A few tips when buying a car. (kinda long)
12-25-2003, 08:08 AM
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A few tips when buying a car. (kinda long)
First, let me say it has been a while since I have been in the business, but I know things haven't changed that much just from me helping friends out when they buy a car.
1) KNOW WHAT YOU WANT. Go to Edmunds.com to see what rebates are available and if there are any interest rates being offered by the mfg. (don't go looking for an Accord, and get a Civic) Also, know invoice on the car, as most dealerships will sell the car for invoice in hopes to make it up in the "back end." Call a few dealerships, and try and get prices. Most will quote a price in hopes of luring there.
2) If you have a trade, find out what's it worth. Again, go to edmunds.com or kbb.com, and they will give numbers for private party sale, trade-in, and retail. Never expect retail, because no one pays retail. Right now (present day) most dealers are hitting cars $2000-$5000 back of whole book, because the market warrants it. Look in the paper, and see what your trade is selling for, and be prepared to carry your inequity into your next purchase if you owe more on the car than it's worth, if you don't think you can sell it. (eg.--you owe $14,000 on a $10,000 Civic)
3) GO SHOPPING. When you are ready to buy, don't buy from the first dealership. This is a common mistake because of the "pressure" you might get. Let the salesperson do his job, and at the same time, you need to do your job. Let's say you want a new S2000, and the salesman asks what you want your monthly payment at and you say $400, if he is good, he will show you an Accord, because you should be smart enough to know that $400 per month over 60 months equals $24,000 & I don't know a dealer that will sell a new S for that. Basically if the salesperson shows you a lower model car, he is doing his job by "planting the seed" that $400 per month will NOT buy the S and when you start negoiations and you freak out about a $650 monthly payment, he will say "remember that Accord I showed you..." Be realistic. Get your numbers, and visit another dealership till you find your best deal. As you leave one dealership to go to another, always give them your cell, because they will call you back, in hopes of getting you to come back with a lower price. Many will over inflate the price of a trade when shopping, but most dealers are smart enough to know what the true value of your car is, so be careful.
4) Know what you can and can't afford. If there are no special incentives from the mfg., go to your local financial institution, and get pre approved. This way, once you find the car you want, you will have more bargining tools in your pocket. The dealerships have "buy rate" from certain banks so the more business they send to that bank, the better their "buy rate" gets. eg.- buy rate is 4%, and they charge you 6%, that's 2% more profit to the dealership. You know what your credit is like, so you should know what to expect. Like with GM, getting $5000 cash back, or 0% for 60 months, take the cash back, because you won't make up the savings of the rebate money.
5) Once you find the best deal, let the negoiations begin. DO NOT pay for the paint protection, acid etched #'s in the glass, or any other bullshit that dealer adds to the car. It's more profit to the dealer. As I have stated in another thread, the dealer has "leg" worked in the payment which is an over inflated payment. Lets say you agree to a $650 car payment, that payment might be inflated $25 extra, and it will make it that much easier for the F&I person to sell you an extended warranty for a few more dollars a month. Remember, most dealers have leg worked in the payment, so if you decide to get an extended warranty, READ THE DAM CONTRACT and see what they charged you. If they say it's only $10 more per month, there is definitely "leg" worked into your payment. In regards to credit life and disability, that's up to you to buy, but I will never buy it. Other than an extended warranty, the only other thing I would RECOMMEND, is "gap insurance" if you purchase it. Here in Phoenix, 95% of the dealers offer it so that in the event your car is totalled in a wreck or stolen, the gap will pay the difference of what the insurance doesn't. I was smart enough to skip right pass the cost of the extended warranty cost and show the numbers of the car, and the new payment after extras were added once in F&I. I can't stress it enough that it is very important to read the entire contract. It will show on the contract what you paid for any of the goodies you bought from F&I.
6) You are basically done. If you don't have the best credit in the world, (you know who you are) you
might want the dealer to submit the contract first and take delivery at a later date. The one thing that I hated as a salesman, was to "hollywood" a customer, knowing that they would need to bring the car back in a week or so knowing the contract wouldn't get bought. The dealer does this knowing you are going to show everyone and their mother your new car. After a week or two of driving your new car, they will call you and tell you the only way to make the deal stick, is to put a couple thousands dollars down, knowing you will try to come up with the money to save face after you have showed off your new car, and the sad part is, this is a common thing. If the dealer calls and says they messed up, and the rate is going to be higher, you will need to make the decision if you want to pay the higher payment, or take the car back. Again, use your better judgement.
7) Lets say you can't agree on numbers, and go home. Well, when the dealer calls you back, and says they will do the deal you wanted, tell them to take an additional $500 off, or throw in some accessories since they could've done the deal when you were there before, and they declined your offer. Make sure you get something since you have to go back. Remember, it never hurts to ask. A lot of people will also say the best time to buy a car is at the end of the month are correct, but here in Phoenix, it's best to buy on a rainy day. No one will go and shop when it's raining so the dealer is more likely to offer a slim deal, and the rain will also hide more dings and scratches, or resprays because the dealer isn't going to go over the car as if it were nice outside. I sold for a VanTuyl corp. and we had 12 steps to follow. It was very effective.
I am sure there are a few things that I have forgot to mention, but it's been 4 years since I have been in the business. I can honestly say, I was good at what I did, and I made a comfortable living at it, but it cost me a marriage because I basically lived at the dealership, that's why I got out. I would love to get an 03 S, but I am not going to carry in-equity to another car again. I am done doing that. I hope this helps, and if there are any other salespeople out there that have stuff to add, please add to the post, to help your fellow S2K members get the best deal on their next purchase. Happy Holidays to all.
1) KNOW WHAT YOU WANT. Go to Edmunds.com to see what rebates are available and if there are any interest rates being offered by the mfg. (don't go looking for an Accord, and get a Civic) Also, know invoice on the car, as most dealerships will sell the car for invoice in hopes to make it up in the "back end." Call a few dealerships, and try and get prices. Most will quote a price in hopes of luring there.
2) If you have a trade, find out what's it worth. Again, go to edmunds.com or kbb.com, and they will give numbers for private party sale, trade-in, and retail. Never expect retail, because no one pays retail. Right now (present day) most dealers are hitting cars $2000-$5000 back of whole book, because the market warrants it. Look in the paper, and see what your trade is selling for, and be prepared to carry your inequity into your next purchase if you owe more on the car than it's worth, if you don't think you can sell it. (eg.--you owe $14,000 on a $10,000 Civic)
3) GO SHOPPING. When you are ready to buy, don't buy from the first dealership. This is a common mistake because of the "pressure" you might get. Let the salesperson do his job, and at the same time, you need to do your job. Let's say you want a new S2000, and the salesman asks what you want your monthly payment at and you say $400, if he is good, he will show you an Accord, because you should be smart enough to know that $400 per month over 60 months equals $24,000 & I don't know a dealer that will sell a new S for that. Basically if the salesperson shows you a lower model car, he is doing his job by "planting the seed" that $400 per month will NOT buy the S and when you start negoiations and you freak out about a $650 monthly payment, he will say "remember that Accord I showed you..." Be realistic. Get your numbers, and visit another dealership till you find your best deal. As you leave one dealership to go to another, always give them your cell, because they will call you back, in hopes of getting you to come back with a lower price. Many will over inflate the price of a trade when shopping, but most dealers are smart enough to know what the true value of your car is, so be careful.
4) Know what you can and can't afford. If there are no special incentives from the mfg., go to your local financial institution, and get pre approved. This way, once you find the car you want, you will have more bargining tools in your pocket. The dealerships have "buy rate" from certain banks so the more business they send to that bank, the better their "buy rate" gets. eg.- buy rate is 4%, and they charge you 6%, that's 2% more profit to the dealership. You know what your credit is like, so you should know what to expect. Like with GM, getting $5000 cash back, or 0% for 60 months, take the cash back, because you won't make up the savings of the rebate money.
5) Once you find the best deal, let the negoiations begin. DO NOT pay for the paint protection, acid etched #'s in the glass, or any other bullshit that dealer adds to the car. It's more profit to the dealer. As I have stated in another thread, the dealer has "leg" worked in the payment which is an over inflated payment. Lets say you agree to a $650 car payment, that payment might be inflated $25 extra, and it will make it that much easier for the F&I person to sell you an extended warranty for a few more dollars a month. Remember, most dealers have leg worked in the payment, so if you decide to get an extended warranty, READ THE DAM CONTRACT and see what they charged you. If they say it's only $10 more per month, there is definitely "leg" worked into your payment. In regards to credit life and disability, that's up to you to buy, but I will never buy it. Other than an extended warranty, the only other thing I would RECOMMEND, is "gap insurance" if you purchase it. Here in Phoenix, 95% of the dealers offer it so that in the event your car is totalled in a wreck or stolen, the gap will pay the difference of what the insurance doesn't. I was smart enough to skip right pass the cost of the extended warranty cost and show the numbers of the car, and the new payment after extras were added once in F&I. I can't stress it enough that it is very important to read the entire contract. It will show on the contract what you paid for any of the goodies you bought from F&I.
6) You are basically done. If you don't have the best credit in the world, (you know who you are) you
might want the dealer to submit the contract first and take delivery at a later date. The one thing that I hated as a salesman, was to "hollywood" a customer, knowing that they would need to bring the car back in a week or so knowing the contract wouldn't get bought. The dealer does this knowing you are going to show everyone and their mother your new car. After a week or two of driving your new car, they will call you and tell you the only way to make the deal stick, is to put a couple thousands dollars down, knowing you will try to come up with the money to save face after you have showed off your new car, and the sad part is, this is a common thing. If the dealer calls and says they messed up, and the rate is going to be higher, you will need to make the decision if you want to pay the higher payment, or take the car back. Again, use your better judgement.
7) Lets say you can't agree on numbers, and go home. Well, when the dealer calls you back, and says they will do the deal you wanted, tell them to take an additional $500 off, or throw in some accessories since they could've done the deal when you were there before, and they declined your offer. Make sure you get something since you have to go back. Remember, it never hurts to ask. A lot of people will also say the best time to buy a car is at the end of the month are correct, but here in Phoenix, it's best to buy on a rainy day. No one will go and shop when it's raining so the dealer is more likely to offer a slim deal, and the rain will also hide more dings and scratches, or resprays because the dealer isn't going to go over the car as if it were nice outside. I sold for a VanTuyl corp. and we had 12 steps to follow. It was very effective.
I am sure there are a few things that I have forgot to mention, but it's been 4 years since I have been in the business. I can honestly say, I was good at what I did, and I made a comfortable living at it, but it cost me a marriage because I basically lived at the dealership, that's why I got out. I would love to get an 03 S, but I am not going to carry in-equity to another car again. I am done doing that. I hope this helps, and if there are any other salespeople out there that have stuff to add, please add to the post, to help your fellow S2K members get the best deal on their next purchase. Happy Holidays to all.
12-25-2003, 10:20 AM
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welcome to www.carbuyingtips.com
but seriously, very nice info, since this is coming from a veteran salesman
but seriously, very nice info, since this is coming from a veteran salesman
12-25-2003, 10:27 AM
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Used car are totally different. It is almost impossible to tell what a dealer is in a used car for. I know where my buddy works, they had an 02 S with 20k miles and they were in it for $23,500 and sold it for $26K+. For a used car, see what wholesale book is, and take it from there. For the high line cars, like BMW and Mercedes, they hit those cars $5k back of wholesale book. My buddy had an 01 M3 and he traded it in and got $37k and the car only had 7K miles. Talk about depressing.
12-25-2003, 10:39 AM
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jayhawk, I have a question about GAP insurance. You've said that this is being offered at all the dealerships. How much does it cost and what advantage does it serve to someone who pays off the car with cash? Please explain what GAP insurance is. I have heard so many different versions of it. 
12-25-2003, 11:59 AM
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50cent, gap can only be purchased if you are financing the vehicle. Before, it was only available on leased cars, and now it's a common thing for purchased vehicles. What it is, is kinda like a second insurance policy you have on the car. When you total your car, or it's stolen, your insurance company will pay off the car according to true market value. Well, unless you put money down, more than likely you are "flipped" which means owing more on the car than it's worth, and again, the insurance company will not payoff the difference. Well, the gap policy will pay what ever the insurance doesn't. When you lease the car, you will already have the gap ins. Hope this helps.
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12-26-2003, 10:55 AM
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Great advice!
Another dealership trick I encountered:
I recently bought a car for my wife (Element) and financed it through Honda. I did lots of research , got pre-approved, etc. and the deal was done exactly as I wanted (paid invoice, 5.9% interest). I had already been to the dealership twice and talked to my salesguy but wouldn't commit. I had also talked to other dealers that were a little further from where I live. When I was ready to buy, I went during the middle of a workday while it was pouring down rain.
Anyway, about a week after buying, I get a call from the finance guy saying the interest rate offered was only offered because they thought I was trading in a car. I didn't trade in anything and made that clear when I purchased the Element. He said they couldn't honor that rate since I didn't have a trade in. I told him tuff, that it wasn't my problem, the deal was done, contract was signed, financing was taken care of and that it was their mistake and their problem.
I'm pretty sure it was just a tactic to see if they could stick me with a higher rate.
READ YOUR CONTRACT AND GET PRE-APPROVED BY A THIRD PARTY!
Another dealership trick I encountered:
I recently bought a car for my wife (Element) and financed it through Honda. I did lots of research , got pre-approved, etc. and the deal was done exactly as I wanted (paid invoice, 5.9% interest). I had already been to the dealership twice and talked to my salesguy but wouldn't commit. I had also talked to other dealers that were a little further from where I live. When I was ready to buy, I went during the middle of a workday while it was pouring down rain.
Anyway, about a week after buying, I get a call from the finance guy saying the interest rate offered was only offered because they thought I was trading in a car. I didn't trade in anything and made that clear when I purchased the Element. He said they couldn't honor that rate since I didn't have a trade in. I told him tuff, that it wasn't my problem, the deal was done, contract was signed, financing was taken care of and that it was their mistake and their problem.
I'm pretty sure it was just a tactic to see if they could stick me with a higher rate.
READ YOUR CONTRACT AND GET PRE-APPROVED BY A THIRD PARTY!
12-26-2003, 07:40 PM
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this is great info, keep it coming! do your research and you will be fine. If you want to shop and waste your time to save $100 go for it. My time is worth more than than. Call around and ask for the fleet department and get 2-3 phone quotes before you bother leaving your home.
BEC I would never go back to that dealer again and I would let all your friends know that too!. You should have told them to go f-themselves IMO, that is just complete BS on the dealers part!
btw: I am a financer for honda.......................
Matt
BEC I would never go back to that dealer again and I would let all your friends know that too!. You should have told them to go f-themselves IMO, that is just complete BS on the dealers part!
btw: I am a financer for honda.......................
Matt
12-26-2003, 07:46 PM
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if you get gap for about 300 it is a good deal 50cent, It is needed if you put less than 20% down and/or have negative equity in your trade in that is being rolled into the new loan. I would not let my own mother out of my office without gap if she put 0% down on any loan with an apr over 3.0%.
We all know that our car insurance companies never give us the full amount of our payoff if a car is totaled, GAP is the way to wipe your hands of your old loan and go get an new one.
Also, did you know that 100% of honda's Leases have gap in them! they have far more money than you and I and they are in the car business, they know that it is worth it, yet people every day buy cars with out it. strange, are they that much smarter than us?
Matt
We all know that our car insurance companies never give us the full amount of our payoff if a car is totaled, GAP is the way to wipe your hands of your old loan and go get an new one.
Also, did you know that 100% of honda's Leases have gap in them! they have far more money than you and I and they are in the car business, they know that it is worth it, yet people every day buy cars with out it. strange, are they that much smarter than us?
Matt