For over two decades, Dell, Inc. has been wildly successful at bypassing the traditional stores and selling computers directly to consumers, custom-assembled according to a selection of options. The promise of convenience and savings, along with Dell’s strong company reputation and their backbone of customer service have helped ease consumer fears of buying a relatively expensive product sight unseen. Gateway and other computer makers have since embraced the online medium and are now enjoying a similar success at a varying degree. It won’t be long before buying a new car online is not going to be much different than ordering a new computer. Some German manufacturers have already caught on to this emerging trend. A BMW enthusiast, for example, could configure and order a new M6 months before its official entry into the US market. He or she could then track its progress through the manufacturing facility online similarly to the way one would track the progress of one’s new Dell. However, buying a new car online sight unseen is not a very risky proposition. One knows what one is getting and there is franchise dealer and a manufacturer standing behind it.
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 Car Service Boston Ma 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.
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.