Personal Finance
3 Things to Watch Out for When Buying a Used Car in 2024
In recent years, the used car market has absolutely exploded. Between this and the growth of online car-buying options such as Carvana, the process of purchasing a pre-owned vehicle has evolved… for better or for worse. I should know as my wife and I went through it all just a couple of weeks ago. And while we were ultimately successful in finding a car and paying a price we were comfortable with, there were a few things along the way that stood out to me.
If you’re buying a used car in 2024, here are three things you might want to keep an eye out for.
3 Potential Pitfalls When Buying a Preowned Vehicle in 2024
Additional fees
You know how the much-hated resort fees that many top hotels now charge proliferated as a result of online booking outlets that put an emphasis on the base rate? Well, it seems that a similar phenomenon has come to car buying. Now that several dealerships allow you to view their used car inventory online including pricing, it turns out that the price you see might not quite be what you pay. That’s because some extra (albeit mandatory) fees may apply.
For example, in our case, there was a $565 “admin fee” that was not reflected in the main vehicle price. On top of that, and perhaps even more egregiously, the dealership required that buyers pay $299 for Data Dots (which are apparently applied to certain car parts to help prevent thieves from selling them). Together, that’s nearly $900 extra on top of the quoted price!
To their slight credit, the dealership did clearly disclose these fees on their site, so we knew to basically tack on an extra grand to the price of any car we were looking at. Alas, if you’re looking on third-party sites, these disclosures may not be as clear. So, be sure to keep an eye out for extra costs before buying — and don’t be afraid to push back if unexpected expenses do sneak their way onto your final price.
Financing interest rate
As I recently wrote about, my car-buying experience showed me how much emphasis dealerships put on monthly payment amounts above all else. While this information is helpful, you shouldn’t just accept any payment because you can “afford it.” Instead, you’ll not only want to know the total price you’ll be paying for the car but also the APR.
When we were buying, the salesman originally came back to me with a payment amount and asked me to sign a piece of paper agreeing to buy it at that cost. When I inquired what the APR of the loan was, he said the financial manager would talk to me about that afterward. However, after I said I’d prefer to know that before signing, he was able to get me the answer.
Of course, this APR might not mean much to you on its face. That’s why it’s helpful to know ahead of time what kind of range you can expect given current markets and your credit history. Plus, beyond the APR, you should also be sure you know the length of the loan terms and how much you’ll ultimately pay in principal and interest. Only once you have all of this information will you truly be able to determine whether you’re getting a good deal.
“Public wholesale” listings
Finally — while this one may be niche to my experience — I do want to share my encounter with public wholesale listings. As it turns out, there are a few different pre-owned car types at the dealership we purchased from. Specifically, most of the listings we saw online were actually public wholesale listings.
So what does this mean? Well, as a text slide inserted into the photo carousel of the cars note, public wholesale listings have not been through the dealership’s shop, cannot be test driven, and (importantly) must be towed off of the lot! Also, these vehicles cannot be financed via the dealership — meaning you either have to pay cash or come in with outside financing.
For those who are much handier than I, these listings might be a good deal but then could also be risky. But what frustrated me about these public wholesale vehicles is that, on certain third-party sites, there wasn’t any distinction between these vehicles and “regular” ones. In some cases, the all-important explainer slide would be placed deep into the photo carousel or, in other cases, might be completely omitted! The issue was so bad that we almost didn’t bother going to this particular dealership at all — and, when we did show up, the first thing I said to the salesman was “I’m looking for a used car that I don’t have to tow off the lot.”
Again, I’m not sure how prevalent this issue is. However, between this and my first note, I think the moral of the story is that you should try to follow up on any vehicle you might find on a search site by trying to visit the dealership’s own site. In doing so, you’ll hopefully be able to gather all of the info you need — including some of the major catches that come with wholesale cars.
Used car shopping has never had a great reputation. On that note, some recent developments have been for the better. At the same time, the current landscape can be a bit tricky as well, which is why you’ll need to keep your eyes open. But, if you’re vigilant about discovering any added fees, knowing your financing APR (or paying cash!), and not falling for a “too good to be true” public wholesale deal without knowing the risks, then hopefully you can find the right pre-owned car for you at a reasonable price.
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