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Not sure why some people think waving cash around will get you a better price. Dealers make money off of loans. Why would they give anyone a discount for cash?
From my experience, KBB is never even close to accurate. It is usually within 10 - 15% but sometimes it is off by 50% or even 100%.
Dealer prices are always higher. I find dealers stop bargaining at $1500 - $2000 more than what a private seller will bottom out at. Dealers have to cover their expenses and make a profit. If a dealer offers a seller $4500 for a car, the must sell it for at least $5000 and that would probably be a loss to them. They really need $6000 to make any money. It is very rare that a dealer will sell te car for anything under that $6,000 mark. However a private seller who was offered $4500 by a dealer, woudl be more than happy to sell it to you for $4600. In some cases, they are willing to sell it for $,500 or even a little under that (some people do not like selling cars to dealers). Lately the demand for used cars is very high. dealers can afford to demand more money because they know someone will eventually come along who is willing to pay in inflated price in order to avoid endless searching advertisements and test drives, mechanic inspections, etc.
The dealers costs for buying, processing and storing a car are the same regardless of whether the car is Cadillac they can sell for $30,000, or a beat up minivan they can only sell for $4500.
Thus, the deal gets worse when a dealer buys a $2000 car. They still have to sell it for $3500 - $4000 to cover their expenses and make a profit. Thus the mark up becomes 100%. That is why it makes no sense to buy a cheap used car from a dealer. For an expensive car (say $30,000), paying the extra $2000 might be worth the added convenience.
Sometimes, if the dealer has had the car for a while and just wants it off their lot, you can leave them a written offer and tell them if they call you before you find a different car, you will buy it at that price (Out the door, or out the door after taxes. Dealers will try to play games pretending to accept your offer, but then adding on all kinds of various mark ups to bring the price back up to what it was.They will add things that you would not have to pay for with a private sale (documentation fees, delivery charges, detailing, finders fee, sometimes some of them will even add fake taxes, or purposefully miscalculate the taxes. I once caught one with 6.5% written on the invoice, but the calculation came out to 15%. When I pointed it out they first said i must be wrong then said oh i made a mistake (B.S.!)))
Not sure why some people think waving cash around will get you a better price. Dealers make money off of loans. Why would they give anyone a discount for cash?
Yeah, cash doesn't get you great deals anymore, and some dealers don't even want cash. When I went to buy mine I was fully prepared to pay cash, but the dealer actually talked me into paying $3k down and financing the rest (only 2% interest). I think dealers must have deals worked out with banks to get them a certain number of loans, and the banks must guarantee a certain number of approvals.
Yeah, cash doesn't get you great deals anymore, and some dealers don't even want cash. When I went to buy mine I was fully prepared to pay cash, but the dealer actually talked me into paying $3k down and financing the rest (only 2% interest). I think dealers must have deals worked out with banks to get them a certain number of loans, and the banks must guarantee a certain number of approvals.
It's no mystery, lenders typically pay dealerships a commission when they sell financing. They usually run from .5%-3% of the loan amount depending on a number of factors.
Not sure why some people think waving cash around will get you a better price. Dealers make money off of loans. Why would they give anyone a discount for cash?
It's also about getting those units off the lot. If it's been there for a while. If it's been there for a few months and somebody walks in with cash to pay for it. They'll give you a discount to get it sold because it's taking up space for another unit that they could sell much quicker. It works every time for me. It's also the amount of cash they walk in with. It's never failed me. I purchased a fully loaded Saab 9-3 Turbo X (though it wasn't even there for 2 weeks) with $42K in cash that was $5K less than sticker. Why? They didn't want $42k to walk. It depends on the dealer and what they hold important to them.
It's also about getting those units off the lot. If it's been there for a while. If it's been there for a few months and somebody walks in with cash to pay for it. They'll give you a discount to get it sold because it's taking up space for another unit that they could sell much quicker. It works every time for me. It's also the amount of cash they walk in with. It's never failed me. I purchased a fully loaded Saab 9-3 Turbo X (though it wasn't even there for 2 weeks) with $42K in cash that was $5K less than sticker. Why? They didn't want $42k to walk. It depends on the dealer and what they hold important to them.
It's not the fact that one has cash that nets a good deal, it's the fact than one is ready to buy. Most dealerships would much rather finance than take $42K in cash. Partly for the commission on the financing, and partly because they don't want to mess with reporting the cash transaction to the IRS.
In my experience a $5K discount on a vehicle with a $47K MSRP is pretty typical. But I will say that I don't have any experience with Saab.
It's not the fact that one has cash that nets a good deal, it's the fact than one is ready to buy. Most dealerships would much rather finance than take $42K in cash. Partly for the commission on the financing, and partly because they don't want to mess with reporting the cash transaction to the IRS.
In my experience a $5K discount on a vehicle with a $47K MSRP is pretty typical. But I will say that I don't have any experience with Saab.
I saw the car, I walked in, waited about 10 minutes to be helped (I guess they didn't like my clothing) looked at the sticker price, had a test drive, reflected over a cup of coffee and told the salesman $42k in cash upfront. After he confided with the manager, they agreed and I drove off with the car. Took me about four hours and most of that was a test drive and getting the car out of the building. They both told me it was because of the cash. It had nothing to do with my readiness. I wasn't even fully ready to commit to it. Hence, my test drive in it. When I was ready to buy I told him what I will do. Again, it is the priorities of the dealership. Have you interviews most dealerships?
They didn't care about filing a CTR. They didn't bother with the commission. They saw $42K and did not let me walk. They wanted $42K in cash. Maybe the trouble of dealing with financing wasn't worth them when they could sit there and take cash, file a CTR and do the title work and get another car off the lot (or in this case out of the building). It took them about 2 hours while people are still working and doing business to move the car out of the lobby and onto the parking lot to be driven away. Don't know or care what their motive was to prefer cash over pushing financing. The salesman suggested financing once and I quickly rejected it. No reason to bother with financing when I can get the title straightaway. The MSRP for was $45K. Saab dealerships that I was familiar with (whether in Europe or the US) are very stringent with their pricing. So $5k may seem typical for you but it was a great deal.
Also, my small chat with the manager of the multi-brand dealership. The dealership also sold GMC, Buick and Cadillac (this is one of those "Which one is the black sheep?" moments). He mentioned that Saabs don't sell too far under sticker and many sold at sticker (which was quite inflated to try to recoup costs for making them which was very expensive) which led to the eventual demise of the brand. Saab (or maybe GM) were very bull headed about pricing and that led to people not wanting them in the first place until they hit rock bottom and dropped their prices outstandingly but it was too late by then. Most people who buy Saabs he explained are Saab fans or very "quirky" people. Hence the market was small for them which also led to inflated pricing because those who would buy a Saab really wanted a Saab and they would pay a premium for it.
I realize KBB is just a guide, just don't agree with their separate pricing.
I think you are missing the point, their pricing is too high
Over the phone they prospected for me to come visit theme so they can "work a deal out".
Doesn't hurt to try
By the way, I have more than enough to buy this car, my budget is $15,000 (technically less, but all the $10,000 car suck).
How are their prices too high? The market sets prices, not KBB. Plus, the peace of mind that tends to come with the Dealership relationship, accountability, services, etc.
Not to mention the commissioned salesperson who has to sit with dozens of whiners who are just convinced that they are getting screwed.
What's your take on the price of milk? Do you negotiate that? Do you think you have a right?
It's no mystery, lenders typically pay dealerships a commission when they sell financing. They usually run from .5%-3% of the loan amount depending on a number of factors.
.t
This.. basically when a dealership tells you what rate THEY got approved for you its basically a lie as the dealer takes .5 +% right off the top. Theyre commision on your loan is paid to them up front. Another reason Ive always told others to get your OWN financing.
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