A used car, also sometimes referred to as a second-hand car or a pre-owned vehicle, is a vehicle that has previously had at least one owner. Pre-owned vehicles can be purchased through a number of different sources, including independent car dealers, leasing offices, rental car companies, and private party sales. Some retailers offer used cars that are certified and have extended warranties or service plans on the used cars they sell, both of which offer more security to consumers.
The price of a used car can be based on a number of factors, including geography. For instance, trucks tend to be more in demand in rural areas than in metropolitan ones. Likewise, convertibles are in greater demand in warm climates. The overall condition of the vehicle can also affect pricing. Condition may be based on the vehicle's history, appearance, mileage, and overall wear. The pricing of a used car can also be subjective.
The mileage on a vehicle is measured by the odometer. This special instrument is used to measure the distance traveled by a vehicle. Traditionally, the odometer was comprised of a series of cogs that displayed numerals. The cogs turned in accordance with the vehicle's wheel rotation and displayed the current mileage. Modern digital odometers track mileage using a computer chip connected to a digital display. The vehicle's mileage is also displayed in the control module of the main engine. Resale value is often significantly based on mileage. Typically, the fewer miles a used car has, the higher its resale value. Odometer fraud, sometimes called clocking, involves setting the odometer reading manually so that it falsely displays a lower mileage in order to increase the value of the vehicle. To combat this problem, the law requires that a vehicle's mileage be recorded on its title each time it changes owners.
The difference between the price of the vehicle when it was purchased new and its value at a later time is known as car depreciation. A new vehicle will depreciate at the fastest rate during the first year following the initial purchase. Following the first year, a vehicle's value can depreciate as much as 20 percent per year. The depreciation rate for a used car can be more difficult to determine. Numerous factors can affect the rate of depreciation for various models, including unexpected market issues. For instance, vehicles with a lower fuel economy may depreciate at a faster rate when gas prices are high. Depreciation rates can also increase if a manufacturer discontinues a certain make or model. High mileage and poor condition can also significantly impact the rate of depreciation and the ultimate value of a used car.