You know the rest of the saying. I wanted to point out one of the major flaws in today's automotive advertising world. It isn't the fault of the car dealers, at least not completely. To some extent, buyers who still make the trek to dealers to buy a $10,000 new car that has a sticker price of $20,000 help to perpetuate one of the most misleading advertising techniques in the automotive world.
One pay leases, or just about any lease for that matter, allow dealers to advertise "Drive Off" prices that are so far below the MSRP, they couldn't be real without some sort of catch. The "catch" with these programs is that you do not actually own the car, you are simply leasing it for the period set by the finance company. At the end of the lease, you can turn your car back in or pay the balance.
Leases in and of themselves are not bad. I want to focus on advertising the leases in a way that makes people believe they can buy a car for far below actual cost. People come in to buy a car at an outrageously low price. This price is based upon the total lease payments of the most basic version of a model. When the customer gets to the dealership, reality is spilled upon them in various degrees and at different intervals.
The goal is to get the customer to the dealership, then put them into a different model at a different cost. Despite the majority of people who do not fall for this tactic, there are still enough who go in for $150 payments and drive off at $299. Granted, the vehicle they take home is nicer than the one advertised and probably has a better finance term than the one offered, but it still keeps some dealers thinking that the tactic works. Why? Because it does, and in today's super-competitive automotive marketplace, it is important for them to do what they can to make it happen.
If you see an advertisement that interests you, call or email and get the details. All of the details. Chances are very strong that you will not get the complete picture upon first inquiry. It's okay. Keep asking. When they say they can discuss it more in-depth at the dealership, simply tell them that "if the terms of this deal are so bad that you cannot divulge them over the phone or email, it must be a ploy to get me to come in hopes that once I am there, you can put me in something else at a higher cost and payment."
Wait for a reply. If it isn't a good one, find someone else with which to deal.
Car Buying Tips
Thursday, October 23, 2008
Tuesday, September 30, 2008
Selling Your Car First
Trading in a vehicle at the dealership is often the easiest way to handle things. Who wants to go through the process of listing vehicles online or in the newspaper, showing it to complete strangers, etc.?
Those who want to save an extra $1000-$3000 or more are the people who go through that trouble.
The concept is simple. If a vehicle is worth $10,000 during a retail transaction, it stands to reason that a dealership is going to want to buy it for less. Whether they are buying it outright or taking it in as a trade-in, they are still "purchasing" the vehicle for some amount and they intend to make money off the sale of that vehicle.
An individual who really wants to get the best deal possible on their next vehicle buying trip should plan ahead and sell theirs first. It is risky, as the true way to do it is to park a vehicle somewhere where it won't be driven and can easily be sold and either borrow/share/rent another vehicle or get rides everywhere. Is it a pain? Probably. Is it worth it? Most likely.
For those willing, here's what to do. First, get it cleaned and parked somewhere with a sign in it. Get it listed on Craigslist at the least and on one of the paid automotive classified sites (autotrader, cars, etc). The newspaper helps, but isn't necessary.
Be ready to buy a car quickly. If it's new, this is easy. If you plan on buying used, be prepared to absorb the rental fees or be a bother to someone else who is loaning you a vehicle or driving you around. There is no point in rushing into a used car deal if it isn't the right one for you, so don't get trapped into needing a used car immediately.
Those who want to save an extra $1000-$3000 or more are the people who go through that trouble.
The concept is simple. If a vehicle is worth $10,000 during a retail transaction, it stands to reason that a dealership is going to want to buy it for less. Whether they are buying it outright or taking it in as a trade-in, they are still "purchasing" the vehicle for some amount and they intend to make money off the sale of that vehicle.
An individual who really wants to get the best deal possible on their next vehicle buying trip should plan ahead and sell theirs first. It is risky, as the true way to do it is to park a vehicle somewhere where it won't be driven and can easily be sold and either borrow/share/rent another vehicle or get rides everywhere. Is it a pain? Probably. Is it worth it? Most likely.
For those willing, here's what to do. First, get it cleaned and parked somewhere with a sign in it. Get it listed on Craigslist at the least and on one of the paid automotive classified sites (autotrader, cars, etc). The newspaper helps, but isn't necessary.
Be ready to buy a car quickly. If it's new, this is easy. If you plan on buying used, be prepared to absorb the rental fees or be a bother to someone else who is loaning you a vehicle or driving you around. There is no point in rushing into a used car deal if it isn't the right one for you, so don't get trapped into needing a used car immediately.
Websites like Bertera Auto Group and Car Dealers give excellent resources on how to sell a car.
Sell it for more than the dealer will give you but less than they would sell it for. Whatever they were going to give you, add $1,000 to $3,000 to that total, depending on the overall value. That is how much you need to sell it for. As you can see, you come out on top if you have cash down instead of a trade-in.
Car Buying Guide
Sell it for more than the dealer will give you but less than they would sell it for. Whatever they were going to give you, add $1,000 to $3,000 to that total, depending on the overall value. That is how much you need to sell it for. As you can see, you come out on top if you have cash down instead of a trade-in.
Car Buying Guide
Friday, September 19, 2008
Gas is High: Time to Buy an SUV
Gas prices are leveling across the country. Sounds good, but in reality, it's a bad sign for the future. Gas trends pointed to higher prices this summer. So far, they have been hovering around the same level. It means we're in for harder times and higher prices this fall and winter.
It also means that now is the best time to buy an SUV, truck, big car, or anything known as a gas guzzler. Sounds crazy, right? It's not.
1) As gas prices rise, standard SUV prices fall. This trend doesn't seem to effect the luxury SUV line, as this MSNBC article shows. Small SUVs don't get hurt either. But if you're looking at an Explorer, Pilot, or other mid-sized or larger SUV, the prices are at their lowest and probably will be for a little while.
2) When winter approaches, consumers in many areas where snow and ice are possible will take their chances with the gas and take on the safety of a 4-wheel- or all-wheel-drive. Prices will go back up a bit then.
3) They don't get 9 miles per gallon, as many people think. An average 15K miles per year, 55% highway miles driver can expect to pay about $10 less per month for every average mile per gallon they improve. So, the difference between a Nissan Pathfinder and a Volkswagen Passat is about $600 per year in gas. It sounds like a lot, but so many people pay $2500 or more extra to get into a hybrid.
This post by no means indicates that I support purchasing an SUV. They are not "environmentally responsible" for someone without a need. But for those nice, big families in snowy states, it's okay to make the switch, and now is the time. They can go to those who brought this article to you, Washington DC Honda, Auto Loan Shreveport, and Minneapolis Used Toyota.
If you're not in that area, any old car dealer will have to do.
Car Buying Tips
It also means that now is the best time to buy an SUV, truck, big car, or anything known as a gas guzzler. Sounds crazy, right? It's not.
1) As gas prices rise, standard SUV prices fall. This trend doesn't seem to effect the luxury SUV line, as this MSNBC article shows. Small SUVs don't get hurt either. But if you're looking at an Explorer, Pilot, or other mid-sized or larger SUV, the prices are at their lowest and probably will be for a little while.
2) When winter approaches, consumers in many areas where snow and ice are possible will take their chances with the gas and take on the safety of a 4-wheel- or all-wheel-drive. Prices will go back up a bit then.
3) They don't get 9 miles per gallon, as many people think. An average 15K miles per year, 55% highway miles driver can expect to pay about $10 less per month for every average mile per gallon they improve. So, the difference between a Nissan Pathfinder and a Volkswagen Passat is about $600 per year in gas. It sounds like a lot, but so many people pay $2500 or more extra to get into a hybrid.
This post by no means indicates that I support purchasing an SUV. They are not "environmentally responsible" for someone without a need. But for those nice, big families in snowy states, it's okay to make the switch, and now is the time. They can go to those who brought this article to you, Washington DC Honda, Auto Loan Shreveport, and Minneapolis Used Toyota.
If you're not in that area, any old car dealer will have to do.
Car Buying Tips
Wednesday, August 20, 2008
Where Car Dealers Make their Money Now
Before the Internet came and ruined everything, it was possible for car dealers to average over $2500 in adjusted gross profit on the sale of a vehicle just in the "front end". "Adjusted" gross profit does not take into account dealer pack, another form of profit that the car dealer institutes to give a base profit for dealer costs. In other words, even in a "break even" deal, the dealership itself still made hundreds or even thousands that was used towards base expenses. The profit over that was truly profit.
In today's world, many car dealers do not average in the thousands on their "front end" profits. Some average less than $1000 profit on vehicles that cost $25,000 or more. One may ask how they can stay in business if they are making pennies on the dollar compared to the early 90s.
The answer lies in the "back end". First, the definitions: Front end is gross profit on the sale of the vehicle itself, regardless of the payment method. Back end gross refers to money made in the Finance and Insurance department through the sales of various products and through percentages made on the financing of the vehicle.
In today's world, many car dealers do not average in the thousands on their "front end" profits. Some average less than $1000 profit on vehicles that cost $25,000 or more. One may ask how they can stay in business if they are making pennies on the dollar compared to the early 90s.
The answer lies in the "back end". First, the definitions: Front end is gross profit on the sale of the vehicle itself, regardless of the payment method. Back end gross refers to money made in the Finance and Insurance department through the sales of various products and through percentages made on the financing of the vehicle.
* * *
Quality car dealers that treat their customers right include Toledo used cars
Another great one to consider when looking at Fords would be OC Ford
Those who buy imports can visit Houston Hyundai Dealers
* * *
These products, which include warranties, gap insurance, credit life, and other various elements, are often high profit items. A dealer may sell an extended warranty for $1,999 but might only pay $600 for the contract itself. The rest is profit.
In financing, dealers have a "buy rate" and then they have the rate that they sign the customer with. The buy rate is how much the finance company charges. Anything over that is profit, and it can be very large.
For example, if a dealer has a buy rate of 4.3% and they sign a buyer up at 5.9%, the money earned through the extra 1.6% is given to the dealer. This is a very simplistic way of looking at it, but it gives you an idea of how the system works.
While front end grosses continue to go down, especially in the ultra-competitive new car market, back end grosses are getting higher. While I am not suggesting that this is a bad thing, it is the place where average consumers are still in the dark.
Dealers have to make money to survive. Despite common irrational feelings that people have towards dealers, they are still a service to us and they deserve the right to turn a profit. That doesn't mean that they have to make their profit off of YOU.
Shop around before you go to the dealer. It isn't just finding the best deal on a vehicle. It is important for people to have an idea of their best interest rate as well as the best prices on warranties or other services they may want to consider. Most of the times, these things can be negotiated in the F&I office.
Check with your bank or credit union to find out what rates they are offering. Check various online auto finance places. Know where you stand in regards to your credit so you can get the best rate you deserve. This does NOT mean applying for a bunch of car loans. Try to get an idea without having your credit pulled more than once or twice. If you can prepare ahead of time, order a credit report and take it with you to the bank or credit union. Ask for an honest assessment of what you can get and what to expect. The car dealer will normally be able to meet or beat any number you get from other sources, so knowing what they offer will give you a bargaining chip.
* * *
There are a lot of dealers that treat their customer right, such as Los Angeles Nissan Dealers.
In Pennsylvania, Ford Dealers Carlisle sells standard cars, plus Roush Vehicles.
With the growing popularity of the economical SUV, being one of the Houston Jeep Patriot Dealers has advangates.
* * *
The same holds true for warranties and other products. It is a little tougher, but can be done. When comparing online, it is important to make sure you are shopping "apples to apples" and not "apples to oranges". Look at it like choosing a health insurance plan. There are cheap plans, but they are just that: cheap. Find a good plan at a good price and be ready with the details when you go to the dealer. Again, they can usually beat anything that you bring in, but if you don't have the information, they won't volunteer a discount.
Smart shoppers know to compare everything, not just the cars they are buying. Knowledge is power, but more importantly, knowledge can save you a lot of money.
Car Buying Tips
Saturday, August 16, 2008
Car Buying Tips: Test the Dealer Before You Visit
The customer experience is important to some dealerships. Some. Most consider it a positive if it happens, but not a necessity. Good news for the consumers is that more dealers are becoming aware of the importance of good customer service.
Even better news for the consumer: you can usually determine if the dealership you are considering will give you an easy transaction, which in the end is what the consumer really wants.
It costs the average business 7 to 9 times more money to acquire a customer than to keep a current one. This holds true in the car business. Until recent years and the advent of the Internet, many car dealers did not practice this philosophy. The ones that do can be easily found through their automotive website and their Internet Sales Department.
The key to finding out is asking questions. In the old days (3 years ago) dealership’s employees, including the Internet department, were taught that less information is better. The goal was to get the customer to come to the dealership while giving out as little information as possible.
The thinking was that cars weren’t sold on the phone or over the Internet. Gross profit, on the other hand, was lost on the phone and over the Internet.
Flash forward to today and the facts have changed. People do buy cars on the phone and over the Internet. It just isn’t hard. Car dealerships who are willing to do this are also the ones that are willing to make the overall transaction easier.
Ask questions. It’s easy. Find automobile dealership websites that you are considering,search their inventory for vehicles, request information, and see what happens. Be honest (believe it or not, many dealerships are promoting honesty in their sales team). If you are wanting to buy a car within the next 3 days, tell them. It it’s something you are just starting, tell them. How they handle your needs is an important sign of their quality.
Once you have identified a vehicle of interest, go after the hard questions. How much, bottom dollar? What does the vehicle history report say? Dealers like Portland Honda Dealers and their fellow auto group stores Portland Toyota Dealers and Portland Lincoln Mercury Dealers are willing to get their customers vehicle history reports upon request.
Was it a trade-in, a local auction vehicle, or a program auction vehicle? These answers should come out easily and within an hour of asking (time enough to talk to the sales manager about pricing).
Trade-ins and interest rates are the only “cloudy” areas that the vast majority of dealers, even honest ones like Used Cars Shreveport, must try to avoid whenever possible. It is a trap, and too many people dishonestly catch dealers in it to the point that they must be defensive about it.
Consumers call regularly asking for a ballpark figure on their excellent condition vehicle and an average rate for their excellent credit. When they come to the dealership in their good (but not excellent) credit and in their nice (but not excellent trade-in), they make demands and threats, creating a bad experience for everyone involved. Within a week, 10 people that the customer knows will never shop at the crooked dealership again.
The best thing a consumer can do for trade-ins and interest rates is to check independently. Banks, credit unions, and online lenders can give a rate, while there are several trade evaluation sites on the web.
FINAL THOUGHTS
Ask the tough questions. Get answers or move on to another dealership. Buying a car can be easy in today’s market for anyone willing to make it so.
Several automobile dealer websites like New Jersey Chevrolet Dealers will use honorable methods to sell you a car. To find dealers like this in your area, you just have be willing to ask the questions.
Even better news for the consumer: you can usually determine if the dealership you are considering will give you an easy transaction, which in the end is what the consumer really wants.
It costs the average business 7 to 9 times more money to acquire a customer than to keep a current one. This holds true in the car business. Until recent years and the advent of the Internet, many car dealers did not practice this philosophy. The ones that do can be easily found through their automotive website and their Internet Sales Department.
The key to finding out is asking questions. In the old days (3 years ago) dealership’s employees, including the Internet department, were taught that less information is better. The goal was to get the customer to come to the dealership while giving out as little information as possible.
The thinking was that cars weren’t sold on the phone or over the Internet. Gross profit, on the other hand, was lost on the phone and over the Internet.
Flash forward to today and the facts have changed. People do buy cars on the phone and over the Internet. It just isn’t hard. Car dealerships who are willing to do this are also the ones that are willing to make the overall transaction easier.
Ask questions. It’s easy. Find automobile dealership websites that you are considering,search their inventory for vehicles, request information, and see what happens. Be honest (believe it or not, many dealerships are promoting honesty in their sales team). If you are wanting to buy a car within the next 3 days, tell them. It it’s something you are just starting, tell them. How they handle your needs is an important sign of their quality.
Once you have identified a vehicle of interest, go after the hard questions. How much, bottom dollar? What does the vehicle history report say? Dealers like Portland Honda Dealers and their fellow auto group stores Portland Toyota Dealers and Portland Lincoln Mercury Dealers are willing to get their customers vehicle history reports upon request.
Was it a trade-in, a local auction vehicle, or a program auction vehicle? These answers should come out easily and within an hour of asking (time enough to talk to the sales manager about pricing).
Trade-ins and interest rates are the only “cloudy” areas that the vast majority of dealers, even honest ones like Used Cars Shreveport, must try to avoid whenever possible. It is a trap, and too many people dishonestly catch dealers in it to the point that they must be defensive about it.
Consumers call regularly asking for a ballpark figure on their excellent condition vehicle and an average rate for their excellent credit. When they come to the dealership in their good (but not excellent) credit and in their nice (but not excellent trade-in), they make demands and threats, creating a bad experience for everyone involved. Within a week, 10 people that the customer knows will never shop at the crooked dealership again.
The best thing a consumer can do for trade-ins and interest rates is to check independently. Banks, credit unions, and online lenders can give a rate, while there are several trade evaluation sites on the web.
FINAL THOUGHTS
Ask the tough questions. Get answers or move on to another dealership. Buying a car can be easy in today’s market for anyone willing to make it so.
Several automobile dealer websites like New Jersey Chevrolet Dealers will use honorable methods to sell you a car. To find dealers like this in your area, you just have be willing to ask the questions.
Sunday, July 27, 2008
Some Humorous Dealer Scams and Secrets
Whether they try to hook us with a "Push, Drag, or Pull" sale or guarantee to pay off our trade no matter how much we owe, car dealers often use less-than-honorable methods to get us to come down to their dealership.
This article talks about 10 of the best ones. I wanted to add a couple:
11) Special Inventory Sales - With this scam, an ad company advertises their "event" as something coming from someone else. "Trader Bob" or "Repo Harry" is in town with his traveling circus if cars that are, for some special reason, marked way down. They normally don't even mention the name of the dealership until the end, as it is a canned media production with the recipient dealer inserted at the tail.
In reality, they are bringing in 5 or 10 extra cars and just putting balloons and red tags in the cars that the dealer already has on the lot.
12) Lenders on Hand - This is probably my personal favorite; it makes me giggle every time. Bankers and lending institutions are sending representatives from across the country to sit in a tiny room and sign off on your loan application. It's hilarious.
Technically, the lenders are always at hand. The internet, fax, and telephone makes it to where 95% or more of the lending institutions in the industry can approve or deny a loan in minutes. There are special finance companies that have to verify information and take longer, but for the most part, anyone with decent credit or better can get an answer while they wait, despite the fact that the dealer doesn't have to have a representative from Ford Motor Credit in the closet to stamp his approval on a contract.
Read the first 10 Dealer Scams.
Dealing with Car Dealers
This article talks about 10 of the best ones. I wanted to add a couple:
11) Special Inventory Sales - With this scam, an ad company advertises their "event" as something coming from someone else. "Trader Bob" or "Repo Harry" is in town with his traveling circus if cars that are, for some special reason, marked way down. They normally don't even mention the name of the dealership until the end, as it is a canned media production with the recipient dealer inserted at the tail.
In reality, they are bringing in 5 or 10 extra cars and just putting balloons and red tags in the cars that the dealer already has on the lot.
12) Lenders on Hand - This is probably my personal favorite; it makes me giggle every time. Bankers and lending institutions are sending representatives from across the country to sit in a tiny room and sign off on your loan application. It's hilarious.
Technically, the lenders are always at hand. The internet, fax, and telephone makes it to where 95% or more of the lending institutions in the industry can approve or deny a loan in minutes. There are special finance companies that have to verify information and take longer, but for the most part, anyone with decent credit or better can get an answer while they wait, despite the fact that the dealer doesn't have to have a representative from Ford Motor Credit in the closet to stamp his approval on a contract.
Read the first 10 Dealer Scams.
Dealing with Car Dealers
Sunday, December 2, 2007
The Worst Way to Buy a Car - A Brief Bad Experience
If it's too good to be true...
Anyone who reads this blog regularly knows that I've mentioned that line before and it never needs to be finished. Just heard of another "technique" that absolutely appalled me.
A friend goes to a dealer in a major east coast metro, drawn in by an ad that says "Drive home in a new (brand withheld so I don't get a lawsuit) today for $13,400!" The cars mentioned normally retail around $20,000.
Upon arriving at the dealership, he finds a friendly salesperson who confirms that it's not a scam and that the deal is real. "I'll own this car for under $14K," my friend asked.
The salesperson, perfectly trained to word it just right, says, "Yep, if you write me a check for $13,699 ($299 doc fee) it'll be in your driveway this afternoon."
You probably see where this is heading.
After a couple of test drives, the negotiations started. He opted for one with more than the basic options, which the salesperson said would be sold comparably but just a it higher than the one in the ad. No problems yet.
Finally, the negotiations. The first pencil comes back at $23K. My friend started to object, but the salesperson cut him off nicely and said that it was just a starting point and that they had to list MSRP for paperwork purposes. He crossed out the number, turned the worksheet over, and typed the following statement for my friend to sign:
"I will be the driver of this ________ for $15,384 cash or check."
My friend was relieved. He signed, called his wife, and waited for the finance department to call him back for the paperwork.
This is where it got ugly.
Versus going into the details of the 2 hour exchange that followed, let me give you the details of the scam and you can use your imagination to fill in the blanks. It's a single pay lease option. A consumer can "lease" a car for three years, paying only the price of the lease itself. At the end of the 3 years, they can either turn it back in, trade it in, pay off the balance, or finance the balance.
The single pay lease in itself is not a scam. For many, it's a great way to "hedge your bet" that the car will depreciate quickly. Most trade or replace a vehicle every 2-4 years anyway, so it's an easy way to pay for a car and not have to worry about trade values or anything like that later.
The scam is, of course, in the way the mesage was delivered hours after the exchange began. The ad is misleading. The salesperson was misleading. The negotiations were misleading. It wasn't until the final stage when the "trap was set" that the truth finally came out.
This is a bad practice, indicative of the techniques used in the 80s and 90s that gave the car business such a bad reputation. When investigating deals and specials on vehicle, remember, if it's too good to be true...
This article is sponsored by honest dealers and automotive companies such as New Hampshire Volvo Dealers, Toledo Dodge Chrysler Jeep, and Beaumont Chevrolet. People have choices when buying new and used cars. It's up to you to get the information necessary to make a good one.
Car Buying Tips
Anyone who reads this blog regularly knows that I've mentioned that line before and it never needs to be finished. Just heard of another "technique" that absolutely appalled me.
A friend goes to a dealer in a major east coast metro, drawn in by an ad that says "Drive home in a new (brand withheld so I don't get a lawsuit) today for $13,400!" The cars mentioned normally retail around $20,000.
Upon arriving at the dealership, he finds a friendly salesperson who confirms that it's not a scam and that the deal is real. "I'll own this car for under $14K," my friend asked.
The salesperson, perfectly trained to word it just right, says, "Yep, if you write me a check for $13,699 ($299 doc fee) it'll be in your driveway this afternoon."
You probably see where this is heading.
After a couple of test drives, the negotiations started. He opted for one with more than the basic options, which the salesperson said would be sold comparably but just a it higher than the one in the ad. No problems yet.
Finally, the negotiations. The first pencil comes back at $23K. My friend started to object, but the salesperson cut him off nicely and said that it was just a starting point and that they had to list MSRP for paperwork purposes. He crossed out the number, turned the worksheet over, and typed the following statement for my friend to sign:
"I will be the driver of this ________ for $15,384 cash or check."
My friend was relieved. He signed, called his wife, and waited for the finance department to call him back for the paperwork.
This is where it got ugly.
Versus going into the details of the 2 hour exchange that followed, let me give you the details of the scam and you can use your imagination to fill in the blanks. It's a single pay lease option. A consumer can "lease" a car for three years, paying only the price of the lease itself. At the end of the 3 years, they can either turn it back in, trade it in, pay off the balance, or finance the balance.
The single pay lease in itself is not a scam. For many, it's a great way to "hedge your bet" that the car will depreciate quickly. Most trade or replace a vehicle every 2-4 years anyway, so it's an easy way to pay for a car and not have to worry about trade values or anything like that later.
The scam is, of course, in the way the mesage was delivered hours after the exchange began. The ad is misleading. The salesperson was misleading. The negotiations were misleading. It wasn't until the final stage when the "trap was set" that the truth finally came out.
This is a bad practice, indicative of the techniques used in the 80s and 90s that gave the car business such a bad reputation. When investigating deals and specials on vehicle, remember, if it's too good to be true...
This article is sponsored by honest dealers and automotive companies such as New Hampshire Volvo Dealers, Toledo Dodge Chrysler Jeep, and Beaumont Chevrolet. People have choices when buying new and used cars. It's up to you to get the information necessary to make a good one.
Car Buying Tips
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