But what about the time investment needed in finding an acceptable car on Craigslist compared to finding one from a dealer?
If you're spending something like 100 bucks and 20 extra hours over three weeks checking out N more cars that don't pan out because {the guy lied about the condition of the car, the guy selling it is really sketchy, other random reasons}, then is it still worth it to save an extra 1-2k?
What I'm trying to ask basically is "but what kind of opportunity costs are involved in these hacks, and when does it stop being viable"?
A great car search engine definitely helps but it's a very tiny part (may be 10%) of buying a used car (speaking as someone who bought a used car 8 months back).
The most time consuming part of buying a used car is to check the car in person (and it's difficult to schedule appointment with an individual person), getting it inspected by a mechanic (If you don't get it inspected by your own mechanic, you are an idiot. I know I was an idiot once.), negotiating the price, paying the agreed price (it's a BIG pain if the car's loan hasn't been paid off).
I recommend CarMax (http://www.carmax.com) (no affiliation what so ever) for used cars because they actually take away all the pain points which I described above.
[And if you are looking to buy a new car, I would definitely recommend carwoo.com. I helped my friend buy a new Infiniti EX at an unbelievable price.]
I had the same exact reaction. I like cars. I like to a variety of drive cars, but I'm not wealthy enough to afford a car collection. Thus, I tend to change cars more than is "fiscally optimal" (every three years). I actually like leasing cars, because I get to negotiation the terms of the buy-back up front. This gives me A) peace of mind knowing exactly what I'll pay in depreciation, B) the opportunity to negotiate that amount up front and in clear terms (I understand the math involved in leasing), and C) a much, much shorter time investment in said negotiation.
Consider the rest of this post to be an anecdotal piece titled, "Hacking the car buying process means getting your hands dirty."
When I picked up a 2006 VW GTI, the dealer was offering 0% financing. I couldn't bring myself to pass up free money, so I bought the car with the intention of turning it around in three years, just like I normally would with a lease. My reasoning was that I'd be giving up the opportunity to negotiate the residual value up front in exchange for the free use of a few thousand dollars over three years. No brainer, right?
Yeah, not exactly. I ran in to a couple of issues.
Lease residuals are actually on the generous side
Leasing residuals are normally pretty generous on the types of cars I like. My GTI was 57%. I negotiated a 63% residual on my current car. Looking at the math from my GTI, with an MSRP of $24,750, the lease residual would have been ~$14,100. When I sold the car at the 3-year mark, it took me three months, and I only got $12,000 for it. So, in exchange for the zero percent financing over three years, I gave up $2,000 on the residual, plus the time and effort involved in selling. I took many phone calls, and drove out to meet about 5 people before executing a sale. Had I leased the car and negotiated decent terms, I would have paid the same, maybe less.
Selling a car over $10,000 is a pain in the ass
Words you really don't want to hear when selling a car: "I've got $3,000 saved up. Can you take payments on the rest."
Times I heard them during the sales process: 9 out of 10.
Selling private means dealing with all kinds of people who really can't afford the car you're selling, but are bold enough to offer you anything. I have no envy for car salesmen. Their job is tough. You're constantly assaulted by people who really don't care if the deal is any good for you. I wouldn't say I was offended, but I did begrudge the time I wasted.
I'm back to leasing now, and very happy with it. If you want a new car every few years, and are ok with the associated financial impact, it's worth your time to sit down and understand the math involved in leasing. You can probably do better (fiscally) than you think.
I've bought 'a' car from Craigslist. Took us about eight hours, from 'first car' to 'I'll take it'. Looked at ten cars in person. In one day.
Granted, we were motivated, needed a car that day (long story) but it doesn't have to take weeks, if you just need a car and your value of 'acceptable' is flexible.
There is also the advantage that trading in a car to the same dealership you buy from will deduct this from the sale price of the to-be-purchased car so sales tax can be reduced to zero depending on the trade-in.
I sold a car on Craiglist once, and I will never do it again. You open yourself up to some potentially dangerous (life threatening) situations.
To me a "potential" loss of 2 grand that I would incur by trading my car in at a dealer is worth the time saved, and safety saved. Also all the paper work is done correctly. To me that is another potential "come back to bite you in the you know what" problem averted.
I also live in the East Bay CA, and there have been a huge increase in violence and theft associated with selling cars on Craigslist. It is also not just cars, I have had a few bad experiences on both Craigslist and Ebay in the last 12 months and as a result I have not used either in months.
To me, I am willing to pay a perceived premium from a retailer (like Amazon with free shipping and no hassle return policy) than deal with the BS I have had to deal with on Craiglsit and Ebay.
If you're spending something like 100 bucks and 20 extra hours over three weeks checking out N more cars that don't pan out because {the guy lied about the condition of the car, the guy selling it is really sketchy, other random reasons}, then is it still worth it to save an extra 1-2k?
What I'm trying to ask basically is "but what kind of opportunity costs are involved in these hacks, and when does it stop being viable"?