The Hidden Secret Dealerships Don’t Want You To Know: How To Buy A Nearly New Used Car From Their Lot For Thousands Less
The automotive industry is a multi-billion-dollar market where car dealerships are constantly looking for ways to maximize their profits. One little-known phenomenon has been going on for years, and it revolves around nearly new used cars sold from dealership lots at a fraction of their original price. It’s a secret that many car buyers don’t know about, but it can save them thousands of dollars.
Why Are Dealerships Hiding This?
Dealerships are in the business of making money, and they often have a complex inventory management system that involves buying, selling, and trading cars. When a car is new, it typically has a high sticker price, and dealerships make a significant profit from its sale. However, as the car depreciates over time, the dealership may struggle to sell it at a reasonable price due to competition from private sellers and other dealerships.
The Concept of “Stales” and “Floor Plan Financing”
One of the ways dealerships manage their inventory is by creating a “stale” category. This refers to cars that are not selling well and have been on the lot for a long time. Dealerships use floor plan financing, a type of loan that allows them to purchase multiple vehicles at once, to buy these cars. The loans are typically secured by the dealership’s assets, such as real estate or other vehicles.
How Dealerships Make a Profit on Stales
Here’s the key to the dealers’ secret: they often buy stales at a lower price than their market value, knowing they can resell them at a higher price. This creates a significant margin for the dealership, which can be thousands of dollars. By keeping this information hidden from the public, dealerships maintain their profit margins and keep their customers in the dark.
Types of Stales Dealerships Sell
There are several types of stales that dealerships sell, including:
- New cars that have been on the lot for over a year
- Cars that have high mileage
- Cars that have been damaged in transit or have other cosmetic issues
- Cars that have been driven by test drivers or used for demos
- Cars that have been returned by customers who leased or purchased them
How to Identify Stales on Dealership Lots
If you’re in the market for a used car, here are some tips to help you spot stales:
- Look for cars that have been on the lot for a long time
- Check the car’s mileage and compare it to the expected mileage for its age
- Inspect the car for any cosmetic damage or wear and tear
- Ask the salesperson about the car’s history and why it’s been on the lot for so long
- Research the car’s market value using tools like Kelley Blue Book (KBB) or Edmunds
Benefits of Buying a Stale
Buying a stale can have many benefits, including:
- Lower purchase price
- Warranties and maintenance may still be available
- Less depreciation since the car is already a used vehicle
- More bargaining power since the dealership is often eager to sell
Misconceptions About Stales
There are some common misconceptions about stales that may deter buyers from considering them. Here are a few:
- Stales are all damaged or defective cars. Not true, many stales are perfectly good cars that have simply sat around too long.
- Stales are only available at low-end dealerships. This is not the case; many high-end dealerships also sell stales.
- Stales are not worth buying. While it’s true that stales have been on the lot for a long time, many of them have not been driven as much as other used cars, resulting in lower mileage.
The Future of Buying Stales
In recent years, the automotive industry has started to change, with many dealerships moving away from traditional sales models and embracing newer ways of selling cars, including online sales platforms and subscription services. This shift may lead to more stales being sold to individual buyers, rather than large fleets or leasing companies.
Caveats and Limitations
Before buying a stale, consider the following:
- Research the dealership and the car thoroughly
- Check the car’s history and ensure it has no outstanding recalls
- Be prepared to negotiate the price
- Consider additional costs, such as extended warranties or maintenance services
Conclusion
The secret of buying a nearly new used car from a dealership lot for thousands less is out. While dealerships can still make a profit by selling stales, savvy car buyers can benefit from lower prices and more negotiating power. By understanding the mechanics of the used car market and knowing how to spot a stale, buyers can drive away in their dream car without breaking the bank.
