one will break and repair will be more expensive than car itself. Not to mention how competent mechanics are here.

  30. a lot off buyers from europe buy crashed cars on auctions in usa online. They repair it and sell with good profit here in EU, becourse in the usa you can buy crashed car just couple years old very cheap.

  31. Buy a car or truck from a private seller.

    And bring Scotty with you. Well…if you can't bring Scotty with you, then buy a Toyota, the rest are money pits!

  32. Used cars in Indonesia are lot more expensive than murica, 5 y.o. Corolla still costs around $20k, and 1994 corolla for $6k.. Even more popular cars such as Honda civic 2010 could have $15k price tag..

  33. Yea but British pound its higher then a dollar plus I don’t think its cheap to bring a car from there

  34. Yeah, used car market here in the U.S is horrible!! I see cars with 100,000 miles plus for 10K or more! Ridiculous!

  35. Scotty, another reason for high used car prices, are the prices for new cars. The prices of new vehicles has went through the roof, so the demand for used cars has increased. So whether the we like the prices offered at used car dealerships or not, somebody out there needs the car, and will pay the price. And that right there is the validation for the price, the willingness to pay it. So, if we collectively had better options, the used car prices would drop overnight.

  36. Scotty, my man -Are you from New Hampshire originally?? I ask because of the "Live Free or Die" slogan over your garage door.

  37. So I'm looking to buy a used Toyota Camry 17 SE … and all the websites have the ones he listed even on Craigslist… Is there a reliable place to look for one?

  38. Another reason used cars in the U.S. are so expensive is because most cars sold in the U.S. market are used. The average American can no longer afford a brand new car(40k+ for a mid-level trim full-size pickup for example) so the market is flooded with used car buyers. High demand = high price.
    It was not always this way. Americans used to buy a lot of new cars in the past. For example, in 1965 you could buy a brand new V8 Ford Mustang for around $2,700. Adjusted for inflation, you'd be able to buy a V8 Mustang for only $19,900 in 2019, literally less than HALF of what Ford is currently selling a V8 Mustang for these days!
    So yeah, as long as they keep over-engineering and over-pricing new cars, expect used car prices to stay high for the foreseeable future. :/

  39. I always chuckle at car dealers’ “no uncomfortable negotiating”. I’m like, “uncomfortable for who?”, I’m perfectly comfortable negotiating a better price

  40. Another factor is the English drives on the right side and the rest of Europe drives on the left. This means most cars that don’t sell in England has nowhere to go while cars that don’t sell in the US gets ship off to other countries driving up prices.

  41. If you think cars are expensive in the US, wait till you come to Singapore. We are screwed over many more times as compared to you. Worst thing is that we can't really do anything about it as the government is at the top of the food chain.

  42. In San Diego, the prices for used cars (through Craig's List, etc.) is significantly higher than Kelly Blue Book.

  43. Id rather ride my bike to work then pay near dealer price, im atleast going to get it down 1000s of dollars before buying.

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