Most used-car transactions start on the Internet and end at a dealer. But the success of eBayMotors.com's auctions has led to a cult of car buyers who search the globe for collectible cars, conduct the whole transaction online and have the vehicle shipped.
You don't have to be an enthusiast or win an online auction to buy long-distance, either. On AutoTrader.com, searching the entire U.S. for a BMW 325Ci turned up one model for $21,900 at a dealer of pre-owned BMWs in Los Angeles — $3,000 less than the lowest price offered in Washington, D.C.
Depending on the vehicle, you can save from $2,000 to as much as $10,000 buying online. Unfortunately, a surge in fraud has accompanied the growth in online buying. In response, eBay now offers up to $20,000 in vehicle protection. But the rules to collect can be onerous, including a 30-day deadline for reporting the fraud.
You could buy a one-way ticket to L.A. and drive your new BMW home, but it usually makes more sense to hire a middleman to vet the transaction and ship it to you. For as little as $100, you can verify that the vehicle actually exists and is free of major defects by hiring a certified inspector through Carfax.com (under "featured partners") or eBayMotors.com (under "buyer services"). An escrow service, such as Escrow.com, can securely transfer the funds and title, typically for $200. Then you need to arrange shipping — at a cost of $800 to $1,200, depending on distance.
But you're not out of the woods yet, explains Chad Pinson, managing director of Buyer Guardian, a service that handles online and out-of-state vehicle transactions. Some Internet escrow services are phony. And the shipping industry is no stranger to fraud, either. In one common scam, brokers who advertise a low rate charge you a nonrefundable deposit, then spike the price later, assuming you will walk away from the deal. (The user reviews of transport companies at Transportreviews.com can help you spot the bad guys.)
If you don't want to do all the legwork, you can hire a firm, such as Buyer Guardian (buyerguardian.com), to perform the whole range of services: set up a vehicle inspection, verify the title to check ownership and spot any liens, hire an escrow service, and arrange shipping. Buyer Guardian's package price is $497 (not including the cost of shipping). It also sells its services a la carte.
Mark Solheim is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.