Used luxury vehicles can be bought from several different types of marketplaces, which include dealerships (independent and authorized), used car retailers, rental car companies, private sellers, car brokers, auto buying programs and auctions. Each type of market has different levels of convenience, risks and potential for savings associated with it. Buying a used luxury vehicle can be exciting because of the end result of having a cool status symbol that you have been dreaming of but you should be aware of the different types of marketplaces to help understand the benefits and drawbacks associated with each of them, which relates to the types of vehicles they sale.
The process of successfully making the purchase can vary depending on the type of marketplace you choose to buy, understanding the differences in these marketplaces and what to expect will help you make an informed decision and help make your buying process more enjoyable.
AUTHORIZED DEALERSHIPS
Authorized car dealerships are the most common place that people choose to purchase vehicles from. While they are known for being franchised by a specific vehicle manufacturer such as Mercedes, Lexus or BMW and selling newly manufactured vehicles of those car companies. They also have large inventories of used vehicles of other makes and models.
Their inventories are typically newer vehicles with lower mileage. They are
established businesses with customer service departments so your buying experience will have all the conveniences of a normal transaction. Since the vehicles are newer and authorized car dealerships have their own full service maintenance departments than the risk of buying a vehicle with any surprise operating issues is low and if it happens there is a customer service department and maybe an extended warranty to help resolve any issues, you may even be provided with a courtesy vehicle while
any repairs are being made.
The potential for saving money is low at an authorized car dealership. You get some of the above mentioned benefits but they come at an expense. Also, since they have full time staff and ownership then they have to get paid and those fees are adding on to your overall cost.
Many authorized car dealerships have their own financing departments so while they can get you into almost any vehicle with creative financing, if you are fiscally conservative then financing terms may not be to your benefit. According to US News car financing companies have recently been stretching out auto loans to 6 or 7 years in order to achieve lower monthly payments but that results in more interest being paid.
Please explore the article here https://cars.usnews.com/cars-trucks/car-loan-mistakes Also, typically most authorized dealerships will accept trade-ins to help lower the price of the purchase vehicle.
SUMMARY
The convenience of buying a used luxury vehicle at an authorized car dealership is high because
they have professionals working at every part of the process that makes things go smoother for you.
Their inventory is based on the vehicles that can fit in their lot or maybe they can special order a certain vehicle for you, so we will consider that a neutral score.
The risk of getting a car with any operating issues is low.
The chance of saving
money and getting a good deal is low.
HOW TO FIND
Search online for any car company and they will have search field to find an authorized
dealership near you.
INDEPENDANT DEALERSHIP
Independent car dealerships are similar to authorized dealerships but on a smaller scale. They are usually not associated with a particular automotive maker and do not sale as many brand new cars unless they ave relationships with the factories or authorized car dealerships that allow them to order brand new vehicles when they are made.
They can be found in more frequent locations than authorized car dealerships and are in most cities.
Their inventories can be as small 10 cars all the way up to hundreds of cars. Some specialize in specific types of vehicles (trucks, sports cars, luxury) and others have a variety of types of cars in
their inventories. Before visiting any independent dealership you should call or check their website for their current inventory.
The convenience of going to an independent dealership is positive. All dealerships are different; the ownership can have a major effect on the buyer’s experience. Some independent dealerships have great
reputations and conduct business professionally and others have poor business practices and unscrupulous behavior. But they are all businesses with some form of professionalism. Since they are established businesses then buyers have some recourse in the event something goes wrong, which is to report issues to the local regulatory authorities take legal action or use the power of social media and write a negative review.
Before doing business with an independent dealership it is a good idea to read online reviews to get a glimpse into their customer service.
The potential for saving money is neutral with independent dealerships. Deals can be found, and they do have affordable vehicles because they are typically selling used vehicles that have already gone through the initial depreciation stage.
But since they are businesses with full time employees they have to make a large enough profit to cover all of their expenses, this translates into higher costs for you. Sometimes they can sale a very small amount of vehicles for a loss, if they have to, and claim the losses as a deduction, which would be to your benefit as a buyer. Also, some independent dealerships will accept trade-ins to help lower the price of the purchase vehicle.
The risk of unknowingly buying a vehicle with operating issues is neutral. Since independent dealerships vary greatly depending on ownership, so does the condition of the vehicles they sale. Many independent dealerships have their own in house mechanics and repair departments.
They have high standards for the condition of vehicles that they approve for sale, they must pass full inspections and vehicles are only sold if they are in proper operating condition.
Other independent dealerships do not adhere to these strict standards. Some sale vehicles “as is” with no
warranty. They simply do not have the resources to repair certain mechanical issues so they only conduct basic inspections and the buyer must beware of any potential latent issues.
SUMMARY
Inventory is neutral because depending on which independent dealership you go to it will vary drastically.
The convenience of going to an independent dealership is positive because no matter how good or bad the business operates, they are establishments subject to proper legal standards and industry practices.
The potential for saving money is neutral initial depreciation has typically already happened but business expenses could increase costs.
The risk of unknowingly buying a vehicle with problems is neutral because depending
on which independent dealership you go to they will have a different inspection
process and repair department capability.
HOW TO FIND
Search google for used car dealership near me and view the websites
and the inventory of the results.
USED CAR RETAILERS
A used car retailer is different from an authorized dealership because it is not affiliated with a particular
vehicle manufacturing company, like BMW or Mercedes, also used car retailers only sale used vehicles. They are different from independent dealerships because they are one company with one brand operating in many different locations, giving customers a consistent, similar experience.
Their car lots are located in most major metropolitan areas and the have a large inventory. The benefit of their many locations is that they all work in conjunction with each other, which means they share inventory, if the location closest to you does not currently have a vehicle in stock than you can request vehicles from other locations be shipped to your nearest location for you to purchase, this
makes their inventory vast.
The buying experience is good because not only is it a business but each location operates with the same
standards and business practice as the next. Even though there are different managers in charge of different locations they all operate under the same business model and standards set forth by the retail company.
Like an authorized dealerships there is a professional customer service department ready to help you resolve any issues, so your experience should be competent at each step.
The potential for saving money is neutral. While you will not pay as much as at an authorized dealership, there is no negotiation at used car retailers. This is a benefit to the customer because it eliminates haggling over the price and makes the process more transparent but it also excludes the opportunity to take advantage of any deep discounts. While used car retailers have to include additional fees into the prices of their vehicles in order to be profitable, with their large inventories these fees are spread out thinly and the service and convenience is worth the additional costs. Also, most used car retailers will accept trade-ins to help lower the price of the purchase vehicle.
The risk of buying a vehicle with any problems is low. Used car retailers select the vehicles that they sale, they are evaluating car buying trends and trying to have vehicles in stock that customers want to buy. They have high standards for the condition of their vehicles and they will not select a vehicle for their inventory if it had issues.
Used car retailers, like authorized dealerships, have professional maintenance/repair departments, so
any problems that a vehicle might have is repaired before it is put up for sale, so buyers have very little risk of buying a problem vehicle.
SUMMARY
The inventory is positive because they can access vehicles from different locations in different cities across
the country.
The convenience of going to a used car retailer is positive because they are professional businesses with standard practices for all locations.
The potential for saving money is neutral because the prices are non-negotiable and they have to pay for company expenses.
The chance of purchasing a vehicle that has problems is low because they have strict standards and they also have an in-house maintenance department.
HOW TO FIND
Go to www.carmax.com, www.carvana.com, www.truecar.com, and explore their websites and inventories.
RENTAL CAR COMPANIES
Rental car companies are very popular and well known for providing vehicles to customers on a temporary rental basis. But many people are not aware that some rental car companies also sale vehicles to public. This is a good business model because they already have the resources and infrastructure to be involved in the business of selling vehicles, since their primary business involves renting newer, low mileage, excellent condition vehicles to customers.
When those vehicles have exceeded their short useful rental life the companies have to continuously refresh their rental inventory. Some rental car companies sale off their entire older inventory to car dealerships (authorized and independent) sometimes in bulk because it is more convenient for them to
deal with the occasional business to business transaction as opposed to a lot of customer transactions.
The convenience of purchasing a used luxury vehicle from a rental car company is positive for buyers because these companies are in the customer service business and they operate professionally with nationwide chains in many locations. They have company standards that insure the service quality at all locations is similar and consistent. Even though used car sales are not their primary business, the buyer experience does not suffer because many of the services required to rent vehicles are translatable to selling vehicles.
The inventory of rental car companies is negative because the vehicles they sale come from the pool of
vehicles they use for their rental car business. Many rental car companies provide services for the average consumer and traveler who are more concerned with convenience and price while traveling and not looking cool, so many of their vehicles are compact, standard, economy and full size. They do
have a luxury class of vehicles but not a lot. If you are able to find a luxury vehicle in their inventory you will probably have to be ready to buy because it will not last for long.
The potential for saving money buying used luxury vehicles from rental companies is positive even though there is no negotiation. The prices are fair based
on Kelly blue book values. The rental car companies are different from car dealerships and used car retailers because the overhead and business expenses they have can be offset by their car rental
earnings. So while you will pay market value, the price will probably not
include additional fees.
While they are relying on earning money from vehicle sales and would prefer that method, they have a small financial cushion with the rental earnings that helps keep them
profitable. This is a benefit for the buyer because the sale of the vehicle is a bonus and usually doesn’t include additional operating fees. You should also keep in mind that typically you cannot offer your current vehicle as a trade-in to help lower the price.
The risk of buying a vehicle with any problems is neutral. Fundamentally rental car companies use their vehicles to their limits. On a daily, weekly and monthly basis these vehicles are driven by renters, taken on trips and treated without a high quality of care. While the vehicles are driven frequently and acquire a lot of miles, the rental car companies are experienced at maintaining vehicles with high mileage and frequent use. Any needed major and minor repairs will be performed before the vehicle is sold but in certain situations the routine maintenance for future repairs might be accelerated.
You can also check out this article posted on Quora to get an insightful opinion from an industry insider on his thoughts on buying a used vehicle from a rental car company.
SUMMARY
The convenience of purchasing a used luxury vehicle at a rental car company is positive because
they are professional in customer service and have consistent standards throughout their locations.
The inventory of used luxury vehicles at rental car companies is negative because the majority of their
vehicles are mid-range and economic and rarely luxury.
The potential for saving money by purchasing a used luxury vehicle from a rental car company is
positive because sales is not their primary business since they make money from renting vehicles, so they don’t have to charge additional fees.
The
risk of buying a vehicle with problems is neutral because the rental car companies
will sale the vehicle in good condition or fully disclose any issues. Also the scheduled routine maintenance might
be accelerated due to the high mileage in a short amount of time.
HOW TO FIND
Go to www.enterprisecarsales.com, https://www.aviscarsales.com/budget-car-sales.htm to explore their inventories.
PRIVATE SELLERS
Private sellers have always been a popular way to purchase used luxury vehicles. In the past putting a for sale sign in a car window or taking an ad out in the newspaper classifieds or in a car publication were the main ways to advertise. Now with the growth of the internet many classified platforms are online making it even easier to locate used luxury vehicles and find good deals on pricing.
The convenience of purchasing a
used luxury vehicle from a private seller is negative. Every situation is different and many sellers are trustworthy and simply want to complete a fair transaction but both parties
should be cautious when conducting a transaction to help ensure the deal goes as expected. Since many times neither the buyers nor the sellers are professionals they must both take additional time to learn how the process for selling a vehicle works. If something goes wrong the buyer has very little recourse since the vehicles are typically sold as-is.
The buyer has to put in effort to ensure that each step of the transaction works out satisfactorily, a buyer should not be passive because there are things that can go wrong and no one else is there to help.
The inventory of private sellers is positive because with the internet you have access to private sellers worldwide. Used vehicle websites like car.com, autotrader and eBay allow sellers to list vehicles and buyers can search for their favorite luxury car.
While the potential inventory is vast it is a good idea to limit a vehicle search to a local region so that the buyer can arrange to meet the seller, inspect and test drive the vehicle. Before buying sight unseen a buyer should be extremely informed on the vehicle and confident in the seller.
The potential to save money is positive because a buyer can negotiate with a private seller. Since the transaction is normally not a business for the seller than they might not be solely motivated by profit, they might be in a rush to sale their used vehicle in order to buy a new vehicle, maybe they don’t want to be inconvenienced with corresponding with many potential buyers. There are very little expenses involved in listing a used vehicle so the price the buyer pays doesn’t have any additional fees added in to cover commissions, salaries and business expenses. This can result in the buyer being able to find the best prices. Also, most private sellers will not accept trade-ins.
The risk of buying a vehicle with problems is negative. First, since private sellers are not professionals they do not have the resources that businesses have to take care of maintenance issues. Many times the
reason private sellers put their vehicles up for sale is because they are experiencing problems. Sometimes these problems might be minor or major and sometimes the necessary repairs are deferred, which makes the problems worse.
Second, some private sellers are dishonest and they will withhold information from you in order to make the sale. Some may even try to hide and disguise problems with the vehicle so even if you do a visual inspection the problems will not be detected. It is a good idea to arrange for a test drive, view the Carfax records and maybe have a mechanic do a diagnostic on the vehicle before purchasing in order to ensure that you are aware of the true condition of the vehicle.
Third, some sellers might be honest but since they are not professionals they truly are not aware of hidden issues and if they are aware of an issue they may not know exactly what it is or the full extent of the problem. Buyers should be very diligent and not let low prices be the only factor when making a purchasing decision because the repair cost on a luxury vehicle can easily be more than the value of the car.
SUMMARY
The convenience of buying a used luxury vehicle from a private seller is negative because typically neither the buyers nor the sellers are professionals so they need to inform themselves on the vehicle and the sales process.
The inventory of used luxury vehicles from private sellers is positive because with the internet you have access to any vehicle that is listed.
The risk of buying a vehicle with problems from a private seller is a negative because some sellers defer maintenance, some sellers are dishonest and some sellers are not aware unnoticeable issues.
HOW TO FIND
Go to www.cars.com, www.autotrader.com, www.cargurus.com, www.ebay.com, www.dupontregistry.com to explore their inventories.
CAR BROKERS
Car brokers are a less common way of purchasing a used luxury vehicle. They are used more often by people who are looking for specific rare, hard to find vehicles, by foreigners who are not familiar with local transactions, by wealthy people who don’t like to do their own shopping and by people who are leasing vehicles and rely on the broker to get the best terms for them. Most brokers will accommodate any request so they are also a potential option to consider when looking for a place to buy used luxury vehicles.
The convenience of purchasing a used luxury vehicle through a car broker is positive because they take care of all the work for you. Initially you have to find a credible, trustworthy car broker but after that you only have to tell them either the specific vehicle you want or the type of vehicle you want or your price range and they will search for the vehicle, inspect it, transfer it to your geographical area if it is a distance away and negotiate purchase terms. All you have to do is show up a pay when the vehicle is ready.
The inventory of car brokers is positive because similar to private sellers they have access to any vehicle that is listed for sale. Some car brokers may have relationships with dealerships and manufacturers so they might be able to get certain cars for good deals depending on their industry relationships.
The potential to save money buying a used luxury vehicle through a car broker is a negative because the broker has to get paid and their money is included in the price you pay. Even if
they do find a good deal on a vehicle, the price will be increased to include the broker’s fee. All brokers charge different fees and structure their compensation differently, so you should
understand your broker’s fee structure upfront. Ultimately you are paying for a service so you should expect the trade-off of convenience over cost. Also,
some car brokers will accept trade-ins it depends on where they are purchasing the used vehicle from.
The risk of buying a vehicle with problems is a negative because the broker preforms their due diligence when locating a vehicle to present to the buyer they know how to spot issues and frequently work with mechanics to help them determine the condition of a vehicle. Also their reputation is at stake so they want to only present quality vehicles in good condition to their customers. Lastly, a buyer should stipulate in the contract agreement some kind of warranty, that the vehicle be covered for any major repairs within the first 6 months. Even if something goes wrong the buyer has immediate recourse.
SUMMARY
The convenience of purchasing a vehicle through a car broker is positive because they handle the process for you.
The inventory is positive because they can access any vehicle that is listed for sale throughout the country and places aboard.
The potential savings is a negative because you are paying for a service that the broker will include in the price.
The risk of buying a vehicle with any problems is a positive because a broker preforms due diligence, wants to maintain their reputation and you should make them responsible to resolve any major maintenance issues in the first several months of ownership.
HOW TO FIND
Search google to find car brokers near you.
AUTO BUYING PROGRAMS
Auto buying programs are benefit programs offered by some well-known established companies like, Sams Club and Costco that provide car buying services for fixed-prices and guaranteed savings that are below MSRP for new and used cars to their membership customers. Since these companies are large and have vast amounts of loyal customers and access to their personal information and buying habits, the companies are able to confidently make bulk purchasing deals with dealerships that include prearranged saving for members and assured high volume sales for the dealerships, resulting in a win win situation.
One of the biggest advantages of an auto buying program is that the people who are entitled to participate are already eligible to take advantage and may not be aware that they have the benefit and do not need to do anything extra to get started. Auto buying programs are associated with well known, established companies that have a variety of valuable programs, discounts (on the primary service offered by the company) and deals, other than auto buying, that are available to members and in most situations are the main reasons that attracted most members to getting a membership. While the other popular attention grabbing programs are what initially attract members, the auto buying program ends up being a pleasant surprise benefit. If you have a membership with a large company and are considering buying a vehicle you should double check your program benefits. If you are not a current member but loyally patronize a company that has an auto buying program you should check the specific details to see if it would be beneficial to you.
These programs are designed for car buyers who are primarily looking for no hassle, no haggle, fair, transparent, bottom line pricing. They value an easy, simplified, direct buying process and minimal savings. Since the members trust the company program they joined, then that trust is transferred to the car buying process so that the members can have a good buying experience knowing that they have gotten a fair price.
An auto buying program will usually have a customer service representative that will help process your order request. They will refer you to the nearest dealership that they have an arrangement with. When you visit the dealership to finalize the purchase the dealer will honor the prearranged price and you should have a quick, painless car buying experience. Keep in mind that financing, insurance and extended warranties are typically not covered in the arrangement, so the price that the auto program offers you only applies to the vehicle price.
SUMMARY
The convenience of purchasing a vehicle through an auto buying program is positive because the auto buying program companies have already negotiated prearranged pricing for you.
The inventory is positive because the auto buying program companies usually have agreements with major authorized car dealerships that offer a wide range of new and used vehicles.
The potential savings is a neutral because the auto buying program companies have already arranged a price that is normally lower than MSRP but you will not be able to get the price any lower since it is prearranged and part of a bulk deal.
The risk of buying a vehicle with any problems is not likely because the auto buying companies want to maintain their reputation, so any vehicle you buy from them should perform as expected with reasonable ways to work out any defects or issues with undisclosed repairs.
HOW TO FIND
Google auto buying programs or visit these companies and search for their auto buying program details.
USAA Sam’s Club Walmart AAA AARP Costco Auto Buyers Club
AUCTIONS
Auctions are another less commonly used way of purchasing used luxury
vehicles. There are several types of auctions; the government seizes vehicles that were acquired illegally. The news sometimes has stories about a
drug dealer’s collection of luxury vehicles being seized and auctioned off. The insurance companies that deem vehicles a total loss might put them up for auction.
After a bad hurricane or flood insurance companies consider water damaged vehicles salvaged and arrange for them to be auctioned off. Banks that reposes their vehicles after delinquent payments may also choose to auction off those vehicles. And salvage yards might also hold their own auctions for vehicles they’ve acquired.
The convenience of purchasing a vehicle at an auction is a negative experience. It can be time consuming, unpredictable and difficult to get customer service. Many auctions do not have regular business hours; they are set up on a temporary basis in a temporary location with part time staff working the events.
The inventory at auctions is negative because the selection of vehicles is unpredictable. The vehicles that are auctioned are acquired by chance so there is no way to know in advance which vehicles will be put up for auction. There is a possibility that someone can attend an auction and not see any luxury vehicles for sale, it might be all entry level compact vehicles. You have to get lucky that there is a luxury vehicle and even luckier that it is one that you like.
The potential for saving money at an auction is neutral. Typically auctions will have a reserve minimum amount that vehicles can sale for or where the bidding starts. But there is no maximum amount limit. Therefore, if you are lucky enough to find a luxury vehicle that you are interested in chances are other bidders will also be interested since it is a desirable vehicle so it may or may not sale for under market value. In addition to average buyers that are at the auction there may also be car brokers and dealership owners there too. So you may have some competition and have to have good timing and be lucky to find a deal. Also, auctions will not accept trade-ins.
The risk of buying a vehicle with problems is a negative because the auction sales the vehicles as-is and provide basic information regarding the vehicles operating condition. The auction normally gives attendees the chance to inspect vehicles the day of the auction but normally you can’t test drive the vehicles. This means that if a vehicle has a noticeable issue than it will likely be known by the auction, documented and told to bidders before the bidding starts. But any latent problems will be the buyer’s responsibility and they will have no recourse after the purchase is final.
SUMMARY
The convenience is negative because it is time consuming, unpredictable and there is very little customer
service.
The inventory is negative because there is no way to know what vehicles will be available for auction so you have to be lucky to find the luxury vehicle you like.
The potential to save money is neutral because the bidding process starts low but a desirable
luxury vehicle will likely be competitively bid on and the price will reach market value.
The risk of buying a vehicle with problems is a negative because the
vehicles are purchased as-is with little time to inspect them.
HOW TO FIND
According to our analysis purchasing a used luxury vehicle from an auction is the least recommending option with the most amounts of negative aspects and potential issues but there are people who have
experienced success at it and know the successful strategies. If you are interested in gaining more
information on how to increase your chances for success at car auctions you should explore our affiliate program. Click here to see what their recommendations and strategies are.
