Are Online Car Buying Tools Really Trustworthy?

onlinecarbuying   Are Online Car Buying Tools Really Trustworthy?Try as we might to deny them, we live with just as many myths today as we did a thousand years ago. They’ve just taken different forms. One such myth is that of the “informed consumer” – a ten-foot tall figure with Internet access and a wad of cash.

Car dealers are supposedly scared stiff of this epic figure who can’t be fooled, bullied or tricked. But as with any myth, there’s a nugget of truth surrounded by a lot of –let’s say – bull-poop. Let’s take a look at some reasons why car buying websites and tools that might not be worth your trust.

The Car That Doesn’t Exist

carinventory2   Are Online Car Buying Tools Really Trustworthy?

Finding the car you want can be half the battle when buying any new or used car. Online tools are supposed to help rectify this by offering online inventory. Instead of traveling to, or at least calling, every dealer in your area, you can check out their inventory and see if they have what you want or something close.

There’s just one problem – nothing says that inventory has to be kept up to date. That car a dealer supposedly offers may have been sold yesterday, or even last week. It may not have ever been there at all.

I know from experience that several dealers near me have a habit of listing all of the cars that they have yet to sell and all of the cars they expect to receive from the factory over the next few weeks. If you review the manufacturer and/or dealer website they will list a broad and varied inventory, but you’ll be lucky if even half of the vehicles listed are available for a test drive.

carinventory1   Are Online Car Buying Tools Really Trustworthy?

Often, the cars listed as available aren’t even consistent between manufacture and dealer sites. Ford says my nearest dealer has a whopping 38 cars available, while the dealer site says they have 26. Last time I went by, it looked like they had a dozen on the lot.

This leaves you open to the old bait-and-switch. You’ll arrive to find the car that you want has been sold or simply never arrived. But don’t worry! There’s another similar car available for just a little bit more!

What You Can Do About It:

I’m afraid that it’s back to the offline tools for this one, folks. At least call a dealer if you are interested in a specific model with specific options. Even this isn’t a guarantee, however, because an unsavory dealer could simply lie to you. Be prepared to walk away if the car they said was available turns out to be smoke and mirrors.

Who’s Really On Your Side?

truecar1   Are Online Car Buying Tools Really Trustworthy?

Most people want a great deal on a car. Most people also want a hassle-free buying experience. These two concepts were a contradiction until recently, when sites like TrueCar arrived on the scene.

TrueCar’s website touts its service as a “Better Car Buying Experience.” If you don’t look closely, you’d never guess that it is in essence a referral service for dealers.  Whenever a customer buys a car via a referral, TrueCar receives a small finder’s fee. This is potentially illegal in some parts of the United States and investigations have been launched.

Finding reasons for concern are easy when you examine the service closely. TrueCar offers real-world pricing data that is based on recent transaction prices. That’s a clear conflict of interest. There’s incentive for the service to manipulate prices so that the offers made by the dealerships it partners with appear more attractive.

Disclosure is a problem, as well. While the service acts as an advertising and referral business for dealers, I couldn’t find any mention of that fact on the website. I haven’t bought a car through TrueCar, so perhaps they alert consumers at some point later in the process, but transparency is not the company’s strongest suit.

What You Can Do About It:

Despite the conflicts, using TrueCar isn’t out of the question. Just don’t fall for the spiel about receiving an absurdly low price. You’ll be receiving a decent price in exchange for less hassle.

Car buying services are also available from companies like Costco, Consumer Reports and Triple-A. You’ll need to be a member to access them, however, and conflicts of interest can remain an issue.

Flubbing Fuel Economy

fueleconomygov   Are Online Car Buying Tools Really Trustworthy?

New cars have their fuel economy ratings on their window stickers and that information is also usually available online. Here in the United States the government site fueleconomy.gov includes a comparison tool that lets you look at up to four vehicles at a time. Not bad, right?

It would be if the data was provided by government tests. It isn’t. Most data is provided direct from the manufacturer, and the government only tests 10 to 15 percent of all vehicles. Suddenly the website doesn’t seem trustworthy, does it?

Readers in other parts of the world may have more reliable regulation – or may live in an area where there’s virtually no regulation at all.

Online automotive reviews will usually report their fuel economy figures, but this information tends to be nearly useless because there’s no standardized loop and (usually) limited information provided about how and where the car was driven.

What You Can Do About It:

Your best source for online data is probably Fuelly. This is a website where owners report their own fuel economy by entering the miles traveled and the gallons filled at every fuel-up. Owners can also enter the price paid and the percentage of city and highway driving.

fuelly   Are Online Car Buying Tools Really Trustworthy?

The site includes data for owners in the United State and the United Kingdom, but I’ve noticed that people from other countries sometimes sign up when their vehicles are identical to those offered in the US and UK.

Fuelly isn’t perfect – the figures are probably a bit high because people tracking fuel economy are presumably going to be driving with fuel economy in mind – but the key here is transparency. You can find vehicles exactly like the one you are interested in and see how they performed under specific conditions.

If you live in the United States I recommend Consumer Reports. They conduct a specific test loop and report city, highway and combined real-world fuel economy. The online subscription is only $5.95 per month and also provides you with all of the company’s reliability data.

Online Information Doesn’t Make You Automatically Informed

It’s true that it’s easier to be informed about buying a car thanks to the Internet. It’s also easier to be misinformed. Using the wrong sources can send you in to a dealer poorly equipped to deal with buying a vehicle. You may arrive thinking that you are going to receive a great deal on a perfectly equipped car with excellent fuel economy only to leave with a so-so deal on a car with options you didn’t want that doesn’t achieve its promised mileage.

Hopefully this article has helped to steer you away from potential traps that can result from having too much faith in the wrong online information. If you know of any online car buying resources that you think are particular trustworthy – or deserve particular scorn – please post them in the comments.

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4 Comments -

Zutronic

All of this information is incredibly useful as I may be purchasing a new car in the hopefully soon future. 

M.S. Smith

That’s how I came across the information myself. I was looking into buying a new car and thought I’d share some pitfalls I’d found.

Viraf Baliwalla

Hi Matt, Great info. I have been preaching the same thing for years and set up my auto broker service about 11 years ago to help people with the car buying process. Unfortunately, the more we told people we were here to help them with the right information and work on their behalf, the more they disbelieved it. i realized sometime later that our story was too good to be true. But we persevered and now run a nice profitable business doing just that. We are just about to launch a new service in the US (it’s already running in Canada) which is totally neutral. It is an interactive vehicle online negotiation tool (IVONTaCar.com). It does not charge referral fees or lead generation fees to dealers, just like all our other brokerage services, hence a dealer’s fees are not padded. Dealers are charged $295 per year, which we openly disclose that there is a small annual subscription fee, which covers their tech support, training and retraining as staff leave, product enhancements, etc. Sorry for blabbing on, it wasn’t meant as an advertisement but just to reinforce the point of your article, that when consumers are drawn to “free” quotes and other services in the auto business, well, nothing is free in the auto business. I’d love to chat with your further about our new program to get your perspective for the US market.

Matt Smith

Indeed, nothing is free. The car search and configuration options on a lot of “free” websites basically work as referral programs to funnel people towards dealers without them realizing it at the time.