Is there a car salesman in the house?

Discussion in 'The Lounge' started by Broken Record, Jul 26, 2007.

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  1. SEC 330 BIPOLAR

    SEC 330 BIPOLAR jive turkey

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    I'm glad I'm not the only one who has had tranny problems. :grrhee:
     
  2. Broken Record

    Broken Record Biscuit Eater Staff

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    Thanks for all the advice and special thanks to Childress for the inside scoop. Very helpful.

    I drive vehicles until they are pretty well spent, so I'm not overly concerned with the depreciation hit. My pickup truck, for instance, is a 1991 model that I bought in 1992 and I've been driving it ever since. Problem with the truck is that it gets 13 mpg and has to have super unleaded gas, not to mention things on it are starting to fall apart.

    My daily commute is about to increase significantly and it looks like with the new car I'll save around $130/month in gas. That makes the decision easier!
     
  3. GoT

    GoT Strength and Honor

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    FWIW my 94 Ranger is going strong at +180k, but like SEC330 it had Tranny problems a couple of years ago. Very depressing having Tranny problems, yes, yes indeed.
     
  4. Broken Record

    Broken Record Biscuit Eater Staff

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    Indeeeeeed. Not to mention expensive.
     
  5. MJTitans

    MJTitans Chris Whitley look him up

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    I work for a software company that sells to car dealerships... we don't have dealers in Nashville (that I know of) but if you tell me the year/model you're looking at I can tell you the range of what our dealers owe on their cars in inventory and what the range of what they sell for. That should give you a good idea of what to insist on. Don't go by invoice - there is the perception that dealer invoice is what the car costs them, and it's not at all.

    Dealerships make their profit in 2 places - front end and back end... meaning the difference between their cost and the sale price (front end) and if you finance the car there is a kick-back from the finance company that gives the dealer money from the interest on the financing (back end). With new cars dealers often get "incentives" from the manufacturer... which is essentially just a rebate - so they may advertise their invoice is 20,000 but the minute they sell the car they can get thousands back from the manufacturer. Some dealers hide this entirely, some will share it with you to get your business (and sometimes they don't get incentives).

    With used cars dealerships can have much more wiggle room on the price because their cost is essentially what they gave the previous owner for their trade-in plus any work that was needed to get it ready for sale. Dealers rarely give you much for a trade - we had one that doesn't even appraise their cars before they quote what they'll give. When we asked don't they risk losing money on the trade he laughed and said they don't offer anywhere near enough to risk losing money.

    Another thing people forget about in the dealer's profit is a trade. It sounds like you don't have much of one, but if you trade a car in the dealer will do 1 of 2 things with it - sell it in their used car department or wholesale it out to someone else (or in large dealer groups a Lexus dealership for example would sell a Honda trade-in to the Honda dealer in the same group). If you have a trade they will sell internally they are going to make 2 profits in one off you. They won't come up much on the trade value (for accounting reasons), but use that to press them on the price of the car. My sister-in-law just got a sweet deal on an Infiniti from a truck dealership. They had been desperate to get rid of their huge Ford truck and no one wanted to give them any money for it. Then they found this used Inifiniti at a truck dealer, and the dealer was desperate not only to get rid of this Infiniti (since none of their shoppers are looking for that), but they also had someone looking for a truck just like her trade-in. So they paid about $17,000 for a $23,000 car. The person who traded the Infiniti probably got pretty screwed on their trade, and my sister got the benefit.

    As for financing (which includes leases), many people feel like if they bring in cash they are more likely to get a good deal because the dealer knows you're ready to buy and is motivated to sell. That could be, but dealers usually make more on the back-end than the front-end, so if you don't finance through the dealer's lender they have to make all their money on the sale price of the car. If you do finance through them this is where shopping around can really help you. Some dealers only use 1 lender (called a "captive" lender) - all the manufacturers have financing companies - Ford, Toyota, etc... Some will shop around from lender to lender because the kick-backs vary widely. We partner with a software company that helps dealers compare all their lenders, and it's surprising what a difference it makes... You can have 5 lenders with the same financing terms, but one gives the dealer a $500 profit and another may give a $4000 profit.

    Probably 80%-90% of dealers are pretty good people and pretty fair. If you go in knowing how they make money and give them a chance to make a fair amount but not crazy amount, then you should get a good enough deal. The ones that aren't good are absolute scum - we had one client ask us to pad in $900 to every deal (undisclosed) just in case the driver doesn't qualify for the rate they quote initially. That way the dealer could raise the interest rate, but tell them they can come down on the price to keep the payments the same (looks like a hero, right?). Of course if the driver DOES qualify they wouldn't say a thing and keep the $900 (we refused to do that, by the way). Totally illegal, and I'm pretty sure they are being investigated now. So shop around.

    Another thing is the difference between the internet departments and showroom... We have some dealers that tend to offer lower prices to internet customers. I joked I was going to set up a booth outside their dealership with a computer and a sign saying "Save $500, ask me how" and split the savings with them. This isn't always the case - sometimes you get the opposite... dealers that feel like the internet is a hassle to deal with and don't see internet shoppers are legitimately motivated buyers.

    And absolutely yes, buy at the end of the month. Most dealerships are very competitive internally - reps that don't meet the quota don't last long, and managers that don't close their deals and meet their quotas don't last long either. It won't be that every dealership you walk in will be under quota, but when you find the right rep in the right store at the end of the month they will come close to making nothing if they have to in order to get the sale.
     
  6. Ewker

    Ewker Starter

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    BR, does the Carmax in Knoxville sell new cars? I know in buying used cars no dealer in Nashville even comes close to what Carmax sells their cars for
     
  7. TitanJeff

    TitanJeff Kahuna Grande Staff

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    I've bought two used vehicles from CarMax.
     
  8. MJTitans

    MJTitans Chris Whitley look him up

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    oh... and a couple more things... Don't get too stuck on one part of the deal. Some new car dealers won't come down on price hardly at all, but they will actually offer more for your trade or offer more of their rebate. All of those decrease your overall price, but they come out of different places on the dealerships books - so it makes no difference to you but it does to them.

    Also, dealers vary greatly in how much power they give to sales people. Most salesmen don't know the actual cost of a vehicle to the store, and often they are given parameters that they can negotiate within. So you may get a salesman that can't negotiate on the price much, but once you get back to the manager they can. Don't get too fixed on a monthly payment - dealers will prefer to adjust your term or interest rate to get to a payment, but term doesn't help your overall cost and you should be getting a fair rate for your credit to begin with.
     
  9. Broken Record

    Broken Record Biscuit Eater Staff

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    The Carmax here only sells used cars. I do like their "no haggle" policy, though. I've also found no haggle deals at Saturn and Scion.

    The car I'm looking at is a Nissan. I went to Edmunds and they have something called a TVR (true value report) that actually tells what the average deal in my zip code is on any car. I'm armed with that report, plus a few online quotes that I can take to the dealer. I've decided what I am willing to pay, so now all I have to do is what I always do, tell them what I'll pay and if they won't take it, I walk. Then I get a call tomorrow saying they can do it. Man I hate buying cars.
     
  10. Broken Record

    Broken Record Biscuit Eater Staff

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    Excellent advice. Luckily, I've already secured financing so I won't have to bother with the dealer on that and I plan on keeping my old truck to haul stuff so I don't have to bother with trade-in negotiations either.

    When all that stuff gets mixed in to the deal, it becomes almost impossible for me to tell which way is up.
     
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