Tips For Buying A Used Car (Autohitch)
Tips For Buying A Used Car From A Dealership
Used Car Buying Tip #1- Your Car And Your Deal
A good starter tip for buying a used car from a dealership is to remember that every car and every car deal stand on their own. What I mean by that is that you shouldn’t assume because a 3rd party website said people are paying X that you will pay X. Let me ask you this- What were those buyers’ credit qualifications? No one can legally tell you that, which means that no one knows, so right off the bat you have to consider those figures mere guidelines in your car buying process. The fact that every car is different, especially in the used car department, should be a no brainer. Let me get even more specific with you though just to best illustrate the point- A car with 99,756 miles is more valuable than a car with 100,456 miles. Why, because it rolled over. In the spirit of things we all know that its not even 1k miles we are dealing with here, but it does mean that a bunch of 100k mile rated parts just became over used. It’s very similar to a minor bumper repair you had done when you backed into your garage door really slowly one day. Because your vehicle history report shows an accident and another cars doesn’t, your car isn’t as valuable. Hey, I don’t make the rules, I’m just here to lay out what you can, and should expect. Use every comparison tool or piece of data as a mere guideline only! It will better prepare you for reality and actually will garner you respect from many dealers/sellers which believe me, pays off more when trying to meet in the middle and make a deal.
Used Car Buying Tip #2- The Carfax Isn’t Law
There is a common misconception about vehicle history reports and that is that they reflect the history of a vehicle. They do no such thing! They reflect what someone has reported about the vehicle, that’s it! If you get into an accident with a curb (For example) and the damage is $800 with your insurance deductible being $1,000, you will go pay for that damage on your own.
Because you didn’t make an insurance claim, and because you were in a single car accident that received no police report, there was no one to report anything to any vehicle history databases. Your car has a “Clean Carfax”. Take this into consideration when you’re out there and someone is eager to discuss their vehicles history. Also worth noting, these reports can contain inaccurate information the other way as well. I had a vehicle that was marked as being involved in an accident but that was only because it was towing a trailer that was hit (Lightly). In those situations both are considered one vehicle so the truck now had a “Dirty “Carfax” which did not explain the situation. I had to go get a police report to sell the truck as clean. Again the repeating theme here is- Nothing is written in stone, use information as a guide only.
Vehicle Inspections For Used Cars
Get any vehicle you are seriously considering an inspection from a certified inspector of your choice. Do not use a mechanic! A mechanic is a specialist on certain aspects of a vehicle, you need someone who specializes in knowing everything about the entire vehicle and that can give you an overall report on its condition front to back. There are several services around such as YOUR MECHANIC that are super easy to book and not very expensive at all. Again, this service has many mechanics so ensure that the person you book is an inspection expert, and not simply someone that knows how to turn a wrench (No offense mechanics) To make is easy you can click here and I have already performed a google search for you (Search for inspection service). A reputable service will cost between $150 and $200 and there are some that cost double that, but you can leave those for the dealers. You just need a quality “Buy or Don’t buy” in my opinion.
Bonus Used Car Buying Tip- Have Fun With The Seller
If you get an inspection (You Need To Get An Inspection!) there will be a chance that something is found that changes your mind and now you’re out the cost of the inspection with no car to show for it. Arguably, you are better off, but it doesn’t feel that way, right? I have a way you can have a little fun with the process, possibly remove that risk, and get a better idea of the actual condition of a car BEFORE ever calling the inspector. Tell the dealership that you are ready to buy the vehicle but that the purchase is subject to an inspection. They must pay for the inspection that you book (Obviously it must be an independent company and not a friend of yours). If the inspection passes what has been disclosed, you will pay for it by adding it on to the sale price. If the vehicle is found to have something wrong that wasn’t disclosed, the dealer eats the cost and you are on your way. Now, obviously there must be some things in writing here to protect both sides, and it amounts to simply making some notes on a deposit form, but the idea is simple- If the dealership stands by the car, they will have no problem doing this. And before any dealers reading this disagree with me, I myself (A former dealer) actually offered this to customers who questioned my vehicles. I never had one single person take me up on the offer although a majority ended up buying the vehicle. Why? Because they didn’t really question the car, they were just busting me down for a cheaper price by pretending to be weary of the car.
Used Car Buying Tip #3- Find The Best Deal In Town
One thing we need to do together is to stop thinking about the car deal as the one that get’s you the lowest price. In used cars, the lowest priced car is almost always the one with the most or biggest issues. There are so many aspects of a deal today that a dealership can set a sale price lower than cost and still turn a decent profit in the end. Smaller independent dealerships can’t really practice this too much, but a larger dealer or dealer group has certain advantages that you should be knowledgeable about:
- They have higher volume so lenders and other 3rd party vendors provide them with higher bonuses and kickbacks for sending them business. If a dealer does a lot of business with bank X, that bank will pay them a fixed amount per loan to continue sending them deals.
- They have the cash flow to invest in the future so, maybe they sell you the car now at cost but because you signed up for a 70 month loan to keep your payments down, those extra months will be almost entirely profit toward the dealership. If they’re willing to wait and if you complete your term, there is good money to be made there.
That may be a little inside baseball for everyone reading this, but what it’s meant to do is de-emphasize what all of these 3rd party car shopping companies have taught you, which is to focus on price. Dealerships are like any business, and when these 3rd parties started eating into their front end margins they got smart and focused on the other side, you should too! The best path here is to give 2–3 dealers a shot and see, not which throws out the lowest price, but which is the most responsive, or the most attentive to your needs. These are often the dealerships that are focused more on people than of process and in turn they typically produce a more consistent flow of happy customers. Customers who may not have received the rock bottom lowest price, but did end up getting the absolute best overall deal.
Used Car Buying Tip #4- The Best Financing Could Be Anywhere
A lot of car buying tips insist you avoid the dealerships when shopping for financing, WRONG! Dealerships are the source of a clear majority of auto loans in the U.S., and banks, like any other business would, compete to get as many of those loans as possible. What this means is higher payouts for dealerships and lower rates to entice customers to buy from those partner dealers. That being said, a dealer doesn’t have to pass along their bonuses as savings to you, but if they do a TON of business with a particular bank, that bank may very well, and many times does, beat even the best of Credit Unions auto financing rates. In reality, a dealership is for auto loans what Autohitch is for car shoppers, which is a place to go where you can see what multiple lenders are willing to offer you. So, the best advice I can provide is to check with your bank, a credit union (If you are a member of one), AND at a dealership. Preferably you want to try this at a larger dealership who works with more lenders, but if that isn’t who has your ideal car then so be it…
Used Car Buying Tip #5- Monthly Payment Isn’t Price
As we referenced above, you can actually lose money on the cheapest car and the perfect example of this is when you enter into a bad loan or a poorly structured payment. Example: If it would only take you 55 months to pay off the loan but you see that extending to 70 months could “Save” you $150 dollars each month, check the math. Chances are, no, reality is that you will pay more in the end. But before you get mad at the dealership understand this- A loan at 70 months has more risk than a loan at 55 months. Thats 15 more months that you could lose a job, get a divorce, or who knows what else that could throw you into default. So, for that extra risk, there is extra reward.
Used Car Buying Tip #6- Used Rental Cars For Sale
For awhile now the amount of used rental cars, such as those from companies like Enterprise or Avis have been plentiful. On the surface these cars look like great deals- The rental companies need to move inventory to keep their fleets up to date and because they are not in the market to make money selling cars, these two factors typically result in prices that are a good amount lower than your average dealership. You might also have read that, like govt cars, they are maintained regularly, which is more than you can say for many private owners.
All that being said, why would I recommend thinking twice about buying a used rental car? “Wear and Tear”. The cars may have been cleaned a lot, and they may have been well maintained, but they were driven by countless people who probably treated them for what they were= Someone else’s car. That may not be something you can see or feel when you get in, but that’s the type of treatment that causes parts not to last as long as they should, and by then it’s your problem. But hey, like anything, it’s a trade off right? You can get a relatively new car at a great price, and because these rental companies sell direct to the public you can even get it without visiting a dealership.
Used Car Buying Tip #7- Auto Value
Most car buyers have a car to trade in or a car to sell when deciding to get their next car which is why one of the first questions car buyers actually have is: “What is my car worth?” The answer is pretty much the same for your car as it is for any you may be interested in buying- It’s worth whatever someone will pay for it.
A lot of the big name experts out there push Kelly Blue Book, which I still just can’t understand, because a book can’t determine value. In an industry where every purchase and every vehicle stand on their own, HOW COULD A BOOK VALUE BE ACCURATE? When determining the value of your car the best bet is to stay away from any website or publication that promises to determine values with math or computer algorithms. Until a book or a piece of software shop for and buy a car, let human beings be your guide….
Go to Ebay and search for your vehicle, then find where you can see auctions that have ended. Method to my madness? Yes! Numbers in green mean that the car was sold, numbers in black mean the car was not sold. These confirmed sales are a great way to see what real people are paying for real cars. Keep in mind many of these sales are cash sales, but, that’s not a bad thing because this gives you insight to what you could expect if you sell it yourself. If that number ends up being substantially higher than any dealers offer you for your car then it may very well be worth the hassle to sell it privately.
Another tried and true method is to scour the listings for your vehicle and take an avg on the asking prices. Deduct about $500-$750 and you’ll get a good avg on what the vehicles will sell for (Retail), then deduct another 2k and you have what dealers are probably paying for it wholesale (At the auto auction).
Keep in mind that your vehicle as privately owned is more desirable to a dealership than any car at the auction BUT, that doesn’t necessarily always translate into being more valuable. So don’t head out demanding more money, just be conscious that you don’t have to give up a ton of it to get a fair price.
Don’t Forget- The dealer is sparing you the hassle of selling the car yourself (Making ads, taking calls from potential scammers, and meeting strangers in parking lots), so when I give you calculations for getting a fair price for your car, I’m taking into account that you are paying for convenience, possibly one of the hottest commodities in the age of Uber and Amazon.
Used Car Buying Tip #8- Research What Your Car Can Be
Car buyers are often so heavily influenced into researching the process of buying a car, that the actual car get’s a “Back Seat” (Great Pun Huh?). Use sites like Consumer Reports to look up whats been breaking on the car since it’s debut. How much are these repairs costing? Are they under some sort of warranty? All questions that SHOULD have an impact on your decision making. This is yet just another example of how the price of a car has little to do with what you could actually end up paying for it.
Conclusions
You tell me. Leave us a comment here or better yet, head over to Autohitch and let us know if you think we missed something important. Let us know if we nailed a certain point or even if we got one completely wrong. We know what that could invite of course, but if you are going to be giving advice or opinions online, you gotta learn to agree to disagree. Thank you for reading and be sure to keep an eye on us as we seek to improve the car buying (And Selling) process for everyone!
Tips for buying a good used car
