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I've been skimming various forums and websites about buying a car from a dealership, and almost all of them say to focus exclusively on the price of the car you are interested in, and don't mention how you are paying for it, or even if you have a trade-in.
We all know that car sales people like to play games and get the upper hand, so from what I've read, the recommendation when negotiating a car price is to not answer any questions about paying cash, monthly finance payment amounts, budget, leasing or financing options whatsoever. That's when the price will go up (to account for the trade-in, or the financing or the leasing costs). From what I read, don't answer any questions until you get a firm price in writing. Then discuss financing, leasing, trade-ins, etc, if appropriate. Do any of you have experience with this? Is there any advantage to financing over paying cash?
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The other thing I ran into when I bought my last car in 2008, is the issue of asking for a driver's license for a test drive. It's illegal to run a credit check on a potential customer if they have not given permission when they are "shopping," but dealers potentially do this when they ask for your driver's license if you want to take a test drive, even with them in the car. They do it to gain the upper hand in a negotiation later on if you decide to buy the car, they already know your credit score beforehand.
If the dealer takes the license to another room to make a copy, beware. They are potentially scanning the license. I had this happen to me when I was shopping for cars in 2008. I didn't realize what they were doing when they said they must have a copy of a DL to take a test drive, until I pulled a credit report a couple weeks later, and saw a credit check for the exact same day I was in the dealership.
They used a 3rd party vendor, so the dealership name doesn't come up on the report, very sneaky. I recall it was something like "ABC Technologies" for that exact day on my credit report. I didn't pursue it with the dealership (they can be fined $2500), since they would simply deny they ran a credit check. I would have had to spend a lot of my time and energy to pursue it, but I can tell you I'd never buy a car from them.
The interesting thing is that after that experience, I went to another dealer a couple weeks later who asked for my DL before the test drive and I said no. I said I have a DL, and turned around and started to walk out, and they called me back and said ok. Interesting.
I also learned recently that credit checks can be run just on names and addresses these days with new technology, so beware giving any of that out at a dealer when shopping for cars, even if they don't ask for a DL. This might be a problem if you had repairs done at a dealer and then shop for a car. They have your name and address info in their system.
Last edited by olderandwiser456; 03-20-2017 at 02:17 PM..
The best way to get a good deal is to make it less adversarial. You sound like this is some kind of warfare, every move has a counter-move...
Tell the dealer the truth. Sometimes they have inventory they want to get rid of and will invest more in your trade than it is really worth in order to make a deal. Sometimes they have incentives from the manufacturer that are contingent on financing through them, and if you are playing games they can't give you the best offer up front.
My personal method for buying a vehicles is to know what I want, test drive it (and give them a copy of my license) and make sure I am comfortable in it. Then I explain that I will fill out a credit application while they get the price. The price will be invoice less any applicable rebates or incentives. The sales rep is instructed that they have 10 minutes to come back from the manger with agreement to sell at that price, and with a copy of the invoice to verify the price, or I am leaving. My last several new car purchases took 10 minutes each.
Sometimes if you finance you will get a manufacturer rebate.
For example I financed my wifes Hyundai Santa fe last year and for $750 off the price. I paid the balance off the following month.
If you know all the information prior to walking in then the only thing you need to negotiate is the price of the car. I never have issues cause I have all my ducks lined up. I say I will pay x..then come back with z and we meet at y.
Sometimes it ends up being some kind of warfare.
As far as giving them my license, it doesn't bother me.
There's a big advantage to financing if the money's cheap.
I shudder to think about how big a bath I would've taken if I had taken cash that was used to buy stocks to buy a car instead.
Let's just say I could've bought a whole 'nother car with the money that cash made, maybe two!
So I tell 'em to beat my CU's rate and they usually do.
When you tell the salesperson why you’re there, you’ll probably be asked for your driver’s license. That’s a pretty standard, reasonable request, something required by the dealership’s insurance company. They’ll make a copy, but you should remind them that federal law forbids them from requesting a copy of your credit report without your permission, and you are not giving them that. If they say they must check your credit to give you a test drive, then you can say, “Thank you for giving me a solid reason not to buy a car here” and walk out.
I don't buy from dealer, I pay cash and craigslist.
But, rare occasions do arise when craigslist simply does not have it.
Last time I bought from dealer - which was a large Nissan dealer, none of those little dinky places - I texted sales guy my final offer. He accepted. That was it. I didn't even see the car. They had extensive pictures, I told him in my text - IF car checks out as advertised.
That was it. Then I "took the loan" not to fork a lot of $$ in lump sum from family budget and paid it off in 2 months. I paid something like 90 dollars in interest. Another reason I did this, I turned around and sold my then Ridgeline, what gave me some time to sell it and covered most of the loan amount.
in late 2008 i saw an add in my local paper for a new 2009 corolla for $16.500 at a local dealer ..i went to them and said " i`ll take it " after a brief time they said good // pay us $210 a month for 6 years and it`s yours .. ( could be off a bit ) .. i said " no " i`ll pay $16.500 today cash .. they did not like that but i got the car for $16.500 ... i could never imagine financing something i could pay cash for ...
in late 2008 i saw an add in my local paper for a new 2009 corolla for $16.500 at a local dealer ..i went to them and said " i`ll take it " after a brief time they said good // pay us $210 a month for 6 years and it`s yours .. ( could be off a bit ) .. i said " no " i`ll pay $16.500 today cash .. they did not like that but i got the car for $16.500 ... i could never imagine financing something i could pay cash for ...
I can't imagine pulling cash out of an investment paying 6%+ when 0% financing is widely available.
I've been skimming various forums and websites about buying a car from a dealership, and almost all of them say to focus exclusively on the price of the car you are interested in, and don't mention how you are paying for it, or even if you have a trade-in.
We all know that car sales people like to play games and get the upper hand, so from what I've read, the recommendation when negotiating a car price is to not answer any questions about paying cash, monthly finance payment amounts, budget, leasing or financing options whatsoever. That's when the price will go up (to account for the trade-in, or the financing or the leasing costs). From what I read, don't answer any questions until you get a firm price in writing. Then discuss financing, leasing, trade-ins, etc, if appropriate. Do any of you have experience with this? Is there any advantage to financing over paying cash?
No, I disagree with basically all of that. The key is to negotiate and out-the-door price and that is all, leaving aside leasing for the moment anyway. Finance or cash can have an upfront effect on that. For example, when I bought my car I could either choose between $1,500 cash back or 0% for 60 months. To give you an out the door price, they need to know if you're financing or paying cash. Or you can just negotiate it and then take off that promotion if you pay cash, but both of you have to know whether the number you're negotiating does or does not include that.
I don't have any issue talking about monthly numbers either. If in the what will you approve me for phase it's relevant. But then once you have an amount they'll approve you for (although you should really get financing before you go anyway) it's not relevant. Ultimately I used Toyota financing. Maximum I was comfortable paying was $500/month so they plugged that in at 32 and 60 month loans to see if I'd qualify. I did and that was the end of it. I probably could have borrowed more than $500 but no reason to.
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The other thing I ran into when I bought my last car in 2008, is the issue of asking for a driver's license for a test drive. It's illegal to run a credit check on a potential customer if they have not given permission when they are "shopping," but dealers potentially do this when they ask for your driver's license if you want to take a test drive, even with them in the car. They do it to gain the upper hand in a negotiation later on if you decide to buy the car, they already know your credit score beforehand.
If the dealer takes the license to another room to make a copy, beware. They are potentially scanning the license. I had this happen to me when I was shopping for cars in 2008. I didn't realize what they were doing when they said they must have a copy of a DL to take a test drive, until I pulled a credit report a couple weeks later, and saw a credit check for the exact same day I was in the dealership.
No, it's perfectly legal to do a soft pull without your permission. Personally, I haven't had a lot of soft pulls when test driving.
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They used a 3rd party vendor, so the dealership name doesn't come up on the report, very sneaky. I recall it was something like "ABC Technologies" for that exact day on my credit report. I didn't pursue it with the dealership (they can be fined $2500), since they would simply deny they ran a credit check. I would have had to spend a lot of my time and energy to pursue it, but I can tell you I'd never buy a car from them.
Pursue what? It's perfectly legal to do a soft pull and there's nothing shady about using a third party vendor for credit pulls. They can't run a hard credit report with just your driver's license. Hard pull it's not really something I'd pursue but I'd certainly make a phone call and speak with the general manager about it.
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The interesting thing is that after that experience, I went to another dealer a couple weeks later who asked for my DL before the test drive and I said no. I said I have a DL, and turned around and started to walk out, and they called me back and said ok. Interesting.
Yeah, it's not required or anything. Just a general best practices to have it on file in case you do go out and crash the car, steal it, whatever. They may or may not do a soft pull to see if you're just joyriding/wasting time with no ability to pay, but I haven't found it common. Probably has more to do with your presentation and ultimately it's inconsequential as soft pulls don't have any affect on your credit.
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I also learned recently that credit checks can be run just on names and addresses these days with new technology, so beware giving any of that out at a dealer when shopping for cars, even if they don't ask for a DL. This might be a problem if you had repairs done at a dealer and then shop for a car. They have your name and address info in their system.
That's nothing to do with new technology. Soft pulls have been around for quite some time. I mean I guess if the computer is a new technology that's true but those aren't really new or anything.
The easiest way to buy a car is to cut out all the BS and negotiate on purchase price alone. So sell your old car to your brother-in-law, arrange financing at your bank ahead of time (if you need it), find the car you want, and tell the salesman to sharpen his pencil.
Will that always get you the best deal? No. There are situations where your old vehicle is one that the dealer has a lot of demand for, so you might get a premium on the trade-in. But usually not. And dealerships typically get a kickback from the lender when they sell the financing. But it's usually less than 1% of the value of the loan, so less than $300 on a $30,000 deal, so what they're willing to do to sweeten the pot to get the financing is pretty minimal. And of course since dealers generally have relationships with multiple lenders they might be able to swing a better interest rate.
But as far as making the transaction as simple and painless as possible, an outright cash deal is the way to go.
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