In the news, used car prices are appreciating! (h/t Splendid Isolation)
Maybe, maybe not. Regular readers know I spent many years retailing automobiles and light trucks. One hard lesson learned was, in most sales, there are two customers. The first, and more important, is the lender. The second, and less important, is the mutt driving off the lot with a “happy tag” in the window.
As you sit fuming in the dealership while the sales person scurries back and forth from the “desk”, the reason is seldom trying to find ways to gouge you. Rather, the “desk” is trying to structure a deal that some lender will be stupid enough to buy and thereby finance your purchase. The lender buys the car; you buy it from the lender one month at a time.
Lenders don’t like financing used cars. The default rate on used cars is much higher than new. New cars have factory backed warranties. You can buy a “warranty” on a used car that may, or may not, be worth more than the paper it is written on.
Lenders don’t want to finance anything older than three model years. If you get one financed, it is because of your stellar credit. Poor credit? You are buy here, pay here material.
May I offer you two important “tips”?
Arrange your financing, via a face to face meeting at your credit union, prior to visiting a dealer. Your preconceived ideas may need readjusting. Using a bank instead of a credit union for you day to day financial business? You are foolish, IMO. Hey WSF, fuck you! Yeah, do your own research. With the knowledge of what your credit union will do, you are in a better position to determine if the dealer can get you a better deal.
The second tip is what to look for in buying an extended warrant, aka service contract, etc. Does it cover seals and gaskets? If not, don’t buy it. Gaskets fail far more often than transmissions and engines. I’m talking $1,000 and up to repair that plastic intake manifold (with the very hot gas recalculating return adjacent) gasket. Double that cost for a rear main seal at the back of the engine.
In conclusion, dealers who pay stupid money at the Mannheim Auction doesn’t mean the lender writing a check to the dealer on your behalf agrees with the value of the hoopty.
As always, YMMV