Any Questions for a Car Dealer?

KCRam

We continue from Smart Shopper Topic 1508 - Any
Questions for a Car Dealer?

kcram
Co-Host - Smart Shopper & FWI Conferences
edmunds.com Town Hall

im_brentwood

I have never worked, nor will I, at a store that will pull a customer's credit without their knowledge.

Now, I will usually ask to pull a beacon score during negotiations for one simple reason: Lexus Financial Uses a tiered rate system.

700+ Beacon: .00345
700> Beacon: .00390
660> Beacon: .00420
620> Beacon: .00454

This means, that if someone like hondobondo comes in, who refuses to let the dealer run a credit check during negotiations, it can become a royal Mess. Now, say we have come to an agreement. Say we were working Level 1 Numbers, now the customer scores a 645. Now I have to bump them $51 a month. Guess what usually happens here?

Bill

audia8q

I just got done reading the 240 page manual which explains how ones beacon score is arrived....I need 6 phd's from Yale to figure this out...but one thing is certain. like inquiries in a short amount of time only count as 1. The inquiries will show up and remain as long as 2 years.

I love all these people who don't want us to pull the credit report and then want us to quote the best rate...more times than not people who pay their bills don't have a great Fico score and get the second tier finance rate. If they had let us pull the bureau ahead of time we could have eliminated this situation
Rich

blackcurrant

Who are the big three credit bureaus and how do the scores relate between them? TRW and ????

agt_cooper

My question was whether the practice of pulling a credit report as a matter of course was the norm, not whether it should occur during the discussion of financing. Obviously, if the customer wishes to discuss the dealership's financing options, they need to be willing to provide access to credit data.

But if they have no need for these services, you have no business knowing there financial history.

And as for the 20/20 piece, it just goes to show that a little research and leg work up front can save you substantial money in the long run. I too, had to laugh at the "suit" trying to put a good face on the practice, saying they are providing a valuable "service" to their clients. While I agree the report was a bit sensationalized, it may help a few people who had no idea that car dealerships can and do make profits on the loans they arrange.

It is yet another piece of evidence that suggests that anyone who wishes to purchase a car had better do a lot of work prior to setting foot inside a dealership. Otherwise, they are setting themselves up to part with more of their cash than is necessary.

audia8q

my policy has always been clear and simple concerning consumer credit reports...the only time we run them is if the customer brings up the bad credit ahead of time or once we have a signed deal. Cash deals do not have credit pulled.

Experian (trw), Trans-Union and Equifax are the big players.
All three sell tremendous amounts of consumer information to anyone who is willing to pay for it. They are the ones giving out everyones secrets.

Rich

md2002

are the BIG 3. TRW has been known to be well not up to standard on clearing incorrect info. I think it was 20/200 or Flatline NBC that did a piece on this fella who had very good credit, but despite having incorrect info removed TRW kept putting it back into his report.

They got sued. And Lost BIG TIME. They are no appealing the case. I mean they lost BIG TIME Millions in damages.

He will never see a penny of it.

I check my report every 6 months and keep all records up to date. It took me 9 months to get Chase Manhattan to remove incorrect info on an account of theirs from 5 years ago. In NYS they have 30 days to resolve a dispute, they ignored it for 8 months and I had to keep writing letters, finally they figured out they had nothing on file, as in they couldn't even find the files in "storage" so they removed it.

Would have been nice if they held up to the letter of NYS banking laws. Not likely though.

fortunate2001

What is the best time of year to sell a car? I
would think (at least in New England and northern
states) that this might be a good time- lots of
people thinking their old cars might not make it
through the winter....

Any historical rules of thumb for this sort of
thing?

mackabee

Again you keep trying to put words in my mouth. Never did I state that it is our dealership's policy to pull everyones' credit bureau. I said it is not illegal in the state of Va. No I'll repeat what audia8 said: If a customers gets anal retentive about the credit issue (interest rate) we will gladly ask for his permission to check his credit in order to quote him/her/they the rate they qualify for. Like I said I could care beans about what their credit is until we settle on the vehicle they'd like to purchase.

; )
Mackabee

P.S X-FILES back on November 5th. I'll see you there agt. Cooper.

agt_cooper

In relation to the 20/20 "expose" on dealership loan practices, I came across this little tidbit that is required by Virginia any time a party to the sale of real estate is also going to assist in securing the mortgage and will profit from that assistance. This notice must appear on a loan application in bold type, minimum 10 point size. It must be acknowledged by signatures of all borrowers.

NOTICE
We have offered to assist you in obtaining a mortgage loan. If we are successful in obtaining a loan for you, we will charge and collect from you a fee not to exceed .... % of the loan amount.
We do not represent all of the lenders in the market and the lenders we do represent may not offer the lowest interest rates or best terms available to you. You are free to seek a loan without our assistance, in which event you will not be required to pay us a fee for that service. If you are a member of a credit union, you should compare our interest rates and terms with the mortgage loans available through your credit union.

Maybe something like this should be added to the buyers order for dealerships who will also arrange financing for the customer? I'm sure the "suit" who was representing the dealerships on "20/20" would be in favor full disclosure on this "valuable service" that dealers provide......

coffeebiz

I was at a Toyota dealer this past weekend looking to buy a 2001 Avalon. The negotiations were going well and I ended up with a great price. When the saleman began to fill out the buyer's order whee he lists the car with the options and my down payment (it's like a dealer standardized form) I saw that there was a $399 "processing and delivery" charge that is assessed automatically. I asked the saleguy to explain this fee but he just gave me a roudabout answer. I walked out because I can't think of what kind of service would justify this amount. I was afraid to sign thinking that this was a scam by the dealer to recoup whatever money they lose from potential negotiations.

Is this fee justifiable and if not, how can I negotiate to get it lowered or off the application all together?

Thank you.

mvargo1

Processing fee is probably just a way to recoup money lost in negotiiations. However, if the fee was not included the final price would probably have been $400 higher. It is also reasonable to assume that a state inspection, Pre Delivery Inspection, Full detail, Full tank of gas, and various notery and other charges could total $399. Your graet price was probably at least $400 lower than any other price you got because of this fee. I'm sure you could attempt to negotiate it, just don't expect it to work.

mvargo1

Who care if dealers are making money on the financing of a car loan. What's the difference if a bank makes the money or a dealer does.

cardreamer

What does it mean when a fleet manager says that they want to get "100% survey" when selling a car at fleet prices?

bobst

Congratulations on having the sense to walk out of the dealer when they tried to add in that silly 'dealer processing fee'

In the future, the best way to avoid this fee and other surprise add-on charges is to make an 'out the door' offer. For example, when we bought our last Honda, we offered $20,300 OTD. They accepted, we gave them a check for $20,320 ($20 for a fancy license plate), and drove the car home.

h_bosi

I am in the process of buying a new vehicle. The thing that is so the same in different dealers is this (or a variant thereof), "how much of a monthly payment can you afford?"

Granted, I can understand why many buyers NEED to know upfront what the monthly payment is. It just isn't my style, because a purely payment-driven purchase leaves me wondering about too many things (actual price & trade-in, interest/lease rate, residual, etc.)

What do you estimate the percentage of buyers who are monthly-payment based, vs someone like me who just let the payment comes out whatever it will come out, depending on the price, financing,trade-in, etc.?

Just curious.

/BOSI

audia8q

good question. The answer really depends on the product line and location. I worked for 17 years in the car biz in a very wealthy part of connecticut. We never worked deals on payments. But now that I am in the Nashville area, very few consumers seem to have any interest in the selling price, they want to know "how much per month"....so I mold the process to fit that particular consumer buying patterns. Also, nobody walks into a MB dealer and says "I have $500 down, what are my monthly's"...but at a Hyundai store I would say that 95% of the buyers are payment buyers.

Rich

ls1v8

Whether it was GMAC, FOMOCO or a third party dealer "preferred" Bank. I always have my financing approved prior to visiting a dealer. Are people like me in the minority for all new car buyers?

mvargo1

Lease customers are by definition monthly payment buyers. Along with people who have never bought a new car before. If someone has never bought a new car before they might not realize that every $10000 you borrow is going to cost them approx $200-$250 a month depending on their credit (assuming 60 mo. financing). If a salesmen properly qualifies a customer they can find out how much someone knows about buying a car. If the guy you are talking with thinks he can buy a $40,000 vehicle for $500 a month with nothing down you better switch him to a different vehicle rathger than have him pass out when you tell him his payment is $900 a month. As a general rule the more expensive the vehicle the less likely someone is to finance.

jmurman42

are 70% of all customers. The rest are either cash buyers or difference buyers. Hopefully you will know the difference between them all.

When it is all said and done, its really payment. For example, we are running 2.9% for 4 cyl Accords this month, thats for 36 months...equalling about a $600 per month car payment. So, even though 2.9% sounds WONDERFUL the reality is that most cannot afford it.

It is true, finding what a customers budget is can be a good way to budget a vehicle. However, the majority of people will give you the "about 250 per month" and that opens up to a premature discussion of interest rates. I try as much as I can to show the car, THEN sit down and discuss HOW they want to buy their car.

isellhondas

I think a lot of that depends on the area in which a dealership operates.

I see very few paymetn buyers. The vast majority of the folks I deal with are pretty savvy.

I did sell a 2001 Accord with the 2.9% financing last week to a guy who was planning to pay cash. He wisely decided that he would leave his money invested and take advantage of the giveaway interest rate.

andre1969

Hey gang,

How good does your credit score have to be to get those real low interest rates? I bought my Intrepid in November 1999, and had no trouble getting the financing. I had been on a CCCS plan from April 1996 to November 1998, and still had a few late payments on credit cards showing up on my report. I had been told that when you're with CCCS or similar payback plans, most people treat you like a bankruptcy until you're finished with the plan.

It just surprised me that I was able to get the 0.9% financing. Also, I've never seen my Beacon score...is there any way to find out what it is?

Thanks!
-Andre

im_brentwood

Id depends on the Finance company. A lot of it is based upon your Beacon score, which perhaps 2 or 3 people on the planet can accurately describe. Seriously, it's a numerical score based on your creditworthiness.

Have perfect payment history but 20 maxed credit cards? Low score. Etc..

Also, Chrysler Financial will be a lot more forgiving than most.

Bill

dsattler

There are legislative moves afoot -- some federal, a few in some states -- that will give consumers direct access to FICO data (Fair, Isaacs) which is the basis of Beacon and other scores. Right now, the only way to find out is if you have a friend -- banker, mortgage broker, etc. -- in the financial services industry. An auto salesperson would work, too. He/she can pull your scores for you. That's what I did, just to check for fun. I won't get into the issue of the information which affects the interest rates you pay for everything, from mortgages to other loans to credit cards, being inaccessible to you.

isellhondas

Going into Consumers Credit Counseling is a decision that should not be taken lightly.

It is a hell of a lot better (and more responsible) than declaring bankruptcy however.

Normally, until the debts are paid while "in" CC, you cannot take on any more debt.

I'm surprised that Chrysler would have approved that loan.

Still, desperate companies will do desperate things. I've seen Ford Credit approve people who should be in jail!

andre1969

I found that out while I was paying my credit cards off how hard it was to secure more credit, so I paid them back as quickly as possible. I was actually on a 5 year plan, but paid it off in 2 1/2. I tried to refinance my mortgage during that time, but nobody would even touch me, so I just paid extra into that, as well.

Maybe because I was able to pay everything off so quickly, it improved my credit rating? Also, about 6 months after paying off CCCS, I had no trouble refinancing my mortgage. I was under the impression that my credit would still be screwed for a couple years!

-Andre

andre1969

Do American cars (or cars in general) depreciate quicker than they used to? I was just wondering...my grandfather saved the paperwork on just about every car he'd ever owned. And it looks like back in the 50's and 60's, he would get about 1/2 of what he paid for his cars when he traded (usually about every 3-4 years). For example, he bought a 1957 Ford Fairlane 500 for $3500, and got around $1700 or so when he traded it for a 1961 Galaxie 500. Come to think of it, I think he got about $6800 tradein on his 1985 LTD when he traded it for an '89 Taurus, and that was about 1/2 or a little more than he paid for it.

But nowadays, I doubt a 4 year old Taurus, Intrepid, or Lumina with average miles would be worth half its original selling price.

-Andre

timadams

The Dec. issue of Kiplingers has tables that indicate the projected resale value of most of the cars on the market after 2 years and 4 years. The resale value is indicated as a percentage of the original MSRP. The figures came from a leasing consultant company.

In general, big three domestic cars do depreciate faster than many imports, but there are also exceptions. In general, Honda, Toyota, Subaru, VW and many luxury brands depreciate slower, but so do some domestic models such as the Pontiac Firebird and Chevy Camaro and Corvette.

In your example, here are the figures provided by Kiplingers for competing family sedans, 2 year/4 year:

Ford Taurus 53/35
Dodge Intrepid 50/33
Chevy Lumina 46/32
Chevy Monte Carlo 56/42
Acura Integra 59/46
Honda Accord 61/47
Mazda 626 58/36
Mitsubishi Galant 55/41
Nissan Altima 58/41
Olds Intrigue 49/35
Pontiac Grand Prix 56/39
Subaru Legacy 58/44
Toyota Camry 57/43
VW Jetta 60/45

The paper magazine has the cars in tables, but you can look up individual cars on Kiplinger's website at:

http://www.kiplinger.com/php/cars/2001/

The web site provides the same resale value information for each model.

CarMan@Edmunds

Kip lingers certainly has some interesting information about automobiles on their Web site. Thanks for sharing the link with everyone, Tim.

Car_Man
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andre1969

That Kiplinger's link is great! One thing I find interesting is that the Dodge Intrepid (which I own) numbers are close to the Taurus and Lumina, and even the new Impala is rated at 53/38%. I keep hearing people say how horrible depreciation is on Intrepids, although it looks like its numbers are in the ballpark with its closest competition.

-Andre

timadams

You're welcome! But please remember to take the figures with a grain of salt.

I'm not questioning Kiplinger's integrity or accuracy, but you do have to remember that the figures they provide are "in advance" projections used to calculate lease payments. What the actual depreciation of a car will be in 2 or 4 years might be quite different, due to supply/demand at that time (as SUV owners will find out, I predict).

I'm sure Isell or Bill might pop in and relate their experiences that, say, Toyotas or VWs or whatever actually do better than projected in holding their value while Chryslers or Pontiacs do worse (just examples).

In other words, while the projections used by leasing companies are valuable information, actual results might tell a slightly different story.

p.s. Andre, the one that surprises me most on the list is the high expected resale value of the Chevy Monte Carlo. It is way out of trend with most other GM cars (other than Firebird/Camaro and Corvette).

audia8q

The problem with the kiplinger type statistics is that everyone thinks their cars or truck is the pefect one...I have found plenty of toyota's that have 95% deprec after 36 months and some Ford's with much higher resale than the toyota...
It truly depends on the individual car and how the owner keeps it...

Also when you call the 1-900-crystalball number you bank on things never changing. But they always do...this is why the so many huge players in the leasing business are out of the business or near financial ruins basing things on kiplinger type statistics...consumers change long before the statistics do...
look at the statistics on Audi before and after the phony 60 minute story..
BTW: some of the numbers are rather accurate but some are totalreal world fiction (like the camaro /monte)

Rich

isellhondas

Many a bank and car company has been burned big time by setting residuals too high.

The Intrepid (or whatever) comes off lease after three years and the lessors walk away.

The residual was set at 12,000 and they are begging at auction for 8500.00.

And...the banks get smarter, and tighter.

And the customer wonders why he can't get the same payment next time!

Why? Because the banks dropped the hell out of the residuals!

stickguy

Don't you also have to take into account that the percentages are off of MSRP? For instance, the Taurus might look worse than it really is. Say MSRP is 20,000, factor of 50%, so residual is 10K. But if you only paid 17,000 for it, your real depreciation is much less.

I also don't care much about percentages. Dollars count. 40% of a 40K car is more than 50% of a 25K car,

audia8q

you are correct about the % of MSRP.
If you figure in .9% financing for 60 months along with a rebate that dodge/ford et al offer the numbers start to get more inline...

rich

timadams

Like other things in life, hindsight is 20-20. I imagine we will look back at the early and mid 90's as a period of leasing bargains, with the pendulum swinging back now to where residuals are much less optimistic. Meaning that leasing payments are higher for the same price cars.

As an admitted SUV hater, I am probably biased. But I think depreciation on many of the SUVs out there will be greater than owners and leasing companies think. Once the craze has abated, they will be worth less than projected. Kiplingers shows many of them worth over 60% after 2 years and 45-50% after 4 years. The old "trucks/4WD vehicles hold their value better" will be an outdated aphorism as supply outstrips demand. It used to be true when a guy wanted a 4WD "beater" to take in the woods and there weren't many around, but that isn't true anymore.

frag235

Are the above resale percentages realistic for Accords in your experience? How about residual values for 2-3 year old ones? (btw, I have a Y2K SE)

isellhondas

No, Accords will have a higher residual since they hold their resale better than most cars on the road. that is why they can be leased for low payments.

Still, the car/leasing companies heve to be very careful when setting residuals.

akangl

Ok, here is my story or whatever you want to call it. I need to trade down out of a 1999 Nissan Quest SE to a small car that I can pay off in 2 years. I plan to sell the Quest on my own, I don't think I will have a problem since it is a very clean, low mileage van. There are 2 Honda dealers in the state of Alaska and I have had dealings with both, some good, some bad. My biggest problem is the 10% market adjustment that they feel justified in charging and if you succeed in talking them out of that its hard to get a car for less than MSRP. Ok, before I go any further I have been in car sales for about 6 months and decided the 85 mile one way drive to work wasn't fun so I moved on to something that required less traveling. That being said I have seen people saying that they paid $24,000 for a Nissan Quest SE same as mine which I paid $26,000 for, MSRP was $28,250 and it was a leftover 99 in June of 2000. This has got me wondering if I can get a better deal on the car I want to buy......2001 Honda Civic EX 5-spd with side airbags, if I go to say Washington. Several of my friends have done that and say they got a much better deal. Any comments? I don't want to seem like an inconsiderate buyer, I am quite the opposite, I am very easy to deal with and not at all unrealistic, however I will go to Washington if I can get a better deal. At least the 2 Honda dealerships up here are owned by 2 different people, the 2 Nissan dealers are owned by the same guy.

vida27

I grew up in Palmer, Alaska but live in Oregon now. It is tough to buy cars in Ak because of the lack of competition. On the other hand, buying a car in WA or OR is tough becuase the drive back to AK is long (2500 miles), gas is expensive in Canada (4.00 per gallon), and the ALCAN will beat the hell out of your brand new car. Tough call.
I would get on the internet and see what kind of price you can get for your dream car. Compare that to what you can get in AK. If you can save a bunch of money by coming to the lower 48, then do it. Otherwise it probably isn't worth the hassle.
I bought my 2001 Honda Accord EX V6 in Portland for 300 under invoice. It was a very satisfying deal. If you could get a similar deal on your civic, it might be worth the trip. Plus, you could show the AK dealers the consequences of price gouging.

vida27

It seems like everyone in the area charges some sort of a 'market adjustment'. Other than for high demand cars like the S2000, they aren't really serious about it. Personally, I find the practice to be repugnant.

frag235

Wow...that's a great price for an EX V6. How'd you buy if from? Did you negotiate yourself, or go thru a broker?

kbynot

FROM THIS WEBSITE I DISCOVERED THERE IS A CURRENT DEALER INCENTIVE ON 2001 9.3 SAAB. FROM THE DEALERS ADVERTISING I KNOW SAAB IS ALSO OFFERING 2.9% FINANCING ON THE 2001'S. THE SALESPERSON TELLS ME IT'S AN EITHER/OR PROPOSITION.....IS THIS TRUE ? OR SHOULD I BE ABLE TO NEGOTIATE A GOOD CHUNK OF THE DEALER INCENTIVE AND GET MY CONSUMER FINANCING DEAL ? THANKS

isellhondas

WHY DON'T YOU ASK TO SPEAK TO HIS MANAGER?

IT COULD JUST BE A "SAAB" STORY!

CarMan@Edmunds

Kbynot, the person that you spoke with at this dealership was telling you the truth. The Dealer Cash that Saab currently has available on the 2001 9-3 may not be used in conjunction with any promotional lease or finance contracts. It would be way too expensive for Saab to allow consumers to combine finance rates as low as 2.9% with thousands of dollars in cash.

Car_Man
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tsctom

Please excuse me if this has been asked before.

We ordered a common, saleable version of an import car, and the mfg hasn't filled the order yet (No VIN, the car is not in port.)

Circumstances have changed, and I need to move on a purchase. Found the car at another dealer, who won't trade with dealer #1.

Is it fair to ask for my deposit back? Again, the car has not been allocated to dealer #1 yet.

audia8q

Alot depends on the dealer. I would talk to the manager and explain your situation...If the car isnt that uncommon they should be able to get one somewhere.

Rich

mvargo1

I don't know where you live but, in PA deposits are refundable up until the day you actually leave with the car. So hey you gotta do what you gotta do. If you need the car right now and someone else has it go ahead and ask for your money back.

black_tulip

I posted this question in "Leasing questions"
topic at FWI, but I thought I would get
a dealer's perspective as well, since you
guys deal with finance companies all day long.

I have a car on lease,
through the financial arm of the
manufacturer. Recently I moved to another
state and the local dmv requested some
documents(titles etc.) from the finance company,
so that the registration could be transferred
to this state.

The problem is, the finance company does not
seem to be interested. I always get the answer
that the original title has been lost and a
duplicate has been applied for. This is going
on for three months now. I have spoken to
supervisors and I get the same canned answer.

Do I have any rights at all in this
situation? How can I gently but firmly
pursuade them to act?
Thanks

audia8q

This is a tough one. Duplicate titles can often take 6-8 weeks in many states but three months is getting out of hand. I would ask for the supervisors boss and keep going up the food chain until you get results. Make sure you get names and extentions also.....This type of thing shouldnt be happening without a better explination.
Also, does your lease contract say anything specific about this? Also, who is the lease source??

Rich

black_tulip

There is nothing in the contract about this.
The lease source is the financial arm of
the manufacturer who makes what your username
refers to.
Do you think writing a letter would make any
difference, rather than just calls?