My nephew is the business manager of a very large local used car lot. It was a great place to buy used because the owners business plan was to do high volume of late model cars at good prices with minimal haggling. Before my nephew worked there we bought a 9 month old vehicle with
What is a "wholesale" price (for used vehicles) ?
I didn't know there was a substantial middle (wholesale) layer for used cars. Ask you nephew to explain it to you, then post it here.
I can easily see how today a lot of people maybe aren't credit-worthy for a new car, and hence they are forced into the used car market where maybe buyers outnumber sellers.
I wonder if the effects of the cash-for-clunkers program is still causing an overall reduction in the number of used cars available for sale.
To dealers, all purchases are essentially cash deals so they don't care. They DO have a relatonship to a bank their customers can use for loans, but the dealer gets cash no matter what. The buyer makes payments to the lending institution in the case of a loan. What you described is possble, for used cars under a certain price, but dealers do not want the liability of the loans and very few make their own loans; it goes to a lending institution.
Agreed.
Agreed. They might do a check on the person's records to see if there's any chance of him getting a loan, but once the loan is made, the dealer receives a cash payment from the lender for the price of the vehicle. Err, car. I'm interpretinig from a legal contract here.
That can work OK as long as the original warranty transfers to you, there are no leins on it, and it's low enough mileage and has maintenance records you can look up and verify. It's just amazing how much detail is available on any car back into the 90's.
Ooohhh, those get an awful smell about a month after the sale! I've seen a couple of those from a dealership that was one of three just closed down by the FTC and Attorney General's office for price fixing and falsifying odometer readings.
But cash is a decent way to go, as long as your cut in interest income from it exceeds what the mortgage/loan interest addes up to.
But, the claim that a used car is a better deal than a new car is NOT true and also frought with surprises for the owner. The new vehicle will always cost you more, even with lo-rate taxes, which are coming toan end for cars. It's usually made up for simply from the warranty charges, delivery charges, destination charges, consignment charges, and applicable taxes, not to mention the almost surely higher insurance rates. Have a friend who bought a used 3 year old car with only 2,000 some miles on it. The woman's husband died shortly after the purchase and it sat in the barn for almost three years. Needed all new tires, a battery of course, some rewiring due to mice/rats, whichever it was, upholstery repairs, all new filters, screens, etc., and a fuel tank drain/refill and I imagine other things I don't recall. Oh yeah, oil and transmission brake fluid changes. First the transmission went out. Pretty Expensive. Followed by the brakes. The engine never did run right and it was plagued by wiring problems one after another for the rest of the time he kept it. They donated it to a Figure-8 race about a year later. RIP.
The dealer gets commissions/kickbacks from those lending institutions, so they do make money off the financing (not as much as if they lent it themselves and earned all of the interest, of course, but they're also taking much less risk too). I don't know the details; it's possible the commission is reduced if the loan is paid back within X time (that's how the commissions that Amazon Wireless etc get for signing you up for Verizon et al work, and why they have their own extra termination fee if you cancel within 6 months), or it might just be a one-time deal. Either way, the dealer isn't generally losing money when you finance; they're likely making more.
It is an important thing to know -- I bought one car with my own financing (lender just cut a check in the dealer's name), and once with cash, and neither time did I get any better price because of it. In fact, it's often better to at least pretend you'll be considering the dealer financing when doing price negotiations (but never, never, let them negotiate based on on "monthly payments"; always the final out-the-door total before financing)
Josh
Yep - Cash for Clunkers did not do anyone any favors as it reduced the supply of low end vehicles. That worked all the way up the used market making 1 year old vehicles very expensive. Combine that with government pressure to stop building SUVs and you can't find any used SUVs at a reasonable price.
Wow. You "saved" $8000? $8k is more than TWICE what I have EVER paid for a car in my entire life! I've always bought used cars and generally put about 100,000 miles on them. (My wife OTOH only gets about 50,000 miles out of the the cars she's bought :) )
I have a 96 Jeep Cherokee right now. It had 94,000 miles on it when I bought it and has 168,000 now. I paid $3200 for it in 2006. I had a 78 Chevy pickup before that that I bought in 1986 for $1500. It also had a little under 100,000 miles when I bought it. It had over 270,000 when I finally got rid of it because the body was just too far gone. Original 350 V8 by the way.
And depending on the lending institution, the dealer gets a "cut" They "write the paper" then "sell the paper" - and make a profit doing it.
Somebody shoulda been beat repeatedly with a clue stick for that C-for-C nonsense. The public interest would have been better served by just passing out 100 dollar bills on street corners. Rather than take the worst, lowest MPG, highest polluting cars off the road, it mainly removed middle-age but still quite servicable vehicles from the secondary market. (I kept an eye on most of the local 'death rows'. Many of the cars were nicer than what I was driving.) People driving the true crap, that couldn't afford a new car even with the $4500 kickback, now had even fewer choices for upgrading, and had to keep their junkers in service even longer. If they HAD to have a C-for-C program, it should have been structured so that the dealers had to sit on them for 90-120 days, and do free (aside from paperwork) one-for-one trades for anyone bringing in something even older (say, at least 2 years), and with higher miles on the clock. THAT would have done some useful culling from the herd. And any reliable vehicles left over should have been donated to 'wheels for work' or similar charities, rather than destroyed. Better a 10 mpg car driven a few dozen miles a week to a paying job, than yet another unemployed person who wants to better themselves, sitting at home. Trashing working equipment Just Ain't Green.
As actually run, the program was a back-door aid package to the automakers. It thoroughly pissed me off as a taxpayer that my money was being wasted that way.
Buying from a dealer is foolish. I've had more luck with three-year old cars that have a good track record than brand-new from the dealer. Someone else has already wasted their time getting all the recalls that plague new cars done and I can inspect it very carefully. Bought a normally $47K Braun Entervan conversion on a Dodge Grand Caravan SE for $25K cash when it was a little less than three years old with 22K miles on it. Great car, great deal and got a receipt for, well, I'd better not say. Tax man might get angry.
I've bought a few new cars, and it's nice to have a virgin automobile - until you get that first huge dent. Less heartache with a car that's already had its dent cherry popped. (-:
-- Bobby G.
Ubetcha. Great minds run in the same ruts. (-: That's why I got a $47K handicapped conversion van with all sorts of bells and whistles for $25K through Ebay without paying the commission. No one bid high enough, including me, so I contacted the seller after the auction and offered $20K. We ended up at $25K because it really was in cherry shape.
The boy they bought it for had recovered from a serious car accident (in the same make and model of car I drove up in - how's that for coincidence). We both realized it was a "meant to be deal" and we both walked away happy. He had bought it used from an estate of a man who died before he could even use it once. That's where the biggest depreciation loss occurred.
I did, once, during the reign of Jimmy Carter at TWENTY PERCENT INTEREST. I needed at car, wanted a new one, had a job, but not enough money to swing it. One of the first Honda Preludes to hit the states. VIN was a lot of zeroes followed by 79. That turned out not to be a good idea to buy the first run of a brand new model of car. Lesson learned.
Bought other cars for cash just to spend the least amount of time in the dealership as possible. Once bought a car through United Buying Service. Got a great price but only because I told them I only wanted a red car, nothing else would do. Then I settled for a white one, the color I really wanted.
Still, there are people (and I know several) who have to have a new car when the ashtrays get full. I love every one of them, especially if they take good care of them, put little mileage on them and sell them dirt cheap privately instead of getting screwed on the trade in.
-- Bobby G.
Yep. It's a good start. Collecting mileage information from inspections, etc during the life of a car is worth the money right there. But you've got to look. And test drive. And probably have it put on a lift at a garage unless you bring your own creeper. I can't creep anymore so I bought a stalk videocam and monitor from HF. Far more useful than I ever imagined. Would bring it to any car inspection now.
Still, a slick used car salesman can work magic that so astounded legislators (in my state, some idiot used car salesman cheated - and I mean cheated - the daught of a 5 term state senator. Thus was born our state's laws regulating - with a capital R - used car sales. Still, as strict as we are, other states make us look like hippy parents, they're so much stricter.
There's a valid public interest in not allowing drowned, deadlined cars to come back to life after some steam cleaning and deoderant, especially if there's a potential safety issue.
I'll bet that there are car wholesalers and appraisers who could answer our every question about what happens to cars when they soak and how length of immersion factors into it. I've seen thousands of drowned cars in the all the flooding we've had this year. You don't think they are all going to the crusher? (-:
-- Bobby G.
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