Some folks say that stupidity is doing the same thing over and over again and expecting a different result.
Well, those folks have never been to an auto auction. Today we had over 95 dealers doing the same thing over and over again. Looking at a vehicle. Bidding it up to the nether-regions. Hoping that profit will come back via retail or buy here pay-here. Carmax has cutthroat middle-fingered competition at their dealer auctions and the prices reflect the screwing mentality that will likely be passed onto the bad credit consumer.
15 year old Explorers? $3000. A 14 year old stick-shift Subaru Impreza that came from the rust belt? $2900. Both of these vehicles were in clean condition… which means they are finance fodder at the buy-here pay-here dealerships.
The Explorer will likely be financed at around the $6k range when all the payments are said and done. The Subaru on the other hand? I don’t know what to make of it. I think the Latino BHPH dealer will find a willing customer who may finance it close to $6k.
You would be surprised how low that $6k balance can be if you spread it over a 24 month period. About $55 to $60 a week for what amounts to run of the mill transportation.
Then again, it can be even lower if you set it up for a 5 year run. The market for low mileage vehicles is just ridiculous. The Subaru in this case had 77k, which means that it can still make a healthy car note in rust-free Atlanta. But let’s look at the higher end side of the world and see if the air is any thinner up there.
2011 Jeep Wrangler Rubicon (2dr, Manual) $27,200
2007 Land Rover Range Rover Sport HSE $31,800
2007 Chevy Suburban 1500 LTZ 5.3L V8 4WD $23,000
2004 Dodge Viper Convertible SRT (67k ) $34,400
The buyer for the Wrangler will likely have around $28k in it once you add in the buyer fee and the Ebay fee. Will he get it? I don’t know. But it only had 3460 miles and looked mint. The stickshift puts it back a bit but the miles are excellent. We’ll see.
The Land Rover went to an exporter (surprise?). The Suburban was a dogfight between two dealers from North Georgia. It still went for $1000 below average wholesale which also happened to be right where the condition was on the vehicle. Overall this was a decent buy during tax season but definitely not something you want to hold since it had 71,000 miles.
The Viper is more of a curiosity than anything else. Given that a silver 04’ with half the miles no-saled on Ebay recently, I’m not too sure that the buyer will make an easy buck on it. I hope he already had a buyer on the hook.
One other item for those still looking for an older low mileage car. The going wholesale price (before fee) of an 11 year old Buick LeSabre with 72k and leather is $5000 according to one dealer at the sale. I’m sure Carmax rang up a $2000 profit on that one within a week. The dealer on the other hand may be able to double that profit. But it will probably take about 3 years and a small bit of luck to make that so.
About a third of finance dealers at the BHPH dealerships go south. Sometimes you get back a good car. Much of the time the cost in repo, repair and recon will average around $800. I’m lucky in that the very few I’ve had to get back this year are voluntary and still in good running condition.
There is an old saying in this business that, “You sell in February and repo in July.” I’m hoping that I can make this year hassle-free for everyone concerned. Now that the majority of my deals are finally cash again, I’m planning for a lot less headaches.