Memorial Day Weekend 2021 Project: Sell Your Used Car

In case you missed the news, used car prices are up. According to the Wall Street Journal, prices have climbed an average of nearly 20% since January 2020 due to a global chip shortage that is temporarily limiting the manufacture of new cars. 

Few things in life are as predictable as automobile depreciation, so it’s worth pausing to reflect on the crazy used car market. It is now entirely possible that you could sell a used car you purchased a few years ago for the same or even more than you paid. Except in the case of rare collectibles, that’s probably never happened before with everyday cars.

In my case, I leased a new 2018 VW Passat a few years ago and mostly regretted that decision right away. In three years, thanks in part to the Coronavirus, I drove the car a total of less than 17,000 miles. When I noticed the headlines about the spike in used car prices, I checked Kelly Blue Book, and, sure enough, my car was theoretically worth more than my payoff of $18,500 – the combined residual value plus remaining lease payments. A sell signal and a chance to get out of a bad investment!

Of course, it's not that easy. There is a massive disparity between consumers and car dealers when it comes to buying and selling vehicles. I’ve probably bought and sold a total of ten cars in my life, whereas the average car dealer probably buys and sells way more than ten cars in a day. In 1982, a car salesman named Remar Sutton wrote an excellent book called Don’t Get Taken Every Time, which explains the tricks dealers use to take advantage of unsuspecting consumers. The book is great, but there is now a much better alternative to buying, selling, or leasing a car yourself – namely using the services of an auto broker, someone who will negotiate all the details on your behalf without your having to go through all the rigmarole. Through a friend, I was introduced to Brad Cormier in Newport Beach, CA, a seasoned professional who I highly recommend. 

As (bad) luck would have it, VW Credit is one of the few finance companies that auto brokers can’t efficiently work with for various reasons I won’t go into. You can call Brad directly if you want to know the details. He offered to help, but Brad suggested that in this case, I would do better to take my car to a VW dealer and sell it directly. 

I had the option of buying the car from VW Credit and selling it privately, a transaction that I know would have been more profitable, but I decided that the multiple steps weren’t worth it. After buying the car, I would have to wait many weeks for the title to arrive, following which I would need to advertise the car on Craigslist or some other site, and then show the car to prospective buyers. Then, of course, there’s the transfer of ownership to someone else, which is a cumbersome process. All that could easily take a month or two, during which time prices might go down. I decided that selling directly to a VW dealer was my best and fastest option, even knowing that I was leaving some money on the table.

Before taking the car to a dealer, I made sure that the vehicle was in pristine condition. I hired a professional detailer and went the extra step of repairing all the slightly scratched rims and replacing a tire with cosmetic damage. Once the car was perfect, I went online to my local VW dealer, the one where I had leased the vehicle in the first place and where I had had it serviced, and entered in the information to receive an instant KBB cash offer. The number came back as $17,900, which was slightly less than my payoff. So, I called the dealer and asked, “Is the instant cash offer as high as you’ll go or, if my car is better than you expect, would you go higher?” After I was assured that they might go above the KBB number, I made an appointment to show them the car.

When I arrived at the VW dealership, the story I got contradicted the one they gave me over the phone. “We never go above the KBB instant cash number,” was the new version. Plus, looking over my vehicle with a microscope, they noticed some scratches on the rear bumper – probably someone dropped a suitcase or a bag of groceries on it at some point in the past three years. Those scratches would need to be repaired, and the total cost to “refurbish” my car would probably exceed $1,000. Plus, I was told, VW is killing off the Passat next year because no one wants them! Which only goes to show that I was a fool to lease one in the first place; I should take their offer and be thrilled to be rid of the wretched beast.

What about the $800 Lo/Jack vehicle recovery system I paid for, and which they themselves had convinced me was such a great idea three years ago? Surely that adds to the value of the car, right? “That’s worth nothing,” was the response. The used car manager said that the system could not be transferred to a new owner, which was utterly false, and he was unmoved even when I showed him the information which contradicted him online. (If you look it up, Lo/Jack will not move from one vehicle to another, but the account is completely transferable with the vehicle.)

Word to the wise from an expensive lesson in automobile accessories: Lo/Jack will not enhance the value of your used car. In fact, KBB does not even ask if you have the option installed – probably because they also know it isn’t worth anything. If you’re worried about someone stealing your car, buy an Apple AirTag for $25, hide it inside one of the seats, and save yourself $775.  

The KBB instant offer turned out to be $300 more than the dealer was, in fact, willing to pay. After much back and forth (every time I said that their offer of $17,600 was too low, the used car manager needed to spend 15 minutes talking it over with the general manager), I decided to wish them all a good day. 

In a nutshell, the experience distilled everything I dislike about dealing with car dealerships. They waste a considerable amount of your time in the hopes of wearing you down, so you’ll make a bad deal. Their tactics are disrespectful and disingenuous.

I drove 20 miles to the next closest VW car dealership and, after more back and forth, we finally agreed that they would purchase my car for $18,250, slightly below my payoff but close enough. The car is now listed on their website at $22,999, but they’ll give you a better price if you give them your phone number and email address. They’ll probably sell it for ~$21,000. I’m OK with it. 

True, I could have probably gotten $19,000 or maybe even $20,000 if I had gone through all the steps of selling the car privately, but the second VW dealership offers a 2-year, 24,000-mile warranty, which I can’t match (and don’t want to). I got rid of a car I didn’t need, cut my burn rate considerably, saved hundreds of dollars in auto insurance and excise taxes, and have one less thing to worry about.

Memorial Day weekend is traditionally an active car-shopping holiday, but in this special Coronavirus year, you might consider selling instead of buying. 

If you do it yourself, which I do not recommend, be prepared for the inevitable low-ball offer, unethical dealer tactics, and worthless haggling. Nevertheless, good luck and enjoy the ride!