Used car lots suddenly overflowing?

Was driving around my local area today, so maybe it's only North Florida, but ALL used car lots seem to full to overflowing like I haven't seen in....?

What's it like in your area?

At least around here (Southern Ontario), the used car market is more saturated than I've ever seen it. There's a 325it manual transmission car that's been languishing at $3500. It certainly seems to be a buyers market in this area for 'older' cars.

Seems like more cars are available, but the prices don't seem to be budging any, they are all overpriced still....

I'm seeing it a little bit down here in Palatka and Palm Coast. I wonder if people are finally trading in for new again.

Ranger50 wrote: Seems like more cars are available, but the prices don't seem to be budging any, they are all overpriced still....

This is what I'm seeing as well...

Maybe they are getting ready for people to get taxes back and xmas

Maybe I'm crazy, or maybe Ohio is different from other states, but I swear demand for cars at the low (sub-$5k?) peaks during tax season and early summer, then drops away as we approach Christmas.

This would make sense, regular people don't just have 5 grand in their checking account to drop on a car, you can't get a bank loan for an older used car, so you buy when you get your tax refund or get screwed at a buy-here-pay-here.

Coming up on Christmas people are thinking about putting extra money toward jewelry and video games (Sega?), plus supply might get a boost from folks getting rid of cars to fund holiday spending.

I don't think this has as much of an impact on more expensive cars which can be bought with bank loans and more frequently change hands through dealerships.

I remember a national nighttime news report within the last week or two, that was related to new car sales and the mild rise in those sales. The source stated that they are seeing more of the 10+ yr old cars being traded in for those Fiat's, Sonic's, etc.. ESPECIALLY when you have the 0% for 60mo deals going on. So that means more of those are being auctioned and brought into the shady corner dealer lots then sitting on the big boy dealer lots..

You are correct, Shadow. During my blessedly brief period in the swinging, swirly world of dealership car sales, the demand goes soft in the fourth quarter. That's exactly the opposite of all other retail. Meanwhile, it could be possible new car dealerships look stuffed because the new 2013s are arriving and the 2012s are still there. They might auction part of their used car inventory to make room which would explain the glut of cars on used-car-only lots.

Local lots in my BFE town are pretty full, only thing different is the lowball lot that had S-10s, Aurori and Tauri now has 5 BMWs at any given time.

i've noticed lately that the used car lots around here are more full than they've been for a while and the prices in the windows seem to be on the high end of the range. a good example: there is a 97 Chevy 4X4 extended cab pickup at one lot.. cab corners are rusted out and the passenger side mirror is broke, and it has 170,000 miles on it. it has a grille guard and chrome running boards, but looks to be otherwise stock. it has "$7500" written in shoe polish on the windshield.. sure seems like a lot of money for what is a $2500 truck on a good day, but i'm sure someone with really bad credit will buy it..

This is good news for me - because I will be looking for another next-to-free 20yr old car in the spring so I can bastardize it to the bejeepers.

novaderrik wrote: i've noticed lately that the used car lots around here are more full than they've been for a while and the prices in the windows seem to be on the high end of the range. a good example: there is a 97 Chevy 4X4 extended cab pickup at one lot.. cab corners are rusted out and the passenger side mirror is broke, and it has 170,000 miles on it. it has a grille guard and chrome running boards, but looks to be otherwise stock. it has "$7500" written in shoe polish on the windshield.. sure seems like a lot of money for what is a $2500 truck on a good day, but i'm sure someone with really bad credit will buy it..

I stopped at the one of the very very few used car lots around here to see if I could find anything worth anything. Lemme see a 98 2wd Dakota with a 4cyl/5spd with 89k on it for 3495. 99 Pontiac Grand Prix GT (still just a badge/sticker package) with 107k for 6k. 97 Cavalier Z24 2dr with a 5spd and driver side rocker rust, 160k, for 3500..... And all of these are straight from the auction with the lane stickers and writing on them.

I haven't paid any attention to dealer lots, but it's the same here in Ohio on Craigslist. Here, it's hard to find "GRM" cars and if you do find a decent one, you will have to pay a high price for it. I hope you in the south and west appreciate your better selections than what we have I'm going to have to have something shipped in from a southern state.

integraguy wrote: Was driving around my local area today, so maybe it's only North Florida, but ALL used car lots seem to full to overflowing like I haven't seen in....? What's it like in your area?

Makes sense. It's cheaper to buy a new car than a used one, right now. 2% financing vs. 20-30% makes a huge dent in the monthlies.

mguar wrote: In reply to integraguy: When new cars start selling, trade ins flood in.. Prices won't drop much because most car dealers don't make a profit when they sell the new car.. Oh once in a while someone walks in without doing on line research and pays way too much for it but most new car buyers are pretty savvy.. When I was selling New Fords recently It was rare that I could get much over a few hundred bucks profit. But that used Pickup or SUV making $5000 profit on it was child's play.. My son-in law was just such a doofus. He had to buy used because he couldn't afford new.. So he bought a 5 year old SUV with 70,000 miles on it and his monthly payments are more than they would be for a brand new version of the same thing.. I even showed him to check the KBB for what the car cost the dealer. I then pointed out that there was $4500 worth of profit.. His reason? "Oh, my credit isn't that great!" So instead of getting a $0 down 0% interest rate loan for 5 years he took a $2500 down 7&1/2 % interest rate loan for 6 years.. on the "cheaper" used one..

Really what vehicle?

Even on $30k, each percentage point equals $20 on a 5 year note.

Datsun1500 wrote: In reply to Knurled: Where have you been financing at 20-30%? If you have the credit to qualify for 0-2% on new, you will be under 5% on used. If your credit is so bad, it's 20% on used, you will not get 2% on new.....

This.

Wouldn't 20% annual interest rate violate usury laws in every state with usury laws? I mean the Federal Discount Rate is .75%! Am I missing something?

Datsun1500 wrote: Maryland has max rate of 24% There are finance companies that do car loans at 23.99 And there are people that sign up for them

those same people probably have several credit cards that are maxed out because they use them to make payments on other credit cards.. they also probably go to the local payday loan place often, too..

From time to time I do replevins and take accounts to judgment, post recovery, that are sub prime (as well as prime) There are a lot of folks with 20+% interest on car loans, and even some with good credit who overbuy, so the rate is adjusted to reflect the risk and is usually in the low teens.

No usury laws in my state that would affect auto time sales, only pay day loans, and that limit is 300% last time I checked. Yes, thats right.

I think in the used car world its not about the car, its about the money. The loans are of course secured by the property, but thats really secondary. Its about writing relatively short term loans at retail credit card interest rates and making a lot of money because people generally need car to live, and don't want to lose it. Not a bad risk from a lending standpoint. If the borrower defaults, repo the car, sell it at auction (so it can be bought by a dealer, sold again to a consumer) meanwhile the creditor can sue for the deficiency and garnish, or sell the note or the judgment to a debt buyer, or just keep it and garnish with the same high interest rate in place and including legal fees.

These dealers and these cars are like vehicles for debt, they just get circulated around the markets, and the buyers get circulated around the financing secondary markets, and if the buyer stays out of default they end up owing a car worth nothing and paying a small fortune for it, while the lenders either make money from the loans or the judgments and recover the expenses to do it on the way.

I guess all of these older cars on the road will be traded in sometime within the next few years in a large wave, or whenever the repair bills exceed the car's market value. Who wants to bet that the politician in power will take credit for the resulting increased new car sales? [/flounder]

used prices here are stupid, except with the new sho's.......I'm patiently watching the '10s drop under $20k....otherwise, $12,900 for a 2006 chebby aveo with 81k miles sitting out at the local gm dealer, people are retarded aren't they?

Yes, the market is crazy at tax time, as everyone will buy something they want.......a friend flips cars all year for extra money, he deals with several 00ish impala's and grand prixs during tax time, and buys and resells the "donks" the rest of the year.....As he says, "The coke dealers are always going to buy E36 M3 year round"

mguar wrote: In reply to Jerry From LA: If they auction their used cars they dispose of those cars which fail to offer a good chance for profit.. The decent profit potential cars they hang onto.. Remember it's rare when a car dealership shows a profit in the new car division. Typically the sole reason new cars are sold is to buy the trade-ins which become the dealerships profit center..

Not gonna threadjack here but there is incredible profit on the new car side. Most folks focus on down and monthly, thereby failing to realize they're paying thousands over sticker. I've watched it done and done it myself.

Most stores don't own their inventory. The manufacturers "loan" the cars to them so they might have like 500 bucks in a $20,000 car. They pay back the loan and keep the considerable gravy. Plus, once the price is agreed upon, you run the gauntlet of financing where they drain the crumbs out of your wallet. Everything is a profit center at your local new car store. They're set up to separate you from as much of your money as possible using cars as bait.

If the customer doesn't like it, they have no recourse. why? Because they signed away their rights to anything other than dealer-sponsored arbitration. If that doesn't work, dealers have the best lobbyists in the world under their employ.

Datsun1500 wrote:

Jerry From LA wrote: Most stores don't own their inventory. The manufacturers "loan" the cars to them so they might have like 500 bucks in a $20,000 car. They pay back the loan and keep the considerable gravy.

Way wrong. They do own it. You either write a check for it when the truck comes in (very few dealers can afford this) or you have a giant loan that covers them all (Floorplan). Since you have a loan on them, you are paying interest on them, and cars that sit around get that interest charged to them every month. There is a reason the manufacturers pushed dealers to stock so many cars instead of having a few in stock and taking orders (like before 1980ish). It is because they sell them to the dealer and they are done. That is why when you see dealers go under the stock gets sold to consumers OR another dealer. They can not return them to the manufacturer.

Yeah, I didn't want to write a whole graph on how this is accomplished and I gave the wrong impression about the loan. I meant floorplan but was under the impression the loan could come from the manufacturer, especially when the dealer's credit is not very good (handling all that money has been too much of a temptation to dealers in the past so they've been known to take their time paying back conventional loan outlets while making their boat payments).

A dealer by us went under after it was discovered they'd not push the paperwork through on when they'd take trades with liens in.....

That is fairly common unfortunately, especially as the dealership struggles to keep afloat, they start selling trade ins they have not paid off and don't have title to, then as they hurry and try to fix it after the sale it eventually catches up to them. Its not just fraud and exposure to civil liability, its a securities violation and can involve prison time.