We were talking about cars on another thread and I know the info I'm gonna post is all over the net but I'd like to give tips to anyone who's thinking about buying a car:
*Start shopping when you're ready to buy. The car lot is not your personal carnival where you test drive cars all day for fun.
*Be nice. Savvy salesmen and managers love to play endless mind game with clients they simply don't like. Firm but nice people get the best deal.
*Know your budget and know what your trade's worth before you hit the lot. Go to kbb.com to find the value of your trade - and not retail value, trade-in value. Go onto a financial website and run some payment calculations so you already know how much that Expedition's gonna cost.
*Never say you have a trade until the price of the car is negotiated first. If they ask, say "For now I'd just like to leave my trade out of it. I haven't decided if I'm trading it just yet."
*NEVER say you just want a specific payment. Pick a car you already know you can afford and negotiated the price. Never ever get into payments - all salesmen are trained to close by payment "So if I can get to you $250 a month can I earn your business?" No - you say "The sticker is $20,000 and you have my business at "$16,000."
*Know the invoice price. You can pull up the invoice price of almost every car sold. The more "rare" or "in demand" the car is they less you'll get off the price. If there's a 4 month wait for the Prius don't expect a deal. However, if they have 35 Grand Ams lined up on the lot you should get invoice and a back rub. Most dealers pay a monthly percentage rate to keep cars on the lot - so if it's sitting there it's costing them money.
*Pull your credit report. If your score is 650 or over you'll get fantastic financing. If your score is from 600 to 650 you'll get a car, but not the best interest. If your score is 550 to 600 you'll get a car but most likely 8% to 12% interest. If your score is 500 to 550 you're a "drek" - you probably will get a car and you'll be paying 18% to 24% with money down mandatory. If your score is 450 to 500 you need to be at a "buy here pay here lot." You'll get a car, but bring your 1st born child with you. If you see a lot with a huge gorilla in the front - that's your lot.
And the last for best:
"YOU NEVER HAVE YOUR BEST DEAL UNTIL THEY STOP YOU AT THE DOOR! When all the price negotiating is done this is what you say:
"Well thank you very much. We really like your offer but we just need to hit one or two more places to make sure this is the best deal. If it is we'll be back to buy it. Thank you."
Then stand up and start walking out the door. They will stop you - then whatever they say at that point is your best deal.
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I agree with everything you say but would like to add one.
This is the opposite of the advice you usually get.
Always let them know that you will finance it through the car lot IF they give you a good deal. The reason for this is; you can work them for a better deal on the car if they think they will make it up on the back end.
When it gets down to the bottom dollar the sales manager will always ask the salesman "Are they financing through us?"
If the answer is yes they will assume they are going to make some profit on the extended warranty and credit life, disability insurance and interest rate.
Once you have the car deal done, just don't buy the extended warrany, rustproofing, credit life etc. And make them compete with your best interest rate.
Also, always remember...the dealer doesn't set the price. You do. The final price should be what you offer them. Not what they offer you.
You have ALL the control in the car purchase because you can walk away and buy it somewhere else.
The dealer always has to decide, is it easier to replace the car or the customer? The only time it's against you is if you're buying a new high demand car that people are on waiting lists for. Then you're screwed!
Also remember that they have a right to a profit. Would you work with a client if it meant you got no commission? Not likely.
At invoice the salesmen has a "short deal" and probably get $50 or $100. If you dragged him around literally all day and from start to end he spent 6 hours with you he likely made $100 for the day.
If you finance through other sources now the dealership can't even hold a point on the back (percentage over the buy rate) - can't make money on the car (except hold back) and the salesman makes squat. So don't "expect it all."
From time to time I'd get people come into the showroom, I'd greet 'em and hear this:
"Listen, we have the invoice price, we're financing through our credit union and we need someone to show us cars." My reply "WHO'S UP?" Then I'd watch an entire show room full of agents scatter.
When I was 17 I bought my own car. I found a used 1988 Escort GT and called the dealer to set up a test drive. The salesman had the car gassed up and waiting for me. He just took my license, and said take it out and see if it what you want. No nice hair, I like your shoes, or other meaningless chatter. I took it out with my Dad, he said lets buy it. We drove back, told him we would buy it for X dollars. He said OK. No games, really simple transaction.
Since that time, my mom bought 2 vans from him, my dad bought his car from there, both my sisters bought cars from him, and my uncle bought a car from him. He also sent me Bday cards for the next 5+ years after I bought it.
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"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." Ronald Reagan
Yep. The best sales people in the showroom lived off referrals and never jerked anyone around. The top salesman at the Beemer dealership I worked at was Kevin - 14 years there and only saw clients by appointment. In fact, he only came in for appointments and never trolled the lot.
The problem is when you're a new salesman you have to "hold gross" to make a living - basically the amount you sell the car for over invoice. Most salesmen are on 25% commish so if the invoice is $15,000 and they sell it for $18,000 they get $750.
A short deal when I worked at Pontiac/GMC was $100. So if you didn't "jerk people around" and just gave invoice you'd need to sell 2 cars a day to pretty much make a living. Most sold about 10 cars a month so that doesn't quit work when you're new.
This is a great thread, info that is very useful or will be at some point.
What about mortgages? I know it's a lot more complex, but does anyone have any insight or experience they can offer in regards to being self employed looking for a home loan??
This is a great thread, info that is very useful or will be at some point.
What about mortgages? I know it's a lot more complex, but does anyone have any insight or experience they can offer in regards to being self employed looking for a home loan??
Maybe someone can start it on a new thread?
If the credit is good and you have at least 5% down, and your debt to income ratio is good, it should be a breeze. If you are taking a lot of deductions to reduce your taxable income you might get by with a "stated income" qualification.
If your credit is not so hot then you might still qualify, however since the sub prime bubble has burst it will not be as easy as it once was.
Did the whole run of the front end and back end of the car business. From Green Pea salesperson, F & I, Sales Manager, GSM, Fleet, all of it including secondary. Point made was very good. These people are trying to make a living just as we are. Usually they are on a draw. Around here mini's are $200 and bonus levels on new and total sales for the month. Some places pay on the backend also, but not many. Know your stuff. Know what you want on the vehicle. What you will accept with less or more items. Unless you want to order exactly, be flexable. Dealers hate to order...the motto: "Don't see what you can sell, sell what you can see." Many dealers, especially the imports (other than Toyota and Honda) are going of total sales....I still have the computer program to build and vehicle made with costs, and everything....I keep it updated, you just never know when I might need it.
I would never work anywhere where I didn't get paid on the back. I always got 10% on the back end. On some cases we'd crack their head on the back and I'd make more in finance then on the front. I also wouldn't work anywhere where I didn't get paid on holdback.
I love working at Beemer because we never took a short deal - ever. Our sales manager hit the TO and always said the same thing when the up wanted us to give it away:
"See that McDonalds across the street? Go over there and offer them a quarter for a large drink, five cents for fries and a quarter for a Big Mac. If they give it to you then I'll give you your price on the 3 series."
To the more rude, arrogant clients it was "I'll sell you the 540 at invoice, but I want you to run around the dealership 10 times." They'd be stunned and say "what?" Terri would say "Yeah, if you want to embarrass us and work for free I'd like to see you work for free."
Last edited by healthagent : 08-11-2007 at 05:28 PM.
I would never work anywhere where I didn't get paid on the back. I always got 10% on the back end. On some cases we'd crack their head on the back and I'd make more in finance then on the front. I also wouldn't work anywhere where I didn't get paid on holdback.
I love working at Beemer because we never took a short deal - ever. Our sales manager hit the TO and always said the same thing when the up wanted us to give it away:
What is a TO and short deal?
To the more rude, arrogant clients it was "I'll sell you the 540 at invoice, but I want you to run around the dealership 10 times." They'd be stunned and say "what?" Terri would say "Yeah, if you want to embarrass us and work for free I'd like to see you work for free."
HaHa, that is hilarious.
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[COLOR=#000066]"Tell me and I will forget. Show me and I will remember. Involve me and I will understand." Confucius
Very very interesting. I bought my last car used (gently!) by researching the crap out of it on the internet and got an absolutely fantastic deal. Even my mechanic (since it was used, I found the mechanic first) couldn't believe it. Turns out, the dealership posted the "internet special price" and the sales guy didn't know about it, said it was more, I told him that's what you've got posted, he say okay. Love it!
A friend of mine's husband freaked out and started selling cars. After 4 months at Pontiac, he had the longest service of anyone in the sales department. According to my friend, his "secret" was not the price or negotiations, it was simply making the customer feel really really good about their car purchase. Don't really understand that one. So, looking for bigger bucks, went over to a Mercedes dealership and completely flopped. A different clientele than the walk-on Pontiac buyers, so today, he's back at another Pontiac dealer.
I always ask what kind of car the salesman drives - mostly it's not what they sell. I think that tells me something! My mechanic drives the same car I do, last time I saw his, his wife was driving it and since I had never met her, I wanted to know why she was driving my car!
My hair person's brother-in-law's family owns a local BMW dealership. She drives a Volvo. Again, what does that tell you?
My hair person's brother-in-law's family owns a local BMW dealership. She drives a Volvo. Again, what does that tell you?
Should have gone with a Mercedes or Audi. Volvo makes some great cars but the name has a subliminal message to it I don't like. Kinda like guys in CA generally don't drive Jetta's.
Just bought a new '07 Honda Civic LX yesterday for $600 over invoice which I thought was fair since it is a high demand car right now. They claimed Honda charges a regional advertising fee of about $200 which added to the invoice which really made it $400 over(whatever!). Salesman was already lamenting on his $50 mini commission, because it was a split deal.
Got to the F&I office to pay cash for it and he cranks out the paperwork that has a $300 processing fee. I said "what's that?" and he tries to lead me to believe it is a fee the state requires...I said no it's called a "BUMP" and it is $300 pure profit, and the state does not require it, they allow it. He concedes I am correct.
He started side stepping quite a bit and said every dealership has it.I told him it was a deal killer, he went to the manager, and instead of removing it, they discounted the price of the car another $300.
Just bought a new '07 Honda Civic LX yesterday for $600 over invoice which I thought was fair since it is a high demand car right now. They claimed Honda charges a regional advertising fee of about $200 which added to the invoice which really made it $400 over(whatever!). Salesman was already lamenting on his $50 mini commission, because it was a split deal.
Got to the F&I office to pay cash for it and he cranks out the paperwork that has a $300 processing fee. I said "what's that?" and he tries to lead me to believe it is a fee the state requires...I said no it's called a "BUMP" and it is $300 pure profit, and the state does not require it, they allow it. He concedes I am correct.
He started side stepping quite a bit and said every dealership has it.I told him it was a deal killer, he went to the manager, and instead of removing it, they discounted the price of the car another $300.
They did it correctly. They can not knock off the document fee to you if they charge it to everyone else. They can discount the car price additional though. They should have disclosed the doc fee when you were dealing on the price of the car.
Don't feel too bad for them though. They pay less than invoice for the car. They have between 3-5% holdback they will get and sometimes there are other invisible dealer incentives that are not reflected with the invoice.
Man, this is why Im trying to get out of 12 years of the car business. Ack!
Our Dodge Rams (new) have $1200 in holdback so I can sell it for invoice and still net that. but we do not get into holdback, even if it means letting them leave. We have to make a profit on a $40k investment.
I did well in cars sales and liked it. Nothing can be easier then just greeting people, knowing your stuff, and honestly helping them find the most car for their money. I quit because it's a dead end job but the real reason I left was when my son was born I was a BMW working bell to bell - 12 hour days. Yes, I was making 10K a month but I never saw my son and the quality of life sucked.
They did it correctly. They can not knock off the document fee to you if they charge it to everyone else. They can discount the car price additional though. They should have disclosed the doc fee when you were dealing on the price of the car.
Don't feel too bad for them though. They pay less than invoice for the car. They have between 3-5% holdback they will get and sometimes there are other invisible dealer incentives that are not reflected with the invoice.
Are you sure they have hold back on all cars? I sold Hondas back in 89-91 and hey had no hold back at that time. We never sold a car for invoice, not even a few hundred over. I think a $500 deal was considered the mini deal, and then only on a low demand car.
The salesperson said they do have some hold back money on some of the Honda cars that are not moving(I am thinking Element), but that there was none on the Civic.
I am sure they get away with the Doc fee "bump" 99.9% of the time as it was an assumption close.
I am not opposed to profit, but I don't liked being bumped.
Are you sure they have hold back on all cars? I sold Hondas back in 89-91 and hey had no hold back at that time. We never sold a car for invoice, not even a few hundred over. I think a $500 deal was considered the mini deal, and then only on a low demand car.
The salesperson said they do have some hold back money on some of the Honda cars that are not moving(I am thinking Element), but that there was none on the Civic.
I am sure they get away with the Doc fee "bump" 99.9% of the time as it was an assumption close.
I am not opposed to profit, but I don't liked being bumped.
Yes, they have always had holdback since at least the mid 70's. The salespeople usually wouldn't know it existed. Even the sales managers if they know about it are not to figure it into their dealings.
The idea behind holdback is to cover the operating expenses of a dealership. It basically keeps real stupid dealers from operating on too low of a profit margin. There are no commissions paid out on it.
How to buy a car
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