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I have a question for those of you who are familiar with the behind the scenes workings of car dealerships.
I'm in the process of buying a new car online. I've given the various dealers my initial offers.
In all of the car ads, there is the big spiel about discounts for using manufacturer's financing, discounts for military, students, blah blah blah. I have a different financing source and I'm neither a student nor military. I've pretty much ignored all of those qualifiers and made my offers (of course lower) as if I did, indeed, meet those qualifiers.
As I see it, a car is a solid physical object like a house. Its price shouldn't change because of who's financing or the buyer's life choices. If a house costs $100k, the seller doesn't care if the mortgage is provided by Wells Fargo or Citibank. The seller is getting their money in either case. The price is still $100k. I understand that in the case of auto financing, the manufacturer's finance company will kick a little back to the dealer, but that has nothing to do with me. I wouldn't be able to sleep (okay, an exaggeration ) knowing that I paid $22k for a car using my finance company while the guy standing next to me paid $20k for the same car because he used manufacturer's financing.
Question: it's the end of the month. What's more important to a dealer? Moving the car off the lot or playing hardball about minutia?
I have a question for those of you who are familiar with the behind the scenes workings of car dealerships.
I'm in the process of buying a new car online. I've given the various dealers my initial offers.
In all of the car ads, there is the big spiel about discounts for using manufacturer's financing, discounts for military, students, blah blah blah. I have a different financing source and I'm neither a student nor military. I've pretty much ignored all of those qualifiers and made my offers (of course lower) as if I did, indeed, meet those qualifiers.
As I see it, a car is a solid physical object like a house. Its price shouldn't change because of who's financing or the buyer's life choices. If a house costs $100k, the seller doesn't care if the mortgage is provided by Wells Fargo or Citibank. The seller is getting their money in either case. The price is still $100k. I understand that in the case of auto financing, the manufacturer's finance company will kick a little back to the dealer, but that has nothing to do with me. I wouldn't be able to sleep (okay, an exaggeration ) knowing that I paid $22k for a car using my finance company while the guy standing next to me paid $20k for the same car because he used manufacturer's financing.
Question: it's the end of the month. What's more important to a dealer? Moving the car off the lot or playing hardball about minutia?
I don't buy cars online. I want to see what the inventory levels of the dealership. If the dealer has 300 Honda Civics on the lot, they will make a better deal than if they have a dozen. A local Honda dealer was leasing four storage lots willed with Accords and Civics. It made him much more amenable to negotiating price.
You did not tell us what type of car your are looking to buy. Popular models sell pretty close to sticker or more. Less popular models have a lot of negotiation room. For example, when Honda first introduced the Odyssey, a friend wanted me to negotiate a good deal for him. I went to a few sources and told him to pay a specific amount +/- $100. I refused to go with him as the dealers were not going to discount. He took a couple of days off and visited SIX dealerships in the Chicagoland area and found that my number was very close to what he could get. (Six months later, he paid about $2k more than he had to for a less popular model as he accepted the first offer.)
You are not going to pay $2k less because you finance with the dealership. There is not that much money in the financing for the dealership.
Dealers want to sell their cars at a profit. There is very little profit in the new car business. Most dealers make their money selling used cars, service, and parts. They are NOT interested in moving cars at a loss. The "minutia" comment is silly. Why should they come off of their "hardball" position if you are not willing to come off of your high horse.
I am a retired corporate fleet manager so I have been in a dealership or fifty in the last decade. Nothing is more amusing than to be in a Toyota dealership who has an advertised Corolla price of $18k, the lowest in the area, and to watch a guy come in and start screaming and hollering that the dealer should sell him a Corolla for $15k.
Sadly, all is potentially much more complicated today.
There are manufactures incentives. Regional incentives. Dealer incentives.
Rebates. Customer loyalty.
And for some - AARP discount. Farm Bureau discount. College Student Discount. Military Discount. Manufacturer employee discount. Supplier discount. DAV discount. And on and on.
And if a GM new vehicle there is the GM MasterCard Points discount. This past February I received card/letter in mail offering me $6,000 off any GM vehicle (except Corvette). NOTE: This is AFTER one makes the final deal. Show the points when time comes to go to the finance person - cash or credit - makes no difference.
Now the naysayers will state that the dealer already knows about these points. NOT TRUE.
For the entire negotiation I used a fake name. Did not show drivers license to test drive. When time came to pay - then I showed my GM Points card. So best deal AND $6,000.00 OFF.
I am a retired corporate fleet manager so I have been in a dealership or fifty in the last decade. Nothing is more amusing than to be in a Toyota dealership who has an advertised Corolla price of $18k, the lowest in the area, and to watch a guy come in and start screaming and hollering that the dealer should sell him a Corolla for $15k.
I'll address some of your other points later. What I'm finding is that many times I would be willing to accept the advertised lowest price. However, when I try to get that price, the dealers come back with "that price only applies if you *insert xyz qualifiers*." Then they give me a price that's $2k-$2.5k higher.
In general you have it backwards. You can in many instances get a lower price if you don't use the manufacturers advertised rate. If the manufacturer is advertising .9% that is costing them something to offer that rate. Toyota is advertising 0% or a rebate. Generally speaking you are better off getting funding elsewhere and taking the money.
Some of the qualifiers are used as advertising gimmicks.....say $500 military rebate. Yes, if you qualify you can get it but it allows the dealer to advertise a price most won't qualify for. You either do or you don't. A college grad rebate may be the same thing.
Now if a dealer can offer you the exact same rate you can get elsewhere I don't understand why people get so upset that they get a small percentage back for originating the loan.
Just find the car you like, price comparison between a few dealers and buy at the dealer you feel the best about. The lowest price is NOT always the best deal. Let's say dealer A which is 5 minutes away is $126 more expensive than dealer B which is 45 minutes away. You are generally better off staying local. A dealer that sold you the car is going to be in general quicker to see that you are taken care of in case of problems than one that didn't. Will they service your car? Yes. Will they provide a loaner or a ride to work if you didn't buy the car there? Not always. (as a dealer, I wouldn't)
Now the naysayers will state that the dealer already knows about these points. NOT TRUE.
I have done this as well. Didn't say anything until the price was negotiated, then collected my GM cash.
Those big top-offs come in January and you have three months or so to use it.
Gives you a choice of taking a year-end deal or waiting and taking top-off deal. Either way, you're getting a bunch off.
I bought a new car last month and the dealer screwed me on the finance rate, 4.99/48 months. I wasn't really in a position to negotiate as the car was in high demand and the dealer was 200 mi from home so I just signed. Besides, I already got $10k off the sticker so I wasn't concerned too much about a bad finance rate.
I refinanced the loan 2 weeks later at half the rate and saved another $1000.
Give them your price. As long as it is fair and reasonable (no higher than their documented cost) don't negotiate. It is almost impossible for you to really know what the car cost them after all of the plans and deals which go on behind the scene.
At their invoice cost they will make a few hundred or more, and you will be happy.
They make money off of financing. Even at 1% (think about what the bank pays you for your saving account... .35% or so. If there is incentive to finance (for you), do it, and then pay it off. Make sure the language says you can do so.
Ha! That does sound funny now that you mention it. I should have qualified that with "among enthusiasts." The car is a Chevy SS which is going out of production at the end of this month. If you don't know, it's one of the few sedans left with a V8 and an available manual transmission.
GM ran a 20% off sale to clear out inventory in March and it was a feeding frenzy for the manuals which explains what I meant by high demand. Mine was also in a rare color and there were a line of people waiting behind me if I didn't want it:
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) knowing that I paid $22k for a car using my finance company while the guy standing next to me paid $20k for the same car because he used manufacturer's financing.
