In the second of a three-part series on “Buy Here Pay Here” dealerships, used car lots that target subprime borrowers with easy credit and triple the national average interest rates, the Los Angeles Times looks at how private equity firms have flocked towards the growing industry, lured by 38% margins. [More]
The Los Angeles Times has an excellent investigation into the national “Buy Here Pay Here” auto dealership phenomenon. These used car sellers purposefully target bad credit borrowers and offer them what no one else will: the chance to buy a car on credit. All they have to do is agree to 20-30% interest rates, a price well above the car’s Blue Book Value, and aggressive repo practices if they fail to pay up. But it’s not a big deal if they don’t. Borrower failure is baked into the business plan. [More]
With the economy in the dumps, used car dealers are having to get creative with the trade-ins. There’s long been used car dealers advertising they’ll take any trade that’s “push, pulled, or dragged.” One dealership is adding trots to that phrase, as they’re now accepting horses. [More]
You get into the seats, place your hands on the wheel and sniff. That’s not new car smell you’re getting, but the faint notes of incinerated tobacco leaves. Perhaps they’re peaking out from a cloying cloud of freshener, like a bra strap from a tank top. Dangit. You thought you found a good contender and wasted all this time to come out and check the car out, and now it turns out someone used to smoke in it. Reader Ethan wonders if this isn’t something that dealers should have to disclose, or at least something that should show up on CarFax. [More]
Between June and November of 2008, while the nation plunged into economic turmoil, car leasing dropped off by 58% as people looked to save money wherever possible. Fast forward to the present day where, because of that drop-off in leased vehicles, the supply of late-model vehicles coming up for resale will soon be shrinking. [More]
Disastrous flooding, such as what the Midwest and Southeast has recently suffered, tends to, well, flood the used car market with damaged vehicles that pass the eyeball test. There are ways to avoid falling victim to unscrupulous resellers try to move water-addled rides, though. [More]
Madison Ave, take some copywriting lessons from this radical used car ad: “Looking for a car with a sweet tape deck and a radio with five pre-sets? A car that needs new brakes and maybe some action under the hood?…Than this is the car for you! [sic]” [More]
In a counter-intuitive turn of events, the way the market is now, a used SUV can end up costing more than a new one. [More]
For those without the temperament or time to engage in the scrum that is negotiating with a used car dealer, Carsala will do it for you. The site boasts a team of professional negotiators who will contact an average of twenty dealers and work to get you the best price possible. No more getting befuddled by the Four-Square or “Oh, I’m sorry, I really want to make this work but my manager in the back will only agree to…” The pros at Carsala charge a commission of 20% of the difference between Blue Book value and the final price. And, unlike some other car shopping sites, they don’t take kickbacks. Handy! Or you can just use their free tools to check out how a price you’re quoted compares to others in the area, and whether the car you want really fits your budget. [More]
The sorry state of the economy the past couple of years has actually led to higher prices for used cars, writes Kiplinger. That’s because more people started buying used cars, which tightened the supply while also reducing the number of fresh trade-ins. It may be a couple of years before prices drop again, but Kiplinger has some suggestions for saving money if you plan on buying a used car this year. [More]
They always say that cars are the worst investment, since they almost always depreciate in value. But Ford Motor Co. learned the hard way that this holds true for car companies as well. They bought Volvo for $6.45 billion in 1999, only to sell it 11 years later for $1.8 billion. [More]
Former used car salesman Alan Slone grew a little Jimminy Cricket in his ear and decided to spill his guts on a classic dealership technique used to addle your mind and empty your wallet. It’s called “The Four Square” and the object of the game is to make you lose. Here’s how it works, and how to beat it. [More]
CarFax provides a useful tool for used car buyers, tipping them off about the myriad abuses their prospective rides once suffered. But Gyorgy says the service failed him, failing to report a number of modifications and indignities that voided the ride’s warranty. He writes:
Trisha in Oregon bought a great new-to-her car from a used car dealership. Unfortunately, the problem with buying a car “as-is” is that the dealer may not be up-front with you about how the car actually is.
BusinessWeek did a little math and discovered that if you lined up all the new financing deals, tax incentives and discounts — a new car might actually be cheaper than a late model used one. But do you care?