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Comment by blakesterz | Hacker News Reader

Buying a car is such a horrible and archaic process still.

I love this quote at the end...

"For the vast majority of dealerships, in-store sales will continue to be the main way they sell cars. Delivering cars to customers can get expensive, and dealers see a benefit in getting them in showrooms, where they can be induced to spend more for features and add-ons, like paint protection and extended warranties, "

That word "induced" made me laugh.

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Carmax feels a lot like dealing with Saturn dealerships. No haggling. Fairly simple process. Low pressure. I’m never buying from a dealership again.

Carmax / Carvana seem to basically charge new car MSRP + tax + fees if you want to buy a one to two year old used car with 5-15k miles, at least in my experience, so I ended up ahead just buying the same model new from a dealer. They also have pretty high interest rates and it is in your best interest to do the 'backdoor' method into PenFed for their rates, which are pretty good.

I have sold cars to Carmax; Carvana requires an official payoff letter from your lien holder, unlike Carmax, which can be a pain or take a decent chunk of time, depending on the lien holder.

It seems like since the cash for clunkers program in 2009 the used car market hasn't been a very good deal. Last year I was looking at getting a 1-3 year old car and hoping to save money. For 5-10% more I could get it new and choose exactly what I want (my state charges the same tax rate on used cars).

My guess is that it's due to a combination of that program and wages not growing since the recession. It seemed like a lot of people used to buy brand new cars every few years. Someone like me could pick up something a year or two old for 50% off the original price and drive it for 5-10 years. I've heard stories of people buying 2-3 year old cars, selling them after a year or two for effectively the same price they bought it at. You may still be able to do that, just at a price closer to original sticker price.

The idea you pay sales tax every time the car is sold is frustrating. It feels like double dipping by the government.

My own theory is that everyone else is thinking the exact same thing: looking for a "great deal" 1-3 year old used car. So demand for these cars is quite high. Modern cars are much more reliable than before, and that is reflected in the price you pay for a lightly used car.

Used luxury cars still have a lot of depreciation and 1-3 year old luxury cars can be a good deal; my guess is that luxury cars tend to be more costly to maintain and less reliable than regular cars. Also, luxury car owners tend to lease their cars, which creates a large market of used luxury cars.

Also, the point of a luxury car is to show off that you can afford a luxury car, so a 3-year-old luxury car doesn't have the same cachet as a new one. The point of a "normal" car is transportation, which a 3-year-old car can do just as well as a new one.

I knew quite a few people who had a dream of owning a specific nicer brand, like BMW. They started making decent money and bought one that was 3-5 years old. Literally 6mo later they'd dump it at a loss because during that time it was constantly in the shop and each repair cost was ridiculous.

I now know a few people who own nicer cars for peer and client status reasons (I'm sure they like having a nice car, too). Leasing or selling the new car after a couple years seems like the only sane way to operate.

A friend bought a Mini Cooper new and drove it for 10 years. It had very low milage because for quite a few years it wasn't needed much. For the most part it ran fine, but paying for expensive brake pads, run-flat tires (no spare), and other maintenance on a car where the glove box wouldn't stay closed and the cloth headliner sagged down just didn't make sense.

The downside being that you pay 10%+ more than you would for the same car elsewhere, with no opportunity to negotiate. (Having bought from CarMax, I was ok with that, it's just something you know going in)

Carmax still only sells used cars, don't they?

I want a no-haggle dealer for new cars, especially if they sell economy cars like the Nissan Versa and Chevrolet Spark.

Honest question: why? Cars’ rapid depreciation makes a gently used car a much better buy than a new one in just about all circumstances. And CarMax does thorough inspections and provides solid warranties for cars they sell, so you don’t have to worry about “used” equaling “unreliable.”

Asymmetric information. The buyer has no way of knowing whether the car was used gently, which results in market for lemons.

CarMax has no incentive to fail a car at inspection. They'd rather sell it to you and if it breaks, fix it under warranty. But for you a broken car might mean ruined vacation or road trip.

CarMax has incentive to fail cars at inspection before they purchase the car, or to use the inspection results to adjust the price they pay for the car.

The price of fixing a car under warranty can be higher than the difference between their purchase price and their sell price.

You also need to multiply the price of fixing a car under warranty by probability of the car breaking before that warranty expires. CarMax only makes money on the cars it sells, so as long as there is a decent chance the car will break after warranty expires, it still might make economical sense to do it.

CarMax gives you a free history report on the life of the vehicle to date, including how many owners it's had, any accidents it's been involved in, any recalls it's been included in, registered odometer readings over the life of the car, and so forth. (Details here: https://www.carmax.com/articles/free-vehicle-history-report-...)

If you don't trust CarMax to give you an accurate report, you can buy a separate one from a third party like Carfax (https://www.carfax.com/vehicle-history-reports/) to confirm the details.

> CarMax has no incentive to fail a car at inspection. They'd rather sell it to you and if it breaks, fix it under warranty.

Any car you buy from CarMax can optionally be covered by their "MaxCare" extended warranty, which lets you choose a deductible and then obligates CarMax to pay the remaining cost of any repairs to the vehicle beyond that deductible. So if you set the deductible at, say, $250, and then you get the vehicle home and discover that the transmission is shot, the worst case scenario is you're out $250. CarMax eats the rest of the cost.

Car YouTuber Doug DeMuro bought a Range Rover from CarMax with this type of coverage a few years back. He paid $3,899 for the extended warranty, and CarMax ended up paying out $16,925 on warranty repairs over the six years he owned the car. More details here: https://www.youtube.com/watch?v=E3jA55TJboA

If the previous owner only changed oil once (just before trading the car in), how would CarMax or Carfax know?

They would know it had missed a bunch of scheduled maintenance. They know how many miles are on the car, they know how many times it should have had its oil changed over that many miles. If the owner never brought it in for service, you can say maybe they were just a gear-head and were changing the oil themselves in their garage. But there's lots of service tasks you can't do in your garage, so if the car missed lots of scheduled maintenance windows, that puts up a big red flag.

Typical lease is three years. In that timeframe there isn't a bunch of scheduled maintenance. You need to pass state inspection a couple of times, but apart from that there's normally nothing really to service yet.

From the carfax report the owner who did the oil changes on schedule with quality synthetic oil looks indistinguishable from the one who did nothing and drove the car like a rental. An you can't tell what's inside the engine block until you open it up.

Oil changes often don't get recorded.

Would one of those reports tell me if a car has ever been smoked in?

I quit five years ago, and ever since then I've been extremely sensitive to cigarette smoke to the point where sitting in a car that people have smoked in before makes me sick.

Is that still true? I feel like that used to be true, but not anymore. Since the 2008 recession (and the "cash for clunkers" program) every time I've tried to crunch the numbers, a 1-2 year old car is only 5-10% cheaper than a new one instead of 25%-50% cheaper. Maybe it's the specific cars I was interested in? I figured the economics of used cars had just changed.

Data is much more comprehensive now, and everyone knows which brands/models to buy.

I would have figured the opposite. That data has made most all car-makers build cars that fit the same customer's needs; lower TCO, less maintenance, lasts much longer. Japanese cars being reliable has been a known thing since the 70s. I feel like today it's fairly well known that most any car is reasonably safe, will last awhile, and have reasonable repair costs (excluding luxury cars).

I’m under the impression that American brands are still terrible, and Japanese brands are still the go to for long term reliability and ease of maintenance.

https://jalopnik.com/every-single-american-car-brand-is-on-t...

I’m sure this is priced into buying used Japanese cars.

Thanks for that info. I don't follow the car press so it's good to see some actual info.

I do think a brand like Honda has the used car pricing built-in. Parts are definitely cheap and plentiful, but they still seem to put some parts in hard-to reach places (all companies seem to do this). But I don't think a head-to-head tells you if the lowest-ranking brand now is better or worse than the lowest-ranking brand from 20 years ago. I'm not saying all the brands are the same, but the reliability of the average (or any) car today seems significantly better than 20 or 30 years ago. I imagine the spread from best to worse is a lot more narrow.

Some brands/dealers are no-pressure. My wife had very good luck with a Mini dealership in 2014. My impression at the time was that that was part of their corporate approach to sales. I have no idea if that's still the case, but it was pain-free, pressure-free and all very easy. All the features were a la carte. There were packages, but you could also order each feature individually if you preferred.

Individual dealerships and salespeople certainly prefer the in-person pressure-oriented sales model. But offering a showroom and online custom-ordering would certainly make _me_ more likely to buy vehicles more often. As it is, I drive my cars into the ground until I don't feel I can trust their reliability for my typical trips any longer (luckily I _do_ trust my mechanic), but it's usually a few years after I start thinking about replacing them. If it was truly easy to do, I would probably jump a lot sooner.

I had the hardest time getting a Honda Fit when I wanted one this summer.

Everybody wanted to push me to buy an S.U.V. though... I'm not sure if drivers really want S.U.V.'s or if carmakers really want to sell them.

I was looking for one a few years ago and had a difficult time. I was told they had recently changed manufacturing plants--the Mexico plant that used to make Fits was making more HR-Vs because they have better margins. Since Fits were now coming from Japan there was a backlog.

Maybe what I had heard was just a rumor, because it was definitely a few years ago and this recent article makes it sound like it hasn't happened yet.

[1] https://www.reuters.com/article/us-honda-production-mexico/h...

It’s the latter, I think. SUVs are more profitable than cars.

From what I understand, SUVs generally count as "trucks" rather than "cars" for regulation purposes, so they don't need to meet the same efficiency standards. I'm sure that's a big part of it.

That's not necessarily true anymore, and is pretty inconsistent. Most crossover "SUVs" (which are the best selling segment of cars in America), for example, are classified as cars.

They have new cars, but it's a pretty small percentage (looking now, it's ~300 new vs. ~8000 used), and it appears to be only Toyotas (?). So that's a good option if you're interested in new versions of Toyota Yaris or Corolla, at least.

Edit: I had the default 250-mile radius setting on. It's ~500 new vs. ~60000 used. Still looks like it's all Toyota, though.

And they don't have any in my state.

Well, almost any. Searching 2019 models only, there are exactly _two_ in 250 miles. A Jeep Cherokee and a Corvette Grand Sport.

I'm aware of at least one Carmax that is also a Toyota dealership, which they sell no-haggle. I think some dealership chains are also no-haggle (e.g., Fitzgerald Auto Mall)

> Buying a car is such a horrible and archaic process still.

Tell me about it. I bought a used car today and my stress level is through the roof.

If you can afford to, go buy a car before absolutely needed, get a Costco quote, go to the dealer and tell them that’s what your willing to pay, and keep saying no to whatever the financing person says. If they get annoying, walk out and find another dealership and hand them the Costco quote, and repeat. Should be done with whole process in 2 to 3 hours with minimal stress.

This is if you don’t want to play the haggling game. But I feel like most sought after cars don’t really have much haggle room anyway since they are so in demand, might as well save a few hours of your life and just walk in with the Costco quote the dealer has agreed to.

I avoid trading in and all that nonsense, that’s when dealers get to start playing games. I just prefer to run the car into the ground, give it away to family, or if I want a luxury car just lease it and return it.

The Costco Auto Purchase program won't give you a quote online or over the phone. You have to set foot in the pre-selected dealership to receive the price. Costco negotiates the price once a year so there's no guarantee that price is market competitive, especially late in the model year.

That's not true, I received a detailed price breakdown over email.

This definitely doesn't reflect my recent experience in the last year. Got several quotes online from different brands. Costco pricing is a good benchmark; you can probably do better if you're willing to put in the time.

I also purchased a car in the last year, but the Costco approved dealer did not give me a quote online.

Also, or alternatively, make sure you have your loan approval in hand as well. I recently bought a car and thought I got an okay rate at the dealer through CapitalOne, but they “figured out” a way to get my interest rate a whole point lower (much better than anticipated) if I went with the dealer warranty. So the price of my purchase went up, but my monthly payments went down. That’s okay with me in the end, but I really would have preferred my “real” rate and no extra warranty of course.

Having a hard price and a solid loan letter in hand before you even step on to the lot is really the only sane way to deal with auto purchasing.

i went in with a 3.64% approval rate.

car guy says "oh, we can beat that!". Come back with "how does 3.5 sound?". "well... fine, I guess... not a huge difference, but if it makes it any easier... whatever".

Mind you this was... $9k loan.

I get their paperwork... reviewing it - 3.59%. .05% difference. I mean, yes, it's lower, but ... "damn, we can beat that!". He was so excited! It's about 40 cents per month cheaper.

40 cents per month cheaper for you, but he made money on the deal. If a car dealership sells you an extended warranty or financing then they get a cut of it. Se he went from making $0 on your third party financing to making some level of money on you. It's a plus for both of you when it works out.

Not only that, but for many people, you should probably try to negotiate for the lower net cost vs. lower monthly payments with a higher total cost. If you can float the money, why pay more?

that's what I figured - they had to be making some sort of kickback or referral fee or piece of that action.

The last time I bought a new car for myself, I had a pre-approved loan from my bank in hand.

The dealership swore up and down they could beat that deal.

Three hours later and they finally gave up and went ahead with our pre-approved loan.

Pissed me off to no end that they made us wait that long before they gave up trying.

my deal only took about 10 minutes. for a late model used car, I wasn't seeing anything much out of the 3.6% range anywhere, so I didn't think they'd be able to do much better. had they surprised me with, say, 2.2%... great, but it's still not a huge savings anyway.

I hope the term was the same.

The whole 4 square shenanigans is really annoying. Agreed on having your own financing lined up, I've never seen a case where a dealer could beat my credit union.

Also wait to mention your trade-in if you have one until after you have the rest of the terms nailed down(and ideally have a carmax quote before).

If the Costco quote is so good then why not just get the car from them?

That's not how it works. "Costco Auto Program" is a system where dealers sell cars to customers at prices negotiated by Costco. Costco itself does not sell cars.

Hm, I'd heard lately of people buying cars from some supermarket chain but that must have been something different.

If you want to buy a car without much ( if any ) haggling and you do not want a specific car with specific options you should (strangely it applies to both used and new cars in larger dealerships i.e. non Buy here/Pay here shops)

1. Only talk to someone at the dealership who does the fleet sales. Simply ask for "Feet sales"

2. Only buy a car that is already on the floor

3. Do it in the last 27-29th day of the month -- dealerships pay monthly floor plan financing fees and you want to take something off their hand at the last moment they can replace it with a new car and still have the entire 30 days clock to sell it. If you are buying the car on 30th or 31st, the replacement car probably won't be there before 2nd or 3rd of the month, meaning the dealership would pay for 2 or 3 days of a floor plan financing when there is no car that they can immediately sell. That in turn means they would attempt to either bake higher price into the car you are buying or kick the sale to the next month giving themselves another 30 days to sell it.

Why would a dealer go through all this rigmarole about being worried about which day of the month the car was being purchased? Wouldn’t it be far more sane for the delay to just average things out and know that every day will eventually have a similar number of cars sold, so they should be priced accordingly?

Because anyone who is not purchasing it on the worst day would overpay by a few bucks. The margins are very tight, if any.

Not wanted to deal with a dealership is the biggest reason I haven't bought a new car in a long time. Last time was such an awful experience.

I bought a car recently, I was in a hurry and I got stuck with the extended service contract.

When I got home I read the contract carefully and found that I could cancel it within 15 days, so I did.

This must be all about new cars; I wouldn't buy a second hand car without seeing it first.

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