COOL TIP: The New Way to Buy or Sell a Car

You are ready to buy or sell a car and you log into Autotrader to begin the burdensome process:  STOP!  You don’t have to do that anymore.  You can now safely buy or sell a car without even leaving your house.   Added bonus:  you’ll get a better price than you would with conventional selling options.    One note of caution:  while selling your car makes sense, buying a car may not.   With the advent of ridesharing, carsharing, low-cost rentals, electric vehicles and the soon-to-appear autonomous vehicles,  buying a car really no longer makes economic sense.   We generally recommend that a household not have more than one car and, if you leave in an urban area, you can save a lot of money by avoiding buying a new car.

OK, but you want to move forward with a purchase or sale.   We urge you to investigate the new online car dealerships that have begun to emerge in the last five years.   The top two appear to be  Carvana and Vroom  — two virtual car dealerships and buy and sell relatively new cars  (5 years or less).    that have created peer-to-peer automotive sales networks, have devised new ways to buy and sell cars online that better serve consumers’ needs.    Some of the benefits of these virtual dealerships include:

  1.  Ease of shopping;
  2.  Lower buying price and higher selling price due to lower overhead;
  3.  Large selection of cars from which to choose;
  4.  Greater transparency in the transaction;
  5.  Avoiding slimy car salespeople;
  6.  Lower cost financing

A recent analysis, conducted for NerdWallet by automotive research firm iSeeCars.com, found that the average used car price among virtual sellers was lower than the average listing price at brick-and-mortar dealerships:

  • $2,048 lower compared to certified pre-owned cars.
  • $202 lower compared to non-certified used cars.

Carvana –  A Must-Option to Explore

We are particularly intrigued with Carvana, which has pioneered a unique retail model that is changing the way used cars are sold. You can pick a car from its inventory of more than 15,000 cars, select financing terms and fill out the paperwork all online.  Carvana claims buying a used car from them will save almost $2000 in fees charged by dealerships and also give you a much better experience. Carvana’s premise is simple: Bypass the salesperson and avoid the car lot.  It offers consumers a way to buy their used cars online at a fixed price, then have the car delivered to them in the next 48 hours.

Carvana sells used vehicles, mostly with low mileage, that are given a 150-point inspection and come with a free CarFax vehicle history report.  Even though their prices are non-negotiable, on-line reports suggest that their prices are superior to brick-and-mortar alternatives.  Additionally, Carvana accepts some trade-ins in local markets.

Carvana shoppers can get pre-qualified financing offers with a soft credit inquiry, which won’t lower their credit score, making it good for rate shoppers. Though most customers who finance a purchase use Carvana financing, you can also pay with cash or financing from an outside lender.

Carvana Guarantee and Refund Policy

Carvana claims to be lemon-free.   It relies upon an extensive certification process that includes:

  • 150 point inspection
  • Accident-free car.   Carvana claims to avoid selling cars with an accident history
  • $250 in detail work to make it look shiny and new
  • A free Experian AutoCheck vehicle history
  • A free oil change
  • Includes the car’s manual, often missing from used vehicles

Their used cars are all guaranteed for 100 days or 4,189 miles, whichever comes first (they say this number is based on the 41.89 miles average commute).  Moreover, Carvana gives you a chance to “Test Own” it, meaning you have 7 days to drive it around and if there are any obvious major problems you notice, they’ll refund your money and haul it away.   However, here are the catches:

  • It has to be in the same condition you got it
  • You can’t have driven it over 400 miles (otherwise pay $1 per mile)
  • You can’t have gotten in an accident

Word of Mouth About Carvana

We analyzed a number of Internet reviews by consumers who bought or sold their cars via Carvana.   Generally, they were pretty positive.  Notably, the reviews were better than the ones we read about Vroom.   Even more notably, we noticed many of the reviews (both good and bad) had responses by Carvana representatives.  In contrast, we saw no such responses by Vroom.   That is telling.    Here’s a representative example of a Carvana review by someone who sold their car:

I recently sold a vehicle to Carvana and wanted to share the details of my experience for those considering this option. I was looking to trade or sell my 2017 Fusion Energi Titanium. KBB trade in value was $14900-16500, Private Party Sale ranged from $17000-19000. The car had 34k miles on it and had original tires on their last few thousand miles, otherwise, had every feature available and was mechanically and cosmetically excellent.

I got offers from 3 services:

    • Carmax – $15000
    • Vroom – $16000
    • Carvana – $17179

I was going to list the car on Autotrader/Craigslist for $18000 and would have negotiated down due to needing tires to $17500. I figured to get it done asap without the headache of dealing with an individual buyer, it was worth a few hundred $$$.

I accepted the Carvana offer on 8/2 and uploaded a photo of my ID, payoff statement from my bank, and photo of the odometer.

Carvana sent several reminders to accept and re-upload, which prompted me to call customer support and see if they received everything. The website doesn’t acknowledge you uploaded docs and lets you re-upload again and again. Customer support said they had everything and would let me know next steps in 72 business hours.

I got a text and email yesterday (8/7) with a link to schedule my appointment for pickup. There was an appointment available the next day at noon, so I took that option.

Driver called today (8/8) at 11:30am, advising he would arrive between 12 and 12:10. He showed up right at 12:10 and did the following:

    • Visually inspected the car (walk around, sat in driver seat, turned the car on…validated the options I listed were on the car)
    • Drove the car around the block in my neighborhood (3 minutes, maybe)
    • Loaded the car onto the flatbed Carvana truck
    • Came back to the door, reviewed the paperwork with me. I signed 7-8 documents.
    • He gave me a Bill of Sale, which he signed
    • Then he handed me a pre-printed business check for the difference between their offer price and what I owed on the loan

The entire process lasted 15 minutes and could not have gone smoother or easier.

I realize this isn’t for everyone and that you can get more $$$ selling privately, or get the tax savings trading the car in on a new vehicle. In my situation, I valued the convenience and guaranteed option far greater than getting my max possible price. Considering their offer was within a few hundred $$$ of what I was willing to accept from a private sale, this was a very easy, convenient, and risk-free option in my mind. I would strongly suggest getting a quote from them if you’re looking to sell/trade a vehicle.

Our Conclusion

If you are thinking of buying or selling your car,  we believe it is worth exploring Carvana.   A few caveats: if you’re on a budget and you need to get a car for less than $10,000,  you’ll likely find a better deal by from private sellers by using Autotrader or Craigslist.

Also, if you like to kick the tires and check the trunk, this type of car buying experience may not be the way to go.   In that case, check out  Carmax or AutoNation.   For consumers looking to buy a car as painlessly and as effortlessly as they might buy appliances or electronics, Carvana offers a proven means to buying and selling your car.   Although, we reiterate our suggestion that buying a car may no longer make economic sense for urban dwellers.

 

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