Buying Online is Trickier Than You Think

Let's establish something right up front - an automobile is not a camera, nor is it a fish tank, nor is it a diamond. This seems a reasonable assumption, right? It seems there are many people today who think otherwise and believe that buying online is a very simple process. It can be but there are definite steps involved.

First and foremost, buy your car from a dealer. Or, if you prefer private sales, try to esablish a relationship with from whom you may buy the vehicle. If you do establish this relationship, there is a good chance the seller will let you have the vehicle checked out by your mechanic. In the end, it ends up guarding you both: 1. you know the car is in good condition; 2. the seller knows he is not selling you a Lemon that can bring down all sorts of fun times (being facetious here) from folks like the attorney general of your state, especially if you have a tough Lemon Law such as the one in MA.

Actually, there are two reasons to look first at a dealer: 1. the dealer bears the brunt of any Lemon Law claims that might arise (try to get a private party to act on the Lemon Law of a state -- chances are you'll be waiting a long time); and 2. the dealer will likely do a safety check on the vehicle in question. If the vehicle flunks, it isn't sold because then it falls under number 1.

This may seem obvious, but, from the quality of other online buying items, it seems that writers who are waxing poetic about online buying are working from very naive positions. (The information for this article comes from an online automotive professional with more than six years of experience as sales as a manager/coordinator of Internet and Ebay sales.)

On average, we had, at the height of our program, 15 to 20 cars per month listed on Ebay, for example. Many of them were very low-cost, high-mileage vehicles on which we ran safety checks. If they were in reasonable shape, we would make sure that all problems were disclosed in the write-up/condition report and we would put a minimum of 30 to 40 digital images online.

We did have folks come in who, after reading our disclosure material, test drove and purchased these vehicles, but we also made sure they signed off on the fact that they knew they were purchasing a vehicle with problems. We also offered to fix any of the issues found at our in-house rates, although it buyer would bear the cost.

Given the foregoing, here's the best piece of advice that you can get: Never buy a car online unless you can get as complete a Carfax as possible. The Carfax should show everything about the car from its in-service date to its latest service or inspection.

This will ensure you have as much information about the vehicle as possible, remembering that there is a pipeline in the Carfax process that starts today and leads ultimately to the Carfax window during which time items that should be reported may not appear and a vehicle that would otherwise be rejected may be purchased. Remember this when you ask for the Carfax.

Despite this shortcoming, Carfax is perhaps the best tool available to the used-car buyer, bar none.

Another tactic to use, if you purchase from a dealer, is to see where the vehicle was purchased. If the vehicle was purchased and serviced at the dealership where you are working a deal, you can ask for the service records in lieu of the Carfax.

Privacy laws being what they are, the name of the buyer and other pertinent information will likely be blacked or whited-out, but you can still see the service records of the vehicle and feel confident that everything was done according to the manufacturer's recommendations.

If the dealer is reluctant or seems to be hustling you to get a deposit and purchase and sales, this is one vehicle to which you should say adios and move on.

If you see the "vehicle of your dreams" online, then the fun begins because no dealer wants to negotiate over the phone or via email. They want you to come in and test-drive the vehicle to see if it's a good fit. That great-looking online (six-photo) spread only touches on the high points -- the sellable points of the vehicle and not on any obvious issues.

Be sure that the dealer is honest enough to list any problems or potential problems that may have been found. An honest dealer will do this to keep legal eagles at bay and won't want see you a car that doesn't pass basic safety checks (always make sure a dealers runs a safety). An honest dealer, too, will disclose any issues that might arise with a vehicle and make sure they are highlighted so you are not walking into the deal blind.

If a dealer is good, the problems will be fixed before the car is sold.

So how do you go about buying online? Most of the time, it's a pretty quick deal. If the dealer (or you, if it's your car) have honestly disclosed all major issues with the vehicle and the buyer is a number of states away, then the deal will likely close with an exchange of checks and overnight shipments so that the dealer can get his/her money and the new owner can get the title.

You will find dealers encouraging people to come to the showroom for a test drive and you may even write an online deal with a contingency clause on the purchase and sales agreement "subject to successful test drive."

Those five words are the keys to any online sales. Even if you have to fly up and drive back, you must get behind the wheel of the vehicle to make sure that you are getting is right for you.

Of course, if you have test driven similar vehicles in your own area and know that the online vehicle is the one for you, it's still a good idea to make sure you fly up for the test drive.

Remember in states that have 72-hour buyer's remorse laws - MA is one - it makes very little sense to try an invoke it, if you have given your deposit and signed a purchase and sales agreement, and if you have even sent a check, because of the time involved. It will take more than 72 hours to get the deal done.

Here's another point to remember. Most dealerships won't turn over title to you until the vehicle is paid for. This means not only your deposit, but also any balance that is left. It just won't happen. The dealership wants the money in house before it will even consider getting the vehicle to you.

Where do you get the financing? That's up to you! You can go to your own bank or a credit union and they will become the leinholder of record and will be recorded as such on any sales agreement.

Here's a great suggestion about funding the balance of the car, try using the dealership's business department. They will often have relationships with bankers who can help push through loans that may otherwise be marginal and they will also be able to get you the best rate possible for your car loan. It really does make sense, unless you can beat the dealership with your own home bank or you come to the dealership with a cashier's check already made out.

Remember, that getting loans and helping you obtain other aftermarket items is the job of the business office and they are there to make business happen; like other salepeople, it is the only way they make their money.

Likewise, if you have had some credit issues, they may be able to use their network of banks to help secure your funding at a more reasonable rate.

Why would a dealership step up to do this? The answer is very simple, they want to sell you the car and move it from inventory to sold. It's the only way everyone makes their living at a car dealership.

You can buy for cash, of course, but this means you will be draining your own personal resources. Here's a thought, why not arrange a note through the dealer and hold it for 90 days and then pay it all off or pay it off in large chunks. In this way, you are keeping your funding available, while, at the same time, using the dealership or bank's money to pay for the vehicle.

By now you probably have a headache as you see that "easy" Internet deal for what it is; it's like the many-headed Hydra of Greek mythology, cut off one and two more grow. That's the way it is with online sales, too.

Yes, they can be incredibly easy if everything is in good shape and everyone agrees on a price or they can become incredibly complicated.

Car buying online then, actually boils down to two words; they are: "It depends..."

Note that if you have a trade, you'll have to face a sad truth, most dealerships do not like or do remote trades. They have no idea of the real condition of your vehicle -- most folks think their vehicle is always in excellent condition and expect way to much in trade, if it's what is known as a remote or distance deal -- so dealers will usually take a pass at your trade and you can expect to sell it yourself.

Be realistic in your expectations about what you will get for your vehicle when you check Kelly Blue Book (KBB.com) or Edmunds.com - unless you have maintained it to the letter of the manufacturer's service recommendations and unless you have washed and waxed it every week, you cannot expect to get the excellent "private" sales price.

Instead, shoot for the "fair" private trade value because that is what you can realistically expect.

By the way, if you try to use your vehicle as a trade with a remote dealer, you will have to remember to cancel the plates on your current vehicle and get either a transfer plate and new proof of insurance so that you can trade your current vehicle and then drive back in the new vehicle. Dealers won't lend out their "dealer" plates because insurance rates are sky high so if you expect to fly in and pickup your new purchase and drive home on a set of "dealer plates" you will be in for a shock because you will have to ensure you have your own plates and insurance - Commerce or Progressive, are two examples -- before you can put the car on the road.

This means you will have to have the deal completed before you arrive at the dealership. There's no way around it. Also, be sure that you fulfill any requirements that your state may have. Some states want a policeman or DMV agent to make sure the VIN is correct and attest to it on a notarized form.

If this seems rather complicated, it is because there's no easy way to buy online. The financing you can arrange yourself or you can go through the dealer, your likely best bet on rate, and you will have to get the vehicle out of there yourself either on a trailer (probably the best way because you can then take your time to insure it) and you won't be tying up valuable time.

Just don't do as some customers have done which is to show up the dealership with a plate and expect to drive away. It won't happen, unless the plate is new and you have good proof of insurance.

Source: Author's experience as online sales manager