Summer Deals a Good Time to Buy a Used Car
When the temperature starts to climb, the sales of used cars by private parties rises. That means summer is a good time to buy a used car but there can be pitfalls.
According to CNW Marketing Research, which I consider the leading expert on used car sales and trends, June car sales are tipping to the casual seller and buyer.
Casual used car sellers and used car buyers refer to private-party transaction sales.
Those are sales between two private individuals (even though dealers will pose as private used car sellers). Private sellers are folks who sell, typically, one or two used cars a year.
Here's the lowdown from CNW, "June will be a solid used-car month with about 4.42 million units sold, but summer brings private party sales to a peak and this month will be no exception. Casual sales, as of June 20, [2013] are running nearly 22 percent higher than a year ago and could come in at 1.49 million units. That would bring the full year-to-date figure to nearly 6.5 million, up 8.8 percent compared to the first six months of 2012."
One of the reasons private sales are doing so well - make that the primary reason - is price. Private transactions are always going to be lower than a dealer, at least for smart buyers. Don't ever pay a dealership price for a private transaction. Check out sites like Edmunds.com or kbb.com to make sure what the value of the used car you are buying is.
Speaking of Edmunds.com, the site illustrates how much a person can save.
For this example, a 2010 Toyota Camry is used with the assumption that it is in good (not excellent) condition and has 45,000 miles on it. The private transaction price is $14,734 while the dealer price is $16,233. (Some day I hope websites like this break down price by independent vs. franchised dealer because I have to believe the better price is going to be lower at an independent dealer, which is a dealer not associated with a new car brand like Chevrolet for example.)
As a buyer, you're going to save almost $1500 by buying from a private seller. Of course, making that decision does have its potential risks. A private seller offers no warranty and sells the car as is. Dealers, according to Federal Trade Commission used car regulations, have to offer at least a 30-day warranty when the price of the used car is more than $3000 (and almost no dealers are selling used cars worth less than $3000 unless they are "buy here, pay here" dealerships).
Summer is proving not to be too friendly to those independent used car dealers mentioned above. According to CNW, "Independent dealers are on track to a 7% decline compared to last year with full-year total virtually the same as a year ago. Franchised dealers are off about 7.6% through June 20 [2013] with the full month looking like 1.56 million sales compared to 1.68 million last year."
It's especially problematic for the bottom of the barrel when it comes to used car sales. "The report continues, "It should be noted that the smallest used-car sellers both franchised and independent are taking the brunt of the decline, dragging down the overall numbers. Large and medium-large franchised and independents are having a solid month with sales up from 2 to 4%."
CNW goes on to explain what the problem is. "Simultaneously, the hottest used-car models are selling primarily through the larger franchised dealers while older, less desirable vehicles are flooding the private party market specifically on Craigslist and other Internet sites." Click the craigslist link for advice on selling on the free website.
The franchised used car dealers are making it difficult for the smaller independent used car dealers to acquire good used cars. For example, you might not find a 2010 Toyota Camry in good condition for sale at an independent auto dealer. They're pretty much the purview of the larger used car dealers, especially Toyota dealers taking them in trade.
Summer time or not, it has to be emphasized the no used car should ever be bought from a private seller (or any seller for that matter) without have a vehicle history report or a third-party inspection done. Plus there's also this helpful list of questions to ask a private seller that will prove helpful, too.