How to Locate A Good Vehicle
|Locating the right
car may take time and effort, but it's worth it. The internet can be a valuable resource, both for information
and for specific cars. In addition, I'll tell you about franchised car dealers, independent dealers, car
superstores, rental car companies, private individuals, and many other resources. Even if you're specifically
looking for a used car, don't ignore new-car dealers: they all carry used cars.
Online - This is a powerful way to research and locate cars, new or used. Many web sites give you a list of available cars in your area, based on your choices. Internet Resources gives you our picks.
Auto Brokers - If you hate the whole car-hunting experience, don't have the time, or are weak at negotiating, consider going through an auto broker to find your next vehicle. Brokers can find a vehicle that matches your specifications, find the best financing, negotiate for you, and deliver the vehicle to your doorstep. If you have a trade, they'll find a buyer for it as well (don't expect more than wholesale for it). Your check to the dealer will normally include their fee, which will range from $400 to $500 depending on the vehicle. Surprisingly, you won't pay any more for the vehicle than if you negotiated on your own behalf, or bought it on the internet for dealer invoice. A broker may be able to buy cars at below dealer invoice. Fleet sales managers like to deal with brokers, because, knowing exactly what they want and what to pay, with a guaranteed customer, they represent a fast, easy sale that helps to increase the year-end bonus. The best way to find a broker is by word of mouth. They do the bulk of their business with small-business owners, corporate executives, doctors, and lawyers. Make sure you deal with a broker that someone you know has dealt with more than once. Brokers try very hard to establish long-term relationships with their clients, so dishonest brokers don't stay in business for long. Even if they don't get you a good deal, you may find that the convenience they offer offsets the money they earn.
Buying Groups - If you're a member of Sam's Club, BJ's Warehouse, Costco, Consumers Union, or the AAA, you may qualify for substantial dealer discounts. They all offer new-car buying programs for club members. Each organization's rules are different, so contact your local representative for specific details. They all work with a dealer network that has agreed to limit profits to a pre-determined amount or percentage for club members.
Classified Ads & Automotive Tabloids - A lot of information, as well as cars, can be found in newspaper classifieds and automotive tabloids like the Swap Sheet or Auto Trader. The first has listings for cars and a multitude of other second-hand merchandise, while the latter specializes in motor vehicles. These publications will give you a good idea of what vehicles are available in your area, and their fair market values. Independent used car dealers advertise heavily in these publications, so you'll get retail prices as well. If you're looking at high-end models, pick up a copy of the Dupont Registry, which specializes in expensive Japanese and European automobiles. Although private individuals are a source of used vehicles, keep in mind they don't necessarily offer a better deal than independent used-car dealers. If the owner's schedule conflicts with yours, test-driving and mechanical inspections may be more difficult to arrange. You should inquire about previous maintenance, repairs, and accidents, but don't expect the previous owner to be 100% honest with you.
New Car Dealers and Franchised Used-Car Dealerships - If price is not your primary concern, franchised dealerships are the best option for finding new and late-model used vehicles. All new-car dealers carry used cars, because they bring in more profit from each sale than new cars. New-car dealers keep only the best trade-ins and usually give them a thorough inspection. Special manufacturer's auctions, open only to franchised dealers, supply their remaining inventory. A dealer who specializes in the brand that you're looking for may be able to furnish maintenance records for particular vehicles, from the manufacturer's shared databases. Look for a dealer with a large inventory, a busy service department, and a well-staffed parts counter. Dealers are one of the most vilified groups in our society and most new-car dealers don't deserve the less-than-stellar reputation. By following my advice, you'll be able to spot a bad dealer or salesperson right away, so don't worry needlessly. Most dealers are honest, hard working businesspeople who value your business, and want you to be happy. Visit as many franchised dealerships as possible, and don't be afraid to try out and test drive any vehicle that appeals to you.
Non-Franchised Late-Model Used Car Dealers - A plethora of off-lease vehicles has changed the used-car marketplace dramatically in the past few years. Manufacturers originally offered off-lease vehicles to franchised dealers only, but current supplies far exceed demand. Millions of these vehicles sell at dealer-to-dealer auctions every week, and many non-franchised used-car dealers specialize in them. Although independent dealers can't buy cars at the closed manufacturer's auctions, the cars they get aren't necessarily in worse condition, as certain models are so common that the manufacturers are forced to offer pristine examples at open auctions. Prices are usually cheaper at independent dealers because they have substantially less overhead (no service or parts necessary). Typical mark-ups range from $1000 to $2000, while new car dealers try to get twice that amount. (Some franchised dealers open off-site used-car lots that look like independent entities, but they still aim for the higher mark-up. Do your comparison shopping and know your numbers.)
Franchised vs Non-Franchised: Are Those High Prices Worth It? - Sometimes more is better. For example, a franchised Mercedes-Benz dealer might offer a Mercedes-Benz Certified 1999 E320 sedan for $36,900. A non-franchised specialty dealer might offer the same car for $33,900. Even though it costs $3,000 more, the car at the franchised dealer might be a better deal. Certified Used Vehicles are covered by outstanding factory warranties, unsurpassed by many available third-party warranties. On a late-model Mercedes-Benz, an HVAC or engine problem can easily cost over $3,000 to repair. With the expensive certified car you're covered. Chances are the less expensive vehicle's warranty lasts for only 3 months/3,000 miles or less. Some independent dealers offer great warranties, most do not. So spending that extra $3,000 can be a gamble. A mechanic's inspection can find obvious problems with a vehicle, but problems that will occur 6 months down the road are usually impossible to detect.
The actual invoice cost of both Mercedes will be much closer than you might think. The only preparation required for factory certification is an intensive 100+ item and system inspection that a Mercedes-Benz dealer could perform for under $200. The factory will cover all warranty repairs for any certified vehicles sold by their dealers. Current (5-01-02) wholesale value of a mint 1999 E320 with 30,000 miles is around $30,000 (give or take $1,500). Yes, the franchised dealer stands to make between $5,000 to $7,000 on their $30,000 dollar investment, depending on whether it needs tires or anything else to meet the certification requirements, but there are potential benefits for a customer willing to spend the extra money. For more information on Manufacturer-Certified used cars see our page outlining Manufacturer-Certified Used Vehicle Programs that are currently available.
The specialty dealer will probably buy their $33,900 E320 for the same amount of money, and make from $2,000 to $4000. That's the advantage to you of buying from an independent used car dealer. (Don't let these Mercedes-Benz prices scare you: on a 1999 Ford Taurus, the potential profit will be substantially less. A franchised dealer selling a Manufacturer's Certified Taurus will make between $2,000 and $3,000 dollars, while an independent will make between $500 and $2,000.)
Traditional Used-Car Dealers - Most used-car dealers offer dependable transportation at a reasonable price. Look for a dealer who specializes in the brand or type of vehicle you're looking for. If they're specialists, chances are better that problems characteristic of the make and model have been discovered and taken care of, as they often operate a repair facility as well. Specialists will usually give you a more honest appraisal of potential problems you may experience down the road.
Friends, Neighbors, & Relatives - Ask your friends, neighbors, and relatives about the cars they own and question others driving cars that interest you. This can be an easy way to find a good car, since you know the owner and can find out how it was treated. Friends and relatives are usually happy to sell their cars for the amount of their lease buyout or trade-in, so speak up if you're interested in their current ride. Never, never buy a problem car from a family member or someone you know. Many friendships have ended due to cars needing expensive repairs. Make sure any car you acquire this way is thoroughly inspected by an independent mechanic before you finalize any deals.