A judge in Maryland is currently looking into finding CarMax in contempt of court for it’s failure to abide by the terms of a 2008 class-action lawsuit settlement. The settlement in question ordered CarMax to provide a “clear warning” to customers when they were offering a vehicle for sale that had seen duty in a rental fleet.

“CarMax still does not disclose its vehicles’ prior use as short-term rental vehicles…” say the plaintiffs in this suit filed in  Maryland County Circuit Court. A spokesperson for CarMax, Trina Lee, replied: “CarMax provides information about vehicle history, including prior rental history, to its customers nationwide.” 

According to Maryland laws, “vehicles formerly used for a purpose other than a consumer good shall be clearly and conspicuously identified as to their former use.”  Former use, in this case, meaning that the car was used by rental car companies as part of their service fleet. Ms. Lee, the CarMax spokesperson, said that their procuderes include placing a note on the window sticker where prior use “includes the word rental where applicable.”  She continued, noting that the company will file a counter-motion asking the judge to dismiss the petition.

A rental vehicle is typically priced lower than a privately-owned used vehicle because their full maintenance and driving habits of the renters are not known. Clarence Ditlow, the Executive Director for the Center for Auto Safety, wrote “States like California and Maryland require disclosure of prior daily rental to avoid consumers paying too much.”

Notably, this class-action lawsuit covers only the state of Maryland. One of the terms of the settlement however, is non-disclosure.  As such, lawyers for the plaintiffs are not able to clarify their points with reporters, nor can they issue a press release with more details.  However, from studying the papers filed with the court, it seems clear that the plaintiffs believe that the terms of the settlement have been violated. Specifically, they claim that the rental-service status is “camouflaged and deceptive” and while they can sometimes be found on the order itself they are not consistently on the financing agreement. They go on to claim that CarMax uses “gratuitous and ambiguous terms” to distract consumers, with potentially misleading words like  “fleet, business use, executive vehicle” that don’t specifically call out use in a rental fleet.

The court is being asked to compell CarMax to fully comply with the terms of the 2008 settlement,  to additionally appoint a third party to monitor CarMax compliance and finally, to  provide legal recourse and compensation for anyone who bought a rental-use car without knowing they had done so.

Shopping for a car with them is almost as easy as buying smaller ticket items at a department store. The disadvantage to the no-haggling policy is that if you find something you like and suspect there’s a better price elsewhere, there is no chance in getting them to the lower the price.  There are a few things to keep in mind when buying a car from them….

Carmax will also buy used cars even if you are not purchasing a car yourself from the dealer. The same caveat about their “no haggle” policy applies…you may not get the best price you can from them, but it will be an easy experience. Every vehicle available for sale must pass a 125-point quality inspection before they are sold. The Carmax quality inspection policy is intended to ensure consumers that the vehicle they purchase is in good condition, and not a flood damaged or otherwise problematic vehicle.

The transfer process
If you want to purchase a vehicle that is not in your local area, Carmax can transfer the car to the store nearest to your location. You simply contact a company Sales Consultant and let them know which vehicle you are interested in buying.

After you have arranged financing and/or a trade-in, the Sales Consultant will arrange for the vehicle’s shipment to the nearest store.  Note however, that this transfer fee is not refundable.  If you change your mind, you could be out anywhere from $150 to $850 depending on how far away the transfer location is.

Other Benefits

In addition to offering quality inspections of cars sold on their site, Carmax also provides customers with free vehicle history reports, a 30-day warranty and a 5-day money-back guarantee. Each car comes with a Clean Title Guarantee that ensures that the mileage is correct and that it has not been salvaged or flood-damaged.

Carmax compared to other dealers
One of the primary advantages of Carmax in comparison to buying a car from a private seller is that the company offers many forms of consumer protection. The car history, inspection, warranty and money-back guarantee will generally not be available when you buy directly from a private seller.

Compared to traditional car dealers, you will likely need to purchase a car if you want the dealer to buy your own car. At Carmax, they do not require you to make any purchase when selling your car. However, they will offer you the same price that they would if you were buying a car from them.

A traditional dealer can spend a lot of time and energy haggling with you over price. In some cases, this can help you get a good deal, but often you will be wasting your time. There is really no way for you to know whether you can get the dealer to lower their price.  Of course, the tradeoff is that CarMax prices their cars such that they make a reasonable, and sometimes more than reasonable profit on each sale.

At Carmax, everything is laid out plain and simple, and you can decide right there whether you want to buy the car or not.

At traditional dealers, you really need to take care to ensure that you get the best value for your money. Consumer Reports has a good guide that helps you maneuver through the process of buying a new car at a traditional dealership at http://www.consumerreports.org/cro/cars/car-buying-advice/.

Since Carmax sells cars at set prices, it takes extra steps to ensure customers that they are getting a good offer. In this way, there is less chance of getting a raw deal as often happens at traditional dealers. The company has built a reputation for offering haggle-free cars at fair prices. If you like what you see, you simply sign the contract, make your payment and drive the car away.

Finding Carmax dealers
One of the quickest and easiest ways to find a Carmax dealer near you is through the major search engines like Google, Yahoo and Bing. Google, in particular, has local business listings through Google Places and Google Maps. Just type in “Carmax” together with your location as part of the search query.

Carmax dealers are located throughout the United States and you should be able to find a dealership fairly close to your area. In addition to using a search engine, you can also find a “Dealer Locator” on the Carmax website.

Carmax also makes it easy for consumers to search for cars online at their website. You can search through an inventory of around 30,000 cars by make, vehicle type, model, price, features and fuel economy. The website also has a search engine that lets you find which one of their 100+ stores is nearest to your location.

The CarMax experience begins with a search of available inventory. Customers can either ask about a car that they saw online or provide their salesperson with criteria. If the salesperson finds a car fitting the customer’s criteria on the lot, then the financing process begins. Otherwise, the salesperson will offer the customer the opportunity to bring a car over from another lot. The price for transporting the car from the other lot is non-refundable, even if the customer chooses not to purchase the car. However, the customer has the opportunity to ask unlimited questions of an on-location salesperson about the condition of the car to be transported.

At a CarMax dealership, salespeople enter the customer’s credit application into the computer system. The application is sent through a series of prime and then subprime lenders, depending on the creditworthiness of the applicant. The offers then come through to the manager, and customers have the opportunity to view the approvals on the salesperson’s computer screen. Customers may take the financing from one of the CarMax lenders, but they also have three days to refinance with another lender if the other lender can beat the CarMax rate.

In addition to financing with CarMax Auto Finance, customers have the opportunity to view offers from multiple lenders. On the CarMax Auto Finance website, CarMax lists each individual lender and provides a general overview of their history and services. Since customers view multiple offers, they have the flexibility to choose the best loan for their needs based on available options. Lenders include CapitalOne, Wells Fargo Dealer Services and Santander.

People have a vast array of opinions regarding the CarMax experience as a whole. CarMax’s hallmark is its “no-haggle” policy regarding car price. The ticket price is the price that customers will pay, and negotiations will not be accepted. The lack of room for negotiation bothers some consumers, particularly experienced car customers who are comfortable with negotiations and who have the experience to spot opportunities. However, some consumers enjoy not having the pressure of negotiating prices with a salesperson, particularly if they dread the negotiation process.

CarMax also has a thorough appraisal process for trade-ins. Instead of receiving a ballpark dealer figure on a post-it note, customers will get a detailed form detailing why the dealership appraised the car at a particular price. Of course, not every consumer receives the quote that they feel is appropriate for their trade-in, and again, the company’s “no-haggle” policy applies. However, if consumers take the time to check their used car’s value with the Kelley Blue Book or with Consumer Reports, then they will enter the CarMax dealership armed with the information that they need to understand whether or not they received a fair trade-in offer.

Consumers should go into the CarMax experience in the same way that they should go into any car buying experience. The more information that consumers have, the more likely they are to get the best deal on a vehicle. In the past, CarMax has received the Better Business Bureau’s Torch Award for Marketplace Excellence. The company received the reward for “commitment to exceptional standards that benefit customers.” Customers who seem displeased with CarMax usually accepted a price that they later came to regret because they had not done their research before going to the dealership.

Before committing to any financing offer, customers should shop around. Looking at available offers from CarMax as well as consulting a bank or credit union will give customers an idea of what type of interest rate to expect based on their credit score. For many consumers, the CarMax financing experience proves to be a straightforward and trustworthy process.

Resources:
Federal Trade Commission Facts For Consumers: Understanding Vehicle Financing (http://www.ftc.gov/bcp/edu/pubs/consumer/autos/aut04.shtm)

Selling to CarMax

One of the extremely positive aspects of selling your car to CarMax is that unlike the typical car dealer, they don’t require you to trade-in your vehicle in order to sell it to them. Although CarMax does have a trade-in option for those who are interested in picking up a new car, they also allow car owners to bring in their automobiles for an appraisal which may lead to CarMax offering to purchase the car outright.

Unlike other resources, CarMax will also put their offer in writing and will honor it for up to seven days which provides car owners with a good opportunity to see if they can sell their car elsewhere for a higher price. If the seller opts to sell their vehicle to CarMax there will be a small fee attached to the sale, but this is not unlike the fee that would be charged for placing a for sale ad in the local paper. Those who decide to trade-in their vehicle will have a wide selection of used cars to choose from and may be eligible for a reduced taxes program on their car purchase.

Private Sales

Taking the private sales route often requires a greater time investment, both to place ads in multiple places and to meet with potential buyers. It is common for personal buyers to offer more money than a dealership as they will still receive a better price point than they would if they were to buy the same car directly from a dealer.

Utilizing this method allows both the seller and the buyer to get a better deal but it does come with some potential drawbacks which are not just related to time; if you’re unfortunate enough to sell someone a vehicle that breaks down shortly after the sale, they will know how to contact you and this could become an issue. Car sellers who are interested in selling to a private buyer should also consider their own personal safety when agreeing to meet with strangers in order to let them test drive the vehicle.

Other Dealerships

Going to a more traditional local dealer does also have perks, especially for those who are loyal to a specific dealership. The ease of trading-in a vehicle at the same place where you’ll be purchasing the next one does free up some valuable time; on the downside, trade-ins typically do not pay as well as selling a vehicle to a private party. If time is a huge factor, however, a trade-in is definitely a good option. Those who are interested in purchasing a new vehicle at the same time as trading-in an old one will save the most time if they go straight to a dealership which sells both new and used automobiles. The national chain CarMax only sells used vehicles, so those who do not want to go to multiple places to sell their old car and purchase a new one will be better served by a trip to a local dealership.

Other Ideas

CarsDirect.com mentions eBay motors as another viable option for those who wish to do a private sale. Utilizing the eBay format does provide an additional layer of security although there are some fees involved. CarsDirect.com also discusses CarMax and refers to their car purchase program as a very good option, especially for busy professionals.

Before you sell your car, you need to determine if time or money are the most important factors in the sale. If time is your main concern then going to CarMax or another car dealer is absolutely your best option. If you’re willing to stick with the car for as long as it takes to get top dollar, however, then selling to a personal buyer makes the most sense. Realistically, most people need to hit a combination of speed and money when selling their vehicle; due to the format that CarMax utilizes, they are a viable option and visiting them for an appraisal can give you a good base to start from.

I just recently had an awful experience at Carmax in Austin, Texas (North location). I first contacted them via the internet and a sales consultant emailed me right away: Kris Santoscoy. I knew the exact car I wanted and there was no other like it in the state. I went to the lot during lunchtime and test drove it. I wanted the car right away – I filled out some paperwork and got approved. I went back to work and started the process of getting my insurance and proof of income. I faxed those to Kris the next morning and arranged to pick up my car that day.

He got all the docs then called me a few hours later with “bad news”. He told me that overnight, their staff was moving cars around me and one of their employees wrecked two of the cars on the lot, one of them being mine. He said that they do not sell wrecked or damaged cars at all and that it would have to be sent to a wholesaler. I was devastated! I arranged to go to dealership that same day and talk with him about my “options”. I was hoping to see the car, get a more thorough explanation and verify that I was not financially responsible for the car (I had not signed the final paperwork yet, so I was pretty sure that was the case).

I get there, and Kris is gone. Another sales guy helps me and glosses over the wreck issue entirely – steering me towards choosing a new car. I smell something fishy so inquire further: “can I see the car?” “does this happen often?” “Can I see the paperwork to make sure I’m not liable?” etc. He finally says “well….maybe the car was not wrecked” – I am shocked and say “MAYBE??” – he says “maybe it was sold instead and he didn’t want to tell you” WHAT?????? I demand to know all the details of what happened to my car either way. He finally confesses “yes, it was sold”. The manager finally comes over and admit that Kris lied to me….the car was never wrecked. Kris failed to do the paperwork/process on his end and that first evening, the manager sold the car without knowing I had a claim on it!!!!!!! I was SHOCKED!

He was very apologetic etc…. He said he could cover the transfer fee for another vehicle outside Austin. I requested they cover the transfer fee for ANY car in the nation and they refused. The most they would over was $200 – basically inside Texas. I said the LEAST they should do is let me find the exact car – no matter where it is – and get it to me. They would not offer me more than the $200 transfer fee. I left and ended up buying a car from another dealer.

BUT, I later found out from the dealership down south – that it is easy to “lose” a car that you are interested in because everyone is looking at that same car online and anyone, anywhere could be staking their claim on it….so it’s first in line so to speak. Apparently, it is often the case that a customer is interested in a car and test drives it, and at the same time elsewhere, someone is starting the paperwork on that same car. They don’t appear to have a great system for “claiming” a car. In my case, my sales guy was incompetent and I was out time and trouble – and betrayed in the process.

Things To Consider

The main things that you need to think about when selling your car include how much you will sell for, what documents you need and where abouts you will advertise your car. Generally you have two main options as to where you can place an advertisement.
Firstly you have local newspapers and car trade magazines. These are usually the best option as they are browsed by thousands of local people. Your other option is to sell online. As time has gone on, more and more people have realized the benefits of selling through auctions websites such as EBay. I’d also recommend listing your car on Autotrader.com. As well as these two options, you can also place a “For Sale” sign in your car. You never know who might see your car out on the streets, never hurts to try.
The main problem that you will have when selling your car is who you sell to. What you may not realize is that there are many people out there who want to take advantage of you. Thieves in particular often target used cars. They pose as potential buyers and then they steal your car right from under your nose. To prevent this from occurring you should never leave the keys in the ignition and you should never leave potential buyers unsupervised with the car. Also do not accept checks or cashier’s checks whenever possible as they can bounce. If you do take a check, try to come to an agreement where the buyer does not get the car until the check has cleared.

As well as checking that you are selling to the right person, you yourself have to have certain documents to hand. You should have the title for the car to show the buyer. Without a title you might not even be able to sell the car. Also make sure any liens on your car have been removed before selling.

Overall selling a car can be hard work. However if you are careful and if you do plenty of research to determine how much to sell the car for then you should end up having a smooth transaction. Also if you need to sell really quickly and just want to get it off your hands two great options are a free listing on Craigslist.org or selling to Carmax. Remember selling to Carmax probably won’t give you as much as you’d like to get, but it’s a process that takes about 30-60 minutes to sell your car. If you have trouble selling your car, don’t know how much to sell for or where to list it for sale… always remember you can e-mail us at So@IsItaGoodDeal.com for free advice.

Interesting Carmax Photo

Carmax locations are popping up around the country, with about 74 locations in 35 markets Carmax is quickly becoming one of the biggest players in the US used car market.

As a car dealer myself I’m in total shock that they are reporting higher and higher profits every quarter. I’d say their are two main aspects of their business: buying and selling.

When we look at their purchasing of cars its one of the biggest rip offs in the business.  If you are trying to sell your car to them, the way they have you believe the process works is, you look up your cars Kelley Blue Book pricing and go into Carmax and walk out with a very similar amount. What happens nine times out of ten is you walk out with thousands less or get such a low ball offer you leave in astonishment.

Unfortunately there are lots of people in such desperate situations who have no other option then to take their offer. The way Carmax buys cars is as follows: they buy it from you so cheaply that they can mark it up a huge amount and sell the car themselves, or even take it to a wholesale “dealer only” auction and still make a profit on it. Either way, don’t expect Carmax to give you what you’re asking, or even something reasonably fair. This has nothing to do with the difference between private party and trade in pricing, this has to do with the difference of Carmax pricing and trade-in pricing.

The other aspect of their business is, of course, selling cars. Their business model here leaves me amazed beyond belief. They have the whole gimmick of “no hassle, no haggle pricing”.. it’s pure business genius. They are preying on people who hate dealing with car salesmen.  So, yes, no haggling, but what happens here is you get way over charged for a car worth hundreds, or in most cases, thousands less. Go to their site and do a simple search for a car and you’ll be amazed the prices they charge. For example, at the moment at our car dealer we have a 98 Civic…I found an almost identical car at Carmax. Carmax is asking $8995 for a 1998 model with over 100k miles !!! I’m selling the same car for $5995 and I’ll even throw in a year warranty.

Do a little car shopping people, Carmax is the biggest rip off in the used car market. I’m really not trying to make other dealers sound better, but my goal is to show the absurd prices and the effect of doing a little more homework before you buy your next car.

[Editor's Note: This is a guest posting...]