A Guide to Selling your Car (Before you Buy it)
So, I ended up selling the Vibe yesterday after just five days on the market. There were a lot of factors that helped me make the sell at a high resale value, some completely out of my control, but others resulting from choices that I made when I purchased the car (used) two years ago.
I’d like to share 10 lessons learned and factors to consider that will hopefully help you when it comes time for you to buy a vehicle that you may someday sell. If you’re not concerned about selling your vehicle down the road, these tips will also help you save money and avoid some common buyer pitfalls.
Before you Buy a Car – 10 Things to Consider
Selling your car for an amount that you’re happy with starts before you purchase it. I’ll spare you the sermon on how may not really need a car in the first place. If you are going to purchase a car, here are some of the factors that you should consider when purchasing a vehicle if you want to save money, sell it for a high percentage of your purchase price, and sell it quickly:
1. Buy used: Let’s get the common out out of the way first. Cars lose 15-20% of their value each year that you own them, and about that much as soon as you drive it off the lot. Unless you’re getting an amazing deal, forget buying new.
2. Buy a car with a warranty or purchase a transferable warranty: having a transferable warranty was THE deciding factor for the buyer of my vehicle. He was determined to buy an older Pontiac Vibe, but dealerships would not offer him an extended warranty.
Not only did the extended warranty I purchased when buying the vehicle almost pay for itself when I had to have my radiator completely replaced, but it was a huge selling point that made it stand out from most other used vehicles.
Another tip here is to not act the least bit interested when asked if you’d like to buy this warranty. This allowed me to negotiate about 50% off of the price of the warranty (your car is not the only thing that is negotiable).
3. Buy a car that will meet emerging newer trends: when I purchased the car two years ago, gas prices were starting to become noticeably volatile and were trending upwards. The writing was on the wall that this wasn’t going to be a temporary movement. I decided at that time that it would be wise to purchase a fuel efficient vehicle and as prices hit $4/gallon and people flocked from SUV’s to fuel efficient small cars, suddenly my vehicle became more valuable due to increased demand.
4. Buy from a private seller if you’re buying into a trend: when tabulating my asking price, it wasn’t surprising to see that dealerships had all cranked up the prices on their smaller vehicles to levels higher than private sellers. Dealerships know that these cars are in hot demand and they can get a nice commission on them. Private sellers usually are not as in touch with current supply and demand in the market.
5. Buy from a dealership if you’re buying against a trend: recently, I noticed a local Ford dealer selling brand new F-150’s for less than $9,000. Ford was offering $7,000+ in rebates on these vehicles, because there is much more supply than demand in the market for them and inventory that doesn’t sell cancerous for dealers. I give Ford and the dealerships credit, as most private sellers would not be willing to slice their asking price by almost 50% instantly, and take a huge loss in the process, just to move the vehicle.
6. If you’re buying from a dealership, don’t buy that dealer’s brand: when a prospective buyer goes to a dealership, they usually are not looking to purchase another brand. For instance, someone going to a Ford dealership is not likely to be looking to purchase a Subaru. Dealers know this, and will sell their used trade-ins at a lower price to make them more attractive and move them. I believe this is what allowed me to purchase my Vibe at a Toyota dealership for about $3,000 less than what I was seeing similar Vibe’s for at Pontiac dealerships.
7. Look for a flaw that will allow negotiation room: If you’re looking at a car that has a small dent or crease, higher than normal miles driven, or some interior stainage (better than you not ask where they came from), use these flaws as leverage when negotiating. If they are easy fixes, go ahead and pay for it on your own or just live with it.
8. Look for a seller that is motivated: Sellers may be especially motivated to sell their vehicle and will lower their price to move it quickly. Some situations that might indicate this could include the seller moving out of state or country, a change in their family or work situation, debt issues, or the purchase or gift of a new vehicle. Be wary of sellers who say they are very motivated but have their price cranked up higher than what the market commands for their vehicle.
9. Compare the sellers asking price to the market value for the vehicle (and pay less): Before you buy a vehicle, check out what the market is commanding for it. Here are the resources that you need to find out what your the vehicle is worth:
- Kelley Blue Book (KBB)
- National Association of Automobile Dealers (NADA)
- Craigslist: There are a ton of cars on Craigslist. It’s a great way to see what people are selling their vehicles for in your area.
Use Kelley Blue Book and the NADA to get industry perspectives. Use autotrader.com, cars.com, and edmunds.com to find actual seller prices. If you have examples of better vehicles at lower prices, use that as leverage when negotiating.
10. Buy last year’s model: If you’re determined to buy a new vehicle, look for a current year’s model after next year’s model is released. This usually means dealer incentives in the form of rebates and zero interest loans to get rid of the old models and bring in the new.
Hopefully these tips will help you find a great deal.