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Tuesday, July 11, 2006

Used Car Dealers: Driven Towards Profit

In America, car dealers are not simply easy targets for mistrust, they are universal ones. Indeed, the only figure more loathed than the new car dealer is the used car dealer. By no means are all used car dealers crooks, but enough of them are to warrant suspicion for the entire industry. Too many victims of fast talking and shiny smiles will break the bank for a broken-down car while the salesman pockets the difference. So how can you tell an honest dealer from a crafty scam artist? How can you secure a safe, reliable used car for a reasonable price?


What It Costs

The average price of a used car sold in the United States is approximately $12,500, about half of the average price of a new car. While a handful of low-end new models are available for $12,500, most used models will boast higher standards of safety, comfort, and performance. As with new cars, used car prices vary wildly depending on make, model, and, of course, the age of the vehicle. The value of a new car tumbles as much as 20 or 30 percent after only one year of driving, so if you're in the market for a used model, you can find one in like-new condition for thousands of dollars less than what you'd pay at a new car dealership.

Classifieds service DomesticSales.com lists the average sale prices for some of the most popular used car models they offer. A 2005 Honda Civic, for instance, sells for $17,138, while a 2000 Honda Civic will cost you only $10,155. Naturally, dealer prices will vary from these private sale figures, and any used car's value depends as much on mileage and condition as on make, model, and year. However, these prices show just how far the cost will plummet if you restrict your search to models a few years older.

The Used Car Dealer Says

"If you are looking for an affordable alternative to a new car, come down to my dealership and check out my selection of high-quality pre-owned vehicles. I stock only the safest and most reliable models on the market, and I or one of our other friendly sales associates will gladly give you a closer look or take you for a test drive. I will disclose the full history of the vehicle to the best of my knowledge. Should you decide to buy, we will step into my office and work out a price together that is fair. Our dealership grants ultra-low financing packages to our customers even if your credit is less than perfect, and we will offer you full value for your trade-in. No matter what, I will never put any unwanted pressure on you, and I will always treat you the way you deserve to be treated. I only want to help you find the right car for the right price."

The Snitch Says

"Used car salesmen do not hold the most pristine professional reputation, which, in many cases, is all too justified. The used car dealer wants you to find the right car at the right price, all right, but the right car at the right price for him. Like the new car salesman, the used dealer has a vested interest in ripping you off: his commission. This is often his only source of income. The used car salesman is under incredible pressure to maximize profits, not only for his own wallet, but for the dealership management's as well. He will, in turn, divert this pressure onto the consumer, and maximize his profits by charging as much as possible for an inferior product. Far from relying on fast-talking salesmanship alone, the most devious of these creatures will even slap on a fresh coat of paint onto a salvaged wreck or roll back the odometer tens of thousands of miles to get you to pay top dollar for bottom quality."

Protecting Yourself

The more money and trust you need invest in a product, the more you must shop around. With a used car, not only are your finances at stake, but your personal safety as well, so before you buy a car, you must be convinced you are purchasing a reliable vehicle for an equitable price. As with new car outlets, you can visit multiple dealerships and play their best prices off of each other to wrangle an even better deal. Unlike new car dealerships, of course, you won't be able to find the exact same make, model, and year—let alone mileage and condition—on different lots, but similarly equipped vehicles within $1,000 of each other will abound.

When you find a car you're interested in purchasing, never, under any circumstances, negotiate straight away. First, take down all of the information about the car, including make, model, year, options, mileage, and condition. Go back home and log onto any of the free web services offering used car appraisals, such as edmunds.com. Enter all the information you have collected on the vehicle to determine its market value. Only when you know precisely what the car is worth should you negotiate. Remember, the used car dealer will always knows the true value of his merchandise, so if you're clueless, he has an insurmountable advantage over you.

Another item you'll want to copy down from any car you're considering is the Vehicle Identification Number, or VIN. The VIN is a series of letters and digits seventeen characters long that assigns a unique identifier to every vehicle made anywhere in the world. You'll find the VIN plate on the dashboard, close to the windshield. Many web sites, like the popular carfax.com, can generate a comprehensive vehicle history report from the VIN for a small fee. First of all, this report will tell you whether the car has been involved in any serious accidents. For the sake of both your money and your safety, any refurbished wreck should be avoided. You'll also want to investigate the car's odometer history. By law, any time a vehicle is serviced in the United States, the mechanics have to record its odometer reading; a detailed vehicle report is then the best way for consumers to detect any odometer mischief.

When giving any used car the once-over, you should always look out for common defects. If you find oil in the tailpipe, the car probably suffers from severe motor problems. Test all the electrical components in the car, such as the lights, the signals, the radio, and the horn; if any of these devices does not work, the car might have a serious electrical problem. Bad tires can signify something as innocuous as too much or too little air, or something as critical as faulty alignment or suspension. You'll also want to check the car thoroughly for any cosmetic damage, like holes, rust, poor paint jobs, worn upholstery, or glass cracks.

Even more so than with a new models, the test drive is crucial when considering a used car. Fortunately, without that intoxicating new-car smell, you'll have a better grip of your senses and quickly uncover any sign of trouble. Before picking up any speed, make sure the vehicle handles well and the brake, emergency brake, and clutch all function properly. Try out the air conditioner and the heater. Check the exhaust to make sure no black or blue smoke is being discharged, as this is another sign of serious motor problems. Listen for any hisses, rattles, squeaks, or any other sounds you don't normally hear when driving.

When negotiating for a used car, start about $1,000 to $1,500 below its online appraisal, even if the sticker price already falls below market value. Come up slowly and in increments of no more than a couple hundred dollars. By no means should you buy a used car for above the appraisal; you should be able to stop around $500 below the mark at most, not including any tax or license fees. Bear in mind that the used car dealer will look at you like you're crazy if you negotiate like this, but he only wants to demoralize you from the outset. He might even explicitly dismiss your "Internet numbers" as inaccurate, even though you never mentioned the Internet. This is a sure sign you're bargaining correctly: why would he assume you found the price on the Internet unless you've nailed it dead on? Everyone knows the people who insist on unrealistic prices are the ones who have done no research at all. Alas, no one gets to be a successful car salesman, new or used, without being a successful actor.

Whenever you're dealing with a used car salesman—or any salesman, for that matter—you must never show any devotion to his merchandise. Don't overcompensate and feign total apathy, but never let a dealer know you have your heart set on his car, in words or otherwise. All salesmen are shrewd observers, so keep your body language in check. After all, the only thing the used car dealer loves more than money is more money, and he will drain the dead-set buyer out of every penny the sucker can cobble together. Even if it's a car you really want, if you can't settle on a fair price, walk away. High-quality, low-priced used cars are never far out of reach, and you're sure to fall in love with any of the dozens of comparable vehicles with fairer price tags in your area.

Many of our tips for handling new car dealers apply here as well. If you have a trade-in, do not mention it until after you've already negotiated the lowest possible price. Even after you've told the used car dealer you wish to pay up-front, he may pressure you into a financing deal; since the dealership earns a stronger profit if you pay more money over time instead of less money all at once, so will he. If you don't think financing is the right alternative for you, don't let yourself be suckered into it. If you do choose to pursue financing, be sure the dealer doesn't gouge you on the interest rate. Many dealers will settle for a much lower base figure if you finance, only to double or triple their profits over the next few years with an extortionate payment plan.

Just Because You Were Curious

Thanks to the advent of popular Internet services such as carfax.com, more and more consumers are checking the VIN before they buy a car. In response, car thieves are increasingly perpetrating a new type of fraud to dupe their victims into unwittingly buying stolen vehicles: VIN fraud. By replacing the VIN plate atop the dashboard with that from a legitimate car of the same make, model, and year, car thieves can trick even the conscientious consumer. However, most thieves are only replacing one VIN of the three stamped on every car manufactured, but since they know that few consumers check the other two, the practice is maddeningly effective. When shopping for a used car, always ensure the VIN on the dash matches the one under the hood and the one in the driver's side door jamb; those two are much harder to replace.

If you want to bypass slippery used car dealers altogether, consider a private transaction. You will find hundreds of classified listings for used cars in your area through the Internet or your local newspaper. The private sale does have two glaring disadvantages: less selection and few, if any, financing options. On the other hand, you can ask straightforward questions and expect straightforward answers. When you respond to a classified advertisement, ask why they're selling the car, whether they're the original owner, how long they've owned it, and whether any repairs are needed. Most used car dealers won't always know the answers to those questions, and even if they do, they can always pretend they don't. And while most dealers calculate the value of every car that so much as pulls into their lot down to the last penny, private individuals are often both ignorant about prices and inept negotiators. Though you will sometimes land a premium bargain at a private sale, just as often you will run into people who stick even more stubbornly to unrealistic prices than salesmen because, unlike salesmen, they don't realize their prices are unrealistic. If you do pursue a private sale, however, you absolutely must run the VIN through a vehicle history service to uncover any major accidents or odometer fraud before you buy.

While car salesmen may never shake their abysmal reputation, at least now you know how to shop intelligently for a used car.

Posted by admin on 07/11 at 01:47 PM



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