How to get a Fair Deal on a Pre-Owned Car
Manheim Auto Auction is the world's largest car auction where car dealers go to buy and sell pre-owned cars. They use the auction for two reasons. First, they might have a car that they cannot sell and they just want to get their money back and the car out of their inventory. Second, they want to buy a car at wholesale and then turn around and sell it. The auto auction sets the going rate for used cars. Thus, the rise and fall of prices at the auto auction is important. Rising prices means more expensive used cars on the market. This past July prices on used cars at the auction spiked in value. According to this article:
The Manheim Used Vehicle Value Index, increased 5.1 percent in July over the same month last year. July used car prices were also up 1.5 percent over the June prices, and the index is at its highest point since it first started tracking used sales in 1995.
Why are used car prices going up? It is the fear of the effects of Trump's tariffs. Trump is slapping tariffs on everything from new autos to parts used to build new autos. As a result, the prices to car manufacturers go up ultimately increasing prices to the consumer. Thus pre-owned car prices go up as a result. Just the threat of these tariffs going into effect is increasing used car prices. So, as long as this is an issue, cars might just be more expensive.
There are three things to know if you are in the market for a pre-owned car
- Know the Average Sales Price of the Car You Want Ahead of Time: Go to www.autotrader.com and conduct a nationwide search for the car you are wanting. In the search, get as specific as possible so that you are looking for almost the exact same car in terms of year, miles, and options. This will give you a price range of what the asking price is for your car across the country. Then figure that the seller will potentially come up off that asking price or list price. It is good to know these figures ahead of time.
- Now Check the Value of Your Car on Nada.com or Kbb.com: These sites will give you approximate values of your car based on condition of vehicle. Keep in mind, car dealers haven't really recognized these values since the bottom fell out of the auto market during the financial crisis. However, it will give you yet another data point.
- Don't Forget Your Trade-In: If you are trading in your car, treat the your trade-in and the car you want to buy as two separate values in the car deal. Most dealers will incorporate both values into one big deal and basically sell you on the payment. Don't fall for that trap. Get the best trade-in value for your car because your trade-in is more valuable as a car that they can sell. Go through steps 1 and 2 for your trade in as well and be prepared to determine if you are getting a fair deal on your trade-in.
- Other Tips: Don't be in a hurry - When you get in a hurry it becomes an emotional decision which are never good deals.
Don't squeeze pennies - save yourself the headache. If they get within $500 or so of your price take the deal. At the end of the day, thousands not hundreds off make a difference.
ALWAYS get pre-approved ahead of time - get pre-approved with your credit union or your bank ahead of time. This way you know you are getting the best interest rate based on your credit and it is less hassle during the sales process.
BOTTOM LINE: Car dealerships and salespeople need to make money and deserve to be paid for their investment and time. They just don't deserve to be overpaid nor do you deserve to steal the car. You are looking for a fair deal!