Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
A reporter would like to speak with you about your experience; please reach out to PR@Edmunds.com by 7/25 for details.
A reporter would like to speak with you about your experience; please reach out to PR@Edmunds.com by 7/25 for details.
Options
Any Questions for a Car Dealer?
This discussion has been closed.
Comments
example...
trade in allowance....$10,000
CT state sales tax.....6%
so the consumer must sell the car to an outside source for $10,600 to break-even with the selling dealers offer of $10k.
post #2049 - audia8Q just explained it. It's not secret squirrel stuff, it's just that if you buy a vehicle outright and sell your trade, you may not be as good a position as you think.
I'm told the bottom line was the same, but it made things look better for the financing organization.
This happened to me on my 96 sable. The dealer gave me a price quote OTD and a trade offer. In his office it was confusing to see all of the numbers on the sheet. He let me take a copy home and when I converted everything over the way I was used to seeing the numbers, he had the new car at $1500 over invoice to cover a higher trade in value that he had allowed. When I called and told him he was about $1500 higher than my best offer and explained how i got to my numbers, he said that was the best he could do.
Funny thing, next day he called and met the invoice pricing on the new car and offered me $1000 more than any other dealer for my trade. Seeing the price of the new car, the trade value and knowing my finance terms upfront allowed me to make an informed accurate decision.
; )
Mackabee
I don't fully understand the concept, but people have it stuck in their heads that their trade is worth more than it really is. They would rather be praised on their trade and told how great it is, and get an over-allowance on it than to be told the truth about its wholesale value.
Also, if a contract cannot show neg. equity, the numbers have to be changed to show the allowance.
I agree that there is a small percentage of customers (edmunds readers, no doubt) that would rather see the figures in black and white, but the majority of the buying public wants to be song and danced.
I don't get it either.
Ed
One thing I forgot with my example was that my trade was paid for, so it was just the value, nothing about how much I owed on it.
It did not take me long to figure out that KBB and edmunds were way off for trade values. But I guess some buyers don't want to face the ugly truth.
I had looked up all of my figures on my trade also. It was an 92 auto ford escort sedan with 75,000 miles. it also had A/C and AM/FM cassette. Rest was pretty basic. The first dealer I went to offered me like $3300. The blue book trade in was like $4200. I showed him my research and asked where he came up with that number. I think he was a new salesman because he proceeded to whip out a "black" book and show me the figures. I figured this was a trick. So I went to another dealer and carmax. the best offer I got was $3500. So I decided right then and there that anytime I saw a "blue" book figure for a car it was inflated about $1000 over the real value.
I ended up getting $4500 from the dealer that I bought the new car from. I felt I could have gotten $5000 if I sound it myself, but the $500 was not worth the hassle. Now $1500 would have been a different story.
That's an unfortunate down side to an otherwise nice car.
Of course, there are only two in stock, and only one has the dealer cash, you're not a recent college grad, Farm Bureau member or AARP member, so there's another $1,500 out the window. You're suddenly back to a bit over invoice, minus the rebate, plus getting nailed at $2K under on your trade.
-yer neighbor, ss4
Gotta love these guys!
l; )
Mackabee
Do I REALLY need gap insurance, and if so, what should I pay? How much does F&I get out of it?
Really -- tell me what state this goes on, and I will hop a flight ...
Terry.
Just curious, what year did this happen.?
Terry.
Your getting ripped off, cuz someone wouldn't buy all those old sleds, so whats a miled up sled worth l.o.l..?
Let's be honest, if you thought they were worth any money you would have had those puppys going to the auction .. who's kidding who here.
Terry.
REAL valuable stuff. especially for such bottemless pits as hondas and toyotas
if your car is totaled, gap insurance makes up for the difference between what the insurance company pays and what you still owe on the car.
last honda i totaled the insurance company paid about 3 grand over the payoff
BUT in case they had come up a nickel or two short -
gap insurance would have paid BOTH of them.
also useful is supernova insurance.
I never said it was fun.
When I was fleet manager in Wyoming, we sent cars to the auction every week or two, always with favorable results.
Fremont Motor Company, Lander, WY - 08/92 - 08/94
Super Shops, West Coast - 09/94 - 10-97
Airport Chevrolet, Medford, OR - 10/97 - 07/98
Lithia Auto Group (same group, same town) - 08/98 - 04/99
Don Davis Auto Group, Lake Jackson, TX - 05/99 - 10/00
Milford CPDJ Daewoo/Indian/Suzuki, Milford, PA - 10/00 - 03/01
Valley Automotive Investigations, Ambler, PA - 05/01 - Present
Just curious.... what happens to all of the those folks who bought Daewoo's? How will they ever get service since they went under?
Mark
I was hoping for about $4000 trade or I would try to sell it myself for $4500 or more. I am not blowing my own horn, but it was in really good shape. i cleaned it regularly and had all of the maintanence records.
When the dealer called back and offered $4500 I was like, let me get right down there. He knew he would have to order the new car so i guess he figured in that he would get all of the holdback with no floor expense. Or he really needed to sell a car. The new car was a sable. I am assuming a mercury bread and butter car.
I am sure they wholesaled the escort, not sure what they would have gotten for it. I am sure it was a pretty lean deal, but they would not have made a deal and lost money.
Just speculation, YMMV.
TB
Even an Xtra hungry dealer might step up and put an extra $2/$3/$400 into it - but with escorts being a dime a dozen and yours having a ton of miles, $1,000 is a faaar stretch.
Not sticking up for Carmax, but they all read off the same page and most times, you can get a pretty good "feeling" of the market at that time on specific vehicles.
Terry.
Ed
royce--not sure what you mean by an over allowance, but it was a pretty straight forward deal. That is what I was trying to explain in my first post. That it was easier to keep all of the transactions seperate in order to keep my eye on the ball (OTD price).
I do not remember all of the numbers ( although I do have the paperwork at home) but let me try to explain what I saw as the transaction, and if I am missing something you can let me know.
First I concentrated on the price of the new car. It was a 1996 Mercury Sable LS with option package 461A. I think it also had a couple of single options like the JBL stereo and the 6 disc cd player. I did not want the chrome wheels that came with the 461A pkg. From my research the invoice price of the car like this was something like $23,000. I had an initial offer from an ABT dealer at this price for the new car. There was also a $600 rebate at the time. So I could buy the new car for $23,000- $600 = $22,400 + TTL.
I had already secured my financing at a rate that no dealer could match, so that was a moot point. Before anyone asks, I got a savings secured loan using some CD's that was 2% above the CD rate. This rate was about 2% less than auto financing options. Skip to trade.
92 escort sedan with around 75,000 miles, auto, air and am/fm/cass. This car is paid for, so the dealer does not have to worry about paying off a loan balance. Any trade allowance will go directly to lowering the new car price. Like I said above I was hoping for $4000-$4200. Initial offers were $3000-$3300. (IMO the dealers knew they were not making much on the new car, so tried to get more for the trade). Since I already had an at invoice price for the new car ( and other dealers would have to match that) the deciding factor was how much would they give me for the trade. I went to about 4 dealers before I got to this one. Like I said before, at first he said he could not match that. Then he called and offered $4500. Maybe there was a dealer incentive that he was willing to share that the other dealers were not. I do not know why he offered so much more than the other dealers.
So the final deal looked like this:
No dealer financing.
New car 23000
Rebate -600
Trade -4500
Total 17900
Tax +900
Doc Fee +200
LMDA +200
OTD 19200
Down Pay -3200
Finance 16000 (I gave the dealer a check for 16,000)
This is pretty much what the paperwork looked like. I think I have all of this in the right order. Sorry it is so long winded.
; )
Mackabee
Ed
If they don't accept and you drive away from the dealer without a salesman hanging onto your bumper, then you know you need to increase your offer if you want the car.
Don't worry about your offer being so low that the salesman is insulted. More than once I have had an offer refused, and then had it accepted once I headed for the door.
Buying a new car is fun, and I am looking forward to getting one next year. But do we get an Accord like usual or a nice Acura RSX, which sure looks good to a couple empty nesters like us?
The reason I am asking is that I have been told that it is a general rule for average selling cars that if you buy at MSRP vs invoice the dealer will offer more for your trade. If you buy at or near invoice the dealer offers you the wholesale on the trade to keep some profit in the deal.
But what normally happens with a hot selling car? Can you expect the maximiun amount for your trade since the dealer is making the maximum on the new car, or since it is a hot seller they offer less on the trade so they can make even more money since they can always sell the car to the next person?
Is that really a "general rule"? I don't think so. A trade is worth what it is worth. There are no rules, general or otherwise. It is up to the customer to have a rough idea of what his trade is worth but nothing is cast in stone AFAIK.
There are lots of reasons why a dealer will over-allow on a trade. Not all of them are related to the selling price of a new vehicle.
Total OTD cost =market value price of the new car - market trade-in value for the new car+fees, tax & ttl.
...about 90% of the time. That same price could be expressed at MSRP or at a heavily discounted price for the same car.
~M