Consumers have the option to buy nearly anything online these days, and often have it delivered as well. Until recently however, you couldn’t buy a car online. The last few years have changed that. Now, large numbers of people shop for their cars online. They determine the options they want, negotiate the price, apply for financing, nearly everything except test drive and finalize the deal. In some ways, buying a car online is the same as shopping for one in person, but there are a number of key differences that consumers should be aware of. Note that the majority of the information here applies to purchasing a car from a dealer, rather than a private seller on something like Craigslist.
How is buying a car online the same as buying a car in-person?
Some parts of buying a car online are identical to buying them in person. You’ll need to:
- Research – It’s critical that you have an idea of the type of car you want before you start seriously looking. Many people recommend having two cars from each manufacturer in mind when you start contacting dealers. Research is especially important these days as not only is so much information available to consumers online, but there are a lot of criminals trying to take advantage of uninformed buyers.
- Negotiate – You’ll likely be able to negotiate the price of your vehicle still. And, since you did your research, you’ll know things like, what the dealer pays for the car, how much the options really cost, etc.
- Test Drive – Just like you’d want to avoid renting an apartment sight-unseen from the internet, you’ll probably not want to purchase a car without giving it a test drive.
- Financing – Car dealerships still stand to make quite a bit of money from financing. As such, buyers should contact their bank or credit union to see what sort of financing they can get. Get pre-approved if you can. That way, even if you decide to go with dealer financing, you’ll have some leverage to get hopefully get more-favorable terms.
- Double-Check and sign the papers – As of now, you’ll still need to sign all the paperwork, whether that be for financing or simply for taking possession of the car. Like with any other major purchase or service agreement, you’ll want to double-check everything. It’s important to verify things like the price, the interest rate if you are financing, even that the VIN on the paperwork, any advertisements and the actual car match.
How is buying a car online different from buying a car in-person?
Even though the basic sales process is the same when purchasing a car in-person or online, there are some critical differences you should be aware of.
- Easier negotiations – Because you can get price quotes from the comfort of your couch, rather than having to travel from dealer to dealer, or spend time making phone calls, it’s much easier to get a competitive price. Some people have reported that the internet sales departments’ starting price was lower than the price they negotiated in-person. Three’s a few reasons for easier negotiating:
- Different sales quotas – Sales quotas in internet sales department tend to be focused more on volume of sales rather than selling a certain dollar amount. This means they are more willing to deal on price, because they are more interested in moving cars.
- No showroom – Because you’re on your couch, rather than in a showroom, you won’t feel any pressure to make a purchase just to avoid having to go to another dealer, or to simply get the process over with.
- Multiple offers – Since you are emailing dealerships, you can negotiate with multiple salespeople at the same time. As soon as you have an offer from one dealer, you can shop it around and see if any other dealers will beat it.
- Easier to track offers – With email, everything is in writing. Shopping online prevents vague dealer promises that are difficult to use as leverage to improve an offer from another dealer.
- Easier to walk away – When people had to travel from car dealer to car dealer, it would take up the whole day. As a result, it was harder to walk away from what seemed like a good deal. Now, it’s as simple as deleting their email. This, coupled with volume-based sales goals, means the dealer’s internet sales department has pressure from multiple sources to cut you a deal.
- Negotiation prior to arrival – If you are reasonably sure about the car or cars you are interested in purchasing, you can negotiate the price before you go to test drive the car. The rationale behind this strategy is that you shouldn’t waste either person’s time by showing up for a test drive if you won’t be able to agree on a price anyways.
The ability to buy a car online has had a major impact on the way people purchase cars. It’s caused such a large shift in shopping habits that most dealerships have a dedicated internet sales department. These departments have a separate set of sales goals that they need to meet, distinct from those of the salespeople working on the showroom floor. If you’re shopping for a car, it’s important to understand how your choice to shop online or in-person can impact your purchasing experience and the price you ultimately pay for your car.