Getting the best deal

[PAULBACH]

Winter is coming when dealers have the most incentive to wheel and deal.

Found these on line today:

10 things not to tell a dealer!

Some good strategies here no matter what the time of year of whether you are dealing for two wheels or four wheels.

 

[adamceckhardt]

hogwash!

As a manager at a car dealer, I can tell you that most articles you read on line about "how to get a great deal on a car/truck/motorcycle" are complete BS.

There was one great piece of advice in that article, and here it is:

"Be polite. Compliment them, and show respect. You'll never get the best price if you talk down to them. At least for the moment, you want them to be your friends." (beyond that, you want them to be your friends for your entire time as an owner!)

A "legend" in the world of selling cars had a great way to calm down an ornery customer. He'd say "Sir, you don't want to loose the good will of the salesperson in this process."

My best advice to all of you is to be honest. If you're paying cash, say it. If you want to buy a car today, say it. Car salesman are professionals. In my experience, when people have lied to us, (we know its a lie in the first place- we do this EVERYday- consumers do it once every couple years) they end up getting a worse deal than the customer that is straight up.

A lady just traveled 300 miles to save $200 on a vehicle that she could have bought from us. She tore her leather seat and wanted US to warranty it. She had a lot of nerve to waste our time in the negotiation process, buy elsewhere, and expect us to lie to the company about the seat being that way from the factory. If she had established a good working relationship with us, she probably would have experienced the creativity of our service writers to get her a new seat cover. Instead she ordered one for $700. How good a deal did she get?

A "good deal" is a state of mind. Do you like what you purchased? Can you afford it? Did you establish a good relationship with the dealer? If you answered yes to those questions, you got a GREAT deal, my friend! Have questions?- fire away!

 

[srb]

+1 adam

 

[osbornk]

My approach won't work if you're determined to have a certain thing but I have flexability when I buy. When I bought my truck (and my travel trailer), I told the dealers what my minimum requirements were, what other brands and dealers I was pricing , how I was going to pay for it (cash) and that I was going to buy tomorrow based on lowest price today. Except for one, the salesmen knew me and knew I would do what I said and even though the other equipment varied, the prices came in within about $300 of each other (except for the salesman who didn't know me and didn't think I was serious. He called back later to try to sweeten the deal but it was to late). After rebates and discounts, I paid about $8,500 under MSRP and I only did minor tweaking in the 15 minutes of negotiations. I did have to finance a moderate amount for 90 days to get an additional $1,000 rebate.

If you're up front, honest and serious, it shows and playing games is not necessary.

 

[PAULBACH]

As a manager at a car dealer, I can tell you that most articles you read on line about "how to get a great deal on a car/truck/motorcycle" are complete BS.


A "good deal" is a state of mind. Do you like what you purchased? Can you afford it? Did you establish a good relationship with the dealer? If you answered yes to those questions, you got a GREAT deal, my friend! Have questions?- fire away!

About the Hogwash - Forbes is incorrect on all the pointers except one?

Now matter how many times I have bought a car the salesman always walks out of the office and has to "talk to the manager." The salesman sells many cars every week and knows exactly what the price is. So what is the walk out of the office all about?

 

[roostershooter]

As a manager at a car dealer, I can tell you that most articles you read on line about "how to get a great deal on a car/truck/motorcycle" are complete BS.

There was one great piece of advice in that article, and here it is:

"Be polite. Compliment them, and show respect. You'll never get the best price if you talk down to them. At least for the moment, you want them to be your friends." (beyond that, you want them to be your friends for your entire time as an owner!)

A "legend" in the world of selling cars had a great way to calm down an ornery customer. He'd say "Sir, you don't want to loose the good will of the salesperson in this process."

My best advice to all of you is to be honest. If you're paying cash, say it. If you want to buy a car today, say it. Car salesman are professionals. In my experience, when people have lied to us, (we know its a lie in the first place- we do this EVERYday- consumers do it once every couple years) they end up getting a worse deal than the customer that is straight up.

A lady just traveled 300 miles to save $200 on a vehicle that she could have bought from us. She tore her leather seat and wanted US to warranty it. She had a lot of nerve to waste our time in the negotiation process, buy elsewhere, and expect us to lie to the company about the seat being that way from the factory. If she had established a good working relationship with us, she probably would have experienced the creativity of our service writers to get her a new seat cover. Instead she ordered one for $700. How good a deal did she get?

A "good deal" is a state of mind. Do you like what you purchased? Can you afford it? Did you establish a good relationship with the dealer? If you answered yes to those questions, you got a GREAT deal, my friend! Have questions?- fire away!

You sound like a car salesman allright!!

 

[adamceckhardt]

About the Hogwash - Forbes is incorrect on all the pointers except one?

Now matter how many times I have bought a car the salesman always walks out of the office and has to "talk to the manager." The salesman sells many cars every week and knows exactly what the price is. So what is the walk out of the office all about?

There are hundreds of cars on the lot, and they are all priced differently. Contrary to popular belief, the salesman and manager actually are discussing the car deal. Its up to the manager (AKA "the desk") to decide how to price a particular vehicle. A lot goes into the decision, including information the salesperson brings to the desk ("this guy is a real jerk" or "this guy is serious and ready to buy") The serious guy ready to buy gets prompt attention.

Plain and simple- I have an "insider's" perspective when it comes to buying cars AND I'm a member of this club. I have an interest in steering you all in the right direction- I consider you all friends. Bottom line- honesty goes a long way!

 

[adamceckhardt]

Another thing I enjoy is getting car salesman's business cards. I use them for other annoying business sales people encounters. I had a wonderful Middle East named one that the other person pronounced better than I. While in NYC someone was pressing me to buy a 15,000 dollar vase so I gave it to him to call later.

Wow! And for a minute there I thought you were "better" than car salesmen!

 

[bubbagazoo]

I leased a new vehicle last weekend and in the ensuing week, I discovered that the salesperson/dealership lied to me on at least 2 counts. The first was the sticker price of the vehicle. They listed it $2,000 higher than the manufacturer's suggested retail price (manufacturer's online build your car tools are wonderful). I actually ended up with a deal $300 lower than MSRP so I don't feel too bad. But to make the customer play the negotiation game to get to the MSRP is wrong. My father has worked most of his life selling new cars and I do know what the dealer markup percentage is. I try to negotiate a deal that is fair for both parties.

The second was regarding my trade-in. While it was not in pristine condition, I figure I should have gotten more for it. Especially after they told me that THEY would have to do a couple of repairs before THEY could resell it (new windshield and a dent repair on the passenger door). I got to work the following day and found out one of my co-workers was interested in the vehicle I traded in. He would have actually paid me more for it. I pointed him to the dealer and even gave the salesman I dealt with my friend's contact info. When my friend finally had contact with the dealer, they did not have the vehicle I traded in. They had sold it to a vehicle clearing house. So much for the "we can't give you want you want because we still have to fix it" line. Seeing as it was their intention to sell the traded-in vehicle to a third party WITHOUT FIXING IT, they easily could have given me more for my trade.

I got the vehicle I wanted at a price I was willing to pay. Do I feel that I was treated with the same respect and courtesy that I gave the dealership -- no. I was lied to twice. Will I do business with that dealership in the future? Very tough call. They will get my business for oil changes and tire rotation for the next few years but those are already paid for.

Oh, my friend chased down my previous vehicle and will be taking delivery of it tomorrow. He wants a gently used, affordable vehicle for his son to go back and forth to work with.

 

[12BSWAYED]

Adam,

I'm in the market for a new car. I've decided it will probably be a Toyota RAV4 or Honda CR-V. So, is the article incorrect in regards to dealer incentives on particular models (cash or inventory) and does the dealership really make money on financing packages? I've always wondered about thoes two things...any other tips you'd be willing to pass on would be greatly appreciated.

 

[dancogan]

Adam,

I'm in the market for a new car. I've decided it will probably be a Toyota RAV4 or Honda CR-V. So, is the article incorrect in regards to dealer incentives on particular models (cash or inventory) and does the dealership really make money on financing packages? I've always wondered about thoes two things...any other tips you'd be willing to pass on would be greatly appreciated.

If you own your own home and are fairly secure financially, then consider a home equity loan for the purchase of the car. That way the interest is deductible.

 

[adamceckhardt]

If you own your own home and are fairly secure financially, then consider a home equity loan for the purchase of the car. That way the interest is deductible.

This is ONLY a good idea if you plan on paying it off within 5 years. Most home equity loans are at least 10 year terms. Even if the interest rate is better on the home equity loan, you'll pay much more interest if you take the full term to pay the loan off. Unless you really need the tax break, its probably more conveinent to use the dealer (or pay cash)

 

[adamceckhardt]

Adam,

I'm in the market for a new car. I've decided it will probably be a Toyota RAV4 or Honda CR-V. So, is the article incorrect in regards to dealer incentives on particular models (cash or inventory) and does the dealership really make money on financing packages? I've always wondered about thoes two things...any other tips you'd be willing to pass on would be greatly appreciated.

Hi!

Two great choices for vehicles! Yes, in most cases, the dealership makes money off of financing. Thats actually the department I manage at my dealership. We make money the same way the bank does, by "selling" the money for a slightly higher rate than we "buy" it for. The difference, that the dealer gets to keep, is called "reserve." Typically, this amount is far less than your local bank will make off of you. In my region, I can beat local banks and credit union rates 9 out of 10 times.

There are also dealer incentives on particular vehicles. This changes often, and can also vary by region. Currently, there are no incentives on CR-Vs, for the customer or the dealer. Toyota, in an effort to play with the big boys (GM, et al) has started to play the "rebate" game. Without knowing Toyota's incentives, I can't guess what they're doing.

I think if you compare like models (apples to apples) you'll probably find the prices to be fairly close. In the end you should buy the car that you like more. Either one will hold its value, and be reliable for many years!

 

[adamceckhardt]

I leased a new vehicle last weekend and in the ensuing week, I discovered that the salesperson/dealership lied to me on at least 2 counts. The first was the sticker price of the vehicle. They listed it $2,000 higher than the manufacturer's suggested retail price (manufacturer's online build your car tools are wonderful). I actually ended up with a deal $300 lower than MSRP so I don't feel too bad. But to make the customer play the negotiation game to get to the MSRP is wrong. My father has worked most of his life selling new cars and I do know what the dealer markup percentage is. I try to negotiate a deal that is fair for both parties.

The second was regarding my trade-in. While it was not in pristine condition, I figure I should have gotten more for it. Especially after they told me that THEY would have to do a couple of repairs before THEY could resell it (new windshield and a dent repair on the passenger door). I got to work the following day and found out one of my co-workers was interested in the vehicle I traded in. He would have actually paid me more for it. I pointed him to the dealer and even gave the salesman I dealt with my friend's contact info. When my friend finally had contact with the dealer, they did not have the vehicle I traded in. They had sold it to a vehicle clearing house. So much for the "we can't give you want you want because we still have to fix it" line. Seeing as it was their intention to sell the traded-in vehicle to a third party WITHOUT FIXING IT, they easily could have given me more for my trade.

I got the vehicle I wanted at a price I was willing to pay. Do I feel that I was treated with the same respect and courtesy that I gave the dealership -- no. I was lied to twice. Will I do business with that dealership in the future? Very tough call. They will get my business for oil changes and tire rotation for the next few years but those are already paid for.

Oh, my friend chased down my previous vehicle and will be taking delivery of it tomorrow. He wants a gently used, affordable vehicle for his son to go back and forth to work with.

I'm sorry that you worked with a dealer that uses an ADM (additional dealer markup). I believe by law they have to have a side sticker (next to the Monroney sticker) showing their markup. Different dealers call it different things ("regional adjustment" "built in trade allowance" or sometimes blatently "additional profit margin")

In the future, if you see something like that, I'd find another dealer to work with. In my opinion, places that play those games don't have a sincere approach to earning your business.

A quick note on your trade- If a dent and windshield detract for your car, it makes the car worth less- period. If they fix it and sell it, or wholesale it to another dealer is irrelevent. In my personal experience, the used car manager may change his or her mind on the car after its been traded. At first thought, they may want to recondition it and sell it, but on second thought, it might be easier to just wholesale the car. The wholesaler is going to have to recondition the car, (in which case its worth the same as it is to the dealer that took it on trade) or retail the car "as-is" (in which case the car isn't going to be worth the same as a like car in perfect condition)

 

[dancogan]

This is ONLY a good idea if you plan on paying it off within 5 years. Most home equity loans are at least 10 year terms. Even if the interest rate is better on the home equity loan, you'll pay much more interest if you take the full term to pay the loan off. Unless you really need the tax break, its probably more conveinent to use the dealer (or pay cash)

There are all kinds of home equity loans, and they can get you in trouble. For instance, some banks will offer interest only home equity loans. But anyone using any type of financing should figure on paying off the loan in 3-5 years. Home equity loans are not necessarily term loans - the borrower needs to determine the rate at which he or she will make payments. It's undoubtedly more convenient to use the dealer, and unless there is some kind of financing incentive going on, it's a heck of a lot more expensive, too!

 

[bubbagazoo]

A quick note on your trade- If a dent and windshield detract for your car, it makes the car worth less- period. If they fix it and sell it, or wholesale it to another dealer is irrelevent. In my personal experience, the used car manager may change his or her mind on the car after its been traded. At first thought, they may want to recondition it and sell it, but on second thought, it might be easier to just wholesale the car. The wholesaler is going to have to recondition the car, (in which case its worth the same as it is to the dealer that took it on trade) or retail the car "as-is" (in which case the car isn't going to be worth the same as a like car in perfect condition)

I whole heartedly agree that the windshield and dent devalued the vehicle. But when I agree to take up to $3000.00 less than what the vehicle could be sold for without the dent and windshield issue (which it was agreed would cost about $1300.00 to repair), I feel taken advantage of. I guess what this negotiation has taught me is that I should not give a damn about what is fair for both parties. Negotiate based upon what is best for me and me alone.

 

[srb]

"when I agree to take up to $3000.00 less than what the vehicle could be sold for"

Does that $3000 represent the dealer's 'potential' profit (it may sell for less than top dollar) less the $1300 to fix it? If so, that $1700 profit on one unit doesn't really seem out of line. People often forget that the dealer is taking a risk by taking your trade, they may turn it over quickly for a tidy profit, or they might sit on it for months paying taxes (some states have a vehicle inventory tax) and interest on it.

 

[James.A]

There are all kinds of home equity loans, and they can get you in trouble. For instance, some banks will offer interest only home equity loans. But anyone using any type of financing should figure on paying off the loan in 3-5 years. Home equity loans are not necessarily term loans - the borrower needs to determine the rate at which he or she will make payments. It's undoubtedly more convenient to use the dealer, and unless there is some kind of financing incentive going on, it's a heck of a lot more expensive, too!

Right on, Dan. I am 9 years into a 10 year home equity line of credit. Prime + zero, interest only. It is easy for an un-disciplined person to get into trouble with these. However, in that time I've used it to purchase 2 cars and a rental house. I use it for liquidity in the short term. I get to decide when and for how long I am going to be in debt. When writing a check and not offering a trade in, it allows you to focus entirely on the price of the vehicle and disregard the other peripheral elements of the transaction.

 

[adamceckhardt]

Right on, Dan. I am 9 years into a 10 year home equity line of credit. Prime + zero, interest only. It is easy for an un-disciplined person to get into trouble with these. However, in that time I've used it to purchase 2 cars and a rental house. I use it for liquidity in the short term. I get to decide when and for how long I am going to be in debt. When writing a check and not offering a trade in, it allows you to focus entirely on the price of the vehicle and disregard the other peripheral elements of the transaction.

Right on! Like you said, the problem with those is that the great majority of people don't understand how they work, and end up in trouble. Unfortunately, I see it nearly every day

 

[adamceckhardt]

I whole heartedly agree that the windshield and dent devalued the vehicle. But when I agree to take up to $3000.00 less than what the vehicle could be sold for without the dent and windshield issue (which it was agreed would cost about $1300.00 to repair), I feel taken advantage of. I guess what this negotiation has taught me is that I should not give a damn about what is fair for both parties. Negotiate based upon what is best for me and me alone.

Where are you getting the figure for "what your vehicle should have sold for?" If you're looking at a book, give it a toss. The book could be high, could be low. Market value is what determines the value of your trade. There are resources that help dealers determine what a certain vehicle is worth on the secondary market. Currently, in my region, domestics are "soft"- several thousand dollars back of what NADA says. It could also be a matter of color. We were calling for bids on a Buick Rendezvous, and every dealer asked what color it was. It was sort of a puke green color, and not a single dealer would give us a buy bid. They simply said something like "we've got 3 that have been sitting on the lot for over 6 months"

Going in with an attitude to get the best deal for YOU is certainly going to be an advantage, but you're only going to come out on top if you remain civil. Dealers are going to make a profit despite the fact that many people think they're not entitled to it. Afterall, I'm sure you all do something that makes a profit, right?