It's Time to Ditch 'er for Something Younger
Jun 18 '06
The Bottom Line Following these tips for buying and selling a vehicle can save you a lot of money.
You’ve noticed her rear-end is sagging, her sparkle and perkiness fading, her cracks and wrinkles stare at you, and maybe she’s even started smoking and giving off an unpleasant odour. Sure, you’ve grown attached, but quit punishing yourself. It’s time to move on to something younger and better, and go back to the days where you were happy to be seen together in public. After all you’ve done for her, now all she does is play around with your mechanic and max out your credit card. It’s time for a change. It’s time to trade in your car for something new.
Having just purchased a brand new Mazda3 – a replacement for my 1995 Tercel – I’ve had to run through all of the buying and selling processes. In the past three and a half years I’ve been involved in selling 3 vehicles and buying 6 (both new and used), and later this year I’ll be faced with the lease-end options for my 4Runner. I’m no stranger to the world of buying and selling vehicles. This review is divided into two independent parts, first covering aspects of buying a brand new vehicle, and the second covering the process of selling your previous vehicle.
Are You New to Buying New?
I’ve never been comfortable buying a new vehicle and I probably never will be. At least not until I win the lottery, but since I just spent all my money on a new car, I can’t even afford a lottery ticket. I’m eternally screwed. Nevertheless, here are a few tips for when you go out to buy a new vehicle:
Find a Salesperson You Like
Don’t forget, every salesperson’s mission is to kick you in the groin vigorously and repeatedly. Still, that doesn’t mean you can’t find one with padded shoes and a relatable personality. If you don’t like the salesperson that’s latched on to you, leave and come back some other time and look for a different salesperson. If the dealership seems to be filled with a bunch of jerks, find another dealership. Being comfortable with the person you are buying from is huge.
Research Prices
Once you have figured out the exact vehicle it is that you want, go home and search for prices on the internet – there are multiple websites out there for this very purpose. Find out the invoice price (theoretically what it cost the dealer to get the vehicle) and the Manufacturer’s Suggested Retail Price (MSRP), and take that information to the dealer. Until you walk in to the dealer armed with that information, you’ll likely have a tough time getting them to negotiate below the MSRP. Proving that you are knowledgeable about the cost of the vehicle can save you a good chunk of cash.
Wait
If possible, just wait and watch. Wait for a promotion/incentive that interests you, and/or wait until the end of the month when dealers are more eager to make a sale. If they don’t have the exact vehicle you want on their lot, consider waiting a month, hoping that they will get one on their lot. It costs a dealer far more to keep a vehicle on their lot than it does to order one in, so if it’s sitting on their lot, you can expect them to be a little more forthcoming in offering a lower price. If you’re not too picky about the exact vehicle, model, and colour you get, check to see if there is a comparable vehicle already on the lot that suits you.
Extended Warranties and Protection Packages
Extended Warranties and Protection Packages are what bring dealerships the big money, and are typically a waste of your money. First off, if you’re only going to be keeping the vehicle for a few years, there’s absolutely no reason to consider any of these sorts of packages. Secondly, if you’re buying a reputable vehicle like a Toyota or Honda, the odds that there will be a need for an extended warranty are not even remotely close to being in your favour. There’s a reason why you’re already paying more than you would for a comparable Chevy or Chrysler…
As for protection packages, they aren’t bad ideas, but the prices dealerships charge are obscene. Fabric protection is nothing more than spraying the seats with something like Scotchguard, which you could do yourself for $10, or pay the dealership $300+ to do. Paint protection is a paint sealant, another thing you can buy and apply for roughly $10 (versus $300+), and it will only last a few months (the dealer’s claim that it will last the lifetime of the vehicle is garbage). Simply keeping the vehicle clean and waxing it at least twice a year is cheaper and will do a better job of protecting the paint. Rust protection isn’t any use, as vehicles come direct from the factory with a rust-proof coating and most vehicles have a factory rust warranty. Undercoating is worth considering if you do a lot of driving on gravel roads, but the improper application of undercoating can actually lead to water and grime building up in places, which will ultimately decrease your vehicle’s lifespan.
Avoid Accessories
You may want a remote starter, or window tinting, or some good floor mats, and all of these things the dealer will offer. Dealerships will charge you an arm and a leg for these things. The only reason I chose to get 3M protection and window tinting done by the dealer on my Mazda3 was because I managed to negotiate the prices down to what they’d be at an aftermarket shop. Initially the dealership wanted to charge me double what it would cost at a shop. Generally speaking, you’re better off focusing your attention on negotiating on the price of the vehicle and not on accessories.
Enjoy It!
It’s never easy to go and spend your year’s salary on a new car, but don’t let that hamper your enjoyment of the car. Don’t beat yourself up if you didn’t get the exact price you wanted. If you got the car you wanted, be happy.
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The Lucky 7 Steps For Selling Your Vehicle
You’ve got some new wheels coming, and now you’re trying to figure out what you should do with your previous mode of transportation. Many people that buy from dealers will just take the simple route of trading in, but you don’t want to do that. It may be a little easier, but you’re lucky if you lose no more than $1000 on a trade-in (many dealers will try to take at least $2000-$3000 off of the value of the trade-in). It will also only serve to complicate negotiations on the price of the new vehicle. But if you keep your vehicle in decent condition, you can sell it yourself by spending all of $100-$200, which saves you a lot of money in the end.
I purchased my Tercel over two years ago for $5000. When I was buying my Mazda3, the dealer offered $2500 for the Tercel. I put in 3 full hours of work with $50 and sold it privately for $5400 in less than a week. How’d I do it?
1. Make ‘er Sparkle!
The minute you decide you’re selling the vehicle, you must realize that the vehicle is no longer yours. It doesn’t matter if you’re still driving it to work every day; it is not your vehicle. You must remove your personality from the vehicle. If it isn’t part of the vehicle, get it out. No crumpled up garbage, no tissues, no fuzzy dice, no bobble-heads, no CDs. Once you have removed all of the larger items, it’s time to really start cleaning. Vacuum the carpets, wipe up the dust, clean the windows, wash the floor mats, wash the exterior, consider fixing windshield rock chips, and make sure everything looks clean and taken care of (even though that may not entirely be the case). Gather up all of the maintenance information and neatly organize it in a folder or binder, and also calculate your gas mileage. Car buyers want to be able to picture themselves in the vehicle, and if your junk is lying around, you make that very difficult for them. Spending two hours fixing up the car will not only help you sell, but sell for a higher price.
2. Figure out a Figure
Cleaning your car and looking at the maintenance records will help you get a good idea of the true condition of your vehicle, giving you an idea of how your price should vary from the norm. To find the norm, look in local newspapers, magazines, and on the internet. There are countless sources out there that will give you an idea of what your vehicle is selling for. If you’ve made some upgrades, a rudimentary guide to figuring out their current value is to take the original price and divide it in half, and then add it to your total. Once you’ve looked around, come up with a solid figure of what you want to get (keep it to yourself) and a price that you absolutely will not go below. Then, add a few hundred to the price you want to get and use that as the advertising price. For my Tercel, the price I was aiming for was $5500, the minimum $5000, and the price I advertised it at was $5700. The first offer was $5400 and I accepted it.
3. Advertise
The car is clean and the price is set, so now you can start inviting people to come and take a look. There are countless ways you can go about advertising that your vehicle is for sale, with the best method depending on where you live. Simply putting up a For Sale sign in your car with a price and phone number isn’t going to gather much attention. Posting up a piece of paper at the local laundromat won’t be much use, since nobody goes to the laundromat to buy a car. Telling friends and family will help spread the word, but my profit-motivated friend, realize that it’s customary to drop the asking price for them. I’m not saying you shouldn’t do those sorts of things, but just don’t be surprised when your car is sitting on your driveway for a month and you’ve only had one call.
The majority of people that are looking for cars will look in car-specific classified magazines or on the internet where prices, features, and contact information are all readily available. Of course, those listing services typically come with a charge, but it’s a better form of advertising that’ll generate more interest in your vehicle. I’ve had the best results with AutoTrader, which is both a printed and online Canada-wide source, with ads that start at $40 (what I always go with) and can go up to over $100.
4. Fielding the Calls
Once the ad is placed, the stress starts to build. The important thing to remember is to stay in control, and not to let the prospective buyers get you bending backwards to meet their demands. Sometimes people will call and say they are coming over, but you never see or hear from them again. People have asked me to drive the car to their house so they can look at it – what the hell are they thinking? Insist that they meet your where you want to meet, whether it be your house, a mall, or wherever. If they’re serious about buying a car, they’ll do what works for you. If they’re asking you a bunch of questions about the car, be honest, and don’t make out your car to be something that it isn’t.
5. The Test Drive
Somebody is at your door and wants the keys to your car, so what do you do? Go out with them and open up the car, and show them a few of the highlights of your vehicle and anything that has been replaced or repaired recently. Avoid telling them about little quirks about the vehicle (that’s what you do when they’ve given you the money), but don’t lie. Once you have given them a basic overview of the car, you should have a good idea of whether or not you can trust them with the keys to your car. If you trust them, ask for some ID and something valuable of theirs to hang on to (ie. keys to their existing car) and then let them head out on their own. If you just don’t feel comfortable enough, hop in the back seat and try to remain inconspicuous while they drive around. Rarely have I had people take a vehicle out for more than 5 to 10 minutes.
6. Lemonade, anyone?
Most people have pretty much figured out whether or not they are seriously interested in buying the car before they’ve even driven it. Taking it for a drive is a signal to you that they are figuring out an offer. When a person gets back from taking it for a test drive, there is a very good chance that they will make an offer or at least make a tentative offer pending a mechanical inspection.
If they want a mechanical inspection, make sure they know they are solely responsible for arranging and paying for it. If the inspection reveals the need for some much-needed repairs, it’s common to drop your asking price to accommodate half of the cost of the repairs. It’s usually only when it’s an older vehicle with already known problems when you make it known that you are selling it “as is” and will not cover any of the repair costs (which you tell them before any inspection takes place).
If they make an offer without the need for a mechanical inspection, recall your predetermined amounts and see where it fits in. It’s rare that a person will offer to pay your asking price, and they’ll usually lop it down closer to your target price (assuming you were reasonable with your prices). In general, people won’t try to bring your price down more than a couple of hundred dollars (unless a need for repairs developed), so I often find haggling over the price to be a quick and simple step that appeases both sides. If they give you an offer that’s too low, tell them you’ll think about it for a few days and see what other offers come your way. As much as you may want to rid yourself of the vehicle, it can pay off to not just hand it over to the first person that makes an offer.
7. The Paperwork
You’ve agreed on a price, so now it’s time for the legal stuff. Exactly how you proceed may vary, as some buyers prefer to put down a deposit and go home for a day or two to take care of getting insurance. Other people will want to fill out the Bill of Sale and sign the cheque immediately, coming back the next day with insurance so they can take the vehicle home. Be prepared for either case, with a Bill of Sale (you can use the back of the vehicle registration as a Bill of Sale), all of the keys, and the vehicle history all collected together in a safe place.
Vehicles cannot be registered without insurance and the Bill of Sale, so therefore a short grace period exists where buyers can drive without a license plate as long as they have the Bill of Sale and insurance information present in the vehicle. Check the local regulations to find out exactly how long that period is.
Most sellers will only accept cash or a certified cheque, as it is the safest method of payment. If they want to use a regular cheque to pay and you’re willing to accept it, at least make sure you look at multiple pieces of ID. As for the license plates, leave them on right up until the new owners are picking up the car to take it home. The final step before letting them drive off with your car is to do one quick sweep to make absolutely sure you got everything of yours out of the vehicle. I once left my garage door opener in the car and the buyer wasn’t too happy to meet up with me later to hand it back over, so do your best to avoid that sort of thing. With the paperwork signed and the keys in their hand, you are no longer liable for anything that happens to the vehicle (unless you manage to drive your other car into it…).
That’s It!
With just a few short hours of light work, you’ve sold your car. Of course, the better your car, the easier it will be to sell, but even with old junkers you can find a buyer sooner or later. Selling a car is easy if you have a plan and make sure you stay in control.
For selling my Tercel, it took an hour and a half to clean it up, a half hour to take care of the pricing/ad, a half hour of dealing with buyers, fifteen minutes to take care of the paperwork and visit the bank, and five minutes to hand over everything and say farewell. The cost of cleaning and placing the ad was $50. It took not even 3 hours and $50 to sell my Tercel for $5400. Compare that to the $2500 Mazda offered as a trade-in, and I’ve saved myself $2850. Therefore, three hours of fairly easy work made me $2850, or in other words, I made $950/hour by choosing to sell the vehicle myself. Sure, there may have been a bit of luck involved this time, but regardless, there is no way the simplicity of trading in your vehicle is worth anything close to $950/hour.
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