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Today Ray and Zach discuss the current state of the used car market. If you’re thinking about buying or selling your used car, you’ll definitely want to watch this first. New data from Black Book and Manheim provide insights into the current and future state of the used car market.
You want to sell your car, but you’re not going to let go of it easily. It’s always worth the effort to sell your car for the most money possible. Once you’ve made the decision to sell, another question comes to mind: “where should I sell my car to get the most money?”
If your goal is to get the most money when selling your car, then be prepared to do a bit of work. If you’re more interested in convenience, then have no fear, there are plenty of people out there who want to make it easy to buy your car from you.
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Let’s run through the three different categories of car buyers, get into the specifics of what work you will need to do to sell your car to each of them, and cover the pros and cons of your varied options. Let’s dive in!
The Middle Ground: Sell to a Car Dealership
There is nothing wrong with selling your car to a local dealership. Will you get the most money possible? No. Will you have the most convenient experience possible? Probably not. Will you get the worst possible price for your car? Definitely not. Will it be the least convenient experience for you? Most likely not.
Selling your car to a local dealership is the ultimate middle ground of car sales. It’s an option, it’ll always be there, and it isn’t great, but it isn’t bad either.
What work is involved in selling your car to a local dealership? Not much. Don’t spend hundreds of dollars getting the vehicle cleaned, detailed, or looking “showroom ready.” The used car manager that appraises your vehicle won’t be swayed by how good the car looks, and they’ll still be thinking about the reconditioning work they’ll need to do to make the vehicle “merchandisable” (sales ready).
Selling to your local car dealer is convenient in this sense. Simply call them, make an appointment to get your vehicle appraised, and have the necessary documentation with you to complete the transaction (more on that below).
Understand that the offer you get from your local dealer will most likely not be top dollar for your car. Quite frankly, it could be the lowest offer you get. Local dealerships typically never offer what the national used car dealers do (more on them next), and although there is less work involved, offers from local dealers are typically much less than what you would get if you sold your vehicle to a private party (stay tuned).
If you’re still asking yourself, “Should I sell my car to a local dealer?” I’d caution that you shouldn’t. I think you’ll find one of the other two options more attractive for obvious reasons.
The Easy Option: Sell to Carvana, Vroom, or CarMax
National used car dealers have invested millions of dollars to create “seamless” and “technology-driven” ways to buy your car. CarMax pioneered the marketing of “we’d like to buy your car, please sell it to us” many years ago, and since then, upstart companies like Carvana and Vroom have doubled-down on purchasing used cars directly from consumers.
What work is involved in selling your car to one of these national retailers? Not much. Similarly to when you sell your car to a local dealership, you shouldn’t invest time or money in cleaning up your vehicle. Carvana, CarMax, and Vroom are all prepared to recondition your vehicle, and a detail will not change the appraisal value.
What are the pros and cons of selling to a Carvana, CarMax, or Vroom? There are plenty. To start with, the best “pro” on the list is the offer price. Carvana and Vroom are notorious for offering very competitive prices to buy used vehicles. We recently sat down with Nicholas Hinrichsen, the former Senior Director of Sell to Carvana, on the Auto Insider podcast. It was fascinating to learn how Carvana determines pricing for their used car purchases.
Carvana and Vroom will also both come to you to purchase your car. Instead of driving to your local dealership, or to a physical CarMax storefront, Carvana and Vroom will send a flatbed truck to you and take delivery of your vehicle right there.
And finally, on the list of “pros” is the fact that all three major players offer seamless, simple, and intuitive online platforms you can use to sell your car directly to them.
What are the cons you may be asking? There aren’t many. The only downside to selling your car to Carvana, CarMax, or Vroom is that there is a chance you may not get top dollar for your vehicle as compared to selling it to a private party. That being said, the amount of time saved by selling to one of these big three national brands can more than make up for the price difference.
The Most Money: Sell to a Private Party
If you’re truly invested in getting the highest offer on your vehicle, then you should strongly consider selling your car to a private party. Selling your car to another individual generally requires a lot more work than any of the other options we’ve already discussed.
When selling to a local car dealer or a national used car brand, you don’t need to worry about cleaning up or detailing your vehicle. That couldn’t be further from the truth when it comes to selling your car to another individual. You want your car to be looking immaculate!
If you can get your car looking great, take professional photos, and get it listed on many different websites, odds are you’ll get top dollar for your vehicle. The cons however consist of investing your time into preparing the vehicle, coordinating appointments with strangers, and letting someone you don’t know test drive your car.
If you can look past these cons, then selling your car to a private party may make sense for you.
What you need with you to sell your car
No matter who you sell your car to, there are a few items you’ll want to have handy to facilitate the transaction:
Some sort of photo ID, usually a driver’s license
The vehicle title, proving vehicle ownership
Vehicle registration, showing vehicle ownership
10 day loan payoff, which is the amount you still owe on the car (if you have a loan)
Both sets of keys
Any service and maintenance records
As a final note, remember to take your belongings out of the vehicle before you sell it. There’s nothing worse than seeing your EZ-Pass get billed six months after you sold your car.
Today Ray and Zach welcomeNicholas Hinrichsen, who got his MBA at Stanford, started an online car retailer Carlypso and sold it to Carvana in 2017. At Carvana, Nicholas built and ran the Sell To Carvana business, and considering Zach is currently in the process of selling his Volvo S90 to Carvana, we thought what better time than now to have Nicholas on the show.
Ray and Zach discuss automotive refinance, automotive tech, and specifically Carvana’s “Sell to Carvana” program in this episode. We hope you enjoy! If you do, please consider sharing with a friend on Twitter, Facebook, or LinkedIn.
Today Ray and Zach discuss negotiation free dealerships (also known as one-price dealerships). Ray explains how they work and also what impact they have on the automotive industry at large. If you’re thinking of buying a car from Carvana, CarMax, or another one price dealership, you’ll be sure to want to listen to this podcast episode first.
The Federal Trade Commission recently released a report highlighting the struggles consumers encounter when trying to buy a car. The report, titled, “Buckle Up: Navigating Auto Sales and Financing,” is a 13 page Staff Report produced by the Bureau of Consumer Protection.
Both reports are dense, and take a long time to read. Here at CarEdge, we feel responsible to distill reports like these for you. So, that’s exactly what we did. Click on the table of contents below to jump to a section, or enjoy the accompanying YouTube video that goes in depth on why you shouldn’t negotiate based off of a monthly payment.
If you find this content helpful, please consider sharing it with a friend or colleague.
Let’s dive in.
Automotive advertising is a bunch of … B.S.
It should come as no surprise that the FTC found that automotive advertisements are generally full of misleading information. The report reads, “Advertisements with misleading financing terms (as well as those with deceptive price and discount offers) remain a concern.”
The report goes on to suggest that dealers should, “make only accurate and non-misleading advertising claims to consumers, advertise terms that are actually available, and clearly and conspicuously disclose material qualifications or limitations on any advertised deal.” This is a novel concept. Let’s hope it catches on.
As we’ve discussed before, there are many ways to find which car dealership you should go to, and our recommendation is to follow these steps:
What the heck is the actual price of the vehicle?
Another key finding from the FTC’s research is that consumers are generally confused about what the price of a vehicle is, and what is and isn’t negotiable. You would have hoped that with the advent of websites like TrueCar, AutoTrader, and more, that consumers would have an advantage in understanding what the true cost to purchase a vehicle would be, but that couldn’t be further from the truth. Unfortunately websites like the ones we listed above simply perpetuate the “smoke and mirrors” that comes with automotive pricing.
The study repeatedly discusses the importance of negotiating the “out-the-door” price. As far as we know, our Out-the-Door Price Estimator is the only such tool on the internet that is designed to help you estimate what your total OTD price will be when purchasing a vehicle. Please use the tool! It is FREE!
The study goes on to report that consumers that do negotiate on the out-the-door price still run into trouble, “As some study participants explained, after negotiating what they thought was an agreed price for a vehicle with sales personnel, they faced negotiating again during the dealer’s financing process, which they found frustrating and time-consuming. The introduction of add-ons during financing discussions caused several participants’ total sale price to balloon from the cash price, and for two participants, negative equity for trade-ins caused the amount financed to increase.”
Be sure to watch this video to better understand how you can be prepared for this situation, should you encounter it:
Consumers get screwed in the F&I office
I spent at least 20 minutes trying to think of a more appropriate title for this section of the article, and candidly, I couldn’t think of anything else that accurately sums up what the FTC uncovered in their report.
As a car buyer, it is important that you know that you can negotiate nearly everything at the dealership, and that includes finance options, insurance products, and more.
The FTC report reads like a horror novel, “Several participants did not recall learning the length of the financing or the APR before agreeing to financing. Several participants were surprised to learn about these terms when they reviewed their paperwork during the FTC’s qualitative study.”
If you do not feel comfortable with something that is going on in the F&I office, ask the F&I Manager to slow down, and ask questions. More on how to handle being in the F&I office here:
Dealer add-ons are confusing and dumb
The FTC report brings to light how confusing and frustrating the dealership practice of adding ancillary products and services to vehicles really is. If you’re unfamiliar with this concept, it is when a dealership sells you a car with additional products installed that you did not request. For example window etch, or LoJack, among many others.
The FTC report highlights the many challenges consumers face when confronted with dealer add-ons, including but not limited to:
Never discussing add-ons, but including them in the selling price of the vehicle;
Consumers are confused and think the add-ons are free;
Consumers are under the impression that the add-ons are mandatory;
And more.
The future of car buying and ownership should be different
Here at CarEdge we are determined to change the way car buying and ownership works in the United States. Buckle Up: Navigating Auto Sales and Financing from the FTC is a great reminder as to why it is so necessary to evolve the way we buy and own vehicles.
If you’re interested in being a part of that change, please consider being an early tester of the CarEdge platform.
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