Buying a car used to involve spending hours hopping from dealership to dealership, haggling over prices, and taking endless test drives. But these days, thanks to companies like Carvana, more shoppers are sorting out the entire process online.
Convenience is the biggest reason. Online car shopping lets you comparison shop, tour, and even deliver a preowned vehicle from the comfort of your home.
Should you, though?
Buying a car is the biggest financial transaction most people will make outside of buying a home, says John Breyault, vice president at the National Consumers League. If they can't see the vehicle, or test drive it before shelling out a bunch of cash, there's a good chance the purchase isn't in their best interest.
That's true for legitimate sites like Carvana, as well as the thousands of scammers who try to sell fake cars over the internet. In 2020, online purchase scams made up almost 40% of all reports to the Better Business Bureau’s (BBB) scam tracker. Among them, motor vehicle and part scams ranked third, and 52% of consumers reported losing money after being targeted.
"Just because a company says you can do everything online doesn't mean you should treat it the same way you would a transaction to order food or buy something from Amazon,” Breyault says.
Here's how to do your due diligence.
What's the difference between sites like Autotrader, Carmax and Cars.com?
Used cars have a ton of online intermediaries these days.
Carmax, the grandfather of online car shopping – and still one of the most popular – has been around since 1993. The company owns hundreds of dealerships across the country, so if you find a car you like on its website, and it's within driving distance, you can visit a Carmax dealership and give it a test drive. In most cases, Carmax will also ship you a car to test drive for an additional fee.
Sites like Cars.com, Autotrader and Edmunds, on the other hand, don’t technically sell cars themselves. Instead, they provide online marketplaces where you can compare prices, calculate monthly car payments, read dealership reviews and connect with sellers.
“In most cases, you’ll still work with a person to complete the purchase, sign paperwork and arrange delivery or pickup," says Cars.com spokeswoman Jenni Newman.
This safeguard makes purchasing a car on an online marketplace, or at least starting the process on one, relatively safe.
Still, Breyault urges shoppers to read some consumer reviews of any car-buying website piquing their interest before taking the plunge. Same goes for the dealership it sends them to: just because a site itself is well known doesn't always mean the car for sale is “100% legit,” he says.
Is Carvana legit?
Carvana is one of a handful of sites that lets you purchase a used vehicle totally online. Shoppers have the option to have their vehicle delivered directly to their home, or they can pick it up from one of Carvana's 24 warehouses, or "car vending machines," sprinkled across the country.
Every car listed on the Carvana site features a 360-degree virtual tour, so shoppers can check out a vehicle inside and out from their computer screen. Carvana cars are also put through a 150-point inspection covering safety features ranging from brake pad thickness to exterior paint quality before they get listed.
The company also touts a seven-day return policy, which a spokesperson called “an upgrade to the traditional test drive.”
However, Breyault notes several states already have laws requiring seven-day returns for car sales. And most used vehicle problems don't show up in the first week of driving it anyway, he says.
If you do buy a car from Carvana, it’s a good idea to have a mechanic inspect it during the seven-day return window, Breyault advises.
What about Facebook Marketplace and Craigslist?
Person-to-person sales through Facebook Marketplace or Craigslist are the riskiest way to buy a car online, since it’s the route most laden with scams, Breyault says.
Often, scammers will place fake car ads on these sites, claiming to be soon-to-be deployed military personnel or recent divorcees who need to sell their car quickly. Whatever the story, these “sellers” always have an excuse as to why they can’t meet you in person. The goal, Breyault says, is to get unwitting customers to send along a big down payment based on the promise the car will be delivered.
“At the end of the day, there's no car at all,” he says. “It's just a scam designed to separate you from your money.”
There are some legitimate sellers on Facebook and Craigslist. But they'll never hit you with a sob story, or a heightened sense of urgency, to get you to make an upfront payment. They’ll also let you inspect and test drive the car before agreeing to buy it.
What's the best way to buy a car online?
These days, there’s more easily accessible information available to car shoppers than ever before. Here are a few expert tips to guide you through the process:
- First, set a budget, and decide how you'll finance the car (whether it's paying with cash or getting a loan from a bank or dealership) before you start shopping
- Compare prices. Find out the average cost of the car on sites like Edmunds, and be wary of deals that seem too good to be true
- Check the Vehicle Identification Number (VIN), which is usually found on the vehicle’s dashboard and should be included in an online car listing. Then, run a vehicle history report through the National Motor Vehicle Title Information System, a free service, or on a site like Carfax.com, which costs about $40
- Always take a test drive. It’s a red flag if a seller tries to keep you from viewing the car
- Avoid ads designed to create a sense of urgency, and sellers who are too pushy. Walk away if you’re asked to pay in an unusual way, like by wire transfer or with a gift card – these are sure-fire signs of a scam
“The old rule of thumb is if it's a good deal today, it's going to be a good deal tomorrow,” Breyault says. “Don’t let someone talk you into parting with your money before you have a chance to do your due diligence.”