Whether your family celebrates Toyotathon or December to Remember, the winter holidays have been a good time to buy a new car, as dealers would cut prices to tempt bargain-hunting shoppers.
These seemingly generous offerings were meant to clear out the previous model year’s inventory while giving shoppers a look at the new (and more expensive) models.
While many dealers are still trying to push end-of-year showroom traffic in this year of shortages, shoppers will most likely find the pickings slim and prices high. According to Mark Schirmer, spokesman for Cox Automotive, an industry consulting firm, new-car inventory as of mid-November stood at about one million. In a normal year, three million vehicles would be offered for sale.
With a dearth of affordable new cars on showroom floors, buyers are turning to the used car market. That’s good news if you’re selling: The retail prices of previously owned cars on dealer lots have skyrocketed, with the average topping $26,000.
Fortune in November reported that used car prices were up nearly 40 percent since March 1, 2020. In a normal year, Mr. Schirmer said, prices drop in autumn. But this year, wholesale prices of used vehicles increased 4.9 percent in the first 15 days of November, according to the Manheim Used Vehicle Value Index.
Many buyers are hesitant to spend lavishly on a new car, let alone for a used vehicle. But since a car is often a necessity, many can’t wait and will pay the going rate. (According to the American Public Transportation Association, 45 percent of Americans have no access to public transit.)
Does anyone have your back when buying used? Large, franchised car dealers have a reputation to protect and don’t want to deal with regulatory agencies or answer to lawsuits, so that’s a plus for the buyer. Many offer a limited warranty, often 90 days or 6,000 miles. Certified pre-owned vehicles, which are offered by the dealers of most automotive brands, are inspected and come with better warranty protection. The prices reflect those extras, but all things considered, a certified pre-owned car is most likely your safest bet.
One key resource for any shopper is Carfax, which provides vehicle history reports for cars that have been previously registered. The reports are reasonably accurate and will at least let the buyer know if the car was damaged in an accident and its recorded mileage at the last transaction. Most dealers will provide a Carfax report, but consumers can obtain one at carfax.com by entering the vehicle identification number. Beware of printed Carfax reports provided by a seller; they can be fake.
Since the price of a used car from a retail dealer is now closer to what many are accustomed to paying for a new car, are there alternatives? Carvana and Vroom are among the enterprises that sell used cars online and deliver them to buyers who never visit a lot.
But growing demand and high volume have apparently caused problems. In October, a Wall Street Journal article suggested that the Carvana experience wasn’t necessarily a positive one. It said dozens of complaints had been filed with state regulators and even more with the Better Business Bureau, a consumer information service.
The bureau has also issued alerts regarding Vroom, saying consumers complained that the vehicle “they purchased from photos was not the vehicle they received.” The service went on to say: “Since January, the pattern of complaints has not trended down but has actually increased.”
CarMax is another used car seller that promises fast online transactions, but unlike Carvana and Vroom, it operates over 200 locations where a shopper can inspect cars. However, reviews of the service published on the Better Business Bureau site are generally scathing.
And Carvana, Vroom and CarMax are fixed-price sellers. Buyers can’t haggle. That may reduce stress, but it might also result in a higher price than one might negotiate in person.
The best opportunity for finding a bargain may lie in searching eBay, Craigslist, Autotrader or newspaper classified ads. But these have few protections for buyers other than Carfax, which in addition to vehicle history reports offers advice for those buying on Craigslist, although its recommendations apply to any private-party used-car purchase.
Carfax’s guide breaks the process down into seven steps. The first step is obvious: Search for a vehicle in the cars and trucks section of Craigslist for sale listings. You can limit the search by price, location, make, model and odometer mileage. You can also choose to view only vehicles listed by owners, and specify condition and transmission type. A search for an excellent-condition Chevrolet Equinox for sale by its owner in the Detroit area, for example, turned up five candidates.
If you find a vehicle that interests you, contact the seller. Request a phone number if none is provided; a conversation is usually more revealing than text messages or emails. If the vehicle is available, you can ask for additional photos.
Run a Carfax vehicle history report — you will need the car’s VIN — which can verify information the seller provided. Carfax notes that if the seller isn’t the original owner, he or she may not even be aware of all the information in the report.
If you decide to buy, meet the seller and inspect the vehicle. Take a friend and meet in a neutral high-traffic area; some jurisdictions allow transactions in the parking lot of the local police department. That’s ideal. If the seller refuses to meet at a safe location, consider it a warning and move on. If possible, have a mechanic inspect a used car before completing the transaction.
Used-car listings can also be found on eBay Motors, which unlike other sources has some built-in protections for buyers and sellers. In a 2019 review, Business Insider pointed out that eBay Motors provided more than listings; it offered secure payment methods, vehicle history reports and seller and buyer ratings of those involved in previous transactions. Up to $100,000 in vehicle purchase protection is also available.
Like Craigslist, eBay Motors lets you narrow your search by equipment, location, transmission type and more. A plus for eBay is its transactions ratings. This can help weed out scammers who may have generated complaints in previous transactions. It also reveals what’s behind the rating. If previous sales were for calendars or concert memorabilia, a high rating may not mean much when it comes to a vehicle sale.
Purchases on eBay Motors are covered by a protection policy, according to Business Insider, meant to ensure delivery and that the vehicle isn’t stolen or has major mechanical issues. Payment goes through eBay via PayPal. Most sales require a deposit after you’ve hit the “buy” button and for the balance to be paid within a set period, which gives you time to inspect the vehicle.
Buying a used car can be challenging. The adage obviously applies: Buyer, beware.