Buying a used car from a dealer?

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Some insider info.

I was recently asked to answer a question that came from a video I had posted. In the video I shared some useful information about looking at a used vehicle that was a private sale.

The question is; what if you are looking at a used car at a dealership? Great question!

Now, it doesn’t matter what type of dealer, big small or otherwise.

One of the most common references I hear from our clients, “I hate shopping for a used car”. I don’t blame them, it’s inconvenient and they are approaching the task with fairly limited knowledge. Then the salespeople arrive and the pressure is on. Eventually, you somehow managed to enter the sales office and are sitting across from the salesperson who is beginning to qualify you. Meanwhile, you still don’t even know what you are looking for.

If you have managed further along the sales process and you have found the right vehicle for you. It can get a bit awkward when it comes time to negotiate, some dealers have a system that makes you feel small, literally. They have the manager who the salesperson seemingly needs to run every bit of the negotiation through, then, when it gets tough you are brought out to the managers podium and stand about a foot or so below them to finalize the negotiations; I stand six foot one and that makes me feel small. Not all dealers operate this way, but a good percentage of them do; and you can bet it was developed with the human psyche in mind.

Then, the bill of sale, what seems like it should be really quite simple, while some are many are not.

Before you go shopping you should have an understanding of how the vehicle sales industry is managed.

AMVIC stands for, Alberta Motor Vehicle Industry Council, they govern the automotive sales and repair businesses in our province; while spending most of their time engaging with dealers and their regulations that they are to be operating within.

The dealer is obligated to inform you on the vehicle’s history, or at least as much as they know about it, as to be considered “full disclosure” (more on this later). They are obligated to provide you with a “mechanical fitness inspection”, performed by one of their licensed technicians, or would have had to use a contractor who is licensed to perform the inspection. When they advertise, they are required advertise the actual vehicle that is being sold, and the price indicated on the ad must include all fees except for financing fees and taxes (there should be no surprises). More info here

Licensed businesses are expected to operate at a high standard of professional conduct; most consumers are unsuspecting and genuinely trust what the salesperson is telling them about the process and about the vehicle.

I have access to thousands of vehicles that are located here in Edmonton at a local “Dealer Auction”. This is the place where dealers buy and sell about 80% of their inventory. If they need to bulk up on their used lot they go shopping, adversely, if something is sitting too long on their lot they go selling. The auction has the capacity to funnel through over 1000 vehicles in the two and a half hours they run every week. It is staggering to think of how quick they need to move them; and chaotic while standing there when 10 auctioneers in their own lanes are chanting at the masses attempting to get the highest bid.

The reason for sharing this is to help you understand just how crazy it is to think that any one employee at the dealer is able to put together the vehicle’s actual history. The auction provides a Carfax report and a fairly detailed visual inspection over the vehicle, to help the purchaser understand its physical condition. Nowhere, other than the Carfax report does it indicate what level of service it has had, how many actual owners, etc. I have even seen vehicles with the cleanest of history (Carfax) look like they had been rolled over and repaired by someone in their back yard. It truly makes one want to question that “fresh trade in”.

When we have a client looking at a second-hand vehicle, they will often call for advice. During that call we will inevitably end up at a place where they are asking the question; do I really need to get it inspected? Even though they have disclosed its history, provided the Carfax report, and their “Mechanical Fitness Assessment”. The answer is a resounding YES.

The Mechanical Fitness Assessment that is provided to you is very basic, and does not include any measurements of wear items, it is either checked off as, “compliant”, or “non-compliant”.

For example, if the brake pads were “compliant” at 2mm remaining (true for strict out of province safety inspection standards). You will be facing a substantial repair bill in less than six months time without question. How inconvenient is rearranging your schedule and trying to come up with a few hundred dollars you weren’t expecting to spend? Maybe the time and money does not matter, but the principle usually does.

A typical used vehicle in the five year and older range will come with an average of $800 in service work that is outstanding; which in my opinion should be considered in the deal.

We have completed hundreds of Vehicle Pre-Purchase Inspections, only a hand full of them were free and clear of any service or repairs required to get it up to speed. If the vehicle is worth pursuing the inspection acts as a great negotiating tool. Either they bring it up to speed, or they discount the selling price to allow you to manage the work on your own. Having an inspection report with digital images and measurements is hard to deny when you are face to face with the salesperson or manager.

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