The Truth About Online Car Dealerships

Have you seen those ads about online car dealerships that tout an easy buying process, “no haggle” pricing, and delivery to your doorstep – without ever having to deal with the stereotypically pushy salesman?

The convenience of these “direct-to-your-door” dealerships is popular thanks to the popularity of home delivery services such as Amazon and DoorDash.

So, why not buy a car that’s delivered to your front door?

Buying a CAR sight unseen IS different, of course.  While these dealerships are really convenient, they can also be very risky.  Actually, traditional car dealers do a lot of online sales and they’re a critical part of their operations.  However, after you find that car online, you can go to an actual lot and drive the car, get it inspected, and determine if it’s the right fit for you. The online dealerships have no physical lot where you can see the vehicle prior to purchase and that’s where the problem lies.

While this is certainly an innovative business model, as especially relevant in today’s climate, as a professional car buyer I have my concerns.

The Process is, Truly Simple

Simply visit the website of your desired online dealership and search away. Just like regular dealerships, they obtain their vehicles from online auctions, off-leases, rental companies and trade-ins. Unlike traditional dealerships, prices are not negotiable.  Usually, there is a delivery charge for most vehicles. Most online dealerships will even take your old car as a trade, while giving you a conservative offer because they don’t actually see your car at the time of the offer.

Once you’ve chosen your car, they will take a deposit while you complete paperwork and financing, and then deliver the car to you within a week or two. The dealership will offer you a no questions asked seven-day return window. Some offer this with a set number of miles, so you don’t go on a joy ride.

If you’re in an accident during those 7 days or the car is damaged in any way for any reason, the return option is void and you’re stuck with the car.

The Number One Problem With Online Dealerships

Since the dealership is 100% online, you cannot test drive or take the vehicle for a pre-purchase inspection. Until you see and drive the car and a qualified mechanic inspects it, you don’t know the true quality of it. Quite frankly, even if you’ve done all the research unless you’ve driven it, you don’t even know if you’ll like it.  With online dealerships, you can’t even see the car in real life before you purchase it. Even if you live near their distribution center or “vending machine”, you still can’t go see the car.

It had a Bazillion Point Inspection!

Some online dealerships advertise that they sell the highest quality cars with an intense inspection process. While most cars are inspected before they are sold at both traditional and online dealerships, this is partly marketing hype and can be taken with a grain of salt.  Some online dealerships even say that they don’t sell cars that have been in accidents, but this just means those that show up on Carfax, which only reports a fraction of accidents.

While some try not to sell cars that have been in accidents, other online dealerships have no qualms about selling cars that have had major structural damage with branded titles. They may even sell cars with lemon branded titles, where a car was taken back by the dealer due to an unrepairable defect. Branded title info is typically on Carfax, so these companies aren’t trying to hide anything – they are being completely “honest” – counting on you to not know any better.

Carfax doesn’t tell you the cosmetic condition, it may not show accidents/damage that were not reported to the police, and it may not show the full (or any) maintenance history, which is the most important thing, in my opinion.

There Are A TON of Photos!

Yes, the online dealership will provide you with lots of photos and videos, and sometimes a 360° view. However, online pictures make it hard to see details.  In the photos, a car can look beautiful but in person be covered in scratches, have worn seats, or a bad odor. Standards for cosmetic quality vary and some will fix some things you find, and others won’t.  It’s a gamble. You just don’t know until you see it, which you can’t do until you BUY IT.

There is usually also a delivery fee. If you decide to return the car, that delivery fee is not refundable. So you may be paying a few hundred bucks for what amounts to a test drive.

But the Car is Certified!

Then there are cars that are called certified. Just like with traditional dealers who say that all their used cars come with a “worry-free” warranty, be aware.  Those are short term, VERY LIMITED warranties that cover the very bare minimum.  It’s better than nothing, but there are lots of things that could go wrong with the car and not be covered at all.

If you buy a car that is less than 3 years old (or more depending on the manufacturer), the original factory warranty may still be in effect. But don’t just take their word for it, or assume so based on year and mileage. Get the VIN and call the manufacturer to confirm the car is still under warranty and that it hasn’t been voided, as well as the date and mileage when the warranty expires.

You Can Return It, So, What’s The Big Deal?

Whether you don’t like the car or your mechanic finds a problem, you can return it within a 7-day window. This, however, isn’t as easy as it seems if you have financed the purchase.  If you financed through the online dealer’s banks, they will handle it all for you and cancel the loan, so minimal hassle to you.  But if you brought your own financing to the table, you have to call your bank and go through the loan cancellation process, which based on my research, is a pain.

Honestly, many people aren’t very diligent when buying a used car.  They say they’re worried about buying a lemon, but then don’t do the research and legwork needed to buy a good quality used car.  Convenience and not having to haggle with a car salesman does usually win over doing the grunt work.  Whether online or in-person, many people see the shiny car and just want to buy it, which is why dealerships like this work and people end up buy lemons.

Does the Car Chick Shop at Online Car Dealerships?

Nope.  Because their process does not allow me to go through my own quality process.  I don’t buy cars “blind” – I can’t stake my reputation on it.  I can’t ask a client to buy a car and hope it’s good.

But if you value the convenience and you’re willing to take the risk, online car buying might be a fit for you. Just make sure you set up that inspection before you buy, so it’s the first thing you do.