Buying a Used Car: Dealer vs. FSBO
I’ve purchased a lot of cars over the years. At last count I’ve owned close to 50 different cars and motorcycles, most of which were purchased used. Ok, I have a problem, I’ll admit it. I’m a car nut and like to experience different cars, I’m fickle. Yet it has not been entirely as crazy as it sounds. With only a few exceptions (Saabs, mostly) I’ve been able to buy these cars, drive them for a while, then sell them later for about what I bought them for.
Clearly, there are advantages to buying used rather than new. Primarily these are monetary: price (buy a car you could not afford new a few years later) and the related depreciation (most of the hit is taken during the first few years, so your ownership costs don’t include this big hit). The downsides are the potential lack of a factory warranty, fewer finance options (there are usually more financing options for new cars like cheap/free financing and leasing) and the fear of buying someone else’s problem vehicle.
The financing issue is becoming a bigger issue these days. The tight credit markets mean that peer to peer sales are often unfinanceable… even with good credit it is increasingly difficult if not impossible to secure a loan to buy a used car from a private party seller (aka For Sale by Owner or FSBO).
That issue aside, and hopefully it’s just a short-term problem, I should say that I really prefer to buy my used cars directly from the previous owner. I really don’t understand why anyone would buy a used car from a dealer unless it was a certified pre-owned car with a serious extended warranty. But dealers usually ask for a hefty premium for these… enough that if it concerns you there are plenty of aftermarket extended service agreements available for a price.
Of course, my position is highly biased by my passion for cars. I am willing to take time to find the right vehicle and I find the hunt entertaining in itself. So, why buy from a FSBO rather than a dealer?
It comes down to information. I like to know who owned the car before me. I like to know how he or she took care of it, maintained it, washed it, and drove it.
I bought my first used car during high school, I think it was about 1986. I visited some dealers and looked at ads in the local paper (remember those?). I ended up looking at a few cars but one really got my attention. It was not that it was the hottest car; it was a 1981 Celica coupe, about 80,000 miles on the clock and in very clean condition. But what really struck me was the owner. He was a surgeon who drove the car through his residency and now that he was making some coin decided to buy himself a brand new Saab Turbo. His garage looked like an operating room in its cleanliness. Next to the Celica was a beautifully restored 1955 T-Bird with the hard top in a hoist on the ceiling. He provided a binder showing fastidious maintenance like oil changes every 2,500 miles since new. The car was spotless inside and out. I just had a good feeling about it. I ended up buying it and driving it until 140,000 miles without a failure. My sister, on the other hand, liked my car and went out and bought another Celica of the same vintage and had nothing but problems with it. The previous owner had no maintenance records, smoked like a chimney, and generally wasn’t a car person. You can imagine that her experience was very different than mine because she ignored the warning signs.
Since then, I’ve really tried to pay attention to a car’s ownership history and this strategy has served me well. The primary reason I don’t like buying from a dealer is that they often take that aforementioned book of maintenance records and throw it in the trash. Case in point is my most recent purchase.
I was looking for a relatively rare model, a 1994-5 Mercedes E320 Cabriolet. There were some examples popping up for sale on Craigslist and eBay every so often. One happened to be for sale at a local Mercedes dealer who reportedly took it in on trade. I checked the car out and it looked very nice, with moderate mileage, flawless interior, and a very nice exterior. It drove like a new car despite having about 70k miles on the clock as one would expect of a Benz from that era. However, they had NO maintenance records available despite the fact that the car had been owned by one person since new. I can just imagine the records that the previous owner must have handed over to the dealer when he traded it in.
CarFax verified the ownership history story I was given. Normally, when buying a car with potentially devastating repair costs I like to get an independent professional inspection by a marque expert. Of course, as a franchised dealer they wouldn’t allow me to do so and instead pointed to their “120 point used car inspection.” I knew that the car had been on their lot for some time and decided to go through with the purchase as the price was the same as I would have paid a private party for a car in the same condition.
To be fair, I didn’t get ripped off or anything. The car has been just fine for the 5 months I have had it. This past weekend I did have a radiator hose burst, an unforeseeable failure and only a $12 part with no damage done. However, if had purchased the car from a private party and had known that the hoses hadn’t been replaced in 15 years I would have gone through and replaced them upon purchasing the car as I have on my other purchases. I always budget $500-$1000 for a solid going-through to take care of small repairs and a for a comprehensive maintenance session like hoses, belts, brake fluid, coolant, oil change, etc. However, since I bought the car from a franchised dealer and had received a number of promises about their reconditioning processes I skipped this usual step. My fault, no doubt.
In most cases, you also have to pay a premium to a dealer… after all they bought the car from an auction or from the previous owner and are marking it up. I just like to skip this step as I don’t find that it adds any value to me. If I buy a used car with no warranty and something breaks two days later the dealer is simply not going to remember my name any more than if I had bought it from the previous owner.
In summary, the benefits to buying from a private party include increased information about the vehicle’s past, maintenance records, an increased ability to get an independent inspection, and a lower price. Buying from a dealer potentially saves some time hunting for the car and gets you increased access to financing. Granted, this alone may be a deal-breaker but usually does not justify the increased expense. Ok, dealers, let me have it, I am sure you can identify some other benefits I have overlooked but my advice to friends and family is to search FSBO listings, get a professional pre-purchase inspection, and budget for a thorough preemptive maintenance session.
Steve Haas
Stumble It!
Clearly, there are advantages to buying used rather than new. Primarily these are monetary: price (buy a car you could not afford new a few years later) and the related depreciation (most of the hit is taken during the first few years, so your ownership costs don’t include this big hit). The downsides are the potential lack of a factory warranty, fewer finance options (there are usually more financing options for new cars like cheap/free financing and leasing) and the fear of buying someone else’s problem vehicle.
The financing issue is becoming a bigger issue these days. The tight credit markets mean that peer to peer sales are often unfinanceable… even with good credit it is increasingly difficult if not impossible to secure a loan to buy a used car from a private party seller (aka For Sale by Owner or FSBO).
That issue aside, and hopefully it’s just a short-term problem, I should say that I really prefer to buy my used cars directly from the previous owner. I really don’t understand why anyone would buy a used car from a dealer unless it was a certified pre-owned car with a serious extended warranty. But dealers usually ask for a hefty premium for these… enough that if it concerns you there are plenty of aftermarket extended service agreements available for a price.
Of course, my position is highly biased by my passion for cars. I am willing to take time to find the right vehicle and I find the hunt entertaining in itself. So, why buy from a FSBO rather than a dealer?
It comes down to information. I like to know who owned the car before me. I like to know how he or she took care of it, maintained it, washed it, and drove it.
I bought my first used car during high school, I think it was about 1986. I visited some dealers and looked at ads in the local paper (remember those?). I ended up looking at a few cars but one really got my attention. It was not that it was the hottest car; it was a 1981 Celica coupe, about 80,000 miles on the clock and in very clean condition. But what really struck me was the owner. He was a surgeon who drove the car through his residency and now that he was making some coin decided to buy himself a brand new Saab Turbo. His garage looked like an operating room in its cleanliness. Next to the Celica was a beautifully restored 1955 T-Bird with the hard top in a hoist on the ceiling. He provided a binder showing fastidious maintenance like oil changes every 2,500 miles since new. The car was spotless inside and out. I just had a good feeling about it. I ended up buying it and driving it until 140,000 miles without a failure. My sister, on the other hand, liked my car and went out and bought another Celica of the same vintage and had nothing but problems with it. The previous owner had no maintenance records, smoked like a chimney, and generally wasn’t a car person. You can imagine that her experience was very different than mine because she ignored the warning signs.
Since then, I’ve really tried to pay attention to a car’s ownership history and this strategy has served me well. The primary reason I don’t like buying from a dealer is that they often take that aforementioned book of maintenance records and throw it in the trash. Case in point is my most recent purchase.
I was looking for a relatively rare model, a 1994-5 Mercedes E320 Cabriolet. There were some examples popping up for sale on Craigslist and eBay every so often. One happened to be for sale at a local Mercedes dealer who reportedly took it in on trade. I checked the car out and it looked very nice, with moderate mileage, flawless interior, and a very nice exterior. It drove like a new car despite having about 70k miles on the clock as one would expect of a Benz from that era. However, they had NO maintenance records available despite the fact that the car had been owned by one person since new. I can just imagine the records that the previous owner must have handed over to the dealer when he traded it in.
CarFax verified the ownership history story I was given. Normally, when buying a car with potentially devastating repair costs I like to get an independent professional inspection by a marque expert. Of course, as a franchised dealer they wouldn’t allow me to do so and instead pointed to their “120 point used car inspection.” I knew that the car had been on their lot for some time and decided to go through with the purchase as the price was the same as I would have paid a private party for a car in the same condition.
To be fair, I didn’t get ripped off or anything. The car has been just fine for the 5 months I have had it. This past weekend I did have a radiator hose burst, an unforeseeable failure and only a $12 part with no damage done. However, if had purchased the car from a private party and had known that the hoses hadn’t been replaced in 15 years I would have gone through and replaced them upon purchasing the car as I have on my other purchases. I always budget $500-$1000 for a solid going-through to take care of small repairs and a for a comprehensive maintenance session like hoses, belts, brake fluid, coolant, oil change, etc. However, since I bought the car from a franchised dealer and had received a number of promises about their reconditioning processes I skipped this usual step. My fault, no doubt.
In most cases, you also have to pay a premium to a dealer… after all they bought the car from an auction or from the previous owner and are marking it up. I just like to skip this step as I don’t find that it adds any value to me. If I buy a used car with no warranty and something breaks two days later the dealer is simply not going to remember my name any more than if I had bought it from the previous owner.
In summary, the benefits to buying from a private party include increased information about the vehicle’s past, maintenance records, an increased ability to get an independent inspection, and a lower price. Buying from a dealer potentially saves some time hunting for the car and gets you increased access to financing. Granted, this alone may be a deal-breaker but usually does not justify the increased expense. Ok, dealers, let me have it, I am sure you can identify some other benefits I have overlooked but my advice to friends and family is to search FSBO listings, get a professional pre-purchase inspection, and budget for a thorough preemptive maintenance session.
Steve Haas
Labels: Dealers, FSBO, Motachanic, Used Cars
Stumble It!
posted by Miss Mota Mouth@ 5:44 PM 3 Comments
3 Comments:
Miss Mota - what scares me is that you would buy any used car without an independent inspection by a qualified mechanic. NO reputable seller will refuse you this. Also, a franchised dealer should have been able to produce some maintenance records for the vehicle. You show a lot of wisdom in your blog overall.
Keith
usedcars.about.com
Hi Keith!!
Thanks for the compliment on the blog. Steve Haas of http://www.stevelovescars.blogspot.com actually wrote this piece. Interestingly, if you look at his blog and read a lot more about him, you will see that he has pretty extensive experience with used cars throughout his life, including his time as Director of FSBO & Collectible Cars at eBay Motors for over 6 years. He is a real asset to have writing for Mota!
Best,
Michelle
Keith,
Thanks for your comment. I agree with you, and this was both the first time I have bought a used car without a thorough inspection (by an independent inspector) and the first time I bought one at a franchised dealer. I violated some of my own rules out of desire for the car in question.
Frankly, this proves my point. Unlike an individual seller, a franchised dealer is highly unlikely to let you take the car to an independent mechanic... at least before you've paid for it.
Also, I asked them for records and they told me that they don't keep this information if provided by the previous owner. They can often pull electronic records if maintenance was done at their facility or at sister stores of the same make.
One part of the problem, based on my experience working with dealers, is that receipts usually include the name and contact information of the former owner. Dealers may have rational about providing this to new owners out of concerns over privacy. If you trade in a car to a dealer you just want it gone and would not be happy to get a phone call by a new owner with questions or complaints.
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