Would You Buy an Over-the-Hill Used Car?

used car lot

Maybe a dealership near you has one.

Tucked in a back corner of the lot, behind all the expensive brand new cars, hidden behind the certified used cars, and shadowed by the traditional pre-owned vehicles might sit an ultra-bargain section of the lot. Some vehicles might have rust, some might have the check engine light on, and all have well over 100,000 miles on the clock.

There’s no warranty on these vehicles, they are sold as-is, and the buyer assumes all risk associated with ownership.

Why would a new car dealer risk a good reputation by selling these junk cars?

Because they are huge moneymakers.

A story on Automotive News last week highlighted a Honda dealer in Michigan that has created a budget corner on its lot, which it calls Budget Row. This is where the dealer sells cars that leak, need paint or have high mileage and would otherwise be sent to a wholesaler. Rather than give a third-party company the opportunity to make money on these cars, the dealership opted to keep the cars and use them to its advantage.

It’s working, with the average profit on each car reaching about $700.

The dealer gives each vehicle a so-called “flashlight inspection,” in which it looks for potentially dangerous safety issues in an effort to keep unsafe cars from reaching the public, but otherwise no repairs are made. These cars are the epitome of buyer beware but, even still, 20 to 30 leave the lot every month.

If your dealer doesn’t currently have a Budget Row, it might soon be tempted by the huge profit potential to add one. If you stumble across these over-the-hill used cars at a new car dealer and find something you like, don’t assume you can’t negotiate. Just because prices are low doesn’t mean they can’t go lower.

Also, it would be smart to compare prices for similar cars on the CarGurus used listings before making the purchase. You’ll either confirm that the car you’ve got your eye on is a good deal, or find an even better price elsewhere.

Would you buy a used car from the Budget Row section of a new car dealership?

-tgriffith

Find Used Cars in Your Area at CarGurus

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