The Key to Purchasing a Car Online
The key to purchasing a car online is understanding the finer details of the online buying process. One of the first things to know is that all online car buying services are not created equal. There are primarily two major online automotive retailers, Carvana and Vroom. Both Carvana and Vroom allow the customer to select from a limited inventory of cars, roughly 20,000 cars between the two online car dealers. There are also automotive applications such as MarketSpace USA that will allow the customer (with their app) to purchase a car 100% online from any dealership in the U.S. All of the online car buying services, Carvana, Vroom and MarketSpace USA allow you to search, get financing to purchase the car and arrange delivery to your home. However, that’s where the similarities end. Let’s take you step-by-step how to use these services and their advantages and disadvantages. Let’s start with Carvana and Vroom, they were technically the first online automotive retailers in the country. Carvana has an easy to use website that allows you to search cars much like most consumers do on websites such as CarGurus and CarFax. The website allows the user to search cars using filters that narrow down the choices to save time. For instance, if a customer is looking for a Ford Mustang GT, they are not required to look through all of the Ford Mustangs. Because there could be hundreds to go through. Instead, the customer can filter or limit the search to only Ford Mustang GT models. That way, they will return only 20-25 cars, saving the customer valuable time.
What to Do After Finding a Car
After the customer locates the car they want, there is no longer a requirement to talk to a salesman about how much it cost or financing. The customer can get pre-qualified for financing on the website and then complete a digital application to purchase the car. The user will need some information before they complete the application, they will need their social security number, driver’s license insurance card and bank statement to verify their down payment if one is required. All of these items will need to be uploaded into their user account, which can be created with a username and password. Which is a process that is similar to signing up for a Google or any other social media account. These websites are very safe with the latest in encryption technology, meaning your personal information is more secure here than at a traditional dealership. During the online application to purchase a car process the customer is directed from one digital tab to the next. If one step is not completed, then the user cannot move on to the next step in the process. All of the steps must be completed before the car can be delivered to the customer’s home address. Once everything is completed, including the customer selecting the financing, the gap insurance and extended warranties. the vehicle can be scheduled for delivery. The customer schedules a delivery date to receive their car at their home. The car is delivered to the customer’s home with no salesperson ever involved!
This looks great at first-glance but the devil is in the details. While this is arguably the most efficient way to purchase a car, is it the best way? Here are some of the pitfalls of this online techno-wizardry. First, companies like Carvana and Vroom, unlike traditional car dealerships have very limited financing options, therefore, in most cases the consumer ends up paying more for the loan than at a traditional dealership where the customer can choose from multiple lenders. While the traditional dealerships may be an acquired taste, there is something they do very well that customers never think about, maybe because the dealers are such experts at doing it! That’s the paperwork involved in purchasing a car, the tags, title, taxes and registration with each state’s DMV. The traditional car dealerships are experts because they have been dealing with DMV’s across the U.S. since cars were invented. On the other hand, online car companies like Carvana and Vroom have only been doing it since 2012 and it shows. Take for instance Derek Munhenke purchased a car from Carvana and it took 11 months for him to receive his title. In this case making it impossible for Mr. Mundhenke to drive his car even though he was stuck paying car payments. So, be careful with the online dealers, while their process may be fast, there are other things to consider such as the cost of the loan and regulatory paperwork.
While online car companies such as Carvana and Vroom may have an efficient way to purchase a vehicle, they certainly don’t have the best way to make sure you get the best deal and ensure your paperwork will be in order. That brings me to the MarketSpace USA application, it’s an application that is a hybrid approach that combines the efficiency of an online dealership with the operational and logistical expertise of a traditional car dealership. The way the application works is customers sign-up for the App with a username and password just like Carvana and Vroom. Once signed-up the user can search for cars on their application with CarGurus or CarFax. The consumer can even apply for financing on the application from multiple lenders that specialize in poor, fair and excellent credit. MarketSpace USA also has major lenders such as Capital One, Truist (formerly BB&T and SunTrust) and Lending Tree. The MarketSpace USA digital application similar to Carvana and Vroom allows the user to upload their driver’s license, insurance card and financing agreement. The difference is that MarketSpace customers, after they’ve uploaded their documents, can actually make an offer to and negotiate via text messages with multiple dealerships simultaneously. Making it easier for the customer to communicate with multiple dealerships and allowing dealerships to compete for the customer’s business. This is very similar to what the LendingTree App does for its customers. This ensures that the customer not only can purchase a car 100% online but can also choose from more car dealerships, to get better financing rates and the lowest price possible. The best part about MarketSpace USA is that the App also allows the customer to purchase from any dealership in the continental U.S. which means the customer can choose from millions of cars instead of just 20,000 cars from online dealerships like Carvana and Vroom. The MarketSpace USA Application gives the user the efficiency of the online car dealerships like Carvana and Vroom and the operational and logistical prowess of traditional car dealerships ensuring that the customer’s paperwork will be in order and complete.
By Kasper E. Mingo
Mr. Mingo is the Co-founder and CEO of MarketSpace USA, a software company that helps car dealerships make the transition from a traditional to an online car buying model.