Re: Dealing with car dealers... yuk
Okay, initial disclaimer ... I come from a GM Dealership family. We sold the dealership when the market was good, but as a family we had 42 years in the auto industry. I was Co-GM/Sales Manager at the time and my one brother was Co-GM/Parts/Service Manager.
First of all, in defense of SOME dealerships, if you read the above posts from a Dealer/Owner perspective you can begin to see where it is an US against the World mentality. What can I do to screw the dealer over? Remember both the dealer and the salesman have to earn a living, and that comes from the profit they generate from car sales. You, the customers are the bosses. The customer is how both get paid. How would you like it if your boss came in and said, okay, today you have to do your work and won't get paid for it. Or, okay, we have agreed on your payment, but wait, I want to change the rules again. There is a reason that dealers are sleazy sometimes, because the customers play games with them.
Okay, back to the point at hand. The $1000 deposit was WAY out of line and I would have NEVER, EVER done that. Being out of the business I like to buy cars and several people come to me to do their car purchases for them. Many of you mentioned about doing homework. Homework is good. You should know what the car you are trading in is worth. Just remember, the actual money the dealer (new or used) is putting in your used car has to be less than what they are going to sell it for. If not, they go hungry and out of business. In many dealerships, this is how it works ... Vehicle your are purchasing has a COST of $20,000. Your vehicle has a wholesale value (what they could sell it to another dealer or what they could get out of it at the auction) of $10,000. So $10,000 difference is a no profit deal. Add $700 profit to the deal and you are paying $10,700 difference. Now the Purchased car has an MSRP of $22,000. So they will "Show you" $11,300 trade in for your car.
When you go into a dealership you have to be honest with yourself. What is the WHOLESALE value of your car. Then be honest with the dealer ... I want to deal on a wholesale level. If you through in a trade in after a deal has been made as if it was a straight sale with no trade, then you should only expect to get a wholesale price for your car. You CAN get more for your car selling it yourself, but then you have the risk and the time involved. The dealer will give you less because he is assuming the risk.
As said by many, I do research. (NADA varies in areas, but in this area of the country it is notoriously high in its values all the way around). Know what you are looking for and the price you should pay for it and know the value of your used vehicle. Then let the dealer know your desires at the beginning. Are you one that likes to play the game or are you a one and done type of person. I hated people that CLAIMED they were one and done, but after giving them my best price they tried to haggle. Be honest with yourself and your salesman. Then stick to your guns. The last vehicle I purchased I got for $3000 less than their first price because I did not haggle and stuck to my guns. He asked if I was going to walk over $500 at one point. I said, well, apparently you are going to let me walk over $500. He didn't.
You can do that and get your price as long as you are fair and allow the dealer to make something. I figure he made about $600 or $700 on my purchase, and he should have because I was buying a VERY clean and low mileage 2 year old vehicle. There weren't many out there like it.
My sister-in-laws new car purchase, I figure the dealer made about $200 on the new purchase (plus the 3% hold-back and got a vehicle out of inventory that had used its interest free days and was now paying interest on to keep on the lot), and when he wholesaled the used car he probably made another $700, so he did okay in the wash.
As for financing, there is nothing wrong with allowing the dealer to arrange the financing as long as you have done your homework. I could generally arrange financing for individuals at the same rates the bank were offering and I would make a 1/4 - 1/2% for doing the paperwork. If it was a good customer I could work with them to get them in a rate less than their banks were offering them. If you know the drill and do the homework you can use it to your advantage. But if you don't do your homework, you can be taken advantage of. This is one of the reasons it is good to have a relationship with the dealer/salesman. If he is your friend and knows you come back, it is harder for him to take advantage of you. There are benefits to loyalty.
Okay, I am done ... gotta head to a dealership with a friend ...
