Advice on Buying a Car?

[mr.jameswoods]

I'm buying a new car. Are there any car dealers or experts in purchasing autos that can give me some advice on how to get the best deal possible. I have done all of my internet research.

 

[Gibby!]

New or Used?

www.carfax.com for a vin check if used? Costs but well worth it. I ran one on my truck and had nothing, my buddy at work ran one and his truck and it had been totaled the previous year (after he bought it!). Dealer didn't say a word...

Now he is trying to sue and it doesn't look good...

 

[mr.jameswoods]

New or Used?

www.carfax.com for a vin check if used? Costs but well worth it. I ran one on my truck and had nothing, my buddy at work ran one and his truck and it had been totaled the previous year (after he bought it!). Dealer didn't say a word...

Now he is trying to sue and it doesn't look good...

I'm buying a new car so I don't have to worry about buying used this time around. I have gone to cars.com and am dealing with an internet fleet manager. I heard it's better to go through them. One guy is offerring me 750 below invoice which isn't bad. The problem is I'm worried he is going to give me below Blue Book value for my trade in and try to b.s. me and charge me some absurd administration fees not related to tag, title, and licensing fees.

 

[GTaylor]

I'm buying a new car so I don't have to worry about buying used this time around. I have gone to cars.com and am dealing with an internet fleet manager. I heard it's better to go through them. One guy is offerring me 750 below invoice which isn't bad. The problem is I'm worried he is going to give me below Blue Book value for my trade in and try to b.s. me and charge me some absurd administration fees not related to tag, title, and licensing fees.

I've worked in car sales once, and while I hang my head in shame for admitting it, I can't say it wasn't a good learning experience. Here's what I've learned from my time in the business:

- If you ever only listen to one say I say, it's this. Do not be afraid to walk out the door, in fact those should be your first words to the salesman. Tell them he'll have one chance to impress, otherwise you're gone.

- Since you're going through a fleet manager I'm assuming you're also going through a credit union. This is good because as a salesman if I couldn't get you to overpay through the cost (Nicknamed 'Front End') then we would try to make you overpay through finance, i.e. interest rates, additional insurance, etc., Nicknamed 'Back End'. The back end is where the majority of the profit comes from on sales, hence why we have no problem telling you "$100 over invoice?? No problem!". DO make sure they show you the invoice, and remember the amount because once they take it away if you don't remember the number then you're at their mercy.
A) If you are not going through a credit union, but are a member - then talk to them first, get pre-approved. Why shop for a $30,000 car if you're only qualified for $25,000? Not only that, but when once you have your loan and you pick out your car you'll spend maybe...5, 10 minutes in the Finance office, tops (Because he really can't sell you anything).

- Sorry to burst your bubble but you're not getting blue book value. There's 3 kinds of value, black book, trade in and blue book. Black book is the bare minimum, trade in speaks for itself and blue book is premium. My goal as a salesman is to give you black book value for your car and sell you the new car for bluebook. Because after the deal I'll be hard-pressed to see your trade-in over blue book value, 95% of the time it'll sell for under. Therefore I'll need room to work with for my next deal. Ex: If your black book value for car X is $5000 and blue book is $8000 I'll try to pay you $5000 so that when I resell it I'll have $3000 tops to work with on the used-car buyer.
A) However, since you're getting the new car for "black book value" expect your trade in to also get "black book". I will admit, $750 below invoice is an awesome deal!! My dealership hardly gave deals out lower than $200 OVER invoice. My advice is to find out the black book value of your trade-in and be realistic and hope for the trade-in value.

TRADE IN TRICKS:

- This is something everyone should know. A salesman will say "let's go take a look at your car" and while out there he'll look for any marks, dents, scratches, etc. Should he see a dent he'll "pretend" to be inspecting it further. What he's waiting for is for you to talk, "Ohh, that was me, stupid me - I accidentally bumped into it with my bowling ball bag" , "That chipped paint was from a rock that came from another truck", etc. When you talk what you're doing is devaluing your own car value. So keep your mouth shut, in fact - Refuse to go out to your car. And when they're done checking out your car ask for your keys back. It's much easier to walk away when you have your keys rather than have to wait 5 minutes for the used car manager to retrieve them, during which time the sales manager will be hounding you. Again, be prepared to leave.

- Most dealerships will do what's called a Four Square. Basically it's a square divided into 4 sections, top left is car price, top right is down payment, lower left is trade in and lower right is payment. Idea here to get you to focus on one box while screwing you on the other three. I can tell you right now what your first offer will be (And why you should be prepared to walk): Top left will be full car price, top right will be 20% down payment, lower left is black book value, and lower right is your car payment at 16% interest. How do you get past this?
A) Be prepared - Bring in a calculator and scratch paper/pen, know your car's three values. In fact if you can buy a book that shows the values. Below is how you can determine the car payment, P&I (Principal and interest). Make sure to ask what the interest rate is of their offer, have them put it down in writing BEFORE you go into the finance office. Most will tell you verbally "Yes- you'll get 5 percent" only to find out when you go into the finance office it's with 20% down, otherwise your rate is 14 percent.

How to determine car payment. Example will be a $20,000 car, 6% interest for 5 years (60 months). If you put a down payment of say, $2000 then change $20,000 to $18,000.

1) $20,000 X .546 (You should have $10920)
2) $10,920 X .06 (You should have $655.20 - congrats, you now know the interest avg. you'll pay per year, if your rate is 8%, change .06 to .08, etc.)
3) $655.20 / (Divided) 12 (Number of months in year) = (Should be $54.60, this is your interest per month. Remember this number.
4) $20,000 (Car amount) / 60 (number of months) = ($333.33, this is your car amount on principal only).
5) Add interest $54.60 to your principal $333.33 and your car payment will be $387.93, add about $25 for loan insurance, etc. and you'll looking at roughly $412.93.

Finally, interest is usually 8.25 % (Irving used to have 6.25 for cars) and Tax Title and License is around $300.

Hope this helps, if you have any questions feel free to PM me. Also, one last thing - if your deal goes south, don't blame the salesman. He's not allowed to negotitate, blame the sales manager. If the salesman is dishonest, then feel free to take out your frustrations on him as well

 

[Yeagermeister]

I usually accept the fact I'm going to get screwed and worry about how much my monthly payment will be

 

[GTaylor]

I usually accept the fact I'm going to get screwed and worry about how much my monthly payment will be

That's a common mistake to make when dealing with a Four square, and sadly it's how they take advantage of you (they'll extend it from 5 years to 6), etc.

BTW - Nice sig! Man it's not the same without Johnny around

 

[WoodysGirl]

I swear I've learned more in just reading this than I ever knew about the whole car buying process. And my uncle used to work for GMAC. Anyway, whoever started this thread, I thank you for asking and I thank you GT for delivering the knowledge.

 

[MichaelWinicki]

It is a damn good thread.

Thanks folks. Taught me a thing or two.

 

[GTaylor]

Thanks for the compliments, however I can help. BTW - the formula above works for houses as well (Change 60 months to 360 (30 years)), loans, etc. However with homes you'll be way off as they'll charge county tax, insurance, etc.

Here's a great article I reccomend, reminded me of my days as a salesman. A guy from Edmunds goes undercover as a salesman for 180 days total. 90 of those days is at a high-pressure import sales (Lute Reily Honda type), the other 90 at a no-haggle, Saturn-type place. Shows the mentality of the dealerships and what goes on in the background. I used to joke that if you wanted to know where to buy cheap Rolexs, ties, slacks and which strip clubs were good/bad don't check the city guide - ask a car salesman

http://www.edmunds.com/advice/buying/articles/42962/article.html

 

[DallasCowpoke111]

I usually accept the fact I'm going to get screwed and worry about how much my monthly payment will be.

This explains why you were so popular in prison.

 

[Yeagermeister]

This explains why you were so popular in prison.

But you will always be their favorite.

Isn't that how you got the name POKE??????

 

[mr.jameswoods]

I can tell you this much from all the research I have done. There is a difference between the Dealer Invoice and the Dealer Cost. Case in point, let's say you buy a Big Mac at McDonalds for 3 dollars. Then let's say you find a coupon on the floor at that same McDonalds. The coupon says one dollar off Big Macs so you give it to the cashier and she gives you a dollar back.

How much did the Big Mac cost you? $3-$1 = $2

However, what was the official price you paid for your Big Mac? $3

Car dealers work the same way. The $3 price of the Big Mac is the Dealer Invoice. The $2 cost of the Big Mac is the Dealer Cost or the cost the dealer ACTUALLY pays in the end when all these factors are taken into consideration. Let's discuss these other factors the dealers don't tell you about.

A. Holdback fees- The dealership takes a loan out from the factory to pay for their fleet of cars. Thus they pay an interest charge to purchase these cars. Dealer Holdback is when the Plant (Toyota) pays the dealership it's interest back if the dealer can sell the car within 90 days or so. The interest charge is 2% for foreign cars and 3% of domestic cars. It depends on the brand whether it's 2% of the base MSRP or the Invoice. In my case, Toyota charges 2% of the base MSRP for all it's vehicles in holdback

Long story short: The manufacturer gives the dealer back 2% of the base MSRP for the cars it sells. Obviously, the dealer doesn't want you to know this so even if the dealer sells you the car at invoice they still make money.

B. Manufacturer to Dealer Incentives- These are not the same things as customer rebates. The Manufacturer will give the dealership an incentive to get rid of cars on its lot. The car I'm interested in buying has a $900 dealer incentive. The dealership doesn't have to pass these savings onto the customer. In fact, Toyota has a $750 rebate on my car. But they don't know that I'm aware that the Manufacturer pays the dealer $900 when they sell the car I'm interested in. You can find out on www.Edmunds.com whether the dealer is getting an incentive from the factory.

Dealer Cost = Dealer Invoice + Destination Charges - Holdback Fee - Dealer Incentive

As you can see, the true cost of the car can often be lower than the invoice as the dealer would have you believe. So don't think you are getting a great deal just because you are paying invoice because they are still making money at selling you the car at invoice.

 

[Banned_n_austin]

I sold cars in college for 3 years.

What you want to do if it's a new car is ask to see the invoice and pay about 100$ over. This is good vor you and the dealer. The dealer has to make a little money.

It's also a good idea to go at the end of the month. This is when the managers need to hit thier volume marks. They'll be easier to negotiate with at this point. The salesman will ask you what he has to do for you to take it today. Then tell him you want the car for 100$ over invoice and ask to see the invoice. This will let the dealer make around 500 - 800 on the deal and you won't be in so much debt that your car is only worth half as much as you owe on it down the road.

The discount you get assuming you have no trade should be about 10% off the sticker price - not including rebates from the factory.

It is also wise to put down your tax, title and license fees. This will keep you from being upside down in your car - meaning your debt won't be way higher than your car's value.

What kind of car are you buying?

And are you trading in anything?

Tell me what you're trying to do etc. . .

It's not as difficult as some on here are making it seem. If you tell me what you need to accomplish I can help you out and make it real easy on you. Most of the negotiating can be done on the phone most of the time. Give me a heads up on what kind of deal you are trying to make.

 

[Banned_n_austin]

I'm buying a new car so I don't have to worry about buying used this time around. I have gone to cars.com and am dealing with an internet fleet manager. I heard it's better to go through them. One guy is offerring me 750 below invoice which isn't bad. The problem is I'm worried he is going to give me below Blue Book value for my trade in and try to b.s. me and charge me some absurd administration fees not related to tag, title, and licensing fees.

Sorry, I didn't read this.


What kind of car are you trading in and how much do you owe on it?

BTW, you're getting a deal that I think you should take.

And it's almost ALWAYS better to sell your trade in on your own.

Sometimes the dealer will try to roll your payoff into your deal. Meaning you pay for what you owe on your old car into your new car loan. This is not good for you.

If you can get the factory financing that is great, but if they tell you that you don't qualify, find another bank outside of the deal to finance your auto loan. Don't let them talk you out of this. Ask them for a buyers order and take it to a credit union or bank. .

Let me know what's going on with that and your trade.

The deal sounds fishy. . .

Most of the time they wont give you that price unless they are trying to make points on the finance (a dealer can add up to 3 percentage points to your rate on top of what loan they get approved) for instance, a bank agrees to finance your car at 6%. . .the dealer can sign you up at 9% and make that interest over the term of your loan which is typically 60 months.

Or. . .they could be trying to 'steal' your trade-in. . .meaning they'll make thier money on your trade by giving you less than it's worth. Be careful on the trade-in. I used to hold money on trades all the time. It put money in my pocket but the customer payed for it.

Give me the details before you buy.

 

[Banned_n_austin]

I've worked in car sales once, and while I hang my head in shame for admitting it, I can't say it wasn't a good learning experience. Here's what I've learned from my time in the business:

- If you ever only listen to one say I say, it's this. Do not be afraid to walk out the door, in fact those should be your first words to the salesman. Tell them he'll have one chance to impress, otherwise you're gone.

- Since you're going through a fleet manager I'm assuming you're also going through a credit union. This is good because as a salesman if I couldn't get you to overpay through the cost (Nicknamed 'Front End') then we would try to make you overpay through finance, i.e. interest rates, additional insurance, etc., Nicknamed 'Back End'. The back end is where the majority of the profit comes from on sales, hence why we have no problem telling you "$100 over invoice?? No problem!". DO make sure they show you the invoice, and remember the amount because once they take it away if you don't remember the number then you're at their mercy.
A) If you are not going through a credit union, but are a member - then talk to them first, get pre-approved. Why shop for a $30,000 car if you're only qualified for $25,000? Not only that, but when once you have your loan and you pick out your car you'll spend maybe...5, 10 minutes in the Finance office, tops (Because he really can't sell you anything).

- Sorry to burst your bubble but you're not getting blue book value. There's 3 kinds of value, black book, trade in and blue book. Black book is the bare minimum, trade in speaks for itself and blue book is premium. My goal as a salesman is to give you black book value for your car and sell you the new car for bluebook. Because after the deal I'll be hard-pressed to see your trade-in over blue book value, 95% of the time it'll sell for under. Therefore I'll need room to work with for my next deal. Ex: If your black book value for car X is $5000 and blue book is $8000 I'll try to pay you $5000 so that when I resell it I'll have $3000 tops to work with on the used-car buyer.
A) However, since you're getting the new car for "black book value" expect your trade in to also get "black book". I will admit, $750 below invoice is an awesome deal!! My dealership hardly gave deals out lower than $200 OVER invoice. My advice is to find out the black book value of your trade-in and be realistic and hope for the trade-in value.

TRADE IN TRICKS:

- This is something everyone should know. A salesman will say "let's go take a look at your car" and while out there he'll look for any marks, dents, scratches, etc. Should he see a dent he'll "pretend" to be inspecting it further. What he's waiting for is for you to talk, "Ohh, that was me, stupid me - I accidentally bumped into it with my bowling ball bag" , "That chipped paint was from a rock that came from another truck", etc. When you talk what you're doing is devaluing your own car value. So keep your mouth shut, in fact - Refuse to go out to your car. And when they're done checking out your car ask for your keys back. It's much easier to walk away when you have your keys rather than have to wait 5 minutes for the used car manager to retrieve them, during which time the sales manager will be hounding you. Again, be prepared to leave.

- Most dealerships will do what's called a Four Square. Basically it's a square divided into 4 sections, top left is car price, top right is down payment, lower left is trade in and lower right is payment. Idea here to get you to focus on one box while screwing you on the other three. I can tell you right now what your first offer will be (And why you should be prepared to walk): Top left will be full car price, top right will be 20% down payment, lower left is black book value, and lower right is your car payment at 16% interest. How do you get past this?
A) Be prepared - Bring in a calculator and scratch paper/pen, know your car's three values. In fact if you can buy a book that shows the values. Below is how you can determine the car payment, P&I (Principal and interest). Make sure to ask what the interest rate is of their offer, have them put it down in writing BEFORE you go into the finance office. Most will tell you verbally "Yes- you'll get 5 percent" only to find out when you go into the finance office it's with 20% down, otherwise your rate is 14 percent.

How to determine car payment. Example will be a $20,000 car, 6% interest for 5 years (60 months). If you put a down payment of say, $2000 then change $20,000 to $18,000.

1) $20,000 X .546 (You should have $10920)
2) $10,920 X .06 (You should have $655.20 - congrats, you now know the interest avg. you'll pay per year, if your rate is 8%, change .06 to .08, etc.)
3) $655.20 / (Divided) 12 (Number of months in year) = (Should be $54.60, this is your interest per month. Remember this number.
4) $20,000 (Car amount) / 60 (number of months) = ($333.33, this is your car amount on principal only).
5) Add interest $54.60 to your principal $333.33 and your car payment will be $387.93, add about $25 for loan insurance, etc. and you'll looking at roughly $412.93.

Finally, interest is usually 8.25 % (Irving used to have 6.25 for cars) and Tax Title and License is around $300.

Hope this helps, if you have any questions feel free to PM me. Also, one last thing - if your deal goes south, don't blame the salesman. He's not allowed to negotitate, blame the sales manager. If the salesman is dishonest, then feel free to take out your frustrations on him as well

You mention how they will subtly try to make you think your trade-in is a piece of turd. Sad, but true.

He also talks about 4 square. This is a numbers game and it's meant to confuse you.

Ask for the 'trade difference' and 'bottom line' and then take your buyers order to a bank to get outside financing.

 

[CliffnDallas]

Have your financing in hand. Before you go to the dealership. Have your down payment. If you know what you want to spend on the car then you will already know your payments.

No extras! No added warrentys. No dealer prep (take out the cardboard and eash it) Just say no. Would you like...NO! Beware when they bring in the office hottie whos job it is to sell you extras. She is evil incarnate.

Know what MSRP (sticker) and what invoice is. Know what the average selling price is for your area.

Good luck.

 

[cowboyfan4life_mark]

Poem for you...If we are close, we talk,...if not, I walk.
If you think that a vehicle is worth say $20,000.00 and they say $30k, say thanks but no thanks and walk away. Don't be afraid to walk. You probably won't even make it to the door.
Don't ever answer this question..."How much of a payment are you looking for?" They will always be just about $10-20 over what you say. Determine what they want for the car, and with your down payment, let that determine what the payment is. Once you determine that price, then spring it on them that you plan on trading-in. Never let them know that you are planning for a trade-in until after you have determined the price for their car. After all, you are doing two deals, buying theirs and selling yours. Treat them as two different deals.
One thing that has worked well for me for the last three vehicles that I have bought is I basically bought them over the phone over about a weeks process. I just feel that they try a little harder because you are not in their "backyard".
Good luck and if I can help with any questions, PM me.

 

[mr.jameswoods]

Well guys, your tips paid off. I wanted the car for 21,000 and I walked out with 21, 250. I was willing to go as high as 21,500 so I'm happy. The experience was pleasant overall. The dearler was fair. Sure, even he tried to levy some b.s. charges like "documentation fees" but in the end I got what I wanted.

Definitely learn the black book value of your car. Knowing that helped me get a good deal on my trade-in. The black book value is about a 1,000 under Blue Book value. The dealer knew he had no chance when I had the black book value of my car in writing from www.blackbookonline.com. So he gave me exactly how it was listed on that website so I got 750 less than Blue Book which isn't bad.

Overall, I got the car for $750 below invoice with no b.s. charges thrown. I did my homework though. I went to edmunds.com and cars.com to assess a variety of charges.

Anyway, I want to give special thanks to GTaylor and Banned n Austin for their detailed advice. It certainly helped.

MOST IMPORTANT ADVICE EVER- Go through their internet fleet manager. I went through www.cars.com. Dude, you will save yourself so much headache. You fill out what type of car you want etc and the website contacts dealerships in your area with your specifications. Mind you, cars.com doesn't send these e-mails to the regular dealer in the showroom. Every dealership now has sellers that work in the back office that only handle internet sales. The internet sales get paid less than the sales guys in the showroom. However, the internet sales people sell more volume to make up for it. They pretty much send you an e-mail with the invoice of the car so you don't have to haggle to figure out what the invoice is and then they offer you a little more or less than invoice. In my case, I got 750 below invoice because there was a rebate. After my deal was completed, I was chatting with my sales guy and he said that the showroom dealers are a dying breed and they they sell more cars through the itnernet fleet managers than the salespeople up front. Yeah, I didn't deal with any of the usual shenangans. It was a great experience.

 

[trickblue]

Well guys, your tips paid off. I wanted the car for 21,000 and I walked out with 21, 250. I was willing to go as high as 21,500 so I'm happy. The experience was pleasant overall. The dearler was fair. Sure, even he tried to levy some b.s. charges like "documentation fees" but in the end I got what I wanted.

Definitely learn the black book value of your car. Knowing that helped me get a good deal on my trade-in. The black book value is about a 1,000 under Blue Book value. The dealer knew he had no chance when I had the black book value of my car in writing from www.blackbookonline.com. So he gave me exactly how it was listed on that website so I got 750 less than Blue Book which isn't bad.

Overall, I got the car for $750 below invoice with no b.s. charges thrown. I did my homework though. I went to edmunds.com and cars.com to assess a variety of charges.

Anyway, I want to give special thanks to GTaylor and Banned n Austin for their detailed advice. It certainly helped.

Thanks guys

So tell us... what did you get?

 

[mr.jameswoods]

So tell us... what did you get?

2005 Forerunner SR5 2 wheel drive, base model with 3 options. The MRSP was 28,566 and the dealer invoice was 25, 546 at my dealership. I paid 750 below invoice with the rebate so I paid invoice for the car. After my trade in and the tag, title and tax, I walked out with 21,250. Not bad.

When I went through the non-internet way, the best deals I got were 23,000 and 22,500.