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I do think car dealerships offer a valuable service: the trade in.
Sure you'll certainly get more for your car selling it privately but for more expensive cars with liens still on it it truly is a big hassle which many aren't willing to take. Not many buyers can come up with $20K in cash and be willing to meet you at local bank where your title or being held. Or worse if the title is being held across the country there has to be some honor system in place as buyer has to supply you with the $20K so you can pay off your loan and wait a week or two for the title to be mailed in.
With a dealer it's very simple even if you are leaving money on the table.
That's fine, as long as you know and accept that you are leaving money on the table, often lots of it.
That's fine, as long as you know and accept that you are leaving money on the table, often lots of it.
I like leaving money on the table: MINE!
But I thought you said in a previous post you wouldn't care about the profit the dealer is making as long as you knew the profit being made? 100% transparency, right? Money left on the table is profit, correct? Now you don't want to leave any money on the table? What you're really saying is that you don't want the dealer to make any profit and you expect to receive the same price they're paying the manufacturer. You want 100% transparency to simply benefit you in receiving the absolute best deal possible. What other items do you purchase that you receive this type of transparency on?
This is where car salesmen do a lot of their dirty work. Simplify your deal! Sell your car on the open market, that is where you will get the most money.
Arrange your financing in advance, but do not tell the dealer you have done that. Make him think he will be doing the financing. He will hide profit there.
Then negotiate your best price for your new car. If you can't get invoice and holdback information out of the bastards, and you often won't, shop 5 dealers and get 5 written quotes and make them battle each other. They may not disclose all their secret data on how much they are making, but COMPETITION WILL HELP SQUEEZE IT OUT, EVEN IF YOU DON'T KNOW EXACTLY WHAT IT IS.
Then, when you have a firm price on an exact car, substitute your own financing and move forward. If the dealer renegs at this point, you know you are dealing with a corrupt RICO-eligible crooked hustling brigand, and you can take your business to the next dealer.
Nothing wrong with trading your vehicle in at the car dealership. Sometimes you can get just as much trading as selling on your own. If you don't like what they offer, you simply walk away. They're not holding a gun to your head and forcing you to trade.
I have a truck that I'm trying to sell. I'm not having much luck due to the fact that it is fairly expensive. Not many people in my area can afford it or obtain the financing on their own. Guess what? I can trade my truck close to the same amount as I'm trying to sell it for on my own. Guess what else? I will only have to pay tax on the difference and not the full amount so I'm actually going to come out ahead. If I decide not to purchase from them and go with a different brand they said to bring them my truck and they will cut me a check for the same amount. How transparent is that?
Here's the thing. The dealer can give you more than you realize on trade because they have outlets that the average person does not have access to. They have wholesalers that sell into different markets that might bring a premium for your particular vehicle. Well that wholesaler is going to pay the dealer more for it which in turn allows the dealer to pay you more than what you are able to sell it for. They can make a few phone calls and get a buy bid for your trade. Your vehicle may never hit their lot for sale. I see vehicles running through dealer auctions for more than what you can buy one for from an individual. There are many different scenarios in play. Don't immediately think trading your vehicle means you're getting screwed.
I don't like when dealers try to get me to buy GAP insurance, extended warranties, financing, etc.. When I go car shopping I am already pre approved for a loan and want to buy a specific car with specific options. Don't try to sell me something else. If I will be trading in my car I don't want it appraised until after we settle on a number for the new car. I also don't like test driving (if at all) before the numbers are where I need them to be. Again, this is a waste of time.
Some people need these things though. I just write car loans, but I've seen people lose their ass when their car gets wrecked. I just had someone who owed $24k on a 2013 Hyundai that got totaled. Not an extravagant amount. Their insurance company paid them $17k. They owed $7,000 on a totaled car. Luckily, they bought our GAP, and it paid it off completely. They went and got a new car and didn't have to roll a bunch of negative equity into it. Even at a low interest rate and even at 72 months, adding $7k to a loan would add $110-$120 to their new car payment. Each month. For 72 months. Instead, they paid $500 for GAP and it wiped out $7k.
Only time I saw where it didn't pay off was where a guy was several months behind on his payments. I paid off everything except his past due amount. He refused to pay that off though, and so he ruined his credit over a few hundred bucks. He complained, but it stated specifically that it would pay everything (including deductible) except any amount past due.
If you get pre-approved, your bank probably offers GAP for less than what the dealer does. Regardless of who offers it, it's still worth looking at if you're not paying cash or have a huge down payment.
A lot of people don't have big money sitting around for repairs, either. If you're buying a used car outside of warranty, the repairs are on you once you own it. A warranty isn't a bad thing to throw in if you don't have thousands of dollars sitting around for a new transmission or anything else that might go wrong.
This is where car salesmen do a lot of their dirty work. Simplify your deal! Sell your car on the open market, that is where you will get the most money.
Arrange your financing in advance, but do not tell the dealer you have done that. Make him think he will be doing the financing. He will hide profit there.
Then negotiate your best price for your new car. If you can't get invoice and holdback information out of the bastards, and you often won't, shop 5 dealers and get 5 written quotes and make them battle each other. They may not disclose all their secret data on how much they are making, but COMPETITION WILL HELP SQUEEZE IT OUT, EVEN IF YOU DON'T KNOW EXACTLY WHAT IT IS.
Then, when you have a firm price on an exact car, substitute your own financing and move forward. If the dealer renegs at this point, you know you are dealing with a corrupt RICO-eligible crooked hustling brigand, and you can take your business to the next dealer.
I agree 100% about separating the parts of the deal, but I would go so fast as to say NEVER trade a car. In some statesm there can be a significant tax benefit to trading, especially if you are trading and buying expensive cars. Also, their is some utility in not having to deal with selling the car. On the other hand, be educated about your cars current value (and don't just go to Edmunds and think retail price is what it's worth) and do some looking ahead of time, then see what they say it would be worth. Separating the deal helps you here, but of course the dealer will do all they can usually so you can't do that.
Some people need these things though. I just write car loans, but I've seen people lose their ass when their car gets wrecked. I just had someone who owed $24k on a 2013 Hyundai that got totaled. Not an extravagant amount. Their insurance company paid them $17k. They owed $7,000 on a totaled car. Luckily, they bought our GAP, and it paid it off completely. They went and got a new car and didn't have to roll a bunch of negative equity into it. Even at a low interest rate and even at 72 months, adding $7k to a loan would add $110-$120 to their new car payment. Each month. For 72 months. Instead, they paid $500 for GAP and it wiped out $7k.
Only time I saw where it didn't pay off was where a guy was several months behind on his payments. I paid off everything except his past due amount. He refused to pay that off though, and so he ruined his credit over a few hundred bucks. He complained, but it stated specifically that it would pay everything (including deductible) except any amount past due.
If you get pre-approved, your bank probably offers GAP for less than what the dealer does. Regardless of who offers it, it's still worth looking at if you're not paying cash or have a huge down payment.
A lot of people don't have big money sitting around for repairs, either. If you're buying a used car outside of warranty, the repairs are on you once you own it. A warranty isn't a bad thing to throw in if you don't have thousands of dollars sitting around for a new transmission or anything else that might go wrong.
For new cars my GAP insurance is far less going through my bank than what the dealer charges. I don't disregard it, just don't like to overpay at the dealer. Its almost double at the dealer than my bank.
Extended warranties are a gamble for me personally. Ive never had a catastrophic failure on and of my vehicles where a warranty would have been worth the money. This is an area I choose to gamble with. The only time I looked into getting one was when I had my SAAB 95 Turbo, it was always breaking and was very costly. I ended just trading it in instead. I have heard it is smarter to invest the money you would have put into a warranty and then if you need a repair the money is there and if you don't, well you gain interest on that money instead.
The ONLY warranty worth having is the manufacturer warranty. Any of these extended warranties offered by third party companies are usually filled with so many caveats and disclaimers they're usually not worth more than the paper they are printed on.
For new cars my GAP insurance is far less going through my bank than what the dealer charges. I don't disregard it, just don't like to overpay at the dealer. Its almost double at the dealer than my bank.
This can be true.....again, there is nothing wrong with knowing what you are doing.
Quote:
Extended warranties are a gamble for me personally. Ive never had a catastrophic failure on and of my vehicles where a warranty would have been worth the money. This is an area I choose to gamble with. The only time I looked into getting one was when I had my SAAB 95 Turbo, it was always breaking and was very costly. I ended just trading it in instead. I have heard it is smarter to invest the money you would have put into a warranty and then if you need a repair the money is there and if you don't, well you gain interest on that money instead.
I bought one once because it made my wife happy. It was on a two year old Pontiac and she wanted to know that if anything happened to me she was covered for any repairs that might pop up. It was worth it so she felt more at ease.
The ONLY warranty worth having is the manufacturer warranty. Any of these extended warranties offered by third party companies are usually filled with so many caveats and disclaimers they're usually not worth more than the paper they are printed on.
The manufacturer also offer extended warranties. Yes, many of the after market ones are not good buys.
I do not begrudge someone making a fair living. Let me ask a few questions:
1. I am considering buying a new vehicle (Ford Explorer) which of the online services (Kelly, Edmunds, TrueCar, CR) can I trust to give me the best (lowest) price.
2. In the above deal I would be trading in a 2005 Ford Explorer (120k miles, one owner, very good to excellent shape).
I would like to be able to walk in and say this is the deal. Take it or leave it. I am very capable of negotiating (out right arguing if I have to) and walking out (I do not need the car) but I would rather not do such.
I want a clean, fast, fair deal.
Suggestions please.
Thanks
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