Dealing with the devil: car dealerships

[TridenT]

What can you expect when dealing with a stealership?

A lot of dealerships are asking about $18000 for a car I'd like. My budget is ~$15k (like, out the door all is said and done in finances $15k). KBB trade-in puts most of them at $13.5k. Private party says $15k.

How impossible is it going to be to get any of them to even get close to $15k?

EDIT: I'm talking about used cars.

 

[GagHalfrunt]

Depends on the real price of the car and popularity of that model. First and foremost, before you walk into the dealership you should know the cost to the dealer of the car you're interested in. Not the sticker price and not the invoice price, the REAL price minus dealer holdback and whatever incentives are active at the moment on that make and model. That will be well under the invoice price. That info is available online and you should be able to find it so you know your starting point.

Once you have the numbers, it comes down to supply and demand. If the model is not in demand and there is plenty of supply, you should be able to easily negotiate a price well below invoice. They'd rather sell a car and make $500 rather than to not sell a car and make $0 and that should be the way you negotiate it. "Yo, sticker on this car is X, the invoice says it costs you Y, but in reality this car costs you $Z with incentives and holdback, I'll give you $Z + $500. You can make a $500 profit or I'll buy at Dealership Q and they can make the $500 and you make nothing. You have 2 minutes to approve the deal."

If the car is in high supply and/or low demand that will work every time. They want to cheat you, but if they can't a small fair profit is better than no profit at all. They'll take the money and try to screw the next guy even more to make up for it. However, if the model is in high demand, short supply or they get an allotment and can't sell more than a certain amount per month, you're out of luck. The leverage flips and they'll tell you to pound sand because they can make $3000 profit off some other schmo and they'd lose money selling it for less than that.

 

[s0me0nesmind1]

What can you expect when dealing with a stealership?

A lot of dealerships are asking about $18000 for a car I'd like. My budget is ~$15k (like, out the door all is said and done in finances $15k). KBB trade-in puts most of them at $13.5k. Private party says $15k.

How impossible is it going to be to get any of them to even get close to $15k?

How much is your vehicle worth? You doing a trade-in? The only reason I would ever go to a dealership is if I had a decent trade-in.

Why? Because a trade-in in negates that amount in Taxes that would be due on your new car.

Example: $15,000 car at a tax rate of 8.25% = $1,237.50 in taxes alone.

Trade-in your current car for.. say... $8,000, and your car now goes from $15,000 to $7,000 ($15-$8k). You now only pay $7,000 * 8.25% = $577.50. Thereby a net savings of $660 off taxes.

Of course, thats only if you have a trade-in. This is the only reason I would ever do a dealership. Outside of that, go for autotrader or something. I bought my current '06 Acura TSX off a guy on Autotrader and love it. I would run it until the wheels fall off.

 

[I Saw OJ]

You have cash or are you going to finance? If you have cash I'm sure you can find a dealer who will do business with you and get you a deal you have in mind.

 

[Humpy]

It will be pretty hard to determine what the dealer feels the car is worth beforehand.

With financing as cheap as it is and being able to find out about what other people pay it doesn't seem worth it to dick around much negotiating to save $500 or $600 on an economy car.

 

[GagHalfrunt]

You have cash or are you going to finance? If you have cash I'm sure you can find a dealer who will do business with you and get you a deal you have in mind.

No.

Financing is a profit maker for the dealer. They can steer financing to places that offer a kickback and they'll make money on the backend. If you tell them up front it's a cash deal they'll go harder for front end profit.

Always negotiate a sale price for the car. Never a payment and never a complicated price + trade + finance package where they can bury you in revolving numbers. First the price of the vehicle exclusive of everything else. That allows you to see what you're really paying. Then do the trade-in so that you can see exactly what it's worth and whether its better to trade or sell yourself. Then and only then talk how you'll be paying and whether it's a cash deal or finance through them or finance yourself though your bank or credit union. They're very good at moving numbers around on a four square to make bad deals look appealing. You have to compartmentalize everything and tackle each stage individually or you'll lose.

 

[OverVolt]

..

 

[s0me0nesmind1]

No.

Financing is a profit maker for the dealer. They can steer financing to places that offer a kickback and they'll make money on the backend. If you tell them up front it's a cash deal they'll go harder for front end profit.

Always negotiate a sale price for the car. Never a payment and never a complicated price + trade + finance package where they can bury you in revolving numbers. First the price of the vehicle exclusive of everything else. That allows you to see what you're really paying. Then do the trade-in so that you can see exactly what it's worth and whether its better to trade or sell yourself. Then and only then talk how you'll be paying and whether it's a cash deal or finance through them or finance yourself though your bank or credit union. They're very good at moving numbers around on a four square to make bad deals look appealing. You have to compartmentalize everything and tackle each stage individually or you'll lose.

Couldn't you just finance and pay it off in the first month even if they get a hard-on for you to finance?

Unless there is some cause commonly in vehicle financing that you pay a large fee for paying it early (I have no idea, I've never done anything other than pay cash for my vehicles).

 

[GagHalfrunt]

Couldn't you just finance and pay it off in the first month even if they get a hard-on for you to finance?

Unless there is some cause commonly in vehicle financing that you pay a large fee for paying it early (I have no idea, I've never done anything other than pay cash for my vehicles).

Depends on the loan, that's another thing that can be negotiable. Some loans will have a pre-payment penalty, some will not. You have to assume that there will be a penalty and read the fine print carefully. The issuer of a loan is assuming risk in return for a higher payback. If they allow loans to be paid off immediately they're assuming risk on only the bad loans and making zero return on the good loans. That won't keep them in business. Most people do not read the fine print, they only notice the interest rate. If they expect 2.9% and get 2.9% they'll sign even if the fine print says they have to offer up their testicles as collateral. Another reason why each aspect of the deal needs to be negotiated separately. There's a lot going on and they're going to exploit people who don't pay very close attention. The more complicated the deal the better it is for them. The more you can control things so that every important number is easily digested the better it goes for you.

 

[andy04]

My rule is simple, get the price from places like Zag or Truecar, then call the dealership's internet department and ask them if they will sell it for that price. Go to all dealers in the town or nearby town, as soon as one agrees, buy it. If no one agrees then do not buy, wait for a while and try again. Bought 3 cars using this method all landed in success and then some. It is time consuming and tedious, these people can really be pesky, but if you want to save money you gotta do the hard work

 

[OverVolt]

Yup... internet department is a thing.

 

[Auric]

How much is your vehicle worth? You doing a trade-in? The only reason I would ever go to a dealership is if I had a decent trade-in.

Why? Because a trade-in in negates that amount in Taxes that would be due on your new car.

Example: $15,000 car at a tax rate of 8.25% = $1,237.50 in taxes alone.

Trade-in your current car for.. say... $8,000, and your car now goes from $15,000 to $7,000 ($15-$8k). You now only pay $7,000 * 8.25% = $577.50. Thereby a net savings of $660 off taxes.

Shirley it doesn't work that way -i.e. the new car is not sold for $7k plus an old car, but rather the old car is bought for $8k which is then applied against the $15k?

 

[OverVolt]

Surely.

But I'm curious myself.

 

[s0me0nesmind1]

Shirley it doesn't work that way -i.e. the new car is not sold for $7k plus an old car, but rather the old car is bought for $8k which is then applied against the $15k?

http://smallbusiness.chron.com/sales-tax-work-tradeins-58914.html

Shirley I'm missing a joke here..

Anyhow, click the link of you want details which basically reiterates my exact wording.

My only correction: It only applies to 44 of the 50 states. The 6 states that do not give a credit are California, Hawaii, Maryland, Kentucky, Michigan and Virginia.

 

[smackababy]

You know, I've been seeing that idiotic CarMax commercial about car buying not being like ordering food at a restaurant. Of course it isn't! The difference is you want to pay less than the dealership wants to sell it for.

 

[Auric]

I just like calling people Shirley. Or Peaches.

 

[JEDIYoda]

You have cash or are you going to finance? If you have cash I'm sure you can find a dealer who will do business with you and get you a deal you have in mind

No dealer is going to come down $3,000 on the price just because he has cash....9 times out of 10 they will laugh you off of the lott!!

 

[smackababy]

No dealer is going to come down $3,000 on the price just because he has cash....9 times out of 10 they will laugh you off of the lott!!

And, then you walk. I guess it also depends on the price of the car. Coming down $3k on a $50k car isn't a huge deal, but on an $18k car is a bit much.

 

[lxskllr]

Go to a second or third tier dealer, and buy a car with cosmetic damage. That lowers the price, without reducing the utility. It helps to know a bit about cars so you can inspect it, but for a newer car, it's mostly common sense stuff.

 

[smackababy]

Go to a second or third tier dealer, and buy a car with cosmetic damage. That lowers the price, without reducing the utility. It helps to know a bit about cars so you can inspect it, but for a newer car, it's mostly common sense stuff.

Even if you know a bit about cars, if the car is used, spend the $100 or so bucks and take it to a mechanic. There is no excuse for not doing that. Used cars are sold as is, for the most part, and no warranty will be issued and no repairs will be covered.

 

[who?]

Watch the movie "Airplane" if you want to get the Shirley jokes.

 

[mikeford]

I disagree with most of what has been said, but I will keep it short.

Dealers make money from financing and may freak if you try and pay cash. Even if you pay cash they usually still want a credit check and part of the purchase contract will fall back to financing if there are any issues with the cash payment.

Arrange your own financing, don't tell the dealer, just pay it in full immediately.

Knowing the dealer cost does nothing for you. The market sets the prices and sales managers will be very aware of the current market price. The only way I've seen to get the best deal is to buy all of the local papers for a couple weeks every day and find the lowest advertised deal.

Dealers usually send all trade ins to an auction or make a deal with a used car lot prior to accepting the trade. Obviously the price will be lower than doing this yourself or selling to a private party. KBB is a joke, as almost all price guides are, as well as asking prices of private party ads. Completed ebay auctions are a bit closer to reality, but keep in mind many buyers back out of ebay car auctions.

 

[EliteRetard]

No dealer is going to come down $3,000 on the price just because he has cash....9 times out of 10 they will laugh you off of the lott!!

And, then you walk. I guess it also depends on the price of the car. Coming down $3k on a $50k car isn't a huge deal, but on an $18k car is a bit much.

It is possible to knock a couple grand off a new cheap car, but it's a lot of work and luck...and you have to be willing to walk, even if you've already spent a lot of time negotiating. And don't be shy about haggling for the last $25 or whatever, even if it comes in the form of a free oil change coupon or something (brand new car should have a 1-2,000 mile oil change anyway).

I managed to get a new Hyundai Accent fully loaded listed for $18,100 for like $14,750 before taxes/fees. I did have a trade in that then covered the taxes/fees and my final cost was like $14,950. The final deal took several hours (felt like all day) and I did get up to go a few times. Each time they found somebody "higher up" to negotiate further. I was asking for $14,500 or so.

Admittedly I didn't get what I wanted for my trade, but I still managed to get almost double the original offer (was $1,000 got like $1,880). Also, I had been trying to sell the car for almost 2 years myself and had to accept it wasn't worth as much as it should be. But then again the windshield split, literally just before going (so that was worth $250 or so).

In the end I did come out with what I wanted, which was a nice new car under $15,000 out the door. Don't know how much it matters, but I paid in full/cash.

 

[Scarpozzi]

I use carmax as a high dollar price on the used market....in other words, they are usually a few grand over what dealerships will sometimes sell for.

You should size up dealerships and either buy from the huge volume dealers or the uber small ones. The logic is the big ones are scoring off Doc fees and likely want to keep inventory moving so orders they placed will have somewhere to go....small ones are just trying to make the sale. (Local used lots)

Use Cars.com and carmax to get a low dollar range and high dollar range and if you buy a used car, you can try to negotiate toward the low price (knowing a dealership got the car from trade or auction under that price). Then it just matters if they're motivated to move it and collect their fees.

 

[brianmanahan]

i emailed about 20 dealerships, told them exactly what i wanted for a new car model, and asked them for an out-the-door price (tax/title/license/everything).

about 5 of them gave me prices, and then i went to the place with the lowest price carrying a check for the exact amount they'd emailed me.

declined all extra options, gave them the check and got the car. probably not the best price as if i pitted dealers against each other and haggled and crap, but it was not stressful at all.