buy car

swagman

New member
Feb 26, 2014
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pontiac michigan
please help.

last year I remember reading a post about what dealers don't want you to know when buying a car is there anyone out that have or remember that post can you please let me know for I can review that post.
 


do you know where I should post this question.

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Guys, it's not even the wrong forum. It's in the enlightened members thread. I remember reading the same one years ago.

You need a paid membership to get back into the enlightment thread. Not really worth the cost.
 
try this:
1. pick what car you want (for this example we will say you want a 2012-2014 Miata in red)
2. figure out the bluebook value
3. place a paper ad in a used car publication like autotrader, (paper ad looks more legit than CL ad)
4. your ad should be for the same car but in a different color ie: black, and list it for way below bluebook value (not too low so it seems too good to be true but I would say like 30% under bluebook value so instead of 10k list it for like $6,999) and make sure to say it's in good condition, low miles etc so there is no excuse for it being priced so low. for example your ad should read something like:

"Excellent condition 2014 Miata, low miles! Bought this for my daughter so she can learn to drive but now she wants a SUV for her birthday and we don't have room to keep this car, she did not drive it much and we have always had regular maintenence done on it. This car is in excellent condition with only 28k miles. Leather seats and new audio system. Firm on price, this is a great deal, please don't waste our time. Call (throwaway gvoice#) Thanks!"

5. take the newspaper ad with you to the Miata dealer, and use it to bargain down the price,, use the color as an excuse for why you would consider paying a slightly higher price to the dealer. So say something like this "I really want to buy this red 2014 Miata you have for sale but your asking price of 10k is a little high considering there is one for sale in the paper for $6,999 and it actualy has lower miles too,, however my boyfriend really likes the red, so I would consider buying this for like $7,500 cash out the door, can you do that for me today?"
Dealer will huff and puff and go talk to manager and come back with offer like $9,500 ...then you say, sorry I can just buy the one advertised in the paper and paint it red and still save money, $7,900 cash final offer or I'm leaving... Dealer goes to manager (etc etc you get the idea) and when it's all done hopefully you walk away with your new Miata for $7,900 - $8,500 instead of the 10k they were asking.

There might be some way to see what the dealer profit margin is or how much they paid for the car before you step on the lot (you will have to do some research on this as I'm not sure if there is actually a way or how you would do it) but the paper ad gives you good leverage. I did the paper ad thing and got my car for much less than asking price and used the color and 2 door vs 4 door as my excuse for buying from the dealer (I did not make a fake ad but the car in the ad was in a fire (which I only found out by doing a carfax on it) and at a junk yard and they would not even let me test drive it,, but knowing this I still used the ad as a bargaining point and got a great deal)

Also they will try to make up for the low price by trying to sell you a bunch of extra shit like extended warantee, and windshield wipers and floor mats etc etc. So i just said no thanks to all that
 
I decided to start a thread on how to properly purchase a new car and get the best price possible. I sold cars for a few years and know the business inside and out so I thought I would share some insight.

Buying a new car:

Many people are under the assumption that there is 15-30 thousand dollars of markup in a car. I used to always ask my customers "how much markup do you think this car has" and some would say numbers as high as 200%.

I sold Hondas for the majority and in a brand new Honda Pilot Touring ($50,000 vehicle) there is only $3,000 mark up. In a brand new Honda Civic LX (base model) there is only $1,100 mark up.

Domestics such as Dodge, GM, Ford have much more markup in their vehicles than imports (Honda, Toyota, Hyundai, Kia). A brand new Dodge Ram 3500 has around $12,000 in markup.

Now there is whats called "dealership holdback" and that is when the manufacturer marks up the dealership invoice price a certain percentage (usually 2-4%). The individual dealerships will pay an inflated invoice price when they first purchase the car from the manufacturer, but are re-embursed that money when they sell the car. (usually paid out quarterly). Once a dealership has paid off their start up costs, they could get by just selling cars at invoice pricing.

Even if a dealership is selling the car for less than invoice, they can still make some money. For example, Honda has a dealership holdback of 3%. If the dealership invoice price for a 2012 Honda Pilot was $40,000, the MSRP would be $44,550 (including freight and PDI which is $1,550).

The dealership holdback on that vehicle is $1,200. That dealership could sell that pilot for $39,000 ($1,000 under invoice) and still make $200 when they are paid their quarterly bonus.

Now it is very tough to use dealership holdback in your negotiations because most sales managers will tell you they don't know what your taking about.

When you have chosen the car you want to buy, do your research on what rebates are available on the car (check the dealerships website, google etc). The first trick in car sales is to not tell your customer about rebates. For anyone who doesn't understand what a rebate is - it's when the actual manufacturer discounts the dealership invoice price of the car which in return discounts your cost the same amount. If the Honda Pilot has a $4,000 rebate, the dealership still has $3,000 of markup to play with.

If a customer did not know about a rebate and I did not tell them, I had a large amount of money to play with in negotiations. For example, on that pilot with the $4,000 rebate, I could easily take $2,000 off and still make $5,000.

Once you know what rebates are on the car, go into the dealership and test drive and find the right vehicle. Tell the salesman to fuck off if you don't want to be pressured into anything. The salesman is going to try and put you into the vehicle with the most markup. He/she does not care about your needs, they only care about your wallet.

Do not tell the salesman you know about the rebate, see if the salesman will tell you when talking price. If the salesman gives you a price without the rebate, ask the salesman if he thinks your stupid and tell him you know about the rebate. The salesman will feel embarrassed and will now know you have control of the situation.

Tell the salesman that you will pay 3% on top of the dealership invoice price and if it's any more you will go elsewhere. 3% profit is usually the redline that a dealership will sell a car for. Make sure you see the actual papers that show you the dealership invoice price (reputable dealerships will not lie about their invoice price).

The salesman (a good one) will tell you that he will only take it to his manager if you make that an offer. That means you will have to sign a piece of paper and usually give your credit cars as a commitment. Tell him you will offer it once you know what 3% is and always pretend that you are ready to leave at anytime.

As a salesman, that is the worst thing a customer could say is "Well I will have to look around or I'm gonna think about it". A car salesman does not want you to leave that dealership because there is a good chance you will not be back. If a salesman is not meeting your demands, just pretend to walk away.

Once you salesman comes back with the price (3% profit), write it down and leave. Tell them you need to sleep on it.

Go to a different car dealership (that sells the same car) and just walk in and say that you have a deposit at another dealership and will purchase here if you can beat their price. You are a salesman's dream because the salesman has to do no work. Any dealership (as long as they have a few of the cars in stock) will most likely give you a better price. If they don't, find another dealership. Once the dealership beats your original price, get on the phone and call the original dealership. Tell them your at xyz dealership and they have given you a better price. Tell them they have one shot to earn your business or else you are leaving your deposit where you are. 9/10 the original dealership will come down on their price even more. If they don't, call another dealership or if you're satisfied with the second one, buy there.

All of a sudden you are very close to invoice price and have gotten an amazing deal on your new car. It's not over though.

If your financing, the dealership will most likely use whats called a "bump". You have already agreed on price and you think your it's all done. When the dealership works out your payment, they will usually bump it up $10-30/month. If you bought the car for $20,000 and financed over 60 months (assuming 0 interest) your payments should be $333.33/month. The dealership will usually give you a bi-weekly payment which would be $153 bi weekly. By doing this, you think that you are only paying 306/month. Keep it mind that you will have to make 26 payments (52 weeks in a year). Bi weekly is not a bad thing, less money comes out of your account in a month's time, you just have to make more payments. Just don't take your bi weekly payment and multiply by two and think thats your monthly payment because its not. If your payment is $153 bi weekly, the dealership will usually tell you its $163 bi weekly.

Since you have already agreed to price, you just assume that they are going to give you the correct payments. Your guard is usually down since you just shake hands and you expect everything to be smooth sailing from there. The dealership will use a payment bump so they can make more money off you in the finance office. If there is a bump of $10 bi weekly (60 month term) on your $20k car, the finance office has $1,300 to work with. The finance office could offer you $1,500 in warranties, protection packages etc. and tell you "wow your payment only went up $1.50" which doesn't seem to bad. If you decline everything in the office, the finance manager will have to give you your actual payment before you leave since it would be fraud to not. (your payment will go down $10 bi weekly). No one ever complains when their payment goes down.

How to negotiate in the business office

The business office managers are going to pretend they are on your side and are just trying to advise you on how to protect your new purchase. They will try and sell you every warranty available, protection packages, disability insurance blah blah blah. Everything they try and sell you is very negotiable. A lot of the stuff they try and sell you can actually be useful. Eg. rockguard, undercoating (although the car already comes with a light undercoating from the manufacturer). You can usually get half off of everything they sell you. They know they only have one shot to make money off you and making $1 is better than making no dollars. Just tell them you will pay 50% of what you want or else you will not take it.

Also, keep in mind that all accessories the dealership has to offer(remote starter, mats, bug deflectors) has roughly 30% markup which is also negotiable (when purchasing the car). Don't be afraid to ask for $100 off the price of your remote starter.

Good luck buying your next new car.
 
and


I sold cars for a bit and what was posted here is spot on exactly how it works. The only thing I would say is skip the dealer financing altogether if you can. Of course if the dealer is offering 0%, you're not getting that from a bank. The guys in the finance office are the sharks, though, not the lowly salesmen.

The rebate thing is very common as well. One of the salesmen at the dealership I worked for even took an old granny for a $5000 rebate.

There is even a way to do this process without ever setting foot into a dealership except to pick the car up, by dealing with an internet sales person if they have one. Also, invoice prices should be findable online as well.



I agree. Typically dealerships give you the choice of a low finance rate (usually 0%) or a cash rebate. Your best bet is to take the cash rebate and put the price of the vehicle on a secured line of credit (usually 3-4% interest)


Always get other dealers in the game and let the salesman know you are doing that. The salesman will usually hate you but it will get you the best deal.


A few more tips:

Never tell a salesman you are financing before agreeing to price. If they keep asking you just tell them your paying cash and then you changed your mind once the deal is done.

Never tell a salesman you have a trade until the deal is done. When a dealership takes a trade in, they low ball your trade value and then transfer profit from the car your buying to the trade.

If they appraise your car at $5,000, they will tell you they are going to give you $6,000 for it and just take transfer $1,000 from the new car profit to your trade. If the deal is done and you have a trade, the dealership will be forced to up their trade value so you are not insulted and they will not be able to transfer any more money from the new car. (assuming you grinded them down).



Originally Posted by davidne
You lost me there...is it just car companies trying to be as confusing as possible?

Also, whenever I like to make a big purchase I usually just research the shit out of it, find an acceptable price, then lowball that price when I'm bargaining (i.e. lying about having another offer).
No, its dealerships inflating your payment so they can pump you in the finance office.

If your payments are supposed to be 300/month, they will tell you they are 310 a month so they can sell you things easier in the finance office. (they can pretend they are giving you things for free)



Originally Posted by lose lose win
Not exactly on topic but.. What's the best way to sell a used car? Any tips?
The best way to sell a used car is private. Dealerships will always low ball you if you try and trade it in.

At the dealership I worked at, we used a program called Vauto. We would simply scan the VIN of a car, enter the km's and it would tell us what the market average and day supply(how many days on average the car will sit on the lot) of that exact same car is across Canada. If the market average of a car was $15,000 and the day supply was 100 days, you would get offered $7-$8,000 for your car. That means your car (on average) is selling for $15,000 but you would only get 7-8k from a dealership.

The reason you would get so low is because Vauto syas that it would take roughly 100 days to sell your car if it was priced at 15k. 100 days is way too long. A car should sit on a lot no more than 15 days. That means the dealership would try and sell it at 12-13k to move that car quickly.

The dealership would also have to run the car through the shop and inspect it which would cose $200-$1000 leaving the dealership roughly 4k to play around with for profit.

The worst time to sell your vehicle is when there are cash rebates from the manufacturer. If you are selling a 2009 dodge ram truck and dodge has 10,000 rebates on their 2011 models, you will have to sell your truck for considerably less (almost $10,000 less). A lot of people do not understand that.

If you paid $50,000 for your dodge ram in 2009 it would be worth roughly 30-35k in 2011(if your lucky). If dodge started selling their brand new 2011 rams for $40,000 ($10,000 rebate), you are going to have a very hard time selling your 2009 for $35,000.

Always try and sell your car when there is no cash rebates and always sell it privately.




A good post...

I too sold Honda's I was also an F&I manager. And was Joe Verde trained.

The best time to buy a car is at the Very end of the month. All car dealerships break their numbers down monthly. Not quarterly, not yearly.

Supra's post is all about negotiating the selling price and he is right. But I just want to reiterate how critically important it is not to talk about how much a month you have budged for your ride. Any good sales man will try to get you to quote him a monthly payment you want to be at. Do NOT do that. Once you tell him a monthly payment especially on a lease you're about to get it up the ass. It still amazes me how many cars I sold and the Customer had no idea what they actually paid for the vehicle -- they never asked. It never came up. I locked them in a monthly payment frame of mind. If they asked I'd have told them: I never lied.

You are also apt to get the best deal at a high volume dealership -- they have more inventory so they can let it go cheaper. Dealership make their money on extras like financing, servicing the cars they sell. And stealing your trade in and selling it for a huge markup. That is one of the most profitable aspects of a new car dealership; selling trade ins.

My best advice is you probably know someone who sells cars or has sold them -- shit I could still find out all the skinny on, Hondas, VWs, Audi's and Hyundais. I have friends that are sales managers, salesmen and recently a dealer owner. Ask around. This would be Invaluable information insofar as rebates and all kinds of other inside knowledge goes.

btw -- the Best salesmen are in the F&I office. I have seen dudes that were so fucking good it'd make your head spin. Watch your ass in there!
 
Solid info, DewChugr!

No one ever complains when their payment goes down.

Except he understands that they were a shady dealership who tried to rip their off by giving inflated/false bi weekly amount in the first place. :)