How Much Is That Car In The Window?
Sep 03 '00
Buying a used vehicle remains one of life’s most stressful moments. For most people, a car or truck remains their second biggest purchase, lagging only behind a home. And while a new car or truck is the ultimate commodity purchase differentiated only by price and service at a specific dealership, a used vehicle requires much more knowledge and attention to detail.
How does the vehicle run? Is the price a fair one? What about the body? Don’t forget the mileage – are there a lot of miles that could indicate a long highway commute or perhaps far too few miles given the vehicle’s age? Finally, you’re faced with just how much you trust the seller.
Unfortunately, most buyers treat this process as the ultimate poker game. They look to win the pot outright and deny the seller the chance to “win”. But a seller can have a fair profit and the buyer can strike a good deal without either side feeling that they lost. Yet, both sides can win and I’ll tell you how here.
Why me? Well, except for a five-year stint where I lost my mind and left the industry, I’ve spent thirteen years in companies that bridge the gap between the auto industry and consumers. On average, I visit 400 auto dealerships throughout the country every year, yet I also belong to numerous consumer groups. I’m not a self-proclaimed expert, but I do have some insight and some tips for you.
BUY THE CAR YOU’RE INTERESTED IN - This is the classic mistake buyers make. They scan the papers, perhaps visit some dealerships, find a car, fall in love and do dumb things. The trick here is to decide your desires, as detailed as possible, before you even start looking. For a purchase this large, you can afford to be choosy; indeed, you must be specific in what you want or you’re going to settle for things you don’t want.
You wouldn’t (or at least shouldn’t) buy a house without first deciding the location, the number of bedrooms and the like before calling a realtor. By the same token, you can’t be mesmerized on a car lot by a candy-apple red sports coupe when you need transportation for six family members.
When I last looked for a vehicle 18 months ago, I used a variety of research to narrow my choices to several: a 1997 Nissan Altima, a 1997-1998 Saturn SL2 or a 1998 Honda Accord. My requirements were specific. I wanted cars with four doors, good reliability ratings, strong resale value, and excellent crash test records. Looks were unimportant. Armed with this shopping list, I was able to determine fairly narrow price bands and then go shopping. I ended up buying a Saturn, but only because I had done my homework first. Indeed, I wavered once on the lot and test drove two other vehicles that were not on my list. We’re all impulse buyers at heart; it’s only a question of degree.
RESEARCH, RESEARCH, AND THEN STUDY SOME MORE - You must know what you’re doing in this purchase. Housing tends to be too complicated, so we use a realtor system that now embraces buyer’s agents. But even they’re not enough. We then (hopefully) pay for a home inspection and pay another firm to check the title in the land records. You can and must take these steps when buying a used vehicle.
There are something on the order of a kajillion web sites that offer vehicle information. Many offer rehashed information drawn from the other kajillion. For specific information, you can’t go wrong with Edmunds (http://www.edmunds.com). You’ll find a variety of reviews, research and other useful information. By now, you should have your shopping list of features drawn up. Start with Edmunds and begin checking cars. You already have an idea of the basic vehicle you want. Start with that one.
Edmunds will give you names of similar vehicles in class and alert you to vehicle twins (cars from the manufacturer sold under one name in a basic line and dressed up with trim packages and sold in a premium line). Like everyone else on the web, Edmunds will let you click all over the place to partners and affiliates. Don’t forget to finish your research.
A word about Consumer Reports while we’re on the subject of research. Yes, their labs are great. And they publish those nifty reliability records, but don’t forget that those ratings are self-reported. While you can get a good feel for how others view a vehicle (think of Epinions) that they own, the information here is self-reported. It is not (as one consumer tried to convince me), based on an analysis of service records from the nation’s repair facilities.
I KNOW WHAT I WANT. WHERE IS IT? - Let’s assume for now that you’re using an auto dealer or someone you know (a friend of a friend) in a private transaction. I recommend you steer clear of people selling cars privately unless they are known to you. Many are “curbstoners”, people who buy and sell many vehicles without a dealer’s license or any of the protections you might associate in dealing with an established business. If your Aunt Bess has a friend at work that is selling a car, go ahead and consider seeing it if it meets your needs list, but be very wary of picking up a name out of the classifieds. Chances are you’ll across one of the pseudo-dealer curbstoners. I’ll write about them in a future Epinion, but for now, steer clear.
So how do you find the car you want? Remember those kajillion web sites with automotive information? Many, like Carfax (www.carfax.com), have approved dealer lists. Some even have listings of vehicles themselves (such as AutoByTel (www.autobytel.com) or AutoTrader (www.autotrader.com).)
No matter how you find the dealer, and you can go low-tech and use a newspaper too, make sure you check out that dealer with the proper local government regulators. Although you can get better information from the right DMV department, it’s hard for someone off the street to find the right department and harder still to get them to spill a lot of information. Your best bet is to try the local (not the state) consumer affairs agency. You can find a listing for your local agency from the federal government’s Consumer Resource Handbook online at http://www.pueblo.gsa.gov/crh/state.htm.
Call the agency and check out the selling dealer first. In every single city I’ve traveled to, every dealer and government employee could point at one specific dealership who routinely gouged people, sold bad vehicles or was just generally a blight on the rest of the industry. Mind you, most car dealers are very reputable. What we have here is the “one bad apple” syndrome. Explain your situation and be polite. Your consumer agency can’t recommend someone, but they can tell you if there have been previous actions, fines, etc.
The local Better Business Bureau (BBB) can’t go that far. They maintain files as well, but they can typically only tell you if the company has not responded appropriately and timely to customer complaints. Only companies who are widely known as bad companies do that – so you’re really not getting a lot of information here. The BBB is a great entity; just not the one you need for this task.
THE DREADED TEST DRIVE - Chances are very good that you won’t be allowed to take the car off by yourself if you’re buying from a dealership. There’s a whole host of good reasons for this, but it typically means that your trusted mechanic (you do have one of those, don’t you?) won’t be able to help you. Of course, you can always offer to pay your mechanic to accompany you on a test drive, but I only recommend that for high-end vehicles that cost you more than $30,000 used. And don’t forget, you’re going to have a trained salesperson in the vehicle with you at all times.
The best resource I’ve found for the do-it-yourself buyer is Autopedia’s Used Car Buyer’s Guide (http://autopedia.com/html/Used_car.html). The page includes a wonderfully comprehensive checklist, some good suggestions and tips, and even copies of a generic bill of sale if you’re buying from a private individual. Obviously, if you’re buying from a car dealer, you’ll be using the dealership’s paperwork to complete the deal.
I could write pages upon pages of how to test drive, but this wonderful checklist does the job in a fraction of the time.
OKAY, FOUND THE ONE I WANT. NEGOTIATE AND WRITE A CHECK, RIGHT? - Absolutely not!
You’ve only just begun. Let’s say you narrowed your choice down to a specific vehicle for sale at a specific dealership. You’ve gone for a test drive, completed the Autopedia checklist and everything seems fine. Now, we get to haggling, right?
Nope. We’re still in research mode. Ask to see a copy of the Carfax report for this specific vehicle. Carfax (www.carfax.com) is a company that checks the vehicle’s past records and finds title problems, odometer rollbacks and more. If the car has no problems, the dealers get a “Clean Title Guarantee” that they can give you. If there is a problem, the company identifies what it is and where it happened. Time to go look for another car then. They have millions of cars with bad records (everything from floods to rollbacks) in the database, and the best part of it is that the dealer should give you a report for free. If they won’t, consider it a warning sign and buy your own. The report is cheap insurance at $15 or so for a purchase of thousands of dollars.
OKAY, CARFAX SAID IT WAS A GOOD CAR. NOW I CAN HAGGLE, RIGHT? - Well, haggle is too strong a word. During your research, you undoubtedly came across multiple pricing guidelines. Dealers hate them because they’re just not accurate to a specific model. They’re a good starting point, but honestly, what’s the difference between a vehicle in Good or Excellent condition? The guides also have long lead times and market conditions could have changed price.
But the price guides are a good place to start. Kelley Blue Book (http://www.kbb.com) and NADA (http://www.nadaguides.com) both offer free pricing guides on the web. Print them out and take them with you, but don’t under any circumstances use them to hammer the price of your purchase down or the price of your trade up. These are guides and only should be used that way. Also, particularly in Kelley’s case, make sure that you’re using the vehicle’s retail price. Don’t assume that the dealer paid the wholesale price. And frankly, even if they did, you can’t go into this negotiation saying “I’ll give you a $200 profit”. You don’t tell your doctor or your hairdresser what their profit margin should be, and you shouldn’t think that you can do that to a car dealer. There are more issues than you’re aware of as a lay person that are used to determine price.
The most important thing I can stress here: Be prepared to honestly walk away from the vehicle and say that you won’t purchase this particular one. This shouldn’t be used as a negotiating ploy, but if you honestly believe that you don’t want to pay price X for the car, thank the dealer for their time, ask them to keep you in mind for a similar vehicle and leave. Don’t negotiate in the parking lot and don’t threaten to leave. Just go.
There will be another car, trust me. There are over 40 million used cars and light trucks sold in the United States every year. This isn’t the last one.
WELCOME TO RUST AND DUST - Ouch, my dealer friends will be upset for this one, but the practice goes on everywhere. You know how the salesperson tries to upgrade you to an expensive warranty when you buy a stereo? Or how the counter person at the rental car agency tries to sell you a full tank of gas and tells you to (hah!) return the car empty?
These folks have nothing on the auto dealer industry.
Rust and dust typically describes the after-sales pitch on new cars, but it’s just as prevalent on used vehicles. The names comes from the sale of such expensive and almost always unnecessary items such as rustproofing and credit life insurance. If you haven’t secured financing before going to the dealership, you’ll be offered every flavor of financing the dealer can find. You’ll be pressured into extended warranties (which are sometimes actually a good idea) and all sorts of add-on features. Be strong. If the feature didn’t make your original list, don’t fall for the pitch. You can always add these things later.
RETURNING YOUR CAR IF THERE’S A PROBLEM - First things first.
You do NOT have three days in which to return the vehicle if you’re unsatisfied. This is a consumer urban legend that grew around contract law. The dealership is not required to take the car back if you are unsatisfied. Sorry. This is a big decision and you can’t buy if you’re not ready simply because you think you can dump the car off tomorrow and get your money back.
If you have a legitimate gripe, call the dealership first and explain the problem to your salesperson. A typical hierarchy goes something along the lines of:
Salesperson – Used Car Manager- General Sales Manager – General Manager – Owner
Work your way up the chain methodically. If you get stonewalled, go around to the next highest rung. For example, if the sales manager won’t speak with you, call back a short time later and ask for the general manager. You’ll find that most dealerships will at least try a resolution. They don’t want you calling an attorney or consumer affairs.
If you honestly feel that you’ve got a problem with the vehicle, and the dealership won’t resolve the problem to your satisfaction, then you should contact your local consumer affairs agency. Outline the problem for them and take their direction. There’s no need to go running to an attorney yet, nor should you lose your cool. Granted, you’ve done your share of work in this process and no doubt feel wronged, but cooler heads always prevail.
By the way, you’re making the right choice. New cars depreciate the minute you pull them off the lot. You can buy late-model used cars for a fraction of the price and still get a great vehicle. You’ll have an adventure in doing so, but if you do your homework, take your time and don’t cave in to impulse buying, you can have some fun too.
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