Let's not forget that most reputable used car dealerships offer some sort of warranty on the vehicle (sometimes up to a year), whereas an individual seller isn't even required to have it inspected in most states (that responsibility often falls on the buyer). Of course, a dealer is going to try to make as much as possible while doing as little work possible.

I personally will probably buy my next vehicle through a wholesaler. I know a couple of guys from San Diego and Alexandria with wholesale auto businesses that buy at auction and can get some really good deals. They deal with mostly luxury autos like Mercedes, BMW, Lexus, etc.