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Negotiating Good Car Deals...

Discussion in 'Fine Living, Home, Design & Auto' started by Artisan Fan, Sep 10, 2009.

  1. DNW

    DNW Senior member

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    As has been mentioned before, dealers make money on financing. Unless things have changed since I was in the business 15 or so years ago, Financing is the #1 profit center in a car dealership and Service is #2. Back then the actual sale of a new car resulted in little, if any, profit. What you want to do is lead the dealer to believe that you will be financing the car through them...even if you have cash or alternative financing. You might also want to inquire about rustproofing or other add-ons and lead the dealer to believe "oh, that sounds pretty reasonable" and that you're going to get them also. Once you negotiate the price of the car (whether over the phone or whatever) you turn around and tell the dealer that No, you don't want their financing or any of their other BS and well...what are they going to do, renig on the deal? And again, as has been mentioned before, dealing at the end of the month, or when a dealer is scrambling to make their quota, will likely result in a better deal. Realize that dealers' profit is not necessarily related to how close to sticker price they sell cars...there are many manufacturer quotas, discounts and incentives involved. The year end model closeout argument is a fallacy in terms of resale value. Generally, if you are only going to keep a car for 5 years or less you want to get a new model as soon as it hits the showroom floor. Think about getting a 2010 model today versus a 2009 model being closed out this January...the perception will always be that the '09 is older and less desirable. Very broad stroke there but (hopefully) you see the point.
    1. You said you were in the business? What kind of advice is it to tell him to negotiate the price of the car with all the add-ons and then turn around 180 degree at the dealer? You, of all people, should know that a deal is not a deal until he signs on the dotted line. And even then, it's still subject to funding, lemon law, etc. You're asking him to be a total jackass while expecting the dealer to not be one? 2. The true cost of a car is impossible to compute, even for dealer principals. After the invoice price, there are volume incentives, customer satisfaction incentives, closeout incentives, floorplan kickbacks, etc. Because of these factors, some of which kick in at the end of the month, quarter, or year, it's impossible to figure out what the bottom line for a car is. That said, you have to work based on what you know, i.e. invoice minus all the applicable known incentives, plus a fair profit. 3. If you're keeping a car for 4-5 years or longer, the model year doesn't really make a difference--unless there's a model update or a model change, or the warranty being affected somehow. At the end of the day, to a used car buyer, a 5 year old car or a 6 year old car doesn't make much of a difference if they're both well kept and in good shape, all else being equal. 4. Finally, the year end closeout for the car business happens anywhere from June-September, depending on the when the new model comes out. The domestics have been known to introduce new updates smack in the middle of the year, and the Japanese and Europeans somewhere in August-September. This is not to be confused with the actual end of the year, when all dealers have various incentives to finish the year strong.
     
  2. Rambo

    Rambo Senior member

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    3. If you're keeping a car for 4-5 years or longer, the model year doesn't really make a difference--unless there's a model update or a model change, or the warranty being affected somehow. At the end of the day, to a used car buyer, a 5 year old car or a 6 year old car doesn't make much of a difference if they're both well kept and in good shape, all else being equal.
    I disagree with this. If you're shopping for an 08 you're not going to give a shit that the 07 was purchased a month before the 08's came out. People, and the value guides, base the value of the car mainly on the production year, not purchase date. All things being equal, if the savings isn't substantial, I'd say go with the future year model whenever possible.
     
  3. Faded501s

    Faded501s Senior member

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    1. You said you were in the business? What kind of advice is it to tell him to negotiate the price of the car with all the add-ons and then turn around 180 degree at the dealer? You, of all people, should know that a deal is not a deal until he signs on the dotted line. And even then, it's still subject to funding, lemon law, etc. You're asking him to be a total jackass while expecting the dealer to not be one?

    My apologies for not being clear. What I was advising was to lead the salesman to believe that you were one of the "easy marks" that would be interested in the not-worth-it add-ons...so that the dealer would be more inclined to take less of a profit (or loss) on the purchase price of the car in order to profit from the add-ons (or financing). It might not be this way at all dealerships, but at this particular one, the customer and GM "signed on the dotted line" for the base price of the car and the add-ons were upsold and not part of that negotiation (although I can certainly see where they would be in a lot of cases as in "we'll throw in a set of free Deluxe floormats or give you half price on rustproofing or whatever"). This is even more true with the financing. Again, by far, the most lucrative part of a car dealership (or most any other business for that matter) is the financing department. It's as simple as saying, "OK, we got a deal, here's $XX,XXX cash." Or "my bank is offering me a better rate." At that point can a dealer turn around and say "Deals off"? Legally they probably can but...

    The bottom line is that you will get a better deal on the base price of a car if the dealer believes he will profit from you somewhere else. Whether or not someone is comfortable doing this or not is another story but I'm not talking about ethics here. I'm talking about negotiating the best price.

    2. The true cost of a car is impossible to compute, even for dealer principals. After the invoice price, there are volume incentives, customer satisfaction incentives, closeout incentives, floorplan kickbacks, etc. Because of these factors, some of which kick in at the end of the month, quarter, or year, it's impossible to figure out what the bottom line for a car is. That said, you have to work based on what you know, i.e. invoice minus all the applicable known incentives, plus a fair profit.

    This is what I was trying to convey here. The whole theory of "sticker price" and "dealer invoice" is ambiguous if not arbitrary.

    Realize that dealers' profit is not necessarily related to how close to sticker price they sell cars...there are many manufacturer quotas, discounts and incentives involved.

    3. If you're keeping a car for 4-5 years or longer, the model year doesn't really make a difference--unless there's a model update or a model change, or the warranty being affected somehow. At the end of the day, to a used car buyer, a 5 year old car or a 6 year old car doesn't make much of a difference if they're both well kept and in good shape, all else being equal.

    Here, I just plain disagree with you (as did the people who were in this business for decades). I cannot cite hard evidence but am convinced that the overall cost of ownership will be lower on a car bought when it is first introduced as opposed to the same car bought more than a year later during a "model closeout sale".

    4. Finally, the year end closeout for the car business happens anywhere from June-September, depending on the when the new model comes out. The domestics have been known to introduce new updates smack in the middle of the year, and the Japanese and Europeans somewhere in August-September. This is not to be confused with the actual end of the year, when all dealers have various incentives to finish the year strong.

    Yes, OK, very interesting [​IMG]

    But again, my point in oneeightyseven's case is that Yes, if you tell a dealer that he's not going to make any money from you on financing that it will hurt you when negotiating the price of a car...so why tell him that? Why not lead him to believe that he will make money from you on financing and in other areas in order to get the best price? Because car dealers are such above board negotiators themselves?
     
  4. BrettChaotix

    BrettChaotix Senior member

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    Someone told me this story and I'm not sure if I believe him. After you read the story, you'll see why I don't take him for his word - tell me if you guys think it's bullshit....

    (this happened several months ago when car sales was really in the pits)

    He had horrible credit, multiple defaults/repos... he also has a LOT of unreported cash from less than legit business dealings....

    He went to a used car lot that specializes in those who have bad credit. He picked out an Acura and gave the salesman his sob story. the salesman tells him that the best he can do is a loan at something astronomical like 30% interest....

    The guy keeps saying that the monthly payments are too high and so to offset the insane interest, the salesman offers to drop the sticker price of the car several thousand dollars and throws in some freebees like oil changes, free tanks of gas, free detailing appts, etc... The guy plays along and agrees, they sign the paperwork and he drives off.

    When his first car payment arrives in the mail he sends them back the monthly payment along with a money order for the full balance of the loan and pays it off immediately.

    Is such a thing even practical?
     
  5. Benzito

    Benzito Senior member

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    If you've got the cash, then yes, it is practical. Some financial gurus would probably tell you to only buy a car with cash so you can avoid the spiral of financing.

    With the last vehicle I purchased for my wife, we did something very similar. They wanted to use their preferred lender, presumably because they get some sort of kickback, and were dealing on all sorts of things - discount on options, bumping up trade-in values, etc. I told the sales manager what I was willing to pay out the door, inclusive of everything, and I didn't care how much of the price went to the dealership or went to the lender. After some hemming and hawing, they called back a few days later and did the deal. First thing I did was to pay off the loan, which basically knocked off 5% of compounding interest over a five year note.
     
  6. Thomas

    Thomas Senior member

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    My apologies for not being clear. What I was advising was to lead the salesman to believe that you were one of the "easy marks" that would be interested in the not-worth-it add-ons...so that the dealer would be more inclined to take less of a profit (or loss) on the purchase price of the car in order to profit from the add-ons (or financing). It might not be this way at all dealerships, but at this particular one, the customer and GM "signed on the dotted line" for the base price of the car and the add-ons were upsold and not part of that negotiation (although I can certainly see where they would be in a lot of cases as in "we'll throw in a set of free Deluxe floormats or give you half price on rustproofing or whatever"). This is even more true with the financing. Again, by far, the most lucrative part of a car dealership (or most any other business for that matter) is the financing department. It's as simple as saying, "OK, we got a deal, here's $XX,XXX cash." Or "my bank is offering me a better rate." At that point can a dealer turn around and say "Deals off"? Legally they probably can but...


    heh, sounds like we were in the biz around the same time. There is something to this story, but the time I've seen it happen involves the F&I guy.

    Buyer negotiated a (mindfuckingly terrible) deal with the salesman on a '94 Mercury Cougar. He had his purchase price, and was then turned over the the F&I manager. F&I manager hosed him badly, the deal included a massive interest rate, A&H, SCL, extended warranty. Payments were around $770. Customer balked at the payments, and the F&I person started cutting the sale price of the vehicle, leaving all the garbage intact. He pretty well took both the customer and the salesman for a bad ride with the deal. Eventually the car sold for a few hundred over invoice, but the back end profit was unconscionably large.

    That said, the customer would have been well within his rights to cancel all the insurances and warranties after taking delivery, and after refinancing would probably have a fairly sweet deal, but the hassle involved would have been more than I would be willing to put up with.

    And, FWIW - this is a deal I watched with my own eyes. I still remember the F&I manager's name, where he worked, and a few of the other specifics. This manager had a reputation for making these kind of deals, and in three years of traveling he was the only F&I manager I ever saw who was on a salary.
     
  7. Piobaire

    Piobaire Senior member

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    To people talking about "kickbacks" on financing...it's not a kick back. The F&I guy knows what rate the finance company will buy his "paper" at, and gets to pocket the $ from the spread of the interest rate between the finance company and what he sold the loan at. Even in this slow market, figure you can touch up the interest rate by 1%. Again, skp the "rust and dust, croak and choke" (god, Jackie B. Cooper used to make me laugh).
     
  8. DNW

    DNW Senior member

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    heh, sounds like we were in the biz around the same time. There is something to this story, but the time I've seen it happen involves the F&I guy.

    Buyer negotiated a (mindfuckingly terrible) deal with the salesman on a '94 Mercury Cougar. He had his purchase price, and was then turned over the the F&I manager. F&I manager hosed him badly, the deal included a massive interest rate, A&H, SCL, extended warranty. Payments were around $770. Customer balked at the payments, and the F&I person started cutting the sale price of the vehicle, leaving all the garbage intact. He pretty well took both the customer and the salesman for a bad ride with the deal. Eventually the car sold for a few hundred over invoice, but the back end profit was unconscionably large.

    That said, the customer would have been well within his rights to cancel all the insurances and warranties after taking delivery, and after refinancing would probably have a fairly sweet deal, but the hassle involved would have been more than I would be willing to put up with.

    And, FWIW - this is a deal I watched with my own eyes. I still remember the F&I manager's name, where he worked, and a few of the other specifics. This manager had a reputation for making these kind of deals, and in three years of traveling he was the only F&I manager I ever saw who was on a salary.


    If the F&I guy ever did this where I used to work (highline dealer), he would've been taken out back and beaten senseless. You never, ever fuck with another man's livelihood.
     
  9. Christofuh

    Christofuh Senior member

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    Go in with your own financing already secured. Then ask the F&I guy what he can do for you.
    Don't disclose the rate which you've been able to obtain on your own.
    Chances are he'll be able to beat it by going via the exact same bank you're using.
    Either way your ass won't be on their mercy.
    Never buy any paint sealant, wheel road hazard plan, fabric protection coverage, extended service contract, and so on from the F&I department.
    Some scumbag dealers charge north of $200 for doc processing.
    No idea how one may go about haggling over that one.
    Negotiating the price of a used car, let alone a certified one could be tricky in that you oughta have some ballpark figure in your head of what that vehicle is costing the dealer.
     
  10. SkinnyGoomba

    SkinnyGoomba Senior member

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    If the F&I guy ever did this where I used to work (highline dealer), he would've been taken out back and beaten senseless. You never, ever fuck with another man's livelihood.
    Dont we all sort of 'fuck with the other guy'. Pretty good post, very good stuff. I've never been a very good negotiator, but I've had a few friends that were and they've amazed me.
     
  11. Piobaire

    Piobaire Senior member

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    If the F&I guy ever did this where I used to work (highline dealer), he would've been taken out back and beaten senseless. You never, ever fuck with another man's livelihood.

    Amen on that, on any big ticket sales jobs, and I've had a few in my younger years.
     
  12. ohm

    ohm Senior member

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    My experience negotiating generally is that I get the best results when I'm nice, know exactly what I'm willing to pay for something and am willing to walk away. I think relatively few people are actually willing to walk away.
     
  13. uhurit

    uhurit Senior member

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    I negotiate by simply walking away if I don't get what I want.

    If it's a place I frequent I won't be such a ball buster. Getting a car built I was a bit annoyed with the close to 30 grand price tag(that was just labor). Guy does good work but still felt I got screwed a bit on the price. Suddenly getting a 5k bill right before he had to pay his employees Christmas bonuses really threw me off. He knocked a few grand off and we were both happy. I plan to use him in the future so I don't want to be a dick to him.

    When I buy my first close to 95 grand car this winter you better believe I am gonna negotiate and squeeze the deal for every penny. In this case I don't need the car and if they don't give me my price I can just walk. Car I want is 95 grand and I want to pay 80 grand. See how close I get. I think I might just get that price in this economy. But in this case I will buy once and thats it. So I feel I can squeeze them a bit more.


    No wonder automotive industry is in the dumpster. I am a big proponent of the predominant european retail model: that's the price, and you pay it, or walk..
     
  14. DNW

    DNW Senior member

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    No wonder automotive industry is in the dumpster. I am a big proponent of the predominant european retail model: that's the price, and you pay it, or walk..

    Socialist!

    This here is capitalism baby. Best deal goes to the best capitalist. [​IMG]
     
  15. uhurit

    uhurit Senior member

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    Socialist!

    This here is capitalism baby. Best deal goes to the best capitalist. [​IMG]




    Nah.... the bloody cheapskate will pay dearly for it all in the service department[​IMG]

    That's kapitalism and bad karma[​IMG]
     
  16. sho'nuff

    sho'nuff Senior member

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    havent tried negotiating any car deals in my life. the only time was when i bought my first car years back. the red celica. i havent had a choice but to accept the terms as i didnt have any credit history or any money at all back at that time.
    i still drive that celica today, but one day when i have to get a new car, i hope to be able to negotiate some good deal. maybe a brand new corolla for only 10,000 cash out the door. yes!!
    (yeah i dont care about my car. i just want to drive something that is reliable enough that year in and year out, i never have to think about car maintenance and repairs. such as my celica. wow, what a breeze of fresh air my car is)
    for my wife, hm. ill get her a bmw . or mercedes. whatevers. not that i can afford it, but because she demands it. i tells her all the time, mercedes uses chrysler parts now. she dont care. she just want that peace symbol on her car. dam
     
  17. Thomas

    Thomas Senior member

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    If the F&I guy ever did this where I used to work (highline dealer), he would've been taken out back and beaten senseless. You never, ever fuck with another man's livelihood.

    The dealer held his nose with one hand, and protected his shark's back with the other. The accounting manager had a bullpen with a window into his office, and she said that he would get irate customers coming back to him at a rate of roughly one a week.

    The deal on the '94 Cougar, btw, had 10k of back-end profit on it. Ford rejected the deal because he made too much money on the extended service plan. 10k of profit on one deal.
     
  18. Piobaire

    Piobaire Senior member

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    Nah.... the bloody cheapskate will pay dearly for it all in the service department[​IMG]

    That's kapitalism and bad karma[​IMG]


    So if a guy paid full MSRP, service would cut him a deal? [​IMG]
     
  19. Thomas

    Thomas Senior member

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    So if a guy paid full MSRP, service would cut him a deal? [​IMG]

    maybe a little more time with a lube job or some such.
     
  20. CDFS

    CDFS Senior member

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    No wonder automotive industry is in the dumpster. I am a big proponent of the predominant european retail model: that's the price, and you pay it, or walk..

    Where's this?
     

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