Most people are familiar with the concept of consignment. You bring your old item to the consignment shop and let the shop do the work of selling it. Once your item sells, you receive a payment equal to the sale price of your item, minus any fees that the consignment shop charges.
Automobile consignment follows the same simple model. Private car sales can be a headache. To sell a car you need to market and advertise, reasearch and price, facilitate negotiations, transfer tags and title work, etc. All of this can make car consignment well worth considering. Professionally consigning a car can also bring other advantages to the table. A professional consignment store can offer financing and service contracts to potential buyers as well as facilitate the transfer negotiations, contracts, and DMV paperwork.
So, how exactly does vehicle consignment work?
Determining Your Car’s Market Value
Bring your car to any dealer, traditional or consignment, and the first thing they will do is conduct an appraisal. Their professionals will look over the car, ask you questions about its history, check out the mileage, assess condition and marketability, and present you with their valuation.
In the case of a traditional dealer, this valuation will be the price they will pay for your car on the spot.
In the case of a vehicle consignment store, the valuation is the price they believe they can sell your vehicle for in the private market. The consignment price is typically thousands more than the dealer’s offer because it represents what many refer to as the “Private Party” price for your vehicle – in other words, what another private buyer will pay for your car whereas the dealer’s price represents the “Wholesale” price for your car.
Marketing Your Car to Potential Buyers
Marketing your vehicle properly is critical to selling it quickly and at the right price. Auto consignment stores should have a professional customer service team, a safe and well-lit lot, and an attractive website that all help advertise and sell your vehicle.
Some vehicle consignment stores will photograph and list your car on Craigslist, Cars.com, Autotrader.com, and other popular sites frequented by car buyers. Some consignment stores will offer cleaning and detailing services to get your vehicle showroom-ready before it is photographed and marketed to potential buyers. Premium listings, like this Cars.com ad, put consigned vehicles in front of the right shoppers.
Before consigning your car, talk to the store’s representatives so you fully understand the services they will provide. Wherever you go, selling on consignment offers greater visibility and broader access to buyers than slapping a “For Sale” sign in your rear window and parking it on a busy street.
Setting the Right Price
Pricing is an area where consignment stores may vary most. Some stores will offer pricing guidance and advice but leave the ultimate pricing decision in your hands. Others will require that you follow a strict pricing schedule set by their staff. Either way, auto consignment professionals know the market and should aim to obtain the highest value possible for your vehicle.
While your advertised price is important, you’ll need to consider how much of the final sale price you get to keep. Some stores take a percentage of the price, usually between 10% and 20%. Others charge only a flat fee, and some do a mixture of both.
A percentage fee can be advantageous for low-priced cars but can mean big dollars to the store for high-priced cars. A flat-fee model ensures that all the vehicles on the lot are treated equally. Sellers and buyers typically prefer a flat-fee model, but consider your options before deciding which makes the most sense for your situation.
Selling, Negotiating, and Handling Paperwork
Perhaps the biggest benefit of vehicle consignment stores is that they handle the actual sale transaction.
Vehicle consignment stores may handle all test drives, buyer inquiries, and DMV paperwork. These essential pieces to private party car sales can suck up a great deal of time and are best left to experienced consignors.
Some shops will also manage buyer negotiations, a valuable service that can be a huge comfort to buyers and sellers alike, as negotiating with strangers can be difficult. While some put buyers in direct contact with sellers, others act as a buffer between the two parties, making the transaction anonymous to both sides. The safest and process for the buyer and seller is to allow the consignment store to handle all negotiations, payment processing, and DMV paperwork.
While consignment can maximize the proceeds and speed of sale for the seller, it is also a convenient and efficient option for vehicle buyers.
Safety is a key concern in private party car sales, and consignment shops protect sellers and buyers alike. Consignment shops also have the ability to offer products and services that many buyers need but often cannot purchase on their own in the private market. A few of these services include: