When I bought my used Mini Cooper in April, things didn’t go exactly as I’d planned. Part of this was because I hadn’t done enough research. But a lot of it was because the dealer had some tricks up its sleeve and I did not.
At Car and Driver, Jared Gall has compiled a list of car dealer tricks to watch for when buying a vehicle. He says that the following are common practices:
- Juggling the foursquare. The “foursquare” is the worksheet on which the salesperson jots down the terms of the deal. It’s an easy way for her to manipulate one factor (purchase price, down payment, monthly payments, trade-in value) or another.
- Profiting from rebates. Gall warns that salespeople often use the presence of a rebate to manipulate buyer psychology. Don’t let that happen to you.
- Inflating payments. The more you’re willing to pay each month, the more room the salesperson has to work. The article recommends ignoring the question of monthly payments until you’ve negotiated the price of the vehicle.
- Fees and extras. “If it’s anything he offers after you’ve negotiated your sales price, you don’t need it and shouldn’t pay for it.”
- Interest-rate bumping. Gall recommends shopping for your own financing before you shop for a vehicle. He also warns that “it is not uncommon for the dealership to secure financing for you at one APR but offer you a rate one percentage point higher — and then pocket the difference.” Be careful.
- Altering the bill of sale. Some dealers will leave the contract open-ended. Don’t allow this. Don’t sign anything with blanks or undefined terms. Be sure the paperwork is complete before you leave the lot.
Gall says there are several other tricks that dealers use, though these are especially underhanded. “If a dealership pulls any of these stunts on you, it doesn’t deserve your business,” he writes.
- Ransoming your check.
- Eavesdropping.
- Lying about your credit score.
- Misplacing trade-in keys.
For more information on these tricks and how to cope with them, check out the full article at Car and Driver.
The dealer trick that got me isn’t on Gall’s list. When I went to look at my Mini Cooper, I was greeted by a young man who’d only been on the job for two weeks. After I test drove the car, we sat down to negotiate. I talked him down from $17,000 to $15,000 and was very pleased with myself. But then he fetched the “closer”, whose sole task was to talk me up from that $15,000 number. I had essentially told the dealer how much I was willing to pay, and the closer was there to get me to pay more. And I did. I paid $15,600.
The young salesman did a follow-up call a week after I bought the car. He was doing a survey to ask me about my experience. I told him it was fine except that I didn’t like dealing with the closer. I felt like I had been manipulated by him. “Yeah,” he said. “You shouldn’t listen to him. He talks a lot, but he’s full of shit. He wants to sell that car. You had more power in that situation than you think.”
Lesson learned.
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@JD – it’s only tough love, and consider it more of a compliment on the overall quality of the site (ie, significantly higher than the financial cotton candy that you find in basically everywhere else).
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I have learned the hard way that there are a lot more dealer tricks than just those mentioned in the Car and Driver article. http://www.insidercarsecrets.com/ has a ton of good information on buying a car in general. http://www.negotiationdynamics.com/newcar.asp provides a really comprehensive plan for negotiating with the dealer.
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While living in Hawaii all the dealers added $1995 to the MSRP, because they could. Everyone (all dealers) did it because they were all in cahoots. I got taken with that. The only one I know who got a good deal was a friend that borrowed the amount he wanted from the credit union and took cash, $100 bills, fanning them in front of the salesmen until they met his price for the cash he had. He said that they saw the cash and wanted it so bad they were almost salivating.
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Here is the LIE I let myself believe,(YES I really wanted the car and let that over-ride common sense!): Just make your payments on time for 2 years and you’ll have no problem getting the car refinanced at a lower interest rate. It is 2 years later and I owe almost 14k on a car I could buy brand new (a model 3 years newer!)for 10k today. NO ONE will refinance an upside down car loan. I’m paying 14.75% interest because I hadn’t done the research back then. 4 more years of 407 a month payments on a KIA means I’ll be paying over 30k for a car worth about 1/3 of that new. Buyers beware!
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Ok, as someone who works at a car dealership, I am pretty irritated by this set of comments. Yes, there are sleazy, dishonest car salespeople out there. Just like there are sleazy investment professionals. And personal finance writers. And… the list goes on.
I’m sorry that so many people had negative experiences. But that doesn’t mean that every single dealer in the world is a crook. I mean, the markup percentage on a vehicle is much less than on a TV at Wal-Mart, and I don’t see anybody having a fit about that. (Before you flame me, I realize that a car is a much larger investment).
As far as dealer financing, because I work with many different lenders instead of just the 4 available in our town, I typically can get my customers a lower interest rate than they could on their own.
Its just like anything else. You have to know what you’re buying, what the price is, and how you’re paying for it.
A large part of the blame does indeed lie on the shoulders of dishonest dealers and salespeople. Just remember not to paint us all with the same brush.
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Unfortunately for most folks that sell cars it is just a job – which they hope is a temporary one till they can do what they really want to do – just a way to make some money till a better job comes along.
What you experienced was a inexperienced nice guy trying to get a “commitment” from you to buy a car. It was to make sure this was the car you wanted. Where he went wrong with his inexperience was failing to clearly communicate the “if” before the $15,000. So you thought the price was already agreed upon. Then the experienced “closer” came in to put the deal together. You may or may not have been able to get the Mini for $15,000.
Cars are one of the few items in our society that are negotiated. Consumers from the USA have little experience negotiating. Car sales folks however do it every day. Car Sales Professionals have a home field advantage. As professionals with a home field advantage I think we are only good at our job when we do it with integrity, and honesty. If we do not provide this we may get the sale, but that is all. When I am negotiating with a client I am not thinking as much about getting this sale as I am my long term income. I am making sure that I am going above and beyond in service, expertise, listening and providing of knowledge. I am confident I am giving a fair price that works for the client and the dealership, that the transaction is quick and fun. I am devoted to making sure that the client is getting the right vehicle, the right equipment and the right financing for their needs. I consider myself more of a educator, and entertainer than a salesman.
I am an artist by nature and I use selling cars to express my artistic nature through creating an extraordinary experience for my clients. Cars cost a lot of money. If I am not adding to the value of the car – why I am doing this? If cars sales representatives do not master their craft buying cars will become just another transaction – a quick and efficient do it yourself process. If sales reps are not adding value to the customer and the dealership they will cease to exist as information, automation, and online interactions become the core of our purchasing society. If I help the clients know what they want, get it at fair price, save time and have a great blast in the process they will buy agin and agin and send their friends. My online reputation is great and I do not have to waste time energy and emotions dealing with drama that I or the dealership has created.
I hope that the future of car sales will change. If not more companies may follow Chrysler and GM, and car sales folks will be a thing of the past.
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I had lots of issues with dealerships when I went to buy my car. I went in looking for a somewhat specific list of things, but nothing too crazy — I wanted a corolla that wasn’t white or red. Preferably manual, but either was fine. Wanted at least a tape deck, and CD was fine. None of the dealers could come up with anything. I found cars I wanted on their website, and they would say “oh, that’s not available anymore — our website isn’t up to date.”
Finally, I found a really awesome dealer. He was a guy selling cars out of a little house in the middle of downtown Bellevue, Washington. He only sold used rental cars, so they were all fairly new cars. He had pretty much what I wanted. Better yet, he did no financing himself — HE sent me to a credit union to secure a loan for a better rate than what my bank was offering me. And, as a final note, I wanted to bargain. The car was $14,000, and it was a bit more than I could reasonably afford. So he said “what about $12,500?” Heck, why not? Maybe I could have gotten it lower . . . but that was about blue book price, the car was what I wanted, and my loan was 4.9% (in 2005).
The car is now paid off, and I love it. I’m dreading the day I may have to go get a new car — I hope mine lasts for a really long time.
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I absolutely hate buying a new or used car! When I purchased the vehicle I have now, it was at my third dealership of the day. It burns me up when the salesmen has to repeatedly get up from the negotiations to go “talk to the supervisor”.
I like going to the dentist more than buying a new car.
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Wow. So much awesome advice in these comments. As much as I do not desire to be a car buyer in the near future, I’m afraid that my clunker is going to stop clunking sooner than later. I read the “Confessions of a Car Salesman” series a few weeks ago and now this thread. I feel pretty equipped to find a reasonable deal now. It should help that I love negotiating too.
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I read the book “What car dealers don’t want you to know” by Mark Eskeldson. It is a little old now, but the tricks remain the same. I felt like I was in a better position to deal with the salesman. I looked at one car, test drove it, saw some things that I didn’t like about it, but decided to talk with them anyway so I could get an idea of what I could get for my trade in.
I let them have my keys…BIG MISTAKE. After he got his little pad out with the four squares and started to play with numbers, I was ready to go. I told them, I would have to think about it, can I have my keys. Instead of my keys, another salesman pops up, keeps trying to make a deal. I ask again for my keys. Another salesman “Oh, I have seen you here before, blah blah”. I had never been there before. I got my keys, as I left, they were still yelling out offers.
Long story short: these weasles tried everything to sell that car. They failed. I know that if I even said yes to the last offer (about half the price of where we started), they would have pushed it back up.
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The last time I bought a car (8 years ago). After finding the car, I went home and researched. I decided beforehand what I was willing to pay and that they had to install a cassette player. I did not trade in my old vehicle. I did not budge one cent nor on the cassette player. I told the guy when I walked in, “This is it. I will not deal. You go and come back as often as you want, but if you take too long, I’m leaving.” Then I sat back. I paid exactly what I wanted to because I knew if not this car then there’d be another.
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I really, really, really dislike car salespeople. My last car shopping experience was enough to send me to auctions and private sellers. I walked in with cash – not check, not credit card, not money order – cold, hard cash. Knew the dealer invoice, knew the appropriate purchase price (gotten from two experienced salespeople in the area) and got turned down at THREE different dealerships. I walked out – and every time I walked the sales person called out to me. The third time it happened I turned around, looked at the sales person and said “it’s obvious you’re in this for the game, not the money.”
That’s it. No more. A friend purchase my last car for cash at a dealer auto auction; I paid $11,000 less than sticker price. Yes it was used, w/less than 20,000 miles on it.
Did I say that I really, really, really dislike car salespeople? ick.
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What I want to know is how the total number of JD’s readers went from about 80-80K to 65K in a week???
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@Christie – that’s great — you did not become emotionally-involved. The salesmen aren’t, so if you are, they have the upper bargaining power. It’s so true that “there’d be another.” Also, the last time I bought a car, they told me they didn’t have my 1st choice color. They showed me all the other colors they had, but in the end, I didn’t budge, so started to walk. I just knew I’d forever regret it if I didn’t get my 1st choice color. All of a sudden, they said they could call another dealer, who had my color, 2 hrs. away, and they would have my car available to me then in 3 hours. In order to do this, they had to trade one of the cars on their lot for it, which they preferred not to, but yes, to make the sale, but then also said, “it happens all the time.” They just didn’t offer that to me until I thanked them and started to walk-out. So I bought the car, and I was happy because the color was important to me. But, when it came time to pay with the other guy? The hard sell to buy an extended warranty was absolutely unbelievable! I declined, over and over, and in the end did not buy it, but it left such a bad experience that as I said earlier, in the future I will buy from a private individual and just get it inspected by a mechanic – just can’t stand buying cars at Dealerships. I’m not a game player and am honest and straightforward. (Kind of the same reasons, in a way, why I don’t deal with credit cards).
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As Todd (#55) and Chance (#56) said, not all car salespeople are crooks. I should know as my b/f used to work in car sales. I’ve learned a lot about car sales thanks to him, and he did meet his share of sleazeballs while working in the industry, but it’s not all bad. If price is your bottom line, you’re best off going to a large leadership where they work very hard to meet a certain volume every month and are eager to get cars off the lot, but if you’re looking for better service, go to a smaller dealership. And it is a good idea to go at the end of the month. As others have said, first look online and then obtain quotes via e-mail or phone. Before you e-mail/call, make sure you know your credit score and what type of car/model and options you’re looking for; that way you can compare apples to apples. Use the best price to get the other dealerships to negotiate with you.
And leasing isn’t totally bad. My b/f and I are leasing our car at 2.2% for 3 years and plan to pay off the car at the end of it. I’m hoping to drive the car into the ground after we buy it. Since the interest rate is fairly low, we’re placing money we would have otherwise used for the car now in CDs and other savings vehicles with a higher rate of return than 2.2%. Interestingly, this interest rate was even lower than what my credit unions could offer me at the time to buy the car. If I wasn’t buying the car at the end of the lease though, I don’t think I’d want to lease.
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I echo the advice of walking out. They need to see that you are not afraid to pass it up.
I have long ascribed to the strategy of buying low mileage used cars, but was surprised when I went looking last month. Actually bought my first new car since 1992, a Mazda 3, which was advertised at a very low price in the paper. Turns out that only one of the 57 available was at that low price. They immediately tried to steer me away from that one, indicating it did not have power locks and windows. I think they were surprised that that was not a dealbreaker, and kept trying to steer me higher. I was able to get a written “out the door” price, then left to go to another dealership. I bought the car when I came back.
I am plenty happy to buy a new car if I can get it at that price, but suspect those conditions will not last forever.
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I hate car dealerships. Truly detest them. Last time I went to buy a car, I first tried buying one online. I filled out the form, detailing the sort of car I wanted, and what happened when I clicked submit? The form went straight to a car dealership who were on the phone bugging me before the day was out. I’d like to order the car I want online, without all the dealer add-on BS and song and dance, pay for it electronically and go pick it up from a central depot. Zero dealership BS involvement whatsoever is what I’d like. Car dealerships are yet another business model, along with real estate and the 6% commission, left over from WW2 and it’s time for a complete and total change.
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We’re in the process of buying a car right now, a 1999 Saab 9-3 convertible.
one trick that will help in any situation is to bring a spouse, friend or some other impartial party.
The moment the seller opened the garage door and my wife saw the shiny black Saab, she whispered to me “I want it!” He hadn’t even started it, she hadn’t even sat in it!
I worry that if I hadn’t been there she would have bought it on the spot!
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When it is time to get a new car, I like to show up at the dealership in a vehicle that absolutely won’t be a trade-in, like my motorcycle or my Delorean. The Delorean is amazing – the salesdroids fall all over themselves asking questions about it and it changes the entire dynamic of the interaction with them. I’m “the guy with the cool car”, not just another buyer. Sometimes they ask about me trading it, but I just name an outrageous price, like $100k (you can buy one for under $30k) and that usually ends those questions.
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Does anybody have any suggestions for the mechanics of selling a vehicle to a private party in which you still owe the bank? For instance, if I still owe $3,000 on my car, but figure I can sell it for $5,000. I have $2k equity.
Does the buyer bring me a cashier’s check, and I deposit it, and then pay off my loan, and then finally have the pink slip a week later and can complete the sale? How does this work?
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I’m not a good negotiator, but negotiating can be fun. I get a thrill from getting $10 off a motel room. (Maybe I should get out more?) But my philosophy in buying cars is to just buy an inexpensive one and I won’t regret not getting the absolute best deal available. That’s not to say someone shouldn’t try to negotiate just becuase they’re buying an inexpensive car, but buying a less expensive car helps take some of the pressure off. Maybe it’s just a psychological trick, but who cares?
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I made over $400,000 last year, and I still drive a now 9 year old car that’s worth 7K.
The secret to my wealth and income is to not spend stupid money on a new car. That is literally the DUMBEST THING to do. Always buy 3-5 years used and let the fool take the depreciation hit, and the lack of satsifaction after owning for more than 2 years.
The problem with America is that everybody buys beyond their means. If you can’t pay CASH for the car, you can’t afford it!
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Sales people definitely had the upper hand when I was shopping for a new car. It was 1998, GM was on strike, and a significant chunk of my car’s price was going to come out of the cashback I’d saved up on my GM credit card. The “there’s always another car” theory didn’t work because there was hardly anything on the lots, and no one knew when they’d start production again.
I didn’t need the car that second; I’d thought that 4-6 months was plenty of time to shop around. It was a bizarre situation.
I got an okay price, though I ended up with archaic “options”. My tape deck has never worked, and I’ve been drenched more than once when it started raining and I couldn’t take my eyes off the road to roll up the passenger window. When she does finally gives up the ghost, I’m going to get a used car with power locks and windows and feel like a rock star.
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@Bulldog Gin Co.
Dude, the crazy thing about America is…you get to make decisions. Thats great you are frugal with you $400,000. I remember purchasing my BRAND NEW Cobra Mustang in 2004…I can tell you there are few things that are as satisfying (to me at least) of the new car smell knowing the history of every mile of my car.
I agree people who cannot afford new cars buy them…and too often that is the case. But to say that it is literally the dumbest thing is immature. What about converting your IRA to gold? Investing in Iraqi Dinar? There are plenty of places to throw money away and a new car certainly is not an investment for retirement but buying used with cash in no way guarantees wealth…a lot of other actions need to be taken. That is all.
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@Tony – #74 – agreed about buying new. I like to buy new and drive the thing into the ground. I’ve still got an 89 Volvo I picked up at the factory, and our 2 Honda’s both have over 100k miles from new, but we know how we drove for all those miles and exactly what maintenance has been done. The last time I took the motorcycle in for service, after a test drive, the mechanic told me he couldn’t believe I had that many miles on it – it felt like a much lower mileage bike. Trading it in every few years isn’t very smart, but buying new and keeping it long term has some benefits.
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Don’t forget that new cars depreciate 25% as soon as you drive them off the lot; by the time 4 years have passed, they have depreciated approx. 70%, so not a smart move when a person is financing it.
Apparently you can buy a car on the internet at the invoice price from http://www.carsdirect.com. Then you go in and get the car and see the fleet manager. (I’ve never done it because I’m happy w/the depreciation I get from used cars, low mileage; my last 2 used cars had just come off of a lease and were in great shape. 5 years have passed, and I haven’t had any major problems.
If you are planning to buy a used car, I recommend that you go to http://www.carfax.com to get a vehicle history report on it, like whether it’s been in an accident, has had odometer problems/rollbacks, any flood damage and so on. Personally, I wouldn’t buy a used car unless I ran it through Carfax’ database.
Edmunds.com is another good website. It has 10 steps on finding the right car for you.
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Tony in KS – Buying a new car is dumb, i agree 100%.
You will go through your motions, but you’ll realize after a while, it’s just a car.
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J.D. That is indeed a negotiation tactic. You should have said “let me bring my boss too” and fetch your wife. She should have said, ok, I can only buy at $14,000. That would have restarted the games evenly and you could bring it down to $15,000 or less.
Another option would be to review the car again and then conclude that the price is not worth and ask them if they wanted to sell the car today you might think again for the price you discussed initially.
The key word in “Always Be Prepared to Leave” is Always, even after you left with the car.
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when I must deal with salesmen, I’ll do my research before hand. Then I’ll go into the office and give them a piece of paper. The paper will have what I’m willing to pay, in cash for the vehicle, including tax, licensing, registration, etc.
At this point the salesman has two choices: He can accept my offer, or I can leave and try another dealer.
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You know, there’s more to buying a car than hammering out the absolute lowest, rock-bottom price.
Everyone seems to be completely focused on how to pay the minimum possible for a vehicle. Let me play devil’s advocate for a moment and suggest that I’d be willing to pay a little more for a dealership that’s in a more convenient location (nearer my work/home), or provides shuttle service or loaners over a dealership that does not, or has a clean, well-equipped service garage, or whose mechanics have an excellent reputation, or who just plain treat me like a human being rather than a number (which, ironically, is how most comments here are proposing we treat the DEALERS).
There are a lot of factors that go into selecting a dealership, particularly in this current economic climate, when our options for dealerships are closing before our very eyes. It would’ve been encouraging to see a little broader vision from the commenters, instead of just “how to berate the salesman out of the last few nickels.”
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I think most people get ripped off their first time buying a new car. I know I sure did! I paid $40,000 for a Volkswagen Jetta, and it didn’t even have leather seats.
It was 6 months after I’d graduated from university and started my first full-time job, making decent money. I felt all grown-up, and decided to buy a car. I went to a Volkswagen dealership and fell in love with a Jetta. The base price was $23,000. Pretty reasonable, for a German car, I thought. Particularly since that price included a lot of fancy features that would’ve been expensive add-ons in other cars, like keyless entry, power windows, power side mirrors, full-size spare tire, and a lot more. We were sold.
I wanted the 6-cylinder engine. No problem, that’s an extra $1,000. I also wanted a sunroof, which meant we had to get the GLS package ($1,000). I wanted a manual transmission, but the salesman said that since it was a new model, VW hadn’t yet figured out how to mate the 6-cylinder engine with a manual transmission, so we had to get an automatic ($1,000). We also wanted the car to be black (Metallic paint: $500).
The dealer found a car that matched exactly what we wanted in a nearby city. The only catch was, it had heated seats ($1,000). We decided to go for it, rather than wait.
For those of you not keeping track of the math, our $23,000 Jetta had grown to $27,500. I was a new-grad, were there any rebates available? Nope, not for the Jetta. Could they come down on price at all? Sorry, it’s a brand-new model, in high demand. Are there any financing deals? The standard rate is 7.9%.
Then they added rustproofing, dealer prep, delivery, admin fee, air-conditioning surtax, gas-guzzler surtax, and whatever else, to bring the total price to $29,500. Federal and provincial taxes (7% and 8%, respectively) inflated the price to $34,000. Minus our down payment of $1,000 (on my credit card, of course), and financed for 5 years, our monthly payment was $656.
That’s a grand-total of $40,360.
And it didn’t even have leather seats.
We learned a lot from that purchase. We made every mistake in the book. But one mistake we WEREN’T going to make was replace it every few years. Yessir, we were going to drive that car until it fell apart. We didn’t plan on buying another car for at least 10 years.
Until it got rear-ended and totaled 4 years and 11 months later (I wish I were joking). Sigh.
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@Kevin: are you a car dealer? Lol
You can go to any fancy dealer for car service. They will take your business without blinking. Go for the lowest price. The dealer makes money anyway or he wouldn’t sell the car to you in the first place.
Think about it this way: he is making at least $100k / year just by talking gullible buyers into spending more than they need. He won’t go broke by selling you at a thin margin.
Do the math at home and don’t stray from it at the dealership. If the dealer presents you a deal that is not in line with your math tell him you have to think about it and you will get back. Never close the deal right away. If the deal is good today it should be good tomorrow as well or next week. Take that info and shop around instead.
I never bought a brand new car in my life but I went to the dealerships with friends and relatives as a sidekick/cooler. I enjoyed intervening from a neutral position in the discussions. I think the dealers didn’t like me too much and in the end it was always a good buy for the new owner.
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Thanks, JD, for this post, as I am still in the market for a good used car. The follow-up comments contain a lot of great advice and I can learn from other people’s mistakes.
I actually started looking at the time of JD’s Mini purchase, but car-shopping got put on hiatus because we decided to take advantage of a home refinance first.
For those who have purchased used cars that they saw advertised online, were you able to get them to come down much on the price? I had a car salesman tell me that there isn’t much room for negotiation on internet pricing because car dealerships put pretty much their cheapest price because they want their car to show up on page one of search results. The theory is: If you put your search criteria in, and arrange the results from cheapest to most expensive, the most expensive cars would be listed last and therefore most people wouldn’t even consider it. So to bring the people in, the lowest price is listed. Has anyone had experience in this?? I would love to negotiate down the price of cars with prices listed online, but I’m not sure how much wiggle room I have.
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@Budgie: Somehow I find the reasoning of the cheapest price online flawed.
The car sites allow one to select a price range so therefore a car with a price could be in the bottom or the top of the ordered-by-price search results depending on the min/max values the user selected. In other words it is not guaranteed to be in the first page.
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And yet car dealerships are going out of business left and right. Seems like poetic justice to me!
I used to LOVE haggling because I’m pretty much a jerk and like the challenge. But the last two cars I’ve purchased, I’ve purchased through Costco’s service. No haggling, and I have saved thousands.
The “trick” is to buy when the new model year comes out. Dealers will do nearly anything to remove the old model line from their lots. Plus, often, you get lots of extras on the car that you might not have wanted (to pay for) but at a price lower than if you would have bought 3 months earlier.
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Hey JD,
It’s OK. Owning and driving that car makes you happy. You earned it! Besides, it’s just one thing on your list of stuff that makes life cool for you. You still have plenty of dough left over to do many other things that will keep you happy in the future, so I say you can let go of the remorse. Cheers!
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I’d also suggest Costco for those looking to purchase a new vehicle. A relative of mine is a GM at a Toyota dealership and he has told us on numerous occasions that the Sam’s and Costco pricing is the best deal – the only exception is for new “hot” models, when Costco allows for a $200 TMV (true market value) bump. But Costco pricing is reviewed on a monthly basis, so the bump isn’t likely to remain there for an extended period of time.
Costco (I’m not sure about Sam’s) also sends in shoppers to evaluate the overall experience. If the dealership doesn’t meet the criteria, they’re dropped as a preferred dealership.
Finally, Costco provides you with a “support” person to speak with on the phone during the negotiations in order to ensure the price truly is the lowest available.
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The most power you have is the walk out. Don’t be afraid to stand up and walk out.
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2 years ago my old trust 93 Toyota Camry was stolen. The insurance payment I received was far more than I thought it was worth. The truth is that I was paid nearly $500 more than what I had paid for the car 2 years earlier. (Shrug)
Anyway….I had 30 days to find a car and I didn’t want to travel more than 100 miles and I had an absolute ceiling as to how much I wanted to pay. I had enough for a down payment and would find financing elsewhere.
First I found financing at a really good rate considering my poor credit score.
After that I spent about 2 weeks emailing dealers within 100 mile radius. I wanted a specific year, make and model car. This would be the first new car that I’ve purchased that I actually wanted. It took some persistence, patience and work but I shortened the list to 3 dealers with the best quotes. Of those 3 I dismissed one because of it’s poor reputation. I visited dealer #2 who had the best quote. When I got there they of course tried to not only get me into their financing deal but they also didn’t actually have the car that they promised me. I test drove a different color just to get the feel of it. The promised that they would have the car that I wanted delivered within a week. Two things went wrong at this point. The first was that they reneged on the promised price. They wanted way more than they offered. The other was they confessed that the vehicle had a small dent. Then told me that the dent was too big to sell as new so were offering me a different car….then tried to get me into a completely different make! (a Saturn)
I walked out.
I called Dealer #3. Similar situation. They actually didn’t have the vehicle that they promised but offer a different color with different features for ….you guessed it…more money.
Back to square one I spent the next week calling more dealers. Nobody wanted to quote me or respond. Finally the Friday before my deadline I managed to get 2 dealerships to negotiate with me over the phone. I promised the first dealer that if he agreed to my price I would come down that evening, write a check and put it in his hand. He faltered….not really believing me.
I hung up and called the next dealer back and gave him my price and my promise. He sighed….was silent for a minute and said…”Listen …I’ll confess that I need the numbers this month. If you promise to come down tonight and see me I’ll give you exactly what you want. The car we have is what you want but it has a few more features than you wanted. I need a little more for that.” He went over the features and I decided that that I could offer a fair price for it (side air bags and a host of other safety features).
The deal was done and I picked it up that evening. No hassle. I even got upgraded rims and rim lock that was supposed to be extra but was thrown in inadvertently. (He discovered it as he was handing me the keys…shrugged and said it was my lucky day)
I got the car well under MSRP and several hundred dollars under the wholesale price. Didn’t break my ceiling and got what I wanted.
Within 48 hours of the sale I got calls from a few dealers that I spoke with earlier including the first dealer I visited…I took great pleasure in telling them that I found a car from a dealer nearby. I could tell some of them were surprised and bitter at the loss.
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Thanks for the tips and advice from everyone! I’ll definitely keep this in mind the next time I’m shopping for a car!
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@Kevin @all
Wow, VW sure can get us “fresh out of school; just got a first career-track job and and a few good paychecks” crowd to part with our money.
A few years ago, I bought a brand new GTI, top spec (sunroof, leather heated seats, Auto/DSG, large alloy “performance wheels”, etc) except nav/dvd and maybe a few other things. Also, Extended warranty, oil changes for lifetime of warranty, GAP, and im sure a few hidden and non-hidden upsells.
I looked at a dozen cars and dealerships.. test drove 4 cars in the 16-23K range (Subaru, Mazda, Ford, Dodge), then a used 06 GTI (21K asking). I really liked the GTI over the others but I wasn’t buying that day. I came back a week or two later after doing (not enough) research, and ended up in the freshly detailed, just-added-to-the-floor, and nearly top spec 07 model.
All said, I traded in my car at probably 10-20% lower than if I’d sold privately, nearly overdrafted my checking account on the check/cash $1100 downpayment, and opened my first credit card 90% maxed out with a $900 down payment. thank god the credit card was 0% for a year. I financed ~34K @ 8.something (even after trade and down!), ending up to ~41K at minimum payments.
In hindsight, I did everything wrong that has been advised in this and other articles/forums.
- I didn’t have a solid budget and top limit set in my mind yet (because I had no personal finance understanding at the time)
- I didn’t negotiate on price hard at all (a couple hundered off MSRP) “It’s brand new, in demand, only have the one of this style for a month, etc”
- Didn’t walk out when they wouldn’t budge
- Didn’t steer the negotiation away from how much do you want to pay (monthly)
- Didn’t walk out when the manager/closer kept talking me back up or playing with the numbers
- Didn’t walk out when financing got their teeth into me.
- Found out later another dealer across town had a similar car, but listed 200 cheaper and they’d add a satnav/dvd for free if you got the top spec model.
- Found out that “performance tires” don’t work on snowy roads and had to buy second set of tires and rims within a year, and storage for the offseason tires.
- Found out that, yes, premium gas is more expensive, and my mileage isn’t great (partly driving habits I learned later though)
Bottom Line – I was buy-crazy for no good reason other than I wanted a new car because i thought i deserved it and i could afford it. I was high on the satisfaction of landing a sweet job right out of college. Luckily I have been able to afford the car (so far). I’ve always paid more than the minimum and refinanced 3.5 points lower last year, but i’m still in negative equity vs the loan.
I have advised more than a couple friends graduating behind me to save save save their first paychecks, and seriously budget before they start blowing throught their first 2-5 years of hoped for salary in a few months like i did. I wish I’d gotten a more sensibe car and used the other money to save and travel.
In the end though, I love the car. It’s fun to drive, solid, safe, reasonable mileage depending on how I drive it… and I intend to drive it till its not worth it to repair (10yr?) or something else comes up. I almost can’t wait to help my gf buy a car or negotiate for real next time given the painful lesson I am struggling to complete.
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Been interesting reading all of these comments. I am a new car sales consultant for a Kia dealership in Southern California. I sleep well at night because I work hard to help people get what they want and I work with integrity. When I follow up with my customers and they tell me how much they are enjoying their car, I feel awesome!
I listen to my customers, I hear what the managers are saying, and if my customer didn’t ask a question that I think would have helped them, I quietly remind them to do so.
I’m on the new car side and see the cost the company pays for the vehicle and our mark up is not enormous. I believe it’s fair. Let’s face it, when you eat at a restaurant the mark up can be up to 70%! All businesses are in business to earn a profit. There is not a lot of money in cars anymore. What you see on the sticker of a new car is pretty much it! At least for Kia.
I agree about the financing… if you can have the amount approved before you come in, it save everyone time! Our finance manager may not like it but, I love it! Now I know what YOU want and that you’re ready to buy and not play games with the whole “I’ve got to see what someone else can do for me and think about it for a while.”
So again, I sleep well at night when I know that I’m making YOU happy with something that YOU wanted. I don’t feel hated by my customers!
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Here are some truths about car sales
1. If they show you the invoice the price there isn’t everything. Dealers receive what is called holdback which manufacturers give the dealers money below the “invoice” price” which is how they can sell a car for less than what they paid for it.
2. Never get extended warranties!!! Not worth the money and dealers mark that up too.
3. Always get your financing from your bank and credit unions. No matter what dealers are going to try and increase your rate so they can split the difference with the bank.
4. Admin fees doc fees etc are JUST PROFIT. NEVER PAY THEM!!!!!!!!! The dealer will say something to the likes “It’s a law to charge them”
5. On used cars dealerships have what they call a “pack” on them which can be upwards of 1300 that I have seen. This is applied before the bottom dollar is set. The “pack” goes to the owners pocket salesmen, sales managers do not get paid on it.
6. When negotiating a used car look up the kelly blue book trade in value of the car you are looking at. More than likely when they gave the offer to the previos owner they didnt deviate much from that value.
7. Always leave if you don’t like the salesman or email me with questions I sold cars for 2 years just to earn money and I would love to help people who are trying to get a fair price in tough times
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