So you’ve decided that you want to sell your car but you’re not sure where to start.
Going to your local Carmax is the most obvious answer. They appraise your car and hand you a check, typically within an hour. In fact, with the never-ending used car shortage, several dealerships will buy your car outright, even if you don’t buy a car from them. Since inventory for quality used cars is low, dealers will sometimes compete to give the highest offer on your car (think Instant Cash Offer on kbb.com or a similar service).
But here’s the thing - both Carmax and dealerships have to resell your car for a higher amount to make a profit. The true value of your car is almost always much higher than what a dealer will pay you for it.
You might have heard the term “retail value”, which indicates the price that a dealer would typically list a car for, prior to sales tax or fees. “Trade-in value” is usually about 10-15% lower than retail value, which is how much dealerships will pay you for your car, and sometimes they’ll even offer less.
On an $35,000 car, that’s $3,500 that you could potentially lose by selling it to a dealer. (The numbers get a bit more complicated once we look at trade ins and sales tax, but we can save that for a future post). Any modifications or aftermarket equipment typically decrease the amount that they’ll pay for your car, because the potential buyer pool is smaller.
That’s not to say selling to a dealership doesn’t have its benefits - it’s fast, convenient, and can reduce sales tax if you’re trading in your car to buy another. The dealership model has proven its success and will continue to do so for people who need to sell their cars now.
Then there’s private party. Previously dominated by Craigslist, Facebook Marketplace is probably the highest volume private party car sales site. You can find a huge mix of cars from $500 beaters to $300,000 sports cars and everything in between. Facebook Marketplace is functional, but isn’t designed as a true car sales platform. There are also private listings on the online behemoths — CarGurus, Cars.com, AutoTrader, etc. — but those listings are mixed in with dealer listings and if you’ve ever listed your car on one of those sites, you’re familiar with the number of spam calls and baseless inquiries that ensue. There are also a few car auction sites, like Cars & Bids and Bring A Trailer, but those are focused on “enthusiast” cars that fit a certain criteria which only they approve.
Though you may be able to get a higher value on your car by selling privately, there are some risks to be mindful of, especially when searching on an “open” marketplace like Craigslist or Facebook:
Buyer Fraud - ensure that buyer funds are legitimate. Check fraud is rampant nowadays. If a buyer offers to pay you in cold, hard cash - that’s a big red flag as the source could be illegitimate. Wire transfers are typically the safest medium of payment since transfers between banks happen within minutes and funds are credited directly to you upon your bank’s receipt.
Seller Fraud - ensure that the seller has the title in hand and that the title is true and legitimate. If there is a loan on the vehicle, it may be more tricky since the seller would not have the title. You would need to contact their financial institution with the seller present in order to obtain accurate payoff info and provide title mailing instructions.
Identity Fraud - if you’re buying from a site like Facebook Marketplace, there’s no identity verification to ensure the seller is who they are representing. This can impact you as a buyer if the purchase was unauthorized.
There are also the concerns with vehicle history, owner transparency, and registration paperwork. Though Carfax is an excellent service, it doesn’t always capture every minute repair or damage to the car. That’s why it’s important to take the car to a private mechanic, or get a private inspection done by someone who is qualified. Registration paperwork can also be cumbersome, especially when transferring titles between different states and ensuring the correct DMV forms are used.
Despite these risks and concerns, the private party market still prevails as evidenced by the volume on sites like Facebook Marketplace, Cars & Bids, and other platforms designed for private party sales. There is a clear demand, but no real infrastructure to facilitate safe and secure transactions.
That’s where Carflux comes in. We created Carflux with the goal of streamlining the car buying process by creating a platform for buyers & sellers to connect. We understand the sensitivity around selling your trusted companion and the need to protect consumers making a big purchase. We will hold your hand and walk you through the process step-by-step, whether you're buying from a large franchise dealership or from a private seller who has a loan on their car.
Aiming to launch mid-2024, Carflux seeks curate the car buying process to ease both buyer & seller concerns. Our private seller marketplace will implement safeguards such as identity & drivers license verification, title procurement, as well as integration with Carfax for vehicle history reports and partnerships with certified vehicle inspectors for added peace of mind.
Other marketplaces leave you hanging after the funds are transferred - that's not us. We see the transaction through title registration because we truly care about curating a seamless transaction. As seasoned car industry professionals, we understand the pain points around the car buying process and hope to create a truly user friendly experience.
As we gear up for our launch in the coming months, follow us on Twitter, Instagram, and Facebook, and subscribe to the Carflux Newsletter as we continue to share car buying strategies, industry insights, and sneak peeks at our marketplace.
See you soon!
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