The inner workings of a car dealership (and how to use them to your advantage)

Yesterday a reader named Dave Black left a long comment on an old article about how to buy a new car without getting screwed. This is his glimpse into the inner workings of a car dealership. I’ve edited Black’s comment to make it a little more readable, but the advice is all his.

I sell cars, and believe me, there are lots of opportunities for a car dealership to make money.

Front of the house profit is derived from the MSRP less the invoice price (the price the dealer actually pays for the car). Each deal has a “pack charge” or “lot fee” of $200-600 or more that goes in as part of the dealer cost, so when a dealer tells you for example, our invoice is $22145, you can subtract $200 to $600 for the lot fee. There are also dealer rebates and consumer rebates to factor in.

On the sales contract there is always a “doc fee” of again several hundred, and a fee for title processing and sales tax. All but the sales tax can be negotiated.

Never trade your car in unless it has major problems and you just need to dump it. You don’t really know how much you are getting off the new car for the value of your trade. Most dealers I have worked for use “rough black book”, which is a number that they can start with before they do an appraisal on your car.

The back of the house profit comes from the finance office. Let’s say you have great credit. They could qualify you for 5.5% loan or less, but the finance manager may hit you at 7.5% and tell you that’s the best he could get. This can be negotiated, too. There is a lot of money being made on raising your interest a couple of points.

Do not buy any add-on service contracts and warranties. The profit on those is 50-100%, and the finance manager is a commissioned salesman. Remember that!

Do not try to bluff or BS anyone in the dealership — they are a lot better at it than you are, and they do it far more often.

Most salespeople do not make a lot of money. I have made as little as $300 a week and as much as $3500 in a week. My average is around $40,000 a year working five days and 55 hours a week. It’s a difficult job. The salesman is trying to negotiate between you and his sales manager. He is more on your side than you might think. He wants referrals, and he will work you hard after the sale, so he wants you to understand that he is going to get you the best deal he can and still make a profit.

Most deals on new cars pay minimum commission — $100 to $150 — because the profit margin on new cars is lower and the competition is higher. You can easily compare prices on new cars because every dealer sells the same car. Used cars have more profit built in, and there is no simple way to price shop because condition and mileage on each car varies so much.

Do not offer a price that is way too low. Be realistic. We are there to make a profit, and we must not sell cars at a loss. Give us a break. Don’t lie or steal from us, and we will treat you right.

The best time to buy a car is end of the month and before the new model year comes out. Monthly bonuses for volume can be very good, so they might be more willing to do a loser sometimes and make up for it on bonus.

Most dealers and salespeople are good honest hard-working people with families and lives like yours. Treat them with respect — they deserve it.

Driving through a lot drives us crazy. If you are really interested in looking at cars, stop and get out and let one of us open the car up and give you a demonstration. If you aren’t really ready to buy, go to the lot after hours so you’re not wasting anyone’s time but your own.

Once I had a customer came in and tell that me he and his wife would like to check out a couple of cars. He said he would give me $20 to work with them for a while even if they did not buy. I liked this. Now the salesman is motivated to work for the customer as well as the dealer — he can’t lose either way.

J.D.’s note: Black’s comments about financing made something clear for me. The last time I bought a car, I thought I got a good deal — $500 over invoice. But I was surprised at the relatively high interest rate. “Are interest rates really that high?” I asked. “Yes,” the salesman said. I didn’t know enough then to argue the point. I just took the high interest rate. Now I know it was a way for the dealership to make back the money they’d given up on the sales price. Chevy sign photo by rjs1322. Negotiation photo by Tony Lanciabeta.

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There are 90 comments to "The inner workings of a car dealership (and how to use them to your advantage)".

  1. Sam says 26 August 2008 at 05:39

    Helpful information for us as we are getting ready to start the nused car buying process. We plan to pay cash, so far I’ve got $15,700 saved for the car and our target date is towards the end of this year (once the new models are out) and our target model year is 2006.

    A lot of the articles I have read suggest that buying a car, especially a new car, is easiest (and perhaps cheaper because the internet sales manager is paid on volume?) over the internet. Would be interested in the author’s thoughts on internet sales.

    • Kris says 26 June 2014 at 16:16

      Most internet managers are paid the same as the sales people. We all get volume bonuses. It depends on the car you are buying. Most of the newer imports don’t have much mark up, but a domestic truck, for example, could have thousands in mark up.

  2. dannatx says 26 August 2008 at 06:16

    My husband is a car sales man and I agree with this article. People get so upset that a car dealership wants to make a profit. But they don’t think twice about buying a $1.89 drink from McDonalds which costs McDonald’s about 3 cents.
    Internet sales managers make commission just like a regular sales person.

  3. MoneyGrubbingLawyer says 26 August 2008 at 06:24

    Great post! As a former car dealership employee, I can vouch for everything that Dave Black has written.

    It is unfortunate that the car sales business has become so adversarial, especially from the consumer’s point of view. Your salesman is entitled to make a fair commission, and you’re entitled to get a respectible deal. If you approach the process reasonably (and find a reasonable dealer), you’ll do alright.

  4. Rob M. says 26 August 2008 at 06:38

    I agree with Sam. Saving money and being able to pay cash for a car is the best way to go. Just figure what a monthly car payment would be on a three year note and save that amount monthly in a high-yield savings account. In three years, you can pay cash for a car.

    However, if you must finance, shop around for auto loans before you go to the dealership. Walking in there with a pre-approval letter gives you a lot of negotiating power if you decide to finance through the dealership.

    Also, statistically speaking, a vehicle’s depreciation is greatest in the first two years. From a financial standpoint, unless you’re writing the car off as a business expense, avoid buying a new car.

    Oh, and try to avoid first year models (new models and re-designs), because generally speaking, they are prone to a lot of problems. You’re basically paying to beta-test a car for them.

  5. MoneyGrubbingLawyer says 26 August 2008 at 06:46

    Good points, Rob.

    But while the first year is worst for depreciation (25%+, in many cases), most cars continue to depreciate at 10%-15% a year for at least the first 5 years. Many people think that after the first 1-2 years they’re avoiding depreciation, but they’re not.

  6. Jill says 26 August 2008 at 06:54

    The one thing I disagree with is the “driving through the lot makes us crazy”.

    Did he ever consider walking through the lot makes US crazy?

    Has he been hounded and followed annoyingly while trying to make a big money decision?

    Maybe some of us are driving through the lots to avoid high pressure salespeople that we don’t need in the mix just yet while we are perusing and deciding which models/colors we like best.

    I think car salespeople would get a lot more “respect” if they let their foot off the gas and turned the BS down a little when someone is walking on the lot.

    • Laura says 18 October 2013 at 10:00

      Jill I understand what you are feeling but now that I work at a dealership (not as a salesman) I see how the guys get yelled at and or fired. These guys are only doing their job.
      If you just want to “look” at vehicles look online or before/after hours .

      • Reese says 15 November 2013 at 11:10

        As a salesman at a car dealership I can tell you why it bothers him. When I see someone in the lot, I go out to talk to them and answer questions. I can’t tell you how many times I see people out walking looking at cars and the moment I step outside they go into panic mode and dang near wreck trying to get away so quickly. We are here to make money just like any other job. It’s like if you were to go to the salon to get your hair done and after when the lady asks you if you want to get any hair products, you turn around and run out the door. Everyone is in retail is a salesman it’s what they are paid to do. I can tell you that I don’t make money unless I take the chance to go outside and show people, who have that sleezy carsalesman stereotype, that I’m just there to help them and answer questions.

    • Chris says 05 June 2014 at 16:31

      Jill,

      You will know when you have a good salesmen when they talk to you about your want and needs in your next vehical. What kind of driving you do, do you need to transport people or cargo, long distance trips, what you like about your current ar, don’t like, like to see diffrent on the next one.

      If you really want to know if they are good, give them your phone number and see if they call you back. They are suppost to, but a lot don’t. And the ones who do call back will say something like “have you bought a car yet?” or worse “are you ready to buy now?” Customer follow up is very important to a dealership, but also needs to be done with tact. The salesperson who follows up with you with tact is the one who is most likely to provide you with the best service.

      At a car dealership I do not want to sell you a car, I want to sell you cars for life. That is what service should be.

  7. Jennifer says 26 August 2008 at 07:06

    Russ Roberts did an interview with Steve Cole, the sales manager for a Honda dealership, for his EconTalk podcast that gives some additional fascinating insights into the market for cars (http://www.econtalk.org/archives/2008/06/cole_on_the_mar.html).

  8. KC says 26 August 2008 at 07:08

    I like how you placed this phrase in bold – Never trade your car in unless it has major problems and you just need to dump it. Most people don’t do that. They want a new car every 3 years. I have a neighbor that has a new car all the time. He’s worried he’ll have to take it in for repairs – so he trades for new about every year. But he always tells me “but my note didn’t go up.” I’ll bet it keeps getting longer and longer, though, and his cars get less nice every time he trades in. I don’t know much about car notes, as I’ve never had one, but I do know they keep extending them out years longer to get you out of your current car and into a new one.

  9. ThatGuy says 26 August 2008 at 07:12

    First off, are car sales men entitled to commissions? Honestly, why does an educated buyer need one?

    Also, a clever trick that I thought off, but have not implemented yet is to do the following:

    Get the best deal you can. Then before the conversation for financing starts tell him that you are willing to pay 9% and make him lower the price of the car by some amount. Then payoff the loan with cash before the end of the first month.

    -ThatGuy

    • Bart says 29 August 2014 at 08:42

      ah yeah thats a great attitude, go into the deal with deception in mind but yet you dont want a salesperson to deceive you.

  10. Ted says 26 August 2008 at 07:20

    Edmunds.com also had a nice writeup of The Life of a Car Salesman: http://www.edmunds.com/advice/buying/articles/42962/article.html

    Both of these articles give you a good feeling for what it’s really like on the other side of those big glass walls.

  11. MoneyGrubbingLawyer says 26 August 2008 at 07:23

    That Guy: I’ve thought of that plan, too :). Unfortunately, many loans have early repayment penalties that can cut in to any move you would save. But if you had a loan that didn’t, it could make for a nice negotiating tactic.

  12. Stephen Popick says 26 August 2008 at 07:24

    All you need to know about buying a car is at

    http://www.carbuyingtips.com

    Seriously, that’s a great site full of information. I’m pretty sure I still have the cheapest brand new 06 Rav4 on there!

    I also use the DR snowball method, sorta. I save a regular car payment into a savings account for the expressed purpose of buying a car outright every 10 years or so.

  13. Rob M. says 26 August 2008 at 07:27

    @MoneyGrubbingLawyer
    Good point on vehicles being a continually depreciating asset. I was pointing out that you’ll take the biggest hit in depreciation for the first two years. Also, after five years, repair costs begin to catch-up/outpace depreciation. Ideally you should have a side business, lease a car and write off all the expenses on taxes. Remember folks, there’s a difference between tax avoidance and tax evasion. Tax evasion is illegal. Tax avoidance is both legal and ethical.

    @ThatGuy
    Your idea sounds interesting, in theory. However, the dealership will more than likely add in a pre-payment penalty clause if they are giving you a discount on the price of the car.

  14. RDS says 26 August 2008 at 07:31

    Great post. I would add four things:

    1. Pay cash if you can. If you need a loan, you will almost certainly get a better deal anywhere but at the car dealer.

    2. Negotiate the price of the car – not the monthly payments.

    3. Make car dealers work against each other. I visited a dealer to know what I wanted, and then called all the dealers within about 100 miles. I told them that I was looking for X model, with X features and I needed to buy it at the end of the month. Once I got all the offers (and I was surprised at the range of prices) I called back the original dealer than I visited. They had given me a good offer, but not the best. Because they had already spent time with me – and because they were the closest dealer to my house, I offered them a chance to beat the best price that I had been offered. They did.

    4. Don’t pay document fees. Last time I bought my car I told them that I was not interested in paying the fee. They quickly backed down.

    In the end I got the car I wanted with very little fuss for a price that was hundreds of dollars lower than sites like Edmunds.com suggested was the price I could expect to pay.

    RDS
    http://financialvalues.blogspot.com/

  15. deepali says 26 August 2008 at 08:14

    I agree that being friendly and reasonable goes a long way. I bought my first car (new) about a year after college. My brother and I went around and test drove different cars and asked questions. We were obviously young (<22), but we were upfront about wanting to get to know all about the cars before making any decisions. Everyone was cool with that.

    I found the car I wanted towards the end of the summer of 2000, when the 2001 cars were coming out. The dealer/manager was eager to get it off the lot, so he gave me $500 over invoice. No haggling, straight up deal. Then he knocked off another $400 for some “new graduate” credit. I told him I was going home to talk to my dad.

    My dad and I came in a few days later to discuss financing. We put a certain amount down, and got a 3 year loan at 2.9%, in my name (good way to build credit too). The loan was paid off about 9 months early.

    All in all, it was a good experience. Where I’ve been burned was not the buying, but the maintenance. I moved states, took the car to the dealership in my new town, and got all sorts of BS charges. I finally found a female mechanic there. I complained to her about how I felt like I was being taken advantage of (being a woman), and she agreed that it happens. She took care of me after that, and I’ve since recommended her to everyone.

  16. jtimberman says 26 August 2008 at 08:23

    Interesting bit on the financing indeed. When I was stupid and bought a brand new car, I did take the dealer financing. I already had an approved loan with my credit union for the same amount, with a 4.5% rate which I thought was great. The dealer financing was 1.9%, all other terms being equal.

    It wasn’t until I went through FPU that I found out how they can make money offering rates that low. A few weeks after I bought the car, my loan went from “Dealer Subaru Financing” (don’t remember actual name) to Chase Auto Finance. As Ramsey teaches, they sell the paper back to the “real” finance company for a lot of profit. One of the other students in the class worked in the finance office at a dealer and further expounded how much profit they make on that – it is a lot, apparently.

    I’d like to hear this post’s author’s comments on that, if any.

  17. kiwiwannabe says 26 August 2008 at 08:42

    Be careful if they show you “dealer invoice”. When we bought my wifes car, they were happy to show us the invoice printed out, and sell it to us at that price. However, we used Consumer Reports and paid $12 to find the actual invoice. Consumer Reports saved us $1200 because that is what we paid below that printed “invoice” they had showed us.

  18. Daniel@youngandfrugal says 26 August 2008 at 08:57

    It is always best to talk about a trade-in, financing, and the price you will pay separately. I recommend negotiating the price of the car, and tell them you can talk about other things after the fact.

    Also, go in pre-approved from your bank or credit union. I was able to laugh at the finance guy when he told me their rate. I got 6.5% at my credit union, they quoted me 9%. I told them if they could match what I was getting through my bank (which I didn’t tell them) that I would go through them.

  19. Charlie Park says 26 August 2008 at 09:12

    Hey! I grew up down the street from that sign!

  20. Richie says 26 August 2008 at 09:12

    #9:

    First off, are car sales men entitled to commissions? Honestly, why does an educated buyer need one?

    Isn’t it fun when you are looking at a car and you know more about it than the salesman does? You might ask them a question about which motor the car has (you already know that it comes in a 2.0 and 2.6 liter version), and then he says “oh this is the 3.0 liter.” (Which doesn’t even exist.)

    I think this is the area where car salesmen (all salesmen really) get a bad rap. They’ll just say anything to get a sale, even if they don’t know what they are talking about.

    As a buyer, I’m not going to mark you down for saying “I don’t know, let me check on that.” But I will mark you down for lying or making things up.

    Here are 2 other stories for how used car salesmen lived up to their reputations for me.

    1) I was looking at a truck. I ended up taking it for a drive. There was no price listed on the truck. I asked about the price, and he said “we’ll take a look at that in the office”. Finally we go to the office. He starts asking me how much I’ll pay for the truck. I say $9,000. He says OK, let’s see if we can do that. So he runs a credit check, looks into financing, etc. Then he comes back and says “we can’t sell it that low. The best we can do is $14,000.” What the hell! He could have saved us both 90 minutes if he would have told me the price of the truck from the beginning.

    2) Later that same day I went to a different dealer. I saw a truck that I was interested in. The salesman told me that it was one of their advertised specials, and it was $2,000 less that day. I drove the truck and really liked it. I was ready to make a deal. We go to the office and begin the paperwork, when the manager comes running in “no, no, no, we can’t sell that truck. There’s something wrong with it.”

    Apparently, it was their advertised loss leader, but the manager wasn’t willing to actually sell it for a loss. In this case the salesman wasn’t really at fault (I don’t think). He was embarrassed and pissed. I walked out. The salesman called me a couple days later and said the manager was “fired” and he’d be able to sell me the truck at the price I liked. But I was done with those guys.

  21. Chris says 26 August 2008 at 09:43

    I have had a bad experience with dealers as well. I was buying a small hatchback back in 1996 (when gas was under $1/gal) and it was a loss leader. The ads normally came out on Saturday and they sold two of these cars at a loss. So I called thursday and asked what the price would be in the Saturday ad and they said $6500. I went in and was told $6500 again, and was all set to purchase the car they even told me how much it was going to be with all the taxes and fees and stuff and I was seriously writing the check, when the guy goes and “talks to the manager” and comes back and says there was a mistake and I was misquoted and it was now going to be $7000. Since the ad hadn’t been printed yet, I couldn’t really argue about the price.

    As I was still getting a good deal (MSRP was nearly $9000) I ended up buying the car, but it was an especially slimy thing to do and I was really annoyed. Then, the next day, when the ad actually came out it was the original price they had quoted me $6500! I called when I saw the ad, but they said the ad was a mistake. At that point, I just didn’t want to deal with them anymore so I let it go.

    Anyway, the whole experience left me with a bad impression about car dealers and I don’t have any sympathy for them if they do crap like that.

    I also agree with other comments, I generally don’t like getting sold stuff by salesmen. I generally like to have info before I go into the store and then buy it. It would almost be better if there was no negotiation but it were like Costco (just a big warehouse with cars) and you deal with a minimum of people, pay for it and go.

  22. Richie says 26 August 2008 at 09:49

    Oh, I forgot the stupid scam that the dealership pulls where I bought my most recent (used) car. They install some stupid electrical ignition interrupt system on every used car on their lot (this device, where if you pull out the little plastic plug the car cannot be started). They add the price into the car. (I think it was like $300.) They do not give you the option of saying no to this device. I was very close to walking away from this car because of that. But I ended up buying it because I was sick of shopping and the car was a pretty good deal otherwise.

  23. dale says 26 August 2008 at 10:01

    I’ve never worked in a dealership, but I have worked in indirect auto finance for over a decade. My job put me in contact with dealer finance managers, sales managers, etc on a daily basis. A couple of things I’ve learned about the car biz.

    1. Dealers don’t discriminate. They attempt to maximize profit on EVERY customer.

    2. The best negotiators get the best deals. Being informed, prepared and willing to walk away from a transaction is paramount to getting a good deal.

    3. The “document fee” is pre-filled on most sales contracts. The salesman in many cases cannot remove it. That way the dealer can honestly state that they charge the fee to every customer. You CAN negotiate it away by telling the salesman that you only want to buy a car, not a dealer fee. Tell them you’re fine with paying the fee, just cut the price of the car the same amount. This works… I’ve done this on multiple occasions.

    4. It’s true that the dealer will not give you top dollar for your trade. He’s either going to clean it up and put it on his lot for resale or sell it to a wholesaler. Either way the less he pays you, the more profit to be made on the resale. Many people HAVE to trade with the dealer, because it’s the only way they can get out from under their existing auto and loan. They can’t sell it privately for an amount that will satisfy their debt. So they roll the “negative equity” into the new loan, and extend the term to have a lower payment.

    5. Not all finance products are poor purchases. Depending on how you drive your car and how long you intend to keep it, a service contract MAY be a viable product. In most cases you can do better by purchasing from a third party, but it’s not a bad product. Many credit unions and auto insurance companies offer warranty products.

    6. If you are rolling “negative equity” into your new purchase, or financing over 48 months with no money down, buy GAP insurance. Again, check with your insurance agent, but it can save you a whole lot of dough.

  24. Cara says 26 August 2008 at 10:32

    I have traded in my last two cars, for the following reasons:
    1. I am a single woman, and don’t like the idea of giving strangers (especially men) access to my car, garage, location of my house, etc. Yes, I have friends who could be on site, but not all the time, and not on short notice.
    2. I have a busy work schedule, and meeting people to show the car and let them test drive it would mean taking time off of work, or eating into my free time (which I treasure).

    I know I’m getting less for a trade-in, but I see value in #1 and #2 so I figure it’s worth it…though it does nag at me. 🙂

  25. MoneyGrubbingLawyer says 26 August 2008 at 10:39

    Cara, in some jurisdictions you get a tax credit on your trade-in, so the difference between trading and selling privately is reduced.

    And as someone who has sold 14 (yes, 14!) cars privately, I can say with authority that it’s a total pain in the tailpipe. Don’t feel bad about trading in. 🙂

  26. Jason B says 26 August 2008 at 11:04

    I felt good about some things and dumb about others with my first new car purchase. I kind of took the dealers word at face value that the Fit was kind of hard to get your hands on, so I didn’t really haggle on the price. But I worked hard to get a decent trade in for the beasted high mileage Tahoe, and I got a better financing rate from them than my credit union offered. But then I agreed to purchase “Xylon” or something like that… (I went back later and refused it and got my money back though!) To sum up…

    1) See if your car is available at neighboring dealerships, and even if it isn’t, you can still negotiate with price. A friend bought almost the same car a few months later for about $1300 less!

    2) Treatments and add-ons may or may not have *some* value but you can probably get them elsewhere for less if they really are worthwhile.

    3) Really good credit can get you solid rates even through the dealer – having a pre-approved rate ahead of time gives you a jumping off point.

  27. F2O says 26 August 2008 at 11:28

    *ThatGuy – That’s almost exactly what I did this past Feb when I bought my wife a new CRV. I wasn’t quite that bold about it, but close. During the negotiating process, I told the sales guy that I had a particular price in mind and I would be financing. When he tried to play the monthly payment game, I told him I didn’t care what the monthly payment was – only the price of the car. We could talk about the payment later. He took that back to the sales manager and they came to within $50 of my price. I took it and lo and behold, our rate was 8.25 on a 5 year loan with my credit score in the low 800s! I checked to make sure there was no prepayment penalty (there was none) and signed on the dotted line. We made the first two payments and then paid the whole thing off in early May. No problems at all.

  28. Sam says 26 August 2008 at 11:33

    I think the “don’t trade your car in” advice is more about don’t include the trade in during your negotiations. The sales folks will work whatever is important to you be that the monthly payment, the value of your trade in, etc. and you lose sight of the actual cost of the car.

    I’ve factored in the value I think my current car is worth (based on research from Edmunds and other sites, my goal is to save $17,000 and get $3000 for my car for a total of $20,000 for the nused car) but when I go to buy my car. I won’t be also talking trade in value for my current car. Instead we’ll do that negotiation separate or not at all (i.e. sell it to CarMax).

  29. dorothy says 26 August 2008 at 11:40

    We bought our car by contacting about 20 dealerships through their internet sales representatives (after looking up the invoice price from an independent source) and going through a few rounds of “our best price from the first set of offers was $X, can you beat it?” About a dozen dealers dropped out after the first round but we ended up with about three dealers whacking $100 off each other’s price several times in row (boring, but whatever). Because it was the end of the month we eventually bought for about $500 under invoice (including everything but sales tax). I’ve heard of people who did even better, depending on the make and model. Given that we never left home until we headed in to sign papers and pick up the car it was all fairly painless.

    Our loan came from our credit union. The dealership was unhappy about that, but we had their offer price in writing, c’est la vie. We would have paid cash, but were going through a job and housing transition at the time and wanted to be sure that we wouldn’t need our savings. The credit union didn’t mind that we paid off the loan six months later.

    That was the first new car we’ve ever purchased and will probably be the last. The best advice we got was not to negotiate at the dealership, because that’s their turf and you’ll always want to leave before they do. When we arrived with our 3-month-old to pick up the car and discovered they had no changing tables in the bathrooms, I realized how true that was.

    We sold the old car in less than 24 hours using craigslist. Although we probably could have gotten a better price on it if we’d been more patient, the lower price allowed us to have a mechanic friend over for a day to take care of any questions (we bought him dinner), and we definitely did better than we would have trading it in.

  30. ThatGuy says 26 August 2008 at 11:45

    Another fun fact that many people don’t know about finance is that 3.9% or 0% rate they give you is really fake. The way it works is the dealership gives the finance company a “blind” discount. Thus they sell you a 10,000 car and you get a loan for 10,000 dollars with 0% for 5 years or a monthly payment of 167. The finance company gives the dealer 8,500. Thus in actuality you are paying close to 6.5% on the car, while bragging to your friends that you have a zero APR loan. It is a little more complicated but that is the basic premise with *all* low APR offers for *all* goods.

    ThatGuy

  31. FFB says 26 August 2008 at 13:21

    When I bought my first car I checked my credit score and got a pre-approved loan online. When I went into the finance office they tried to give me a ridiculous high rate. I told him to check my credit score and he told me I was right and gave me a lower rate. Still too high for my score. I then told him I had a loan in place. It was then that he gave me a better rate. The dealership makes money on having the financing through the car company so they may beat any rate you get outside.

  32. Tim says 26 August 2008 at 13:47

    I would just like to know why can’t cars be purchased like any other consumer item? Just as another commented above, is there a reason we can’t just go to some store (not dealership) and purchase a car? Either with cash or a credit card or something. I know salespeople would be needed sometimes, just as with furniture and TV’s and what not, but if I know what i want, why can’t they just have the prices listed and I can just go buy it?

    • AndrewGP says 10 July 2013 at 10:23

      I have exactly the same question myself! What is the big deal about cars so they not selling them in supermarkets? It is merely a transportation device! Don’t tell me about danger and safety of those things and all that BS, because I can buy used car wherever and that thing is potentially way more dangerous than new car. Dealers do nothing for me except making me to pay for their wages and fancy buildings with all the included maintenance costs whenever I want to buy a new car.

  33. leigh says 26 August 2008 at 14:55

    the real dealership profit leader isn’t sales, it’s service. in the long run, it’s those guys you want to watch out for.

  34. jtimberman says 26 August 2008 at 14:57

    @ThatGuy,

    What the car dealership and the finance company have negotiated is immaterial. Thats like saying you’re paying 20% too much when a manufacturer sells a car to a dealer and they mark the price up 20%.

    If the lowest negotiated sale price of the car is $10,000. Why wouldn’t the consumer take a $10,000 loan at 0.0% from the dealer instead of a $10,000 loan at 4.5% from their own bank?

    @Tim,

    There’s plenty of “no haggle” dealerships that will allow you to do exactly that. You buy the car on their terms (usually a lease deal these days), though.

  35. Lee says 26 August 2008 at 15:30

    Okay, haven’t read everyone’s responses so some of the following may have already been mentioned…

    1. The Doc Fee varies from state to state, here in CA, it is capped by the state at $55.00

    2. The trade-in decision comes down to the individual deal. I don’t believe a blanket statement like “never trade your car in” is accurate. You have to look at the whole deal. How much are you paying for the car that you are buying? Is it below market value? Some people do not have the time to try selling their car privately, others don’t have the ability to store 2 cars. People get tripped up when they confuse realistic market value vs emotional value, especially in cars that have been owned for a long time. Black/Blue book is a guide, however the majority of dealerships will go by the wholesale market (auction) price for their trade appraisal. Factors like the type of vehicle they are trading, (no one wants SUV’s at the moment for example, and values have tanked)

    3.Yes, dealerships make money on financing, but this again comes down to the relationships individual dealerships have with their lenders. Again, in CA, rates can only be marked up 2.5%. My advice is to get pre-approved for a loan from your own financing source. Then walk into the dealership already knowing what you can qualify for. This can work in your favour in another way as well. So the dealer can still try and make some money on the sale, they now know what they have to do to try and get you to finance through them. Dealers have access to literally 100’s of lenders, and can very often beat the rate you have walked in with, so you win by getting a lower rate, and the dealership earns a little for their efforts as well.

    5. I think the service contracts and warranty’s are a case by case basis. It can very much work in your favour to pre-pay maintenance, and get the extended warranty from the dealership. You can save up to 50% by pre-paying your servicing costs at the dealer i work for.

    In general though i agree with Dave’s post, and re-emphasize the point that not all sales people are bad. Most are good honest hard working people. I would stress that with all the information available to the consumer now, the ball is very much in their court. It is just up to the consumer to do the appropriate research on their vehicle of choice. Join web forums for the car they are looking to buy. See what the current owners are saying about the car, and what they are paying. Be informed, and be realistic.

  36. Ken says 26 August 2008 at 16:51

    Great info…Just something to add about trading in & sales tax. Let’s say you are buying a $10,000 car and trading in yours for $6,000. You would only pay sales tax on the difference ($4,000), not the full $10,000. Just something to keep in mind, especially if you live in a high tax area like I do (TN – 9.25%).

  37. ThatGuy says 26 August 2008 at 21:27

    @jtimberman

    What I was getting at is that in theory a dealership should be willing to accept 8,500 from you, IF you pay in cash.

    ThatGuy

  38. Peter says 26 August 2008 at 22:42

    “If you aren’t really ready to buy, go to the lot after hours so you’re not wasting anyone’s time but your own”

    I don’t agree with this. If I want to look for a new car but I’m not ready to buy and I tell you that I’m not ready to buy, then leave me alone. When I find the car that I would like to purchase,I’m certainly not going to deal with the guy who wouldn’t leave me alone. I’ll choose some nice fellow who respected my wish to shop in peace.

  39. Greg C says 26 August 2008 at 23:16

    Some comments have talked about saving to buy a car with cash. Saving money to buy a car cash is alright. But don’t forget inflation. Whatever you save up over a 3-5 year time period, a portion will be eaten up. MAYBE with a high yield savings, the interest will pay for the inflation and taxes. But I really wouldnt count on too much compoundng. Let’s say you want to save for a $15,000 car now and you do the “save the monthly payment thing” and have the money in 3-5 years. The car you wanted might cost $20,000 by then.

    If you have good credit ( apologies to the “no credit; I’d rather pay more” gurus) you can get low rates today. And not pay any more for the car in the long run.

    FWIW, I have always paid cash but I buy cheaper cars that last longer. no need to save up for years and years. I bought my first car when I was 16 and made all the money to buy it in 1 summer. It cost 3 grand. Two years later I sold it for 5 grand and bought another car for 7 grand. That second car was 2 years old and had 40,000 miles. 11 years later I am still using it. So I got 13 years of car for 5 grand in cash.

    I have always been about the “cash” deal, but the next car I get will probably be brand new, financed at a low rate, and driven 10+ years.

  40. Jack says 27 August 2008 at 00:45

    RDS:

    I have to disagree on your statement “Pay cash if you can. If you need a loan, you will almost certainly get a better deal anywhere but at the car dealer.”

    While I agree that you should pay cash if you can, I disagree about your statement regarding finding better financing through non-dealer channels.

    First, because of the credit crunch, banks and other financial institutions are witnessing their cost of funds increase dramatically, and unfortunately, they are passing that on to consumers in the way of higher rates.
    Second, because of weak auto demand, auto manufacturers are loading on the incentives. A significant portion of these incentives (especially the lease-centric ones) are available only to those customers who finance with the manufacturer’s captive finance company, which is typically only available through the dealer channel.

    The net result is that a savvy, informed consumer will almost always do better financing at the dealer in today’s economic environment.

  41. jtimberman says 27 August 2008 at 08:54

    @ThatGuy

    Buy from private party :-). Cash sings to people looking to sell a car.

  42. Lee says 27 August 2008 at 10:28

    Another commment on the Cash vs Finance.

    This does nothing to change price. The dealership gets the money either way, whether it’s from your pocket or the bank.

    In fact if anything, you are more likely to get a better deal financing through the dealer as thats how they make money.

  43. Chris says 27 August 2008 at 17:08

    I still like my Mom’s method of negotiating for a car. She decides what kind of car with what options she is interested in then goes to three dealerships. She tells them that she is buying a car today and for them to give her their best price for the car that she is interested in. She then buys the one that is the best deal. It’s straightforward and not too time consuming. She always sells her own used cars.

    As far as financing goes, someone told me to prearrange financing at a local bank or two so that I come in prepared – knowing what kind of financing I can get. Then if the dealership can do better, great! Otherwise, I go with the bank or credit union. I always ask about prepayment penalties to be certain that I don’t get dinged if I pay it off early – which I always do.

  44. Bill in NC says 28 August 2008 at 11:52

    I hope mom checks prices with an independent buying service as well.

    That’s going to be cheaper than any price you’d get from the dealers for a new car.

    Were I buying a new car, I might kick the tires at a dealer (I’d give their internet person a shot at my business) but I’d never negotiate price or financing options on the lot.

    Too much emotion involved, and like the poster said, they’ve got years of experience you’ll _never_ best.

    Look at the previous comments and you see just how many buyers got pwned by the car dealer.

  45. Financial Course Blog says 29 August 2008 at 05:54

    Great and very informative reply, really makes me understand more about the process.

    The best way to buy a car is to pay by cash even if that means going to the bank and getting a loan for personal needs because a loan that the selling company gives you can be full of special statements or hidden details or just have a higher interest rate. Plus you don’t want to pay more for a car that you don’t basically own till the end of the credit while in the same time the actual value of the car goes down day by day.

  46. FFB says 29 August 2008 at 07:06

    I keep hearing that the best thing is to pay cash. That may be the case most of the time but I don’t think that’s always the case.

    I bought my recent car with a 0.9% financing from the manufacturer. We could have bought the car outright but we’ll make more by keeping the money in out ING Direct account. Even better if we put it into a CD.

    Also, by getting the financing deal through the manufacturer, the dealer qualifies for incentives which allowed the dealer to give us a better deal.

    You have to do all of your homework when purchasing a car. It’s not easy for sure but you can get a great deal.

  47. KAB says 29 August 2008 at 11:47

    While I would like to believe that most car salepeople are decent hard working individuals, I guess I have not been lucky enough to have encountered the likes of them during my current car shopping. Perhaps it is even worse because I am a single professional woman and they seem to find it odd that I have done my research and have very specific ideas and questions related to things I deem important in my decision making process about the model I will eventually choose and get rather defensive if I challenge them or am not fawning over their make and model immediately but rather just comparing it to 5-6 other similar makes and models in my process. I have been dismayed to say the least far more than impressed at all of the dealers so far. One guy that bragged about workign there for 18 years had to look in a book to anser a question about the seat feature in their hot selling model and had little good to brag to me about regarding their service department, saying they were usually okay but it’s best to go through him(the salesman) if you encounter problems getting and appointment etc and he’ll get around it for you. Hello???! I deem the integrity of the service department as critical to my decision process, after all, once you’ve signed on the dotted line it’s all you’ve got for the extent of the warrantee so if they don’t respect that and even attempt to put on a good face about their department it sends up red flags to me. I also feel like I get confronted when wanting to wander the lot myslef a bit and not have the pressure and distraction of a salesperson immediately or the entire time for that matter. The dealerships that truly get it are the ones that understand it is as much about building a relationship with a potential client like myself as it is the cars, because I may then end up a very happy customer who will then send friends and relatives their way based on their own excellent initial and ongoing experience with every aspect of that dealership…seems logical to me but is unfortunately not the norm so far in my experience anyway. Only 2 of the 6 so far have stood out and been very nice, very patient and low pressure. That’s the kind of place I will want to go back to once I am at the actual negotiating stage for the car I decide I want.

  48. Renae says 31 August 2008 at 16:54

    As previously mentioned, the article by Edmunds website titled, “confessions of a car salesman” was an eyeopener. I was dragged all over town when we were looking for a car and encountered so many of their scams. Are there really any honest car salesmen around? I don’t thinks so.

  49. Paul says 02 September 2008 at 06:55

    From my experience:

    Used is usually a much better value than new.

    Do not finance a car. Don’t pay interest on a depreciating asset.

    Trading in may be the best option, even if your car is in good working order. The hassle of selling it yourself vs the ease and convenience of trading it in has a value. Agree on the price of your new car, start to write the check, then mention you have a trade… it becomes a secondary transaction, and you can leverage it (I will walk out without a new car if you don’t give me $xx for my old one).

    Finally, and most important – use the internet. I purchased my last car (new, which was a departure from the norm for us) by having two dealerships compete for my buisness via email. Turned out, they were selling the EXACT same car. The dealer who made the sale had to go get the car from the dealer that didn’t. I got a great deal, no hassle.

  50. Edward says 03 September 2008 at 08:40

    I am a car salesman and let me say that the don’t come on to the lot during business hours is true. We are paid on commission, but our sales managers ride us to make sure that every customer is attended to. If we let someone leave without atleast a introduction to a sales manager, we can be let go for lack of aggressiveness. I personally believe that no one will ever buy my product if they don’t ever come to see my product, but I don’t want to look for a new job because everyone is “Just Looking”

    • Ev says 28 August 2014 at 10:07

      For some personalities it is that aggressiveness(forced by managers) that annoys or scares people away. Salesmen could give some breathing room. Be ready to assist, near, but not always hounding. I mean no offense, just an opinion. Thanks for your post.

  51. Kirk says 03 September 2008 at 12:19

    I have found car dealerships very frustrating. I can appreciate that they just want to make a living, but I just want some honesty.
    Invoice prices are often not really invoice prices – there is an additional profit margin built into the “invoice price”. This is why middle aged men often walk out of a dealership with lower price quotes than younger potential buyers (women especially). When I went to buy my first car my father went to the same dealership, priced out the same car from the same sales rep, and was quoted a price nearly 10% less than had been quoted for me. He told both of us that this was “one dollar over invoice”.
    For my second car purchase, I was unable to get some dealerships to quote me a price for their cars. They would not talk to me unless I told them the “monthly payment I felt I could afford”. I had saved for several years so I could pay cash for a car – and after several hours at different Big 3 dealerships I ended up buying foreign since I could not get a single quote for any U.S. car.
    Finally, I can appreciate that depreciation is a significant loss in the market value of the car – but I drive my cars until they are dead (average life of more than 12 years each with more than 200,000 miles) and unsalvagable. I do not care about market depreciation, I only car about service-flow depreciation. Every person I know who has bought used has had service-flow problems – the cars do not last as long. I know that not all used cars are lemons, and not all new cars are cherries – but I have never had a problem with my new cars. I buy small, inexpensive, fuel economy cars and take care of them. When I am in year 10 and roll +200k miles, the amount of market depreciation in years 1-4 is irrelevant. At +200k miles, the car has no market value. Its value is in the services (service flow) that it provides to me. The odds of finding a similar used car with an equal useful life but also offering cost savings are pretty slim/zero. By buying new, and keeping until the day it dies, I have a car whose use/abuse is completely within my control. I also do not have to expend all the costs associated with researching, hunting, finding and contracting yet another used car deal every couple of years.

  52. Kelly says 06 September 2008 at 07:52

    Ok my question is about getting a warranty, I know the dealership makes money on the warranties, but in my experience nearly every new and used car has to go to the shop, and if you can get a GOOD warranty it will easily pay for itself and then some! Am I crazy?

  53. Patrick says 06 September 2008 at 18:47

    @Kirk – “When I am in year 10 and roll +200k miles, the amount of market depreciation in years 1-4 is irrelevant.”

    That’s not not the whole story. If you had bought that car when it was three years old, it would last only 7 years instead of 10, but you’d have the three grand you saved at purchase time to cushion the blow. Invest that at 5% while you’re driving your car, in the mean time, and you’ll have almost 4 grand toward your next car.

  54. RemSaverem says 14 September 2008 at 23:06

    My worst experience dealing with a used car salesman was this jerk in Midland, MI…. He came up and asked what I was looking for, I put out a list of my requirements. Told him payments of no more than $250 a month, good gas mileage, NO SUVs, 4 door, and the backseat had to fit my infant son’s carseat.
    First car he shows me? A 1998 2 door Grand Prix. Over 100,000 miles, and they wanted $13,000 for it. Told him to try again.
    He kept suggesting vehicles that didn’t match my description, then when that didn’t work, tried to talk me into a brand-new Ford Edge for $398 a month. After wasting 2 hours of my time (and me trying to deal with a cranky, hungry infant) I told him I’d look elsewhere. And he had the nerve to scream at me after that for wasting his time. Crap, I should have left after his first suggestion. (Seriously, a 2-door car? For someone with an infant?)

  55. MattS says 15 September 2008 at 06:22

    Arguments about if I should or should not pay with cash aside.
    If I’m looking for a 10,000 car and I have cash. Is it a good or bad thing to tell the salesman that I plan to buy with cash?
    It seems like they might not want to give me as much of a deal since they can’t make up any profit on a loan. Or will they be more eager to sell because they want cash?

  56. Cracker says 24 October 2008 at 10:04

    If you have the money saved to purchase your car, you put that money into a CD at your bank. Borrow that same money against your CD at 1.5-2 % interest and pay it back over however many years you wish. After you pay off the CD you have the cash you saved up already, you have the vehicle, you didn’t have outrageous insurance rates, you have clear title, and the stealer (I mean Dealer) cant hold that financing cr#p over your head. They will deal with you! Deposit that check in your bank account that you just borrowed or get a cashiers, You can set there and pester them all day like they would you. Wear them down to your number! Or they call the cops and have you escorted off the lot.

  57. AFI says 07 January 2009 at 09:13

    Interesting post. It is innacurate that Extended Srevice Contracts have a 50-100% markup. As a Finance Manager of a franchised dealership, we have always marked up the esc for a reasonable profit.

    The peace of mind an esc provides is invaluable and the ones provided by the dealership are the best value.

    Compare the dealership esc to one of the aftermarket ones that bombard your mailbox as solicitations.

    To research a “well-run” automotive F&I Department, visit:

    http://www.AutoFinanceInsider.blogspot.com

    AFI

  58. ryan says 07 July 2009 at 09:13

    It’s amazing in these times we stil have people speaking out of one side of their mouth. As our country struggles you continue to publish only the dark side of a small portion of DEALERS. Why cant we talk about the great deals and the full disclosure most dealerships use these days. GET THE FACTS, BOTH GOOD AND BAD. I know thats tough for a writer, but try it.

  59. JOHN says 07 July 2009 at 10:32

    tHERES NOTHING MENTIONED HERE ABOUT THE “DEALER hOLDBACK” FROM THE MANUFACTURER. I accidentally got a hokd of a sheet which told the true price and it also showed the dealer holdback numbers. I went to another dealer about an issue with the same vehicle even though i did not buy from him because his sales people said they were not ordering anymore vehicles of that current year. So i bought from a dealer who was still taking orders. When the dealer i know heard it he was aghast. But he saw the dealer holdback numbers on the sheet. No dealer ever sells a car at cost. If they say they do they are lying. Do they ever sell a car below cost? No they are lying again. They know they have a holdback and things called “spiffs” from the manufacturer. However, the real money is not made during your negotiation with the salesman or the “closer” who comes in “to make your mind up for you”. The real money is made in the finance office. There is where they can extract $2700 in profit from you by going through their financing and selling you wax jobs and undecoating and fabric treatment and extended warranties all of which are valueless.

  60. Bill says 07 July 2009 at 10:34

    JD,
    I believe you had good intentions on sharing some of your knowledge but, as a finance person, I can tell you that some of your ideas fell short. Recommending people not to buy warranties is irresponsible! Many people can not afford the high price of car repairs in their budgets and as long as they are getting a fair price, you should be recommending them to your readers.
    People should have coverage to match their plan of ownership.
    In fact, this is the only time you can negotiate your repairs, otherwise you will be paying whatever the bill is. Consumers spend so much time and effort researching and negotiating their selling price and then pay full price for repairs later … it makes no sense!

  61. Ben Ling says 07 July 2009 at 11:45

    With the $4,500 vacher the government is handing out. I might have to buy from a dealership

  62. Mopar says 07 July 2009 at 14:05

    There are some dealers who are reputable and others who should fold. Few auto sales personnel are properly trained, their management are “wanna be” professionals and the owners are nothing more than crooks. The American automobile is manufactured just fine, but the distribution channels (dealers) cause the manufactures the great pains of failure. All dealers should be factory stores. This would improve retention of qualified sales personnel, eliminate “make believe” sales managers, improved training, and compliance guided F&I people (hopefully somewhat educated, as most are NOT). Just about every F&I manager interviewed couldn’t explain the difference between simple and compound interest.

    ESC is a joke and a rip off, it overlaps factory warranties, covers very little (deductible included), and who can expect a fight when that contract is exercised. As for dealer generated financing, by law these dealers can charge up to 3% more, and they will exercise that option.

    As a previous writer indicated, the sales people are human. One must feel sorry for these poor souls who stand around most of the day/night waiting to pounce on the first prospect. They can’t explain anything technical about the vehicle or anything that might be historical. The training received (generally Control, Inc.) is a hair below pottie training and designed to “control” the consumers buying decision.

    Bottom line, convert all dealers (if not factory stores) to test drive and pick up terminals. Shop your vehicle on-line, select multiple dealers web sites, arrange your financing on your own and most importantly eliminate the out dated dealer experience.

  63. headdcase says 07 July 2009 at 15:10

    I don’t buy from dealers anymore. They operate on a system that was outdated 40 years ago. They lie, cheat and are for the most part, slimeballs. I only buy from private parties. Saturn had a good business model. Not sure why it wasn’t more successful.

  64. Al says 07 July 2009 at 15:18

    I don’t see any discussion about ADM (additional Dealer Markup). This side sticker usually bumps the price dramatically. Sales use the pad created by the ADM to give you a good deal on trade, or purchase price.Don’t fall into this trap of barganing “down” from their ADM price, bargain for their profit only and have available their real purchase price, holdback and incentive numbers if you can get them.

    When you get your monthly payment number, check to see if they have rolled all of the add-on stuff into it, especially if you have given them an amount that you are willing to pay monthly (and they know you will really pay 10-20% more than that if they have done their job of selling the sizzle of a new car). Once you give a monthly amount, they will find a way to get you there with all the add-ons, even if is a 72 month contract.

  65. Lee says 07 July 2009 at 15:48

    @headcase – Because they were Saturns.

  66. c says 07 July 2009 at 15:59

    I have been in the car business for over 10 years and have heard all the crap i’m hearing here everyday, so let’s set some things straight. First the guy who wrote this is hearing “i’m just looking” from every customer and getting frustrated by it, is probably not cut out for this business. However, I will give him props for mentioning the customers that just drive through and wave. Roll down your window and give us the same courtesy you would a salesman at a department store.

    “fake invoices” This is a thing of the past LONG before I got in this business. If a dealer shows you an invoice it is printed directly of the manufactuars website that they provide to dealers.

    “hold back” yes there is hold back we have to make money somehow. However 9 times out of 10 the salesman does not get paid off of it. Would you sell your house for less than you have in it? Didn’t think so.

    “you got ripped off” I know there are shady dealers out there that confuse people and then laugh about it but most don’t. Most of the people who think they got ripped off are the people the salesman made a mini (minimum commission) on. However in the cases where someone paid too much due to there own negligence let me ask you one question. if someone offered you full asking price (sticker) or above for your house would you tell them you couldn’t sell it for that much? Didn’t think so. If you think car dealers are ripping you off because of there huge mark up and low trade ins, look at the furniture industry. Most furniture is marked up at least 100% not like the 4-12% (12% being highend cars) dealers have. the reason you don’t complain or feel it is simple… You don’t trade in your couch on a new one.

    and finally financing… can we mark up the interest rate… absolutely, so does your bank. Do you really think they are buying their money at the same apr they are loaning it to you at? NO, they are making money on you too. Solution… finance with the dealer but use a credit union that they offer. Credit unions pay the dealer a flat fee and the dealer is not allowed to mark it up.

  67. TED says 07 July 2009 at 16:09

    LET’S MAKE THIS SIMPLE SINCE NOBODY OUT THERE FEELS A NEW CAR DEALER SHOULD MAKE A PROFIT…PAY STICKER PRICE..THAT IS PUT ON BY THE MANUFACTURER NOT THE DEALER.

    AND HEADCASE..WHERE DO YOU GO WHEN YOUR CAR NEEDS A FACTORY WARRANTY OR RECALL DONE?? HOW ABOUT THE DEALER. GREAT ADVISE.

    AND SPEAKING OF EXTENDED WARRANTYS..I SEE FOLKS CRYING ALL THE TIME IN THE SERVICE DEPARTMENT WHEN THEY ARE HANDED A $1000 PLUS BILL ON A 60K MILES CAR..MORE GREAT ADVISE ABOUT NOT BUYING A WARRANTY..

    WALK IN OUR SHOES FOR ONE WEEK!!

    FLORIDA CAR SALESMAN

  68. Lee says 07 July 2009 at 16:21

    @ MattS Says: Re cash.

    It makes no difference. The dealership gets the money whether it comes directly from your pocket, or from the finance company. So it is not going to make any difference on the price that the dealer is going to sell you the vehicle for.

    They would in fact prefer you to finance through the dealer, as this is a source of income for them.

  69. Bob says 08 July 2009 at 06:13

    Car salesman are for the most part the bottom rung of the evolutionary ladder. They lie cheat and steal right from under your nose.
    The best way to buy a car is to research invoice, then call the fleet mngr to buy at $150.00 below that price with your own financing.
    Extended warrantys are a huge waste of $$ only idiots buy them, very few people who buy new cars keep them 60K+. Used car buyers may benefit from them, as they may own into the twilight years of a daily driver.

  70. c says 08 July 2009 at 11:16

    Bob, “Car salesman are for the most part the bottom rung of the evolutionary ladder. They lie cheat and steal right from under your nose.” if you fell that way you need to educate yourself before you go buy a car. Most people that get “ripped off” are uneducated about buying a car.

    I have NEVER lied to a customer and never will to sell a car. I’ve been on both sides of the desk and know how I would like to be treated and I treat my customers the same way. I work hard at my job to support my wife and daughter, which is what most car people are doing. Trying to make a living.

    Maybe you people that want to bash salespeople should try something. Treat them with respect and you’ll get treated with respect in return. If you don’t move on and find a slaesperson that will.

    We can pick up on your “better than us” attitude real quick, and I can only speak for myself here, I return the favor.

  71. beforewisdom says 02 September 2009 at 14:18

    This seems to follow what I’ve been reading in a free, online book on how to buy cars. If you want even more tips check out:

    http://www.carbuyingtips.com

  72. Sid says 25 August 2012 at 23:23

    thank you for taking the time to write this. Still very valuable info for us!

    Also, some of the comments with other links are very valuable as well. Especially Ross Roberts podcast.

    I’ve eliminated the salesperson altogether by working directly with the fleet manager. They know the bigger picture and are easier to work with. Dealers want to move the car because there’s a business aspect of this with the manufacturer (volume).

  73. Mike Fischer says 06 September 2012 at 09:48

    Now-a-days, most of the people are showing interest in buying a car from the dealer. But, unlike some of them will go for a stranger for buying the car. But the best deal will be, going for the dealer. This is the safe alternative for the purchase of a car.
    The used cars at the dealership are expected to be of better quality and they offer more mileage. The used cars will be usually either the trade-ins or the previously leased vehicles. Both cars which offer better mileage are only sold. Manufacturer’s original warranty will also be carried with this type of used cars.

  74. Mike Fischer says 06 September 2012 at 09:51

    Now-a-days, most of the people are showing interest in buying a car from the dealer. But, unlike some of them will go for a stranger for buying the car. But the best deal will be, going for the dealer.
    The used cars at the dealership are expected to be of better quality and they offer more mileage. The used cars will be usually either the trade-ins or the previously leased vehicles. Both cars which offer better mileage are only sold. Manufacturers original warranty will also be carried with this type of used cars.
    Twitter @ unocardealers

  75. wholesale auto dealers says 04 March 2013 at 23:50

    Thanks for the good information. It will come in handy next time I buy a car.

  76. VeronicaVillalva says 19 June 2013 at 08:31

    This post is very interesting, especially that you base it upon experience of owning a variety of cars. It is important to know all that you need in a car before buying one so you do not have trouble in the future. High reputation of the car dealer can really affect the price value but small car dealer nowadays can offer a great deal.

  77. Tera says 12 July 2013 at 10:25

    This was a terrible article for me to read before going to buy a car. It assumes that all car sellers are upstanding and my experience is that they are not. I went to two different dealerships trying to treat others respectfully and did not get respect returned. I don’t think it’s a good idea to go into the deal thinking of the car salesman. You have to keep your own priorities in line because different salespeople have different and well-practiced ways of manipulating buyers so that they can get the most money for the car. Of course the sales person is more in alignment with the sales manager than they are with you – they work with that person everyday.

  78. Honda City CNY says 23 September 2013 at 06:40

    Tera,

    I both agree and disagree with your comments buddy.

    1) There really are some “dodgy” car salesmen out there but they can’t all be thrown into the same bucket. I have had both good and bad experiences.

    2) If you choose a reputable company, you should have a great experience.

    3) This isn’t a terrible article at all, as the previous comments show, lots of people have found it hugely beneficial.

  79. AJ says 22 April 2014 at 10:12

    I’m a car salesmen in NJ and have been at it for a few years. All of what was said here is right on the money, and I would like to point out a few more things… New cars are the hardest most time consuming sale for a salesman and pays the least. The competition is so tight and the info out there on the Web had ended the day where dealers held all the cards. Now ppl believe that they somehow deserve to take up hours and hrs of invaluable time on the floor and get the cat for less than we paid minus the hold back, all in the interest of saving $500 on a $25 – 35k car. Want to save money on a car with the least Amount of time spent negotiating and sitting in dealerships in an adversarial position? Go on the many sites that guarantee you a price well under msrp that is normally $200 over invoice btw and bring it into the dealership. The salesman will ask if you are sure about what you want and if yoy are go ahead and get your car for you. No tricks no games. Both of you will be happy bc u get a car at an incredible deal and cut outall the bs and they will be very happy and give u better service bc yoy are allowing them to get a chip on the board closer to their bonus and get back on the floor to their next customer… The average new cat sake, if it’s wrapped up the same visit takes about 3 hrs but that’s only if it’s the one visit. I’ve had sales that all told took up 9 to 12 hrs ago together just to make $100-175 bucks. The absolute must money I’ve seen on a new car commission is $400 and that’s one 5 with the next highest being $250… Sales man are there to get you a great deal if you’re willing to work with us and not lead us along. If yoy dint like something about us the car or the dealer then tell us. We can fix most of the probs you bring up but we’re not mind readers. But when you say wow that’s great ilu and will only work with you and then go ahead and never answer calls or no show appointments it makes salesman wary of ppl that take up our time. Bottom line, do your hw. Ask around about the dealers reputation. Fig out your budget and don’t think there’s thousands of dollars that you’ll negotiate away so you can get the EX instead of the LX that you really can afford and you’ll get your car in a few hrs and the get on with the rest of your life. ..

  80. Thomas Vargo says 28 September 2014 at 18:26

    Its pretty easy to obtain a car loan with bad credit in 2014 than in the past. Consumers should be warned that they will pay for it in steep interest rates. One website called “InfoAviator” list these poor credit lending institutions on their website. The reason I mention this site is because they have one lender that will approve people before they go to the dealership so they can maintain there bargaining edge when dealing with the dealers salespeople.

  81. Arthur Dent says 04 March 2016 at 20:24

    They waste as much of your time as possible hoping that you will just wear out and buy. Make sure you can leave, and do not be afraid to. Preferably before you have wasted as little of their time also.

    Their should be fixed, no-haggle pricing. The dealers are a victim of this horrible model created by the car manufacturers in a bygone century.

  82. Raymond maragh says 29 April 2016 at 09:45

    New car =$100000
    Trade in =$30000
    New car to be delivered in 9momths
    Should I get taxed on the diff bet the
    two amounts?

  83. Rockford Johnson says 05 October 2016 at 18:12

    I learned a lot about car dealerships by reading this article. It was interesting to learn that the best time to buy a car is at the end of the month. I hope that this article can help me the next time we are shopping for a car.

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