Any Questions for a Car Dealer?

cadillacmike

I'm going to relax and unwind in Hawaii in 2 weeks! no cars - except for the putt putt rental that I'll have

qbrozen

who invited my mom?

sorry, j/k, but it is darn funny. I think the "last straw" speech used to be immediately followed by "wait till yer father gets home!"

Question for dealer: Terry, what has better resale at the auctions? CRVs or Escapes/Tributes?

And I think a previous post brings up another good question in my mind ... is KBB really "significantly more" askew for one brand over another?

bobst

We buy cars that we realy like and, unless we give them to our kids, we drive them for at least 120K miles. That takes at least 10 years. At that point, no car is worth very much.

butchbr73

....Recently bought a car. As far as I can remember back, this has happenend to me each time, just never really give it any thought. I usually trade my cars in, partly b/c i don't want to deal with the hassle and the state I live also gives a tax credit...

Ok, in the negotiations, you typically agree on the price of the car you are buying and the price of the trade-in. In the past (thank you Terry), I've got a pretty good read on the values of the cars I'm selling and I'm buying. So, I beat them over the head for awhile, play the game a bit and bingo, we've got a deal.

Now, in writing up the sales agreement, they inflate, and I mean inflate, the value of the new and the old. No biggie to me b/c the difference is the difference, and that's all that matters.

Dealers/F&I's, why are the values inflated? Sometimes, $3/4/5k over the "real values" that we agreed upon. For example, the trade in value for my Ford Escape is $10k and the value written on the paperwork we are signing is $14k. But the new CR-V I am buying is really $20k, but in the paperwork it says I am paying $24k for it?

Either way, its a $10k difference, so it doesn't matter to me....? Then you add TTL, doc fees, etc...plus any $$$ owed on the Escape to get the final number. You get to the same number either way.

Is there some underlying tax reason? Business reason? Underlying revenue reporting reason to inflate the value of the cars? Does it have to do with the loan values of the new/old vehicles? Curiousity has got me.....? Done it everytime I can recall. Happen to anyone else?

thanks in advance.

frnkrzzo

i'm spoofing nothing. i've handled many escape/mariner/tribute trades and i've never seen anyone with one get hammered on it. i have seen some crv owners in to their necks though. as for the percentage arguement, and the price difference arguement, i did the same comparison on an escape xlt v6....

19357.00 price

2003 trade-

11930

depreciation-

7427.00

about the same as a crv. i used base models originally because i was trying to compare apples to apples. escapes cost less than crvs. but this example would be one with a similar cost of admission instead of similar equipment. any way you look at, i was right, even if it was by not very much. the reason i used kbb was although it isnt perfect, it is unbiased. i dont understand why so few people can concede that the escape type suvs have pretty good resale. i sell many of them used, and they ALWAYS bring good money.

damish003

Here's my question. I have a 96 Plymouth Neon sitting in my driveway that I want to get rid of. Has about 79k miles on it, new tires and good service records. Decent shape for the age. Not currently inspected. It needs a couple of struts and a new tie rod to pass inspection. About $400 to pass inspection. Looking at Edmunds appraisal, wholesale is about $1100 with the mileage adjustment. Retail about $2200. I live in NW PA, so it would make a decent banger car for a college kid or some such.

Considering the work needed to pass inspection, I'd be happy to get $700 for it as it sits. My question is, would I be better off to put an ad in the paper, a sign for sale on the car itself, or bring it to a local used lot?

I can't let someone drive it, as I don't have insurance on it anymore. While the car's in decent shape overall, it's not exactly a desirable car around here. If the difference between selling it myself and giving it to a used car lot is only 100-200, I'd just as soon let the lot get it.

I've never sold a car myself, always traded things in.

Any advise would be appreciated.

-Dan-

mikefm58

You might want to post this over in "Real world trade in values"

cadillacmike

"Finally, different cars have different values. Some cars trade closer to their book values than others and some dealers have better wholesale sources than others.
Hondas, Toyotas, Lexus, and certain bimmers trade closest to their book values.
Domestics, koreans, Mitsu's,Saabs don't usually come anywhere close th their book values.
Everyone else is somewhere in the middle. "

This is a BS filled statement if I ever heard of one. When are the various books update once - a millenium? :confuse: If they are update as often as everyone claims, then ALL makes' values should be similarly close in either direction to "book".

cadillacmike

"I'd post your car on the Real World Trade-In Values thread and see what Terry says it's worth. "

Yeah, but Terry always tells me that my cars aren't worth the space they take up :P (and they take up a LOT of space)

john500

Good question.

I've noticed that also. On the books, I always pay sticker price and then the trade-in value is rated about 3-4 K over what Edmunds listed as "true market value". That has happened to me twice also. Perhaps salespeople get a % of the selling price or the dealer can list more revenue?

cadillacmike

The SSCRA caps interst rates but doesn't absolve you from making payments. It also aplies only if you are ACTIVATED (i.e., Reserve or Nat Guard), if you were already on active duty, oh well...

cti

I'm going to relax and unwind in Hawaii in 2 weeks! no cars - except for the putt putt rental that I'll have

Putt putt rental? You are renting a golf cart? :P

Say, "Hi", to my wife. She is stationed at one of the many Naval bases there.

frnkrzzo

its a psychological reason. if the salesman talks to you and thinks you are a "trade in" buyer, he will inflate your trade and the price along with it. most buyers have no idea what they can actually buy a new one for or even what their trade is really worth. they all know, however, what their payoff is, and sometimes people get insulted and storm out when they hear what their trade is worth. once someone gets mad and storms out, they will never come back to that dealership, even if after doing some shopping they come to the realization that the original dealership was treating them fairly. also, sometimes when a dealership knows you're going to walk out and shop around without buying from them, they will quote you a trade rather than a price. when you shop, no dealer will match their trade in appraisal, insuring you'll come back to them. you might not be haqppy when you see the price, but getting you back in and taking a shot is better than you never comming back. good explanation?

butchbr73

i can see it with some folks... but we've already discussed the Escape as a $10k trade in.... never mentioned the $14k number, and we discussed the CR-V as a $20k vehicle, never mentioned the $24k number. The numbers on the paperwork were arbitrarily inflated by the F&I guy for some reason??

and I know what my difference is... its not $6k, its $10k... if you tell me the trade in is $14k and I know the "new" car is $20k, we've only got a $6k difference, which is not the real difference.....

that's not quite the answer I was looking for, I can see it for some, but not me, as we discussed the whole transaction around a $20k new CR-V and a $10k trade in Escape. Have no idea where the $24k and the $14k come from...?

kyfdx

The sales guy gets his commission off the gross on the new car only.. They pad the number, and he gets a big slice of it...

Then they hide the trade-in for awhile, and eventually the dealer takes a bath on the inflated price..

Salesperson is happy, new car sales manager is happy... Bad trade-in price gets averaged out with 100 other units, so owner/dealer is none the wiser...

Everybody wins but the owner, who paid out a bigger commission than was actually earned... He isn't out any more on the trade, as the difference is the same... Just the bigger commission...

Just a guess...

kyfdx

typhon1991

sales people don't get any more commision because the trade difference stays the same. Usually the reason is that most people have payoffs on their trades and you can't show the new lender any negative equity. What dealers have to do is inflate the trade value as well as the selling price the same to show equity in the trade and some extra so it looks like a down payment. Dealers usually don't do this on cash deals if you notice.

bmw3434

I work as a salesman at a BMW store. It may be different elsewhere, but I do get paid on the trade difference. It does not matter how inflated whatever is, ultimately it is the trade difference. There is an ACV on the trade, and of course MSRP on the new car.
We mainly have to inflate numbers because, at least in BMW's case, they will not approve a LEASE with negative equity. It really does not matter on a straight purchase/finance, especially if they are a member of the CU/bank we are financing through.

typhon1991

You misunderstood me. I get paid a percentage of the profit just like you. All I was trying to say is it dosen't matter how much you inflate the selling price or trade value, as long as the trade difference stays the same because that is what counts.

toyotaken

That's exactly true, and that is the discussion that takes place often when we have a customer that's "upside down" or owes more than their car is worth when they trade it. At least in NY, most lenders have complied with a newer law allowing negative equity to be shown on loan contracts. However, there are still a few (Toyota Financial Services being one) that will not accept a contract with negative equity. So here's an example... $20,000 selling price of new car. $5,000 Trade value and owes $9,000. On the paperwork, it would show... $30,000 selling price, $10,000 trade allowance, $9,000 balance to be paid.

The other reason for doing this is that for getting an approval for "difficult credit" customers, showing even a little equity on their trade helps alot. So even if you're greatly inflating the price of the car sold and the trade allowance, it can help when seeking an approval from the bank. No real difference in the basics of the loan, but phychologicly nicer for the credit analyst to see.

Ken

thenebean

well folks,

due to the overwhelming change in the dealership i work in (clean sweep of management - and some of the best people ive ever known) i am going to be resigning on friday - time to move on! i know most dont care - but for those who've ive given a little advice to along the way, my internal knowledge of the business is about to end.

anyways, just wanted to share -

-thene

mark156

Thene, I've never responded to your posts but I have read everything. I hope that your new adventures will prove to be very beneficial in your life.

I've enjoyed reading your input.

Mark

fredvh

I am sorry to hear that you are leaving the business. I can only speak for myself but I have enjoyed your imput and timely advice. I sincerely hope that you will not leave here just because you are leaving your current job. Thanks

muscogee

My boyfriend and I would like to take advantage of GM's current "employee discount" offer to purchase a 2005 Chevy Silverado Crew Cab. I have good credit (720 FICO) and my boyfriend does not (600 FICO). Therefore, I plan to apply for financing in my name only and then list him as an additional insured on my auto insurance, though he will be the primary driver. My boyfriend currently owes $6,000 on his 2002 Dodge Ram truck and we would like to trade in his truck when we purchase the Silverado. My question is whether a dealer will allow us to do this, as the Dodge's financing is in my boyfriend's name only and there is no "legal" relationship between the two of us. Thanks!

butchbr73

....so, is it common place to do it on every order? Aren't the lenders somewhat knowledgeable and do it on every order? What if a customer owes what its worth, or owes less than what its worth? It appears from my experiences they still overstate the values.... is that now just common practice? I would think lenders catch on and know the real tmv of vehicles or do they go strictly by the book/msrp?

I can look at the msrp of, lets say, any Ford product and tell you I know its not worth msrp and you don't buy them at msrp, so why is this guy... and the next guy, etc...?

Kirstie_H

Oh thene!! I will miss you greatly, and so will the many members who have received thoughtful advice from you, with your friendly, helpful attitude. I sure hope you'll continue to drop by, and should you find yourself at another dealership, we look forward to ou sharing more of your "internal knowledge."

Best,
Kirstie

mikefm58

Good luck where ever life takes you. And THANK YOU for educating us consumer folks here. I've learned more about car buying from folks like you in the past couple years.
.
PS.....Hope your dealership stays one of the "honest" ones.

thenebean

thanks everyone!

i wont be leaving here - and as long as i can continue to give advice, i will! i like cars so i'll be lurking around.

things just got hairy at the dealership i was at, and the reason i stayed longer than i did is because the people that i worked with were some of the nicest, most honest people i know - and it made the car buying experience for our customers that much better. seeing who's taken their place now (and quite suddenly, unfortunately) i've decided its now time to go and find a new job. i have a feeling the guys coming in are more old school - and i dont do that kind of sales.

anyways, you'll all still see me around :-D

-thene

graphicguy

thene....although we've only had brief "cross posts", I have always enjoyed your posts and found them thoughtful and helpful.

My sincere wishes for the best wherever you land. My guess is, you're going to end up better where you're going than where you've been.

Please, don't be a stranger!

asafonov

Good luck in your endeavours.

So, does it look to you based on this management changeover that "nice" dealerships with honest employees have trouble competing with not-so-honest ones?

(That's a question to a soon-to-be-former dealer, so it's on topic...)

qbrozen

Well, hopefully a dealer will chime in on this, because I'm not one nor do I have a definitive answer. My inclination on this is that it shouldn't be a problem. Your boyfriend will be signing over the old truck and you will be signing for the new one. In essence, he's getting paid by the dealership for his and he is handing you the money and you are using it to apply toward the new one. Granted, all of those steps aren't actually taking place, but that is what is happening ... just in abbreviated form.

capitano

Isn't that the message that many of the pros here have been carrying for years? That as much as we, the consumers, complain and moan about these high pressure, screamer dealers, we continue to buy cars from them. We buy from them so much that these guys are the big volume places that place pricing pressure on those dealerships that have a friendlier approach.

goodfella499

We do it a lot at the dealership I work for--but it's not to fool anyone, including the lenders. In fact, the lenders are the ones that ask that we do it. Here's why. In the state where I work, it is a violation of state law to have a negative number in certain sections of the contract. Just like in one of the previous examples, if sell you a car for 20K, give you 5K for your trade, and you owe 9K on it to the old lender, then technically your net trade allowance is -4K. The lender on the new car won't allow us to have that number (-$4,000) on the customer's contract because of the state law. So, I bump the selling price to 25K and your trade to 10K, your net trade allowance becomes $1000, the lender's happy, your deal didn't change a penny and everybody's satisfied. It doesn't change anything--taxes, commission for salesperson, payment for customer--anything.

isellhondas

Thene,

I hope your decision has nothing to do with these forums. Reading some of the negative stuff here is enough to make a person wonder why they are even in the business!

" Most don't care"...probably true. I care, and I think your store has lost a good person. Good luck, whatever you do!

ksccts

"I went to a local Jeep dealer armed with a packet of internet research on comparable inventory at different dealers. Prior to our negotiations, the salesman had been extremely helpful, even allowing me to try on the car for 24 hours. I really wanted to give him my business."

Yes, but you screwed him anyway. So the salesman lets you test drive the Jeep for a full day and then you buy from their competition. You wanted him to match the CarMax price even though he had given you service and value which placed him above them. Pretty cruel, Stanley!

Do you not feel you owed the original dealership anything for your 24 hour test drive? You want them to let you test drive the vehicle for 24 hours and then charge the same price as Carmax? Does that seem fair to anyone?

:confuse:

audia8q

I am well aware of the changes your going thru.....I was actually a manager at your dealership before your last owner took over. Like most of the long term employees I couldn't put up with that nutty lady...LOL.... Hope things work out for you.

jane0218

I'm being told that a dealership in Arizona I'm considering buying a new Sonata from will be charging $199.95 as part of its "doc" fee for Vehicle Theft Registration. They say it is "to protect ourselves if a vehicle gets stolen. It gives you an extra $3,000 on top of whatever your insurance company will pay if the car is stolen and not recovered. There are some other benefits to it as well, it is something our finance managers know all about."
I'm buying the car and then moving 3 days later out of Arizona to the East Coast, in case this info is relative to the question.
Is this a fictitious or real fee?
Thanks!

graphicguy

I'd tell them I didn't want the $200 "Vehicle Theft Registration" and to deduct it from the deal.

danf1

It is VIN etching that they are trying to make you buy. It is a valid aftermarket product, but by no means should it be mandatory. If you don't want it, tell them so. There are many laws protecting you from having to pay for it regardless of what they call it.

butchbr73

thanks Goodfella.
So they just do this for everyone? Just arbitrarily bump the values up? I ask, b/c in my last transaction, we did have negative equity of ($500) dollars of actual cash value. But the transaction was written with a gross up of $5,5.. no kidding. So, instead of showing the trade at $15k, they showed $21k.

Is it recorded all the way thru the books that way? Or is it just the state paperwork that shows it? How is it recorded in the ledger, in the inventory that you hold? What price gets reported to the GM/owner as the sales price for the new car and the trade-in price for the old car? What is reported up to the manufacturer as the actual sales price of the new car? Or do you even report those values? Or does all the GM/owner care about is the difference.... but then it comes back to the inventory question... reporting gross, you'd lose your pants on the used cars but your new car manager looks great.... :confuse:

thanks for the response.

butchbr73

....interesting fact, Carmax makes (gross margin), on average, of $860 per unit on new sales and $1,817 per unit on used. Gross margin on new units have been trending down per year and used units trending up...

Any data on how this compares to other dealers around? Is that a pretty common amount? I am sure it varies w/ make.. Lexus, etc... I assume grab much more on each vs. a Ford dealer... It'd be interesting to see how the different stores and models line up against each other.

ezshift5

...just appraised my car (good for seven days/300 miles)

1. I plan to take the car to the dealer when I pick up my new car
2. I plan to left them know I have a CM written offer to buy.
3. I do not plan sharing the actual CM number ($XXXX) with the dealer.
4. If dealer beats CM, OK
5. If dealer less than CM offer, I'll have a choice:
(a) Thank buyer/drive away
(b) Indicate he/she is pretty low; invite a rebid

These "car dudes/chicks" are generally pretty sharp(at least within this particular area).........................any sage guidance appreciated big time.........

all the best..............ez

isellhondas

For a lot of people "being "fair" means nothing. It's all about the almighty dollar. If they can "save" a hundred dollars, they will do so without a thought or without even giving the first person a chance to match it.

Allowing a 24 hour test drive was nuts in the first place in my opinion.

If I sound cynical it's because I am.

None of this bothers me anymore, I've gotten used to it I suppose.

thenebean

thats a good question, and to be honest, i am not sure of the answer. i know that if i had to speak with the new manager as a consumer, i would not want to do business - not because he was pushy, but because he talks down to people as if they dont know anything. to me, that is just as obnoxious as the high pressure types.

the place is going to chance to a format of sales i do not feel comfortable with, and thus, my decision to leave

thanks for your kind words! :-)

-thene

bobst

Ez, I think your plan is very good, but I don't think you should do step 5-b.

If the dealer offer is less than Carmax, don't whine about it and beg them to increase their offer. Just sell the car to Carmax.

thenebean

isell,

thank you for the kind words - i had actually made the decision a while back that once the people i worked with were gone, i would be too. sales was a very interesting experience for me, but i would like to get into the career i went to college for. the people coming in, honestly, are not very smart as to what the consumer is looking for in a pleasant transaction. i do not want to subject myself to a selling environment that i do not feel comfortable with. i tend to side more with consumers than customers, and put myself in their seat when working with them on a deal - and it has helped me gain the confidence of many customers. however this new manager is going to be very different and chances are, my selling style that worked so well with my previous managers, will not work with him.

i'll probably move on from the car business to try to find a career in education or graphic design, and wherever the road takes me, it takes me.

i'll be around here, and offering as much advice as i can from what i learned in the 2 years i was at the dealership, and hopefully help others know how the process works, and what really IS a fair deal ;-)

-thene

thenebean

audi,

i just sent you an email (so you can be on the lookout)

small world isnt it! i'd be interested in hearing from you :-)

-thene

jane0218

First, thanks for the reply regarding the Vehicle Theft Registration.
A new question:
Is the "doc" fee negotiable? I'm being told by the same dealer (that wants to charge the VTR fee) that they (as employees) have to pay $299.95 doc fee, and so would I. I've read in several places that this is a padded fee, but this guy refuses to budge on it.
Any assistance/guidance would be appreciated.
Thanks.

thenebean

the doc fee isnt usually negotiable, though you can try to get the dealer to drop the price of the car to cover it. it is a somewhat legitimate fee, in that it does go towards paying for any dmv fees that we get charged for doing registrations in house, paperwork, drivers, etc. and yes, the employees are even charged that fee. like i said, if you can haggle them to knock the price of the car down to compensate for the fee, fine - but it isnt that big of a deal in the overall scheme of things - i'd just let it be and go home happy with your new car :-)

-thene

basscadet

Wow, that's awfully nice of you to waste 45 minutes of a Carmax employee's time so you can get a bargaining chip to use at another dealership.

Tacky, tacky, tacky.

basscadet

He may have to charge the $299.95 fee, but he can take that $299.95 out of the sale price of the car if he really wants the sale. Suggest that to him and see what he says.