Dealer, Bubba's Used Cars, or Private Party?
Where should I buy a car? A dealer, Used Car Lot, or Private Party? This will largely depend on your budget, whether or not you need financing, your comfort level, and whether or not you require a warranty. It is important to understand the motivation of the seller to appreciate the pros and cons of each. Regardless of where you buy the car, you will want to look at The Checklist.The Motivation Behind The Sale
What motivates dealers, used car lots, and private parties? Each is described in turn below and the reason why I prefer private party transactions.Dealers
Dealers want to sell you a new car. Most of the cars they have on the lot are cars that people have traded in for a new car. If the used car has made it to the dealers lot, then it is typically a higher quality car. The cars that don't make it to a lot or sit too long are typically sold to a local used car lot (that the dealer has a relationship with) or at an auto auction.Dealers charge a premium for the selling the used car. If you are in college, then you will likely be able to find a better deal elsewhere. However, sometimes dealers sell below the Kelly Blue Book to get the car off their lot. Dealers are not as flexible to bargaining on a used car but you should at least know what the car is worth.
Used Car Lots
Used cars lots are a mixed bag. If you are in a low income situation (such as a college student) then this can be hit or miss. There are a number of used car dealerships that have integrity, a long history, and some solid mechanics. There are unfortunately many that have none of the above.In college, you are usually new to an area and don't know whether a used car lot has a solid rapport (feeling of connection and trust established between people). There are a few ways to find out more about the used car lot:
1. Call them and ask them for references: i.e. A list of college students who have bought from them. Then try to contact them.
2. Ask professors or staff in your college department if they know anything about the lot.
3. Take your time to talk to the salesmen and get a feel for what kind of pressure they are under to make a sale.
4. Call and ask what local shop they use for their inventory. Then call that shop and talk to them about the car lot.
Immature used car lots usually don't own any of their inventory. They have a loan from a bank to buy a number of cars. They have to sell enough cars every month to cover the interest on the loan and make enough to live off.
The cars on a used car lot usually come from direct dealer liquidations and auto auctions. Some may come from trade-ins. Used cars from an auction cannot be checked out by the used car lot before they are purchased. If they discover that they purchased a bad car from the lot it cannot be returned. They may try to repair the car at a local shop or sell it to you.
They also have cars on consignment. If you ask if they have any cars on consignment then you may be able to work our a lower price with the owner.
There are also used car dealers like CarMax. Their inventory is typically costs around $8,000-$12,000 and the price is not very flexible at all. Their approach is bottom line value based sales. They know how much people are willing to pay for a car. Be careful though because they sell a number of cars with terrible reliability ratings.
Private Party
I personally like to deal with private party because it connects me to the owner. Although this approach is not fail proof, I trust my judge of character and like to deal with the person who has been driving the car.One of the easiest ways to find a private party is by craigslist.org. Craigslists is an online community where you can post classified ads for free. A number of private party sellers use craigslist to sell their car. I have used craigslist to personally buy multiple cars. If you are a college student in a major city then craigslist is definitely worth looking through.
What I like about craigslist (and other private party avenues) is that you can see the owner and where the car was kept. You can have a normal conversation and find out why the person is selling the car. Usually, the are selling the car themselves because they either don't need the car anymore or they want to buy a new car but know how much their used car is worth and don't want to lose money by trading it in. These are the best situations to deal with. But regardless of where you buy the car look over The Checklist to make sure that you haven't overlooked problems.
Beware of "dealers" and scam artists on craigslist. There are a number of people trying to get your money dishonestly. However, it it easy to spot these people and when you look at the photos and ads on craigslist you will get a feel for what is a legitimate posting. I look at where the car is parked. Is it a nice neighborhood? Do they leave their name and number in the listing?
I personally love craigslist because it is a true market value in my area for the car. If for no other reason for benchmarking when dealing with a dealer or used car lot.
One example of a scam is someone who had to leave to go to another country for work. They had to leave their car here in a garage and want you to perform a transaction for them. I found a car with a great price (much less than Kelly Blue Book) and had to check it out. Sure enough, it was some guy that had to move for work and wanted me to do a money transaction for him. Anyway, you can check out some of the scams here:
Escrow Scam
Bad Checks, Money Orders, Etc.
Craigslist Advice: Deal locally to avoid 99% of scams.
Here is Craiglist Advice:
You can sidestep would-be scammers by following these common-sense rules:
- DEAL LOCALLY WITH FOLKS YOU CAN MEET IN PERSON - follow this one
simple rule and you will avoid 99% of the scam attempts on craigslist.
- NEVER WIRE FUNDS VIA WESTERN UNION, MONEYGRAM or any other wire service - anyone who asks you to do so is a scammer.
- FAKE CASHIER CHECKS & MONEY ORDERS ARE COMMON, and BANKS WILL CASH THEM AND THEN HOLD YOU RESPONSIBLE when the fake is discovered weeks later.
- CRAIGSLIST IS NOT INVOLVED IN ANY TRANSACTION, and does
not handle payments, guarantee transactions, provide escrow services,
or offer "buyer protection" or "seller certification"
- NEVER GIVE OUT FINANCIAL INFORMATION (bank account number, social security number, eBay/PayPal info, etc.)
- AVOID DEALS INVOLVING SHIPPING OR ESCROW SERVICES and know that ONLY A SCAMMER WILL "GUARANTEE" YOUR TRANSACTION