Buying a used car can be a great experience or a complete nightmare, depending on what you know when you sign on the bottom line or hand over your hard-earned cash to the seller. While most used car establishments are reputable, there are still some that will be happy to sell you a little less car than you bargain for. As a matter of fact, some dealers and individual sellers simply don't know the history or the problems with a car when they offer it to you.
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Check these ten important things before you agree to buy a used car.
1. The Oil Dipstick - You can tell a lot about an engine and a car owner from the dipstick. Pull it out, wipe it off and put it back, then carefully pull it again. Note the oil level. If it is overfull there may be gas in the oil which is a bad sign. Low, but not below the bottom line on the stick is actually OK. Lower than that is a problem. White foam on the dipstick is a sign of water or coolant in the oil. Run away. Now here is the tricky one. If the oil is pure, clear amber then it has just been changed. If that is the dealer policy on every car then you're ok. If your car is the only one on the lot with crystal clean oil then something was wrong when it arrived and they had to freshen the oil. If, on the other hand, the oil smells nasty and burnt, it has probably been in there way too long. You want to see a good level, oil that is used but not burned up and does not have white or brownish foam in it.
2. Smooth Paint - Drag your fingers along door jambs, around the windshield and the trunk opening. Factory paint is smooth. Body shop paint will be a little rough. Look for paint lines, especially at the edges of body panels or paint on the trim. Robots at the factory paint around the body panel before the trim goes on. A body shop paints from one direction, leaving a line at the edge and overspray on the trim. Look for broken glass in the carpets, especially under the seats where they forget to vacuum. Also, look for body color and shine that doesn't match up on the same or adjacent panels. All of these are signs that your car has been in a wreck. Move on.
3. History Report - Vehicle history reports aren't perfect but they are better than flying completely blind. CARFAX, Kelley Blue Book, and others offer history reports that include accidents, insurance claims, ownership chronology, and even some service history.
4. Little Burn Holes - Most people are aware of what a cigarette burn looks like in a seat or carpet, but if you see little round holes the size of a pen tip then someone has been smoking marijuana inside the car. While this is not, in and of itself a deal killer, the car could have been involved in something nefarious or spent its life at a rental car agency being abused. Signs of smoking anything in the car is a good reason to look elsewhere.
5. Glovebox Provenance - You cannot imagine how many car owners and dealers leave historical paperwork in the glovebox. You may find old rental agreements, evidence of major body or mechanical work, insurance claim paperwork, service history and more. All of this can give you clues as to where the car has been and how it was taken care of.
6. The Tires - Like the oil dipstick, the tires have a lot to tell. Uneven wear indicates long miles without tire rotation or a bad wheel alignment. Low pressure or sagging sidewalls are signs of a leak. Cracking in the sidewalls means dry rot, which also means the tires have probably been sitting for a long time. Bald tires tell you the previous owner didn't care about safety or maintenance and, if you are on a dealer lot, it tells you they don't care much either. Every dealer should want you to drive out on safe tires.
7. AirBags - Airbags are a one-shot deal and have to be replaced if deployed. Most airbags rip through plastic or cloth trim to save your life. Look for ill-fitting trim, steering wheel center covers, dash covers and other airbag areas like the sides of seats and over the doors. Anything out of place is probably a sign that the car has been whacked and the airbags had to be replaced. You may want to think twice about a purchase.
8. Back Seat Wear - If the back seat is stained or worn then usually there were kids back there. Now, there is nothing wrong with kids, in fact, you may want to consider foregoing a clean back seat and buy solid proof of a family-owned vehicle. People with children tend to drive more cautiously, avoid accidents and take precautions against breakdowns. Sure, you may find an errant Cheerio or two under the seat cushion, but it is easier to clean a car than to fix it. One note: if you smell spoiled milk in the car it will never, ever go away. Never. Leave the car on the lot.
9. Smooth Engine Operation - The engine should start, run and stop with no odd noises or fanfare. Likewise, the transmission should shift smoothly and positively and not lurch, hesitate or slip. Be honest with yourself. If you feel the car doesn't run right it probably doesn't. Trust your instincts and find a better choice.
10. Dash Lights - There are many dash lights and warning messages that let you know something is wrong or has been neglected by the previous owner of the car. You may be tempted to take a chance on a ride that seems to run and drive fine but has a check engine light, anti-lock brake light or other warnings on the dash. Chances are, the previous owner got an estimate to fix whatever tripped that light, freaked out over the cost and got rid of the car. Don't become the next freaked out owner.
We can't say this enough. Follow these tips and trust your gut. If a car has telltale signs of problems or just doesn't make you feel confident, walk away. There are millions of used cars to choose from and you can find them everywhere from the local used car lot, the newspaper, on the internet and a hundred other places. Don't ever be afraid to walk away from the wrong car to get to the right one.
Traditional wholesaling has typically involved getting cars off the lot when they can’t be sold to retail buyers. Wholesalers then sell the unit to another retailer for a profit. Wholesaling has been about moving unwanted vehicles off the lot to free up funds and minimize loss. This guide aims to help dealers understand the transition of wholesaling to online operations. We’ve kept it high level to promote broad understanding in a general audience.
Essentially, online auto wholesaling takes the brick-and-mortar auction and puts it online. It does the same with your flesh-and-blood wholesaler. But the ubiquity of the internet means that the whole country is your market instead of just the local area, and your wholesaler is sourcing from every region. Dealers can now buy and sell to other dealers through online auctions while maintaining their relationship with their traditional wholesaler.
The used car industry is changing, as made apparent by the rise of such disruptors as Carvana and Vroom. Buyers expect retailers to deliver tailored offerings in all areas of commerce, including auto sales. Online wholesale allows dealers to meet customer demand more effectively while maintaining or even increasing the trust and rapport that buyers value from their local auto seller. Dealers who have added online auctions to their repertoire have seen increased sell-through rates and sent fewer vehicles to traditional auctions, while some have ditched the traditional auction altogether.
24/7 auctions: These platforms are not limited to fixed schedules but can carry auctions at any time, from anywhere in the country. You can buy anytime or have a vehicle launched online in a matter of minutes after handing over the keys.
An immense pool of vehicle offerings: Instead of just what’s on offer at the local auction or through a regional wholesaler, dealers can source the models that are hot in their market from dealers outside their market area who are motivated to move no-profit units.
Enhanced pricing information: The volume of sales handled by these platforms gives them datasets that they pass on to the user. Users get easy access to info for researching and pricing vehicles.
Pre-auction run lists: Online auctions are quick, as short as 20 minutes, but also offer run lists before the auction so you can see what’s coming up and even place proxy bids.
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Unbiased inspections by certified inspectors: The online platforms employ local inspectors that prepare in-depth reports you can rely on because the business model depends on repeat use by buyers satisfied with their experience.
No “auction day”: With online wholesale, you don’t have to transport to the auction, spend time waiting for a bid you might not want, or the unit that sells too high for any front-end gross profit potential. With the auction online, you spend your time at the dealership.
Stable inventory: Online wholesale can smooth out inventory spikes or troughs by providing access to the right vehicle segments and types for the local market; and by shortening your refresh cycle from constant auctions to acquire stock and offload deadweight.
High sell-through rates: Rolling online auctions let you sell all the time, and not on the local auction’s schedule. You get another outlet to sell units to, again, a larger market.
More info, not less: It may seem counterintuitive initially, but many dealers report they actually get more data on a vehicle from an online platform than at a traditional auction. Each vehicle listed online has a detailed report prepared by a trained inspector.
Ease of selling/buying: Online platforms offer an integrated, end-to-end, streamlined process at the click of a button.
Transport: Depending on the size of your operation, this can be a full-time job. But not anymore. Most online wholesale platforms provide integrated or add-on transport options. Again, this streamlines the movement of units to where the profit is. You save time by eliminating another touch-point with a vehicle either coming or going. Letting the auction platform handle transport also significantly reduces a dealer’s exposure to scams or unscrupulous drivers.
Credit and Financing: Online wholesale platforms also offer several options for credit and financing. Even if you want to keep all your finances in one place with your existing floorplan lender, the built-in financing offerings are tempting to a dealer just trying out wholesaling for the first time to see if it can work for them. Alternatively, if you go all-in, online platform credit options allow for quick acquisitions of the units you need for your industry, cutting down approval processing times.
Accessibility: Getting around the brick-and-mortar auction is not easy for everyone. For those with significant disabilities, like the visually impaired, online auction platforms make wholesaling available to those who could never have participated before through screen-reading software and other accessibility apps. Not only that, online wholesale platforms can make auctions for any size independent dealer or BHPH because they have no contracts and no minimum volume requirements.
When you can reach a wider market with cars you can’t turn on the lot, which means you can accept more trade-ins. The unit that you couldn’t take yesterday because it’s not a seller in your area, you can now sell online. That means more trade-in offers to customers coming in off the street. If your competitors haven’t caught on, you have the edge with the customer who is counting on value from their trade-in.
Lenders like to see inventory move. Low turn-over of inventory can cause a potential lending partner to pass on your floorplan or limit the possibilities an existing lending partner will consider when you want to expand options. With online wholesale, you don’t have to wait until the next auction, only to take a chance on a sale or bring a unit back to the lot to sit until the next sale. Increased, steady throughput keeps lenders happy and improves the chances of a positive outlook on expanding.
While there are more and more auto wholesale sites going up on the internet, we want to profile some of the big names so you have an idea of what’s on offer.
In late , this startup platform’s success resulted in a $425 million sale to KAR Auction Services.
Another top online auction site, ACV offers everything an independent or BHPH dealer needs to break into the world of online wholesale. ACV has some features and services that set it apart.
This site claims to be “the world’s largest wholesale auto marketplace.”
Regardless of which site you pick, when looking for an online wholesaling platform, make sure it has:
While the above features are primarily targeted at the buyer, they are just as important to the seller. If the platform isn’t attractive to buyers, you only limit your opportunities for sales to other dealers. The wholesaler that works best for you is probably the one that other dealers will want to use.
There are also online solutions that can complement your online wholesale platform to maximize efficiency. Enhanced inventory tools harness market data to make sure you pay the right price to reach your profit goals. Here’s a quick profile of one company, vAuto, that offers enhanced inventory tools:
This company touts its “Live Market View” through its Stockwave product. Stockwave has many intriguing features, including:
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