In this digital age, we’re used to purchasing almost anything online with one click. Online dealerships are trying to make car buying an experience people can do without ever leaving their laptops.
A national survey for the 2016 Beepi Consumer Automotive Index found 87% of Americans dislike something about shopping at a car dealership. And a majority of 18-34-year-olds admit they’d rather clean their home than negotiate at a car dealership.
You can buy a car completely online in today’s world, but there is a caveat. It must be a used car.
A 2018 article in the Journal of Business and Economic Policy explains that beginning in the 1930s, dealers sought “to prohibit auto manufacturers from selling cars directly to consumers; thus the status quo was codified into dealer franchise laws.” As of 2002, all 50 states have such dealer franchise laws making it illegal for manufacturers to sell you a new car; you must go through a dealership. Tesla is the one exception here. CEO Elon Musk wrote on the company blog that since it hasn’t granted any franchises, there is no harm in Tesla opening up stores of its own.
How does it work?
Now, don’t get nervous. Buying a used car online is fairly simple. Take KSL Cars for instance. You can filter your search by year, make, model, mileage and price.
I just purchased a used car completely online. I had no desire to haggle with a salesperson over the price or to pay dealer fees. I took my time, chose the car, lined up financing and completed my purchase on a Saturday. Nine days later, a semitruck pulled up to my house and the driver unloaded the car I bought and handed me the keys. The whole process was seamless, and I did it all without ever leaving my house.
Some of the most popular online car dealerships share a lot in common. Vroom, Carvana and CarMax all say they don’t haggle on prices and that all cars are put through vigorous inspections. Each of them allows buyers seven days to check out the car and to return it if it isn’t everything they had hoped. Vroom and CarMax have 90-day limited warranties, while Carvana adds 10 days to its plan.
All three provide auto history reports for potential buyers to look at along with 360-degree views of cars inside and out. These visuals are thorough, showing features of each car along with any imperfections. And all of these online car dealerships will buy your car from you or let you trade it in toward one of their used cars.
But there are ways these companies differ.
Vroom and Carvana only sell accident-free cars; not so with CarMax. And while all three say they can deliver the car right to your home, there are some exceptions.
With Vroom, you can pick up your car from their headquarters near Houston, or they can deliver it anywhere in the U.S. for a $599 delivery fee.
With Carvana, if you live near one of their dozens of locations, there’s no delivery fee. But if not, they also charge $599 to drop it at your house.
CarMax has hundreds of locations and will deliver your car free if it’s located at a store near your home. But if CarMax has to ship the car from another location it will cost you anywhere from $99 to $999 depending on how far it has to travel. The shipping fees are listed online along with car prices and none of the companies refund their delivery fees if you decide to take advantage of the seven-day money-back guarantee.
After your purchase is complete and verified, Vroom says it will deliver your car in 10 to 14 days, while Carvana estimates delivery in five to 15 days. CarMax works a little differently. While buyers do all the paperwork and financing online, the purchase isn’t complete until the test drive. That will either take place at one of its stores or when it delivers the car, anywhere between one and 28 days later.
Each of the companies have their own unique perks too.
Vroom’s site has fewer cars in its inventory, but most are low-mileage. And every car comes with a year of 24-hour roadside assistance (except for buyers in California and New York). It’s like getting an upgraded version of a AAA membership for free. It covers towing, dead batteries, flat tires, emergency delivery of gas and other fluids and lockout assistance. Plus it doesn’t matter who is driving because the coverage is for the car, not a specific driver.
Carvana gives you the option of buying your car out of one of its dozens of multistory vending machines. You get a unique coin to drop in and watch the car maneuver down the tower. In many cases, you could book a one way flight and pay for a ride to the vending machine for less money than the $599 delivery fee. Carvana also sends you a $50 prepaid Visa it suggests you use on your first car wash or tank of gas.
Since you complete your CarMax purchase after a test drive, whether it’s at the store or your home, it should take less than 30 minutes to finish up.
While some consumers will still choose to walk into a dealership and buy a used car in the traditional way, these online car-buying options are offering a convenient, modern alternative to the process.