How much cheaper you can get by buying used cars by owner on yourself than being guided by a dealer?
A couple of hundreds dollars or maybe a thousand at the most. I used to give myself an answer like this during the past years. Until recently, I finally did some research and put down all the numbers on a piece of paper together…
I was shocked!
A 20% percent has been added onto the bottom price of a second hand car with a dealership. It means for a 15k dollars used car, you are paying an extra 3000 dollars beyond its naked value.
I cross checked the listed price on ebay under the catogories of used cars “by owner” and “by dealer”, despite all the other factors, generally a few thousands dolloars could be found. And here is how that 20% make up:
Dealer commission: 6% up
Somebody says that a car dealar takes 3% of whatever price you pay, but it’s not the case anymore. Interestingly enough, the bad ecomony is actually making a better second hand car business — as more people prefer to sell and buy a used car — dealars commission has doubled.
I often refer to manhattan’s apartment broker fee when i talk about something crazy and rediculous. Just think about that: for every used car with an average 15,000 dollars, you are paying almost $1000 to the dealar. I was told that many of the sales people he worked with would take an extra thousand dollars profit without a thought, then you should really feel lucky for not getting “overcharged”.
Ads costs: 5% – 8%
Compare to used cars by owner, dealers’ cars won’t sit still waiting for you to get in the door. There are plenty of chanels for you to find them, outdoor billboards, local radio and tv stations, newpapers, internet.. you name it.
You read the ads, dial the number, without taking a second to think about this question: who do you think is actually paying for all the ads bills?
Obviously, every cent dealars spend, you pay them back eventually.
Actually when i’m typing this right now, one think jumps into my head that if you see a used cars commercial ad during superbowl live, remember the brand and dodge. I just can’t help wondering how profitable this business is when it’s affording a million-dollar worth 30-second ad.
Other overheads: 3% – 6%
Rental, security, office management, energy bills etc, everything costs in your office applies to car dealers company as well.
Each bill is not worth talking about individually, but it becomes a fairly considerable difference when they all come together. Compare to this, the private seller of a used cars won’t charge you for a new garage door.
Okay, now sum these items up you’ll get a 14%-20% extra edge around your car’s naked price. That how you are going to pay 2000 to 3000 dollars more for a 15k dollars car.
You know what I mean. You may get certain benefit by buy a dealership car, but nothing comes free.
Tips: A quick way to calculate the bottom price of a used car
1. go to ebay motors
2. look into cars and trucks
3. click “used” under condition
4. target my car
5. check “used cars by dealar” to refine my search list
6. only look at the buy it now price(take it as the dealer’s price)
7. no matter how much mutiple it by 0.8
That’s it! The naked price!
Only if you are interested in bottom-price used cars by owner
9. go back to the full list
10. check “used cars by owner” this time
11. bid around the bottom price you just figured out
12. enjoy the deal!
Online Resource: ebay motors