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Any Questions for a Car Dealer?

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  • jasmith52jasmith52 Member Posts: 462
    Just for discussion, lets turn the tables and suppose that the error had been in the dealerships favor.

    So you go home and look over your paperwork a couple days later and find the mistake.

    Then you come back to the dealership to tell them that - "This isn't the deal that we discussed - I was supposed to pay you $2000 less"

    Would the dealership step up to the plate and change the deal ??

    Maybe, but I know a few dealerships that I wouldn't be so certain of the outcome.

    As an aside, Isn't the "paperwork error" one of Lucky Eddies car sales profit improvement methods ?
  • kyfdxkyfdx Moderator Posts: 266,116
    What does that have to do with right and wrong?

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  • klbrmbklbrmb Member Posts: 41
    "What you did wrong, was discussing your personal finances with others.. (not including us, of course..lol)"

    Perhaps I should have clarified who the others where... Family members doesn't really qualify as others. :) Being that I am an accountant, I know better than to do that.

    Thanks everyone for the comments though. It's nice to know that I am not the only person who felt it was the right thing to do.
  • stickguystickguy Member Posts: 53,403
    it's usually pretty clear what is right and wrong morally. I think the question here was what legal recourse is there (I guess in case the buyer takes the $ over morals path).

    Someone pointed out above that some dealers would just say too bad, and I have a feeling that once everything is signed sealed and delivered, the buyer could say the same thing.

    Actually, I think the dealer should eat the loss if they made a mistake, just as a business decision, unless they just forgot to collect sales tax.

    2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.

  • kyfdxkyfdx Moderator Posts: 266,116
    In my experience, the dealership will get their money.. If they discover the math error, there is usually financing involved, and that is where things get sticky for the buyer.. Also, usually you don't have all the paperwork to get your plates for three or four weeks, and they could withhold that as well..

    (since we are talking legally)

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  • jondwrightjondwright Member Posts: 1
    Hello,

    I am considering a car, and when running the carfax report on this 2001 car, I see that it was leased for 3 years when it was brand new. It was then sold at auction to a dealer, sent back the auction 2 months later, sold to another dealer, sent back to auction 2 months later, and then sold to the dealer I bought it from. Should I be concerned about this?
  • bobstbobst Member Posts: 1,776
    Case 1: Suppose the MSRP of a car is $30K. The salesman misreads the sticker and sells it to me for $15K. I give them a check and drive home.

    Later they call me and say the price of $15K was a mistake. Should I offer to pay more?

    Case 2: I want to sell a car to Carmax. I look up the Blue Book value and I see $4K. So I sell it to them for that amount. Later I realize I looked at the wrong figure, and the car was actually worth $10K.

    Should Carmax offer to give me more money to make up for my mistake?
  • kyfdxkyfdx Moderator Posts: 266,116
    Neither case 1 or case 2 is analagous to what happened in the posting above.. It was strictly a math calculation error while doing the paperwork.. In both cases you propose, prices were agreed upon and the sale was executed to match... different things...

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  • kyfdxkyfdx Moderator Posts: 266,116
    Case 1: Assuming you don't have title in hand, I'll bet you'll never get it, and will have to unwind the deal.

    Case 2: Out of luck, most likely.

    Moral: The car dealer holds most of the cards.

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  • stickguystickguy Member Posts: 53,403
    But, in case 1, you could take legal action against the dealer to get the title, etc., and win.

    case 2 is just your tough luck. Also why I always like to let the seller make the first offer, just in case I somehow have misrread market conditions.

    2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.

  • zodiac2004zodiac2004 Member Posts: 458
    Case 1: Suppose the MSRP of a car is $30K. The salesman misreads the sticker and sells it to me for $15K. I give them a check and drive home

    Perfect case of finders keepers. You pay the check and drive home with the title, it's yours. Absolutely nothing they can do about it, unless they are holding something you need, like the title or something.

    Case 2: I want to sell a car to Carmax. I look up the Blue Book value and I see $4K. So I sell it to them for that amount. Later I realize I looked at the wrong figure, and the car was actually worth $10K.

    Books don't buy cars. Carmax evaluates cars and offers a price based on that. But if you went in and said "I want 4K for my car cause that's what the book says", then obviously you have no recourse.
  • jaserbjaserb Member Posts: 820
    The original poster said, "they took the value of the new car rather than the trade value to determine negative equity." So the trade value was known and the payoff was known, and I'm guessing both were documented on the contract. It wouldn't have taken too long for them to have figured it out.

    Either way it was the right thing for you to do.

    -Jason
  • mohatumohatu Member Posts: 21
    Hm, am I the only one here feeling like having a deja vu? I'm pretty sure the similar thing was hotly discussed on some other thread about 2 months ago... And the figure of $2K was the same...
  • stickguystickguy Member Posts: 53,403
    That's because there's nothing new on the internet. the same stuff just gets recycled (the same thing I tell my wife about the articles in her women's magazines)!

    2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.

  • kzitzewitzkzitzewitz Member Posts: 1
    I have always had a question I would like answered. I work for the GM Card Redemption Center. Constantly we have dealers who redeem GM Card Earns for a customer on a non-eligible GM vehicle (i.e. PEP model or special events). Months later after the customer has rec'd the benefit of the Earnings (an incentive per GM) the dealers will call asking us to reverse the authorization because it was not applicable to the deal. GM Card will not reverse the earnings if the customer has rec'd the benefit of them in the deal unless the customer pays the dealer the amount or the dealer accepts the loss. What recourse does a dealer have in this situation. Are they screwed out of this money, or can they get their car back.
  • stuckinonestuckinone Member Posts: 3
    I was wondering about this potential solution to negative equity. If you downsize the vehicle and the cost of the new purchase, can trade value in excess of purchase price be applied to trade in negative equity? .

     

    Example:

    Trade in vehicle owed balance $30k

    Trade in vehicle trade value $20k

     

    Purchase vehicle price $12K

     

    Balance of trade ACV $8k

     

    Total new negative equity $2k

     

    Is this something that can be done? Will a dealer function this way?
  • Kirstie_HKirstie_H Administrator Posts: 11,242
    If I understand your math correctly, you are asking if you can finance a $12K vehicle for $20K.

     

    The simple answer is no, you cannot. You can often roll some negative equity into a new vehicle finance package. However, no finance company is likely to give you a loan on a vehicle that is nearly twice its actual value. An auto loan is basically a "secured" loan, meaning that if you fail to pay, the loan has been secured by a named, tangible asset - in this case, the vehicle.

     

    With secured loans, the loan amount can't be more than the asset is reasonably worth. It'd be difficult to make the case that a $12K car could reasonably be considered a $20K asset. So, it's not the dealer, it's the finance companies that will make it a no-go.

     

    Those who have more finance expertise, please correct me if I'm amiss.

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  • isellhondasisellhondas Member Posts: 20,342
    I have to deal with this pretty often. When we hear people say they want to "downsize" we cringe.

     

    Some people think we can bury 5000.00 of negative equity and lower their payments in the process!

     

    No bank is willing to stick their necks out that far.
  • stuckinonestuckinone Member Posts: 3
    What I'm asking is if my trade value is 8000 more than the vehicle I purchase, can the trade balance be applied toward negative equity?
  • qbrozenqbrozen Member Posts: 33,740
    What trade balance?

    I think you are trying to say "my car is worth $20K and I want to buy a car for $12K, so that $8K difference can be used to pay off the extra $10K I owe," and the answer is HECK NO! You seem to be forgetting that you still owe the bank $30K for that car! So there is no equity no how no way. Where is the $30K coming from to pay off the original loan?

     

    Actually, its a common math mistake, but, if you sit down and really think it through, you'll see it just doesn't work that way.

     

    $20K trade - $30K debt = -$10k

    -$10k - $12K new car = -$22K

     

    that's reality.

     

    I think what you are trying to say is this:

    $20K trade - $12K new car = +$8K

    +$8K - $10K negative equity = -$2K

     

    But, as you can see, you took the $20K trade money and gave $10K of it to pay the negative equity without ever actually paying the full $30K balance. Is that clearer?

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  • stuckinonestuckinone Member Posts: 3
  • Kirstie_HKirstie_H Administrator Posts: 11,242
    Here's the math made easy:

     

    You trade in the vehicle for $20K. You owe $30K. Your balance = -$10K.

     

    You buy a vehicle priced at $12K. Depending on the vehicle and whether it's your lucky day, you may be able to finance it for $13K (rolling $1K of the -$10K into the new loan). This leaves your balance at -$9K.

     

    Before the deal can even be done, you must come up with $9,000 to pay off your trade-in. The bank that you owe for your current vehicle has to be paid before anything else can happen.

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  • steine13steine13 Member Posts: 2,825
    I'm not trying to be mean or anything. But if you need to ask this question, then do not go to buy another car without a friend in tow who can do math.

     

    Certainly, the $20k trade-in value counts towards the plus side of the sheet... just like the -$30k owed is on the minus side. The -$10k "negative balance" is the result of applying both of those numbers.

     

    Put another way, when you trade your car and it is indeed appraised at $20k, that means you're walking in with -$10k in your pocket after your trade is fully accounted for.

     

    You did confuse me there for a minute, though...

    -Mathias
  • kyfdxkyfdx Moderator Posts: 266,116
    You did confuse me there for a minute, though...

    -Mathias


     

    Guess he better not take you with him, then..

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  • volvodan1volvodan1 Member Posts: 188
    you could maybe possibly do it on a new car. Let's say a Malibu is $24,000 w/ $5,000 rebate and another $2,000 - $3,000 discount you'd be at $7,000 - $8,000 under sticker. You can generally borrow up to sticker, so you could maybe with lights out credit "get done". BUT YOUR STILL BURIED, JUST A LITTLE DEEPER!
  • Kirstie_HKirstie_H Administrator Posts: 11,242
    That's the point - you can get a new car that's been discounted (through rebates & negotiation) by nearly $8000, but EVERYBODY is getting these deals, so you're borrowing $24,000 on a car that's worth, on the open market, $17,000. In 3 years, when you owe $15,000 on this car, it'll be worth $8,000 as a trade-in, so unless you plan to keep the next car for a long, long, time, it's a very bad idea.

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  • driftracerdriftracer Member Posts: 2,448
    that we "dug you out of one car and buried you in the other one..."

     

    And NO way to lower the payments without considerable ($10k in this case) cash down.
  • volvodan1volvodan1 Member Posts: 188
    Last year I had a customer that owed $32K on an 02 Ranger that was worth $15-16K. He had a 72 month note from Ford Credit. Rolled neg equity from previous car into the Ranger loan. Wanted to buy an Volvo S60. No money down of course. Not a ton of room to hide anything on an S60. No lender that we dealt with would touch it.

     

    I told him his best bet was to pay on the Ranger for a few years. He agreed. After I mentally inducted this customer into my Upside Down Hall of Fame, I find his sunglasses in the Volvo. He comes in the next day to pick them up driving his new Lincoln LS. Said Ford Credit was able to do the loan. WOW!!!!!

     

    I found it hard to believe that anyone in that situation would get it done, but after seeing that, I doubt nothing!
  • driftracerdriftracer Member Posts: 2,448
    Now, he owes $45k on an $18 Lincoln LS...
  • volvodan1volvodan1 Member Posts: 188
    That's the quandry of helping people out in this profession. I stopped trying to help them to do what I think is right and let them choose what they think is right. Anyone in the the situation of the above guy is only going to get done in a car that has a ton of incentives and is probably going to drop like a rock in value. But I'll do my best to get him done.

     

    Same thing w/ going 72, 84, or 96 months on a loan. Really you shouldn't go more than 36 or 48 months, but definately not more than 60. But my favorite close w/ a payment customer "Here are the 48, 60, & 72 month payments, (or 60, 72, & 84 month payments). Which option would you like to go with?" I will explain the pros & cons of longer terms, but they can do what they want. If I don't give them the option, someone else will.
  • explorerx4explorerx4 Member Posts: 20,743
    isn't that 'git 'er done?'

    there's a lot money on the table for '04 aviators.

    really though, thanks for a reality check on those finances.
    2024 Ford F-150 STX, 2023 Ford Explorer ST, 91 Mustang GT vert
  • driftracerdriftracer Member Posts: 2,448
    you don't WANT to do a deal like that, or get them hooked up for a 7 or 8 year loan, because you know you won't sell them on a 3-4 year cycle - you also know that they're going to get it done somewhere, so it might as well be you taking them off the market for 6-7 years...
  • volvodan1volvodan1 Member Posts: 188
    Exactly.

     

    I just remembered one more. I sold an 01 PT to a very nice couple in January. They rolled $2500 negatory into the PT note. They stop back in asking about Escalade EXT's in October. They decide they want to buy the EXT for $52K. Now they would have bought a used Avalanche at another dealer for $30K. But I got the deal because she wanted White Diamond. O.K...... Oh yeah. Besides being buried $4500 in the PT. They traded an RV that they were upside down $16,500.

     

    They drove away in their new Escalade after getting a home equity loan. Nicest customers I've ever dealt with and fully aware of what they were doing. They knew they are going to be driving the EXT for awhile. But they are happy. They aren't paying for an RV that they don't use and have a nice Caddy that they drive everyday.
  • driftracerdriftracer Member Posts: 2,448
    drive what you like...
  • isellhondasisellhondas Member Posts: 20,342
    I want to almost yell at people...

     

    ARE YOU NUTS ???

     

    These are the people who quickly tire of a car and want something different. I'll admit that I've had a couple of "Dutch Uncle" talks with customers but it does no good.
  • jasmith52jasmith52 Member Posts: 462
    A fool and his money are soon parted.

     

    OK - lets say one of these fools comes onto your lot upside down on his trade 4k/8k/15k - whatever.

     

    So, out of curiosity, What is the ideal vehicle to hide these large negative equity balances in ? Does it take large dealer and consumer incentives to hide the balance ?? Does one of the OEM manufactures go more lenient on over the top loans ??

     

    Someone posted that a Lincoln LS and a Aviator were good candidates. Anything else ? and why ??
  • danf1danf1 Member Posts: 897
    Think domestic manufacturer. A few things are necessary to overcome an inverted equity position. You need large rebates to hide some of it, and good credit for the bank to even consider it. My most flexible bank will allow 140% loan to value as long as you have premium credit.
  • isellhondasisellhondas Member Posts: 20,342
    That are several thousand dollars "back of book" can suck up a lot of negative equity.

     

    Then the buyer is REALLY buried!!
  • stickguystickguy Member Posts: 53,403
    the nice thing about negative equity is that it vanishes as soon as you pay off your loan. And the only way to break the "buried" cycle (other than dropping a wad of cash down) is to just keep a car until it is paid off (or close to it).

     

    Of course, not too many people are happy with denying themselves instant gratification, so they never figure this out.

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  • volvodan1volvodan1 Member Posts: 188
    I really think that's a chunk of the reason the Domestics stick w/ the incentives. If you bought a domestic and want to trade it in 1-2 years the only thing you can buy is another domestic. But if you just start off w/ import or used domestic, you are in a lot better shape. The "new car smell" is very powerful

     

    But most of the time they don't realize what a slippery slope it is. Isell is right, they are always the ones that "want" to trade every year or two, but don't have the money to do that. Then they really get in deep when they go 72, 84, etc. and really get the neg. snowball rollin.
  • damish003damish003 Member Posts: 303
    It seems to me that for those who want new vehicles every 2-3 years or so, a well-chosen lease would be better for those folks than the constant roll-over of negative equity. If nothing else, they would never be upside-down in it. Unless they put 20k miles on it every year.

     

    -Dan-
  • kyfdxkyfdx Moderator Posts: 266,116
    In theory, you are correct.. In practice, they go for 60 month leases to get the lowest payment, then try to trade out of it in 18 months...

     

    Same reason they take the rebate in cash and finance MSRP for 84 months at 9.9%.. they can't see past the next payment..

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  • chicagojochicagojo Member Posts: 6
    I'm interested in knowing what other dealers/dealerships would do in response to this situation: I purchased a new vehicle from a local dealership on Saturday (12/11/04). I also purchased several optional accessories for the car, but they could not be installed that day because the service department was about to close. I brought the car back today (12/14/04) to have those accessories installed and while the car was in the service department, one of their employees crashed another car into mine with enough force that the bumper needs to be replaced (and who knows what other frame damage may have been incurred). Aside from replacing the bumper, the dealership is not offering me any other compensation. In fact, they are not even offering an apology - the attitude of both the service manager and the general manager was "sh*t happens." To me, it is simply not acceptable that my brand new car now has collision damage that is the dealership's fault. I asked them to replace the car with an identical make/model from their stock but they claim they are not allowed to do this. If this happened at your dealership what, if anything, would you do for the customer? What can I reasonably ask for or expect? How much discretion do dealers have in compensating customers for errors such as this?
  • steine13steine13 Member Posts: 2,825
    What kind of vehicle?

    If it's a brand-new Camry, it ain't that big a deal except it's painful; if it's a 745 bimmer, you've got issues, 'cuz they have to be *perfect* to retain their value.

     

    Regardless, i'd have a competetent independent shop look at it; IF there is frame damage (which I doubt), then you have a car that lost significant value.

     

    If it's just the bumper, oh well... :-(

     

    -Mathias

    (not a car dealer)

    (yet)
  • blckislandguyblckislandguy Member Posts: 1,150
    Post #41 on the Yukon/Denali Prices Paid, Buying Experience got me thinking. As the poster related the story, he was able to use a spread sheet of his cost of other competing brands (i.e., Sequoia, Land Cruiser, etc.) vs. Denali to convince the sales guy that unless he got close to his offer he would walk.

     

    Which comparison in car negotiations is more powerful: comparison to another brand that the buyer might buy or a comparison to a another dealer of the same brand? The answer may not be automatically the latter because the dealer probably has a good idea of what the customer is going to be offered at the nearest same-brand store. In other words "everyone knows" that a new BMW X5 is going to sell for around invoice plus $1200. But what if I negotiate that I need Invoice plus $900 or else I am going to buy a Porche Cayenne for the same price?

     

    What do the pros think?
  • ddeliseddelise Member Posts: 353
    Similar thing happened to me. I brought my Volvo S60 in for some warranty work, and when I was signing the papers when the work was complete, I looked to my left, and saw the technician pull my car up. I looked down to sign, looked back over, and saw him back it up into another car that pulled in behind him. Funny thing was that when he realized what happened, he just ran away - fight or flight response I guess! There was no damage to the Volvo he backed into, but my bumper was creased.

     

    So, after signing for the car, and seeing the accident, I turned to the service advisor and said something to the effect of - "Get the rental car ready again because I'm going to need it". They needed to replace the entire bumper and some other part between bumper and the car.

     

    Good thing for me is that the car is leased, so I don't have any diminished value to worry about. And 'No', they did not offer me any compensation - nor did I ask for any. I have the attitude that accidents happen, so no biggie.

     

    But if it was 2 days into ownership...
  • gkbenjigkbenji Member Posts: 29
    Just to update those who might care about the SAAB story and the "Patriot Act" salesman...

     

    I ended up buying a very similar SAAB wagon from another independent dealer. This time, no BS. The price was reasonable from the get-go, car in excellent shape (with decent tires!). The driver's door adjustments didn't work; the dealer paid to have it looked at and fixed while it was being inspected! And the capper: as we're driving back from the inspection, we look in the folder with the driver's manual and find... a SAAB Certified Pre-Owned certificate with the warrantee good through March '06! Dealer didn't even know about it. Didn't try to raise the price based on that, and didn't ask me to sign one thing until we'd reached an agreement. No mumbo-jumbo; the buyer's order was one side of one page. No giant "handling fees" or documentation fees or other tacked-on charges. A big change from the last place. Maybe this should go under "considerate dealers" thread.

     

    (FWIW, '00 9-5 wagon, black, 48K, 15mo warrantee, leather & heated seats for $16.2K OTD)

     

    But anyway, my question. Maybe more for the service dept. guys, but... while the car was getting inspected at the local SAAB dealer, I asked the service rep to pull the dealer repair/warrantee history for me. He refused, saying that security laws prevented it. "The history of the car belongs to the previous owner" or something. Huh? I can see blacking out names and addresses, that's only prudent. But nothing? I did get him to tell me the highlights of any major warrantee service. But what's up with the whole "security" thing?
  • volvodan1volvodan1 Member Posts: 188
    I guess if you want to term it that way, the comparison to the same brand different dealer will probably get the better deal. If you tell me you can buy my Escalade for $53K across town, and you'll buy it for $52K then it's pretty simple.

     

    When competing with other brands I think it's easier because if I "sold" my car, dealership, me, etc. then I can get past the rest. I don't care what the Sequoia, Land Cruiser, etc. cost because it's a different vehicle. I guess I never understood that type of negotiating. When I didn't sell cars and was a buyer, it never really entered my mind to negotiate on a car like that. I found the car that I wanted to buy and went out and got the best deal I could.

     

    I sell Volvos and Caddy's and it's two totally different negotiating universes. There are 4 Caddy dealers in a 15-20 minutes radius in an area that might barely crack the top 300 metropolitan populations. So invoice on a majority of the deals is the norm. Too easy to go to the other dealers. So on Caddys we generally compete w/ other Caddy dealers (Lincolns too, but other than the occasional Navigator, we don't lose too many to Lincoln). Same brand - different dealer is almost all we do.

     

    In Volvo land I am the only game in town. You have to drive an hour either way to find another Volvo dealer. When I show why the XC90 is a better value than RX330, X5, etc. and you want to buy, it's a lot easier for me.
  • rroyce10rroyce10 Member Posts: 9,332
    **In other words -"everyone knows"- that a new BMW X5 is going to sell for around invoice plus $1200. But what if I negotiate that I need Invoice plus $900 or else I am going to buy a Porsche Cayenne for the same price?** ....

     

               I think this is the part were consumers get the most confused, so lets put this in it's proper perspective for starters ....

     

             Can a Bimmer dealer sell an X5 for $1,200 over.? Sure he can, he can probably sell a few vehicles in his inventory for $1,200 or less, that also means he's going to sell a few others for $2,500/$4,500 over invoice ..

     

                   Where most of this information gets confused or perceived incorrectly is, that "every" dealer, BMW, Benz, Lexus, Infiniti, etc, etc, has an "average rolling cost" figure for their overhead, and it's watched very closely .. most Bimmer/Benz stores only sell 70/90 vehicles on a "good" month, thats why most dealers will let a customer walk when they reach a particular figure .. because even though in your mind they are "making" a $900 profit, they might actually be losing $1,5/$2,500 because of the time of the year, build schedule and what may, or may not have coming down the chute ...

     

                  As far as competition is concerned, lets be honest, it comes down to payments .. maybe the guy you work with would "love" to have a X5 or a Cayenne, but after all the negotiations, the payoff on the trade and all the taxes, he may end up driving a Navigator, Land Rover or a Yukon because of the $5,000 rebate money ~ these are just "some" of the little items that never get posted on Edmunds ..l.o.l....

     

                   Another example is a friend I golf with, he believes he should pay $200 over net net for a loaded 05 MDX .. now another friend of mine is an Acura dealer and he won't sell it for that or even close .. the golfing buddy tells me yesterday: "he has plenty of em' and he should sell it for a loss and he has 15 of them sitting on his lot" .. but what the golf buddy doesn't understand is, he sells 30+ a month and he won't see any new ones until the 18th of January ...

     

                                     Terry.
  • keeferbkeeferb Member Posts: 81
    We took delivery of a 2005 Altima 2.5S this week. MSRP was $22980, Edmunds invoice is $21304. We paid $21104 - $1500 rebate + $90 fees/title. No trade-in. I think they also had to swap to get this car. Three years ago when we purchased a new Sentra from this same dealership, they sold it to us for Edmunds invoice but insisted on a $400 advertising fee. This was listed on their invoice so we paid it. So if I add that amount to the Edmunds invoice for the Altima, we essentially paid $600 less than the dealers cost. I'm just wondering how that's possible. Could there be dealer rebates involved that aren't 'public' knowledge to make up for this? Eliminating advertising fee or dealer holdback? I just find it hard to beleive any dealer is going to sell a car at a loss. Any thoughts from a dealer?

     

    Thanks!
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