Consider the Internet When Buying or Selling Your Next Car
Most of us are aware of the current global computer chip crisis and the effect this shortage is having on the availability, and price, of some durable goods, such as appliances and automobiles, that depend on these chips for their products. With fewer chips, there are fewer products, and this shortage, along with higher consumer demand, has increased the prices of everything from automobiles to microwave ovens.
The rise in prices of new automobiles, coupled with the rising demand, has had a spillover effect on the used car market. The price of used cars has skyrocketed as the demand for a more affordable option has increased. And this is an area of the market most people are not very familiar with, and can benefit from.
My recent experience in this arena is something I would like to share. My wife’s lease on her Toyota RAV4 was quickly approaching, and we both decided leasing a new vehicle was our best option. Her RAV4 was in excellent condition, and had low mileage- only 18,000 miles on a three-year-old car. I was convinced the car was an attractive trade-in and I attempted to leverage the ‘equity’ I had in the lease to lower the monthly payment on a new car. I quickly learned this was not going to happen.
I was made aware of an option I had never thought of through a friend of mine. He suggested I reach out to an online retailer of used cars, of which there are three: Carmax, Vroom and Carvana. The process of receiving a bid for your used car is very simple: you simply enter the Vehicle Identification Number (VIN) of your car, answer a few questions specific to the condition of your car, hit the ‘submit’ button, and a bid is made for your automobile. This bid is good for seven days, has a reference number and has no obligation to complete the sale.
After receiving bids from the three retailers, I chose Carmax. Vroom and Carvana will actually pick your car up at your home; Carmax asks that you bring the car to one of their physical locations. All three will inspect the car to make sure the condition of the car is consistent with what you reported online. The Carmax representative, after inspecting my car, made the arrangements to pay off my lease in full, and issued me a check for the difference, which was substantially higher than the payoff amount of my lease.
Who may benefit from this? Anyone who has a leased car and the lease is due to expire soon, or anyone who owns a car, and would like to purchase new car. Rather than trade the car in to the dealer, explore the options from one of these online retailers. You might be surprised how much your car is currently worth. I would suggest receiving a bid from all three. For a leased vehicle, I would contact the financial institution the car is leased through to determine the payoff amount. This will allow you to determine the value in the bid you are receiving. And, before selling your car, make sure you have a replacement: as mentioned earlier, the new car supply is low and prices are rising. Have a plan in place!
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