Buying a Used Car on the Internet – a New Breed of Shoppers

What about the used car market online? How can consumers quantify the risk they are taking buying a used car sight unseen to make sure it is justified by the savings of such purchase?


Historically, conventional used car buyers have been able to kick its tires, take it for a spin, and haggle over the asking price of the car they like at their local dealer since the invention of the automobile. Because of the internet, a considerable number of these “conventional” used car buyers have found a myriad of ways to harness the power of the ever expanding online automotive resources and tools available at their disposal to make informed buying decisions.

It is from those online savvy buyers that a new breed has emerged - those who buy their used cars online, sight unseen. Although they represent a relatively small portion of the used car buyers, these brave souls see an unmatched advantage and find ways to minimize the risks. But what’s in it for them, one might ask? Simple, actually: selection and price. The internet offers easy access to a vast selection of vehicles worldwide - online car portals, classifieds, conventional dealers with online presence and pure online-only outfits, online used car brokers, to name but a few. Since most of them are looking for a specific vehicle, their chance of finding “the one” is far greater online compared to the confines of their local area.

Needless to say, virtually all of them are looking for a bargain. Our brave souls take risks, but these are justified, at least in their eyes, because of the savings they realize by utilizing the online channel. How do they do it? They, too, are well-armed with the online tools they need to make intelligent buying decisions. Here is how these online tools help them through the decision-making and buying steps of the process.

Fair Market Value

Determining whether a particular car is a bargain is a function of understanding its fair market value given its condition in the context of the current supply and demand. For the non-economists, of course, there are a number of excellent online market valuation sources available. Kelley Blue Book, NADAGuides, Edmunds.com are some of the most widely used car pricing providers. They all base estimates on a large number of recorded transactions and provide appraisal adjustments for the year, make, model, mileage, options, condition and even local market trends. As their appraisal algorithms differ slightly from each other, the estimates may vary, so checking more than one source is recommended. There are three major price levels: trade-in (or wholesale), private party and retail. Trade-in is what one would expect to get from a dealer for one’s used car – it is the lowest of the three averages, but it’s important to know as a baseline. Private party is what one would expect to get if one sells a car to another person, and retail is what one would pay for that car at a used car dealership.

Third Party Vehicle History Reports

In addition to the seller’s honest word and availability of service records our prudent innovators tap into the same third party vehicle history report providers the rest of the used car buyers use. CARFAX and Experian’s AutoCheck, initially serving the automotive professionals only, have been available to the general public for a number of years now. For $24.99 CARFAX offers 30 days and AutoCheck offers 60 days of unlimited vehicle history reports. These provide extensive reporting on the vehicles’ recorded history: date and type of registration and renewal events, as well as checking for recorded incidents, odometer rollbacks, junk, salvage, rebuilt titles, insurance loss, theft, lemon buybacks, etc. Many dealers realize the convincing power of stating the recorded facts and now offer free vehicle history reports for the cars they sell.

Car Inspections

Independent vehicle appraisal/inspection services with online presence have also seen a boost in their business. For $99.95, CARCHEX offers to give any automobile a 155-point pre-purchase auto inspection almost anywhere in the USA. Not too high a price for peace of mind, especially if it can save one from having to deal with surprise repairs. For half of this amount, one can find a mechanic in the local directory who can check out the car and even take it for a test drive on one's behalf and then fax a detailed report. Nevertheless, some of the more thrifty buyers have found ways to save themselves the nominal fees mechanics charge without depriving themselves of the peace of mind of a pre-sale inspection. Say, I live in Boston and happened to find a 1974 BMW 2002tii that I really wanted all the way in San Diego. Now, I would definitely want the car inspected prior to buying it. My thrifty side, however, wants to avoid the $150 fee a local company would charge me to inspect the vehicle. The solution? I would ask a fellow member of the BMW enthusiast community who lives in San Diego to take a look at the car for me. There are plenty of BMW forum members that would be more than happy to offer their time and expertise to a fellow east coast bimmerphile in need.

Shipping

There is a sea of car shipping companies that would gladly bring our pioneers their newly acquired vehicles home at a reasonable price. One example, Dependable Auto Shippers operate a fleet of state-of-the-art, satellite tracked vehicle shipping transporters, which allow one to track one’s car while it's on its way much like one would track a package. Yet, a healthy number of this new breed of used cars buyers opt for driving their new purchase home on their own instead. It’s cheaper, it’s faster, and admittedly, it’s much more exciting. Sellers specializing in online sales of this kind have also adapted to accommodate the demands of this new kind of used car buyer. Airport pickups for our weary yet eager buyers are more or less industry standard, these days. Sellers specializing exclusively in online sales, providing a hot meal for their ‘guests’ at the family table before they depart on their voyage home, is not unheard of.

Although buying a used car online sight unseen is not for the faint of heart, it is a growing phenomenon, which if executed carefully, could be a very rewarding experience for all parties involved.


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Is Your Check Engine Light On?

Have you ever noticed that when your Check Engine Light comes on, the car runs fine? There are no noises or signs of anything uncommon going on? Why? Becasue there isn't anything seriously wrong. It's more than likely a quick, easy, inexpensive fix that shouldn't cost you any more than a couple hundred dollars, at most.

Here's What To Do and What Not To Do.... and Why:

- First and foremost, DO NOT FREAK OUT! Why? Because you will end up spending hundreds and hundreds of dollars more than you should.

- After you DON'T freak out, check your gas cap. Why? Because a loose gas cap is a common reason for triggering a Check Engine Light. It sounds too simple and silly to be true, but guess what.... it's true. After filling up your tank, make sure the cap clicks at least 3 times before jumping back in your car. If this is what triggered the light, it will turn off once it's tightened.

- If that didn't fix the problem, go to an Advance Auto Parts, Discount Auto Parts, or NAPA store. Why? Because they ARE NOT mechanics. They sell parts, not fix or replace them. They will scan your car for free and they will be honest with you, unlike most mechanics (unfortunately). Their scanner will pull a "code" which will be translated into the actual problem (if there actually is a problem). In turn, they may try to sell you the part (more than likely a sensor or hose), but it's up to you whether or not you want to purchase the part yourself. Either way, you will know exactly what triggered the light to come on, so you will not be taken advantage of by a Service Shop or Repair Facility. You can save some money by purchasing the part at the Auto Parts Store and having a Service or Repair Facility install it. Believe it or not, it can actually be absolutely NOTHING AT ALL (you'll see what we mean later in this article). If this is the case, the Auto Parts store can reset the computer and the light will turn off.

- DO NOT go to AAMCO, or any other Franchise Service and Repair Facility for their FREE diagnosis of what triggered the light. Why? You know, as well as us, that nothing is FREE at these places. Well, the actual scan might be, but we will guarantee their estimate for repairs will exceed a couple hundred dollars, when in fact it should barely cost that much to fix.

- DO NOT go to the Manufacturer's Service Department. Why? Same as above, except they will not scan the car for free, they'll probably charge you an hour labor, when in fact it will take them all but 30 seconds to scan, and then hit you up for $400-$500 in unecessary repairs. You'll be surprised how many Manufacturer's set the cars computer to trigger that light at certain mileage intervals, in hopes you will freak out, run to them, and get charged hundreds and hundreds and hundreds of dollars for them to do absolutely NOTHING but reset the computer! The same thing that can be done at NAPA, Discount Auto Parts, or Advance Auto Parts stores for FREE!

That's it. It's that simple. Again, common reasons are a loose gas cap, or a $50-$150 sensor, or maybe a hose with a leak, or in fact nothing at all! So don't get all nervous and think your car is broken, because in fact it's not that serious of an issue.

One thing we do want to point out is if the Check Engine Light is flashing. If this happens, you actually do have some serious issues. In this case, get to a reputable Service and Repair Facility ASAP. Why? More times than none, a flashing Check Engine Light is in fact a direct engine or transmission issue.

- Tampa Bay Auto Network

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Tips and Advice on Reading Used Car Vehicle Identification Numbers - VINs

The most important number in a used car is not its price or fuel economy rating. It is its Vehicle Identification Number or VIN, as it is more commonly known. Reading used car vehicle identification numbers will help you know if the used car or truck you are buying has the equipment you think it does.

How To Read a VIN

A VIN is basically a serial number for your car, truck or SUV. It is 17 characters long and is a mixture of numbers and letters. It has four parts:

• World Manufacturer's Identification (WMI - three numbers or letters)

• Vehicle Description Section (VDS - five numbers or letters)

• The VIN Accuracy Check Digit (one number)

• Vehicle Identification Section (VIS - eight numbers or letters)

The First Three Characters

These numbers and letters are the manufacturer identification and tell you where the vehicle was built.

The First Character tells you where the vehicle was built. The U.S. is 1 or 4, Canada is 2, and Mexico is 3. Australia, New Zealand and some South American countries are also represented by numbers. Some of the more common countries are: Japan (J), Italy (Z), Germany (W) and Great Britain (S).

The Second Character will tell you the manufacturer while the Third Character identifies the kind of vehicle or the company’s manufacturing division.

The 4th to 8th Characters

This is the vehicle description series. It identifies the body style, powerplant, brakes, and the restraint system. The problem is different companies put the information in different places. With GM, for example, the restraint info is in the 7th character position, while BMW has the code in its 8th character position. By the way, if you’re buying a Chevy Impala and the 7th digit is a “0” your airbags have been deleted.

The 9th Character

This is something called a check digit. It verifies the previous 8 characters based on a mathematical computation developed by the U.S. Department of Transportation.

The 10th Character

This represents the year the car was built. Cars built before 1980 don’t have VINs, which is why the system starts in 1980. You will also notice the system does not use every letter in the alphabet. I, O, Q, U, and Z are omitted. The system are repeats itself every 30 years probably assuming most people could tell the difference between a 1980 and 2010 model.

• A: 1980

• B: 1981

• C: 1982

• D: 1983

• E: 1984

• F: 1985

• G: 1986

• H: 1987

• J: 1988

• K: 1989

• L: 1990

• M: 1991

• N: 1992

• P: 1993

• R: 1994

• S: 1995

• T: 1996

• V: 1997

• W: 1998

• X: 1999

• Y: 2000

• 1: 2001

• 2: 2002

• 3: 2003

• 4: 2004

• 5: 2005

• 6: 2006

• 7: 2007

• 8: 2008

• 9: 2009

• A: 2010

• B: 2011

• C: 2012

• D: 2013

• E: 2014

• F: 2015

The 11th Character

This tells you the plant where your car was built. Frankly, when buying a used car, this should not be a huge concern. Quality problems will have demonstrated themselves long before your purchase.

The 12th through 17th Characters

These are what most of us call the serial numbers of the car. Each manufacturer has a different system for what this means.

In the end, the best bet for understanding various components of a used vehicle’s VIN, is to go to a search engine and type in Understanding BMW VIN. It will take you to various sites that will help you further decipher the VIN.


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Predicting What A Used Car Will Be Worth

Do you have your eye on a new car or truck that has just been introduced, but you know you can’t afford it new? Well, there is a simple formula for predicting what a used vehicle is going to be worth three years down the road.

The first fact to consider is almost all used cars, trucks, SUVs and crossovers lose a minimum of 24% of their value after 12 months. That’s based on the Manufacturer Suggested Retail Price.

To keep things simple, a used car costing $20,000 would be worth $15,200 after one year. So say the folks from Black Book (www.blackbookusa.com). It sounds like a dating sight, but it’s actually the number one resource for predicting a car’s residual value when it goes on sale. That’s extremely important for setting leasing rates.

Then, from the basic 24% drop in value, you can start deducting 6% a year. A decent used car, introduced with the price of $20,000, would have an estimated value breaking down this way:

•After 12 months: $15,200

•After 24 months: $14,288

•After 36 months: $13,430

•After 48 months: $12,624

Of course, this formula will not work 100% of the time because some cars and trucks have residual values that drop like stones after 12 months. Case in point would be the Chevy HHR.

• 2009 Chevrolet HHR LT - $20,729

• 2008 Chevrolet HHR LT - $11,225 dealer price, according to Edmunds.com.

That’s a drop of 46% in one year. Wait two years and you’re looking at a $10,551 vehicle. Proving pretty much if you want a Chevy HHR, buy a used one. You are going to save a ton of money.

Use this basic formula to help you get started on what the value of a used car should be. It will save you from spending too much on your next used car or it will help you put aside the right amount if you’re a good saver!


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How To Spot Car Scams On Craigslist

1 - Log on to Craigslist and look for a deal on a car. Some of the most successful Craigslist car scams involve used cars that are rare or "classics".

2 - Look for expensive cars listed for a price well below their market value. Scammers use very obvious deals to get potential victims interested in doing business with them.

3 - Respond to the ad. Get an immediate reply from the scammer telling you the reason why he is selling the car, even though the details are irrelevant. Scammers usually refer to an overseas move and difficulty in transferring the car into the new country.

4 - Note that that the scammer is only willing to give you a limited amount of information about his identity. In some cases, the scammer may give you more information than is needed, but the information will be fake or unverifiable.

5 - Refuse to close the transaction without seeing the car. The seller will try to convince you to use a supposedly secure escrow service to transfer and hold your money until the transaction has been completed. The escrow service will be associated with a company that you've never heard of or based in a foreign country. In some cases, the scammer will insist that you wire money.

6 - Understand that if you use the escrow service or wire money to the scammer the car will never be delivered and you'll lose your money.


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