Wednesday, September 11, 2013

How to Avoid the Top 5 Used Car Dealer Scams

Towards the end of summer we got involved with a used car dealership that was running an event in Vancouver near our shop.  We ended up agreeing to detail a few of their rigs to help with overflow that their 2-man detail team was struggling to keep up with.  We did about half a dozen cars in just a few days.  It felt like going from Johns Hopkins to a MASH unit--forget technique--just go fast.  Only 1 of the cars we did was worth anything, the rest were basically auction house garbage.  (They were literally some of the worst cars we had ever seen.  The garbage from one of them actually filled a grocery bad to the top!)

Suffice it to say, we will never work with a used car dealership ever again.  Over the course of the few days we had our disagreements with the dealership and how they wanted their cars done.  I thought letting my readers know what used car dealers do to their cars before you get to test drive them might be interesting.  First, I challenge any of you to go to a used car dealership and find a sales rep that will admit to you that the car they are selling came from an auction house.  Each week here in the Portland area, a company called Manheim coordinates an automotive auction for dealers only.  They sell between 400 and 500 cars each Tuesday to used car dealers in the Portland Metro area.  In fact, they have offices all over North America and likely sell tens of thousands of cars per year.

500 cars a week into a metro area as small as Portland is a lot of cars (2K per month), yet I can't find a single one on any used car lot in the area.  Every single car is "taken in on trade", according to the dealerships.  This is an obvious lie.  But why do they lie.  Here's why.  I went to an auction back in the middle of summer with a dealer friend and watched as car after car was bid on and most of them sold.  I had my eye on a 2001 Jaguar because it had very poor leather and I was interested in talking to the owners about fixing it for them.  I met the young husband and wife who ended up with the winning bid.  It was just a hair above $5K which was higher than most thought it would get.  I followed that car to it's final resting stop on their dealership.  The bad leather was never repaired, dressing was sprayed all over the engine (making it shiny) and the price went from just above $5K to $12,995.

I asked them to see a breakdown of what was done to the car.  Guess what!  Nothing was done to the car, yet they more than doubled the price.  Used car dealers can do this because they prey on a certain type of buyer; the one looking for convenience.  I've met several people who have purchased from used car dealers and I've done it myself once.  Used car dealers do make getting a car convenient and this leads to them being able to get away with a lot that a private seller can't.  They can finance the car of course, but they can also coordinate licensing, insurance and so on all in the time it takes you to peruse the rest of the cars on their lot.  And they can tie all of these expenses into one financed amount.  When I did buy from a used car dealer, I paid cash and so I took away one of the biggest control features the used car dealer relies on to take advantage of you.  The rule is, always be prepared to walk away from any car, even if it seems perfect for you.  There is always another car and another deal.  When buying used cars from a used dealer, patience is the best weapon you can take with you.

How do you know if the car they are showing you is worth what they are asking?  What do you look for?  Surely not all the cars they have on the lot are clunkers?  You've noted that the cars look really good when you looked at them on the lot.  Some of them do, however, used car dealers do some things that are basically akin to parlor tricks to make their cars look better than they really are.  Everyone knows they put five gallons of varnish on the engines to make them look new.  However, they also put what is basically a silicon grease on all the bumpers and dark material on the car, even the wheel wells.  This gives the appearance of being newer or in better shape, but not only will that not last, when you drive your car in the rain the first time, the dried silicon will begin to mix with the rain and drip from the rubber components all over paint.

We've tried it and we don't like it.  When we find a rubber component that has been damaged by years of exposure to the sun, we completely respray it with rubber paint in the original factory color.  This is going to last much longer than a cheap, greasy quick fix that you can buy at Walmart, but it takes time and time costs money.  Used car dealers are about flipping as many cars as they can for as high a mark-up as they can.  They are not interested in spending money on the car, only in selling it to you.  This doesn't mean that you will not find some very nice cars at a used car dealership; certainly there were nice cars at the auction, it just means that among the nice cars there will be others that were repossessed by banks and sat under a tree for 2 years, and others that were completely destroyed on the inside by dogs, cats or whatever, a few that were in floods and the dealer has done everything they could (without spending money) to hide the evidence and so on.

The simple truth is that if a dealership wants $9995 for a car on their lot, they probably have less than $5K total into that car.  When they detail the cars, they will cut corners and instead focus on doing the parlor tricks (hiding scratches, putting grease on sun damaged parts, etc.)  I watched the two guys this used car dealership was having prep their cars.  After one of them lectured me (I'm a guy who has restored Ferrari's) on how to detail a car, I watched him buff out a Ford sedan in direct sunlight on a 90 degree day without so much as having taped off the seams and not even a cheap little canopy system to block the direct sun.

Yea kid, you really know what you're talking about.

Buyer beware everybody.

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