Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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Purchasing Strategies - Questions & Success Stories
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I was 19 years old, and a long haired college student with a sorta-babyface (back in the day when long hair wasn't cool.) I was buying a Japanese import back in the day when there were still voluntary import quotas, so margins above invoice were relatively high compared to today.
I went to the fleet manager (these days, I wouldn't necessarily make a point of doing that, but at the time, I followed that old-wives-tale recommendation -- you can negotiate with just about anyone). This was pre-internet, but you could get the KBB new car prices at the public library, so I knew the invoice and holdback, and was able to haggle it down to about $400 over invoice, plus some free floor mats and such, which was a pretty good deal at that time. (These days, I could have gone for more, but this was my first deal, and I didn't know better. I'm guessing that I may have left about $100 on the table, given the times.) Cash deal, no trade.
The car needed to be PDI'd, so I went back the next day to finish the deal. However, my gut told me to be wary of a last minute problem, so I did a bit of planning, making sure that I parked my old car (not a trade in) down the street from the dealership in a direction that would require me to traverse the front of the showroom if I were to walk out.
Sure enough, we end up in the fleet manager's office, at which point the F&I guy strolls into discuss his "problem". That's right -- the sales manager had made a "mistake", and the price was off by $500. The F&I guy was extremely apologetic for the horrendous oversight (a terrible mistake, really), but told me that I would have to make up the difference or he couldn't sell me the car.
I realized that I was being gamed, so I decided to play my role as well -- since I was a poor college student, that's what I was going to remain. So I tell him, "Well, I haven't got the money."
He seems sad. "Listen, I'll tell you what, let's do this." He takes out a piece of paper and pen, and starts writing numbers down: "Well, you're here...and we're here....and I know that you want to drive off in this car today, so why don't we just meet in the middle...here?"
I looked at his numbers, and winced at what he had written down. "Well, I haven't got that money, either."
Now the negotiating begins. His face brightens up, as he comes up with a solution: "I'll tell you what -- I can loan you the money for a week, interest free. Not a problem, you can take the car right now, and just come back and pay me in a week. No strings attached."
I look back at him, a bit sad. "But I won't have the money in a week. I won't be able to afford that!"
He's still pretty excited about his great brainstorm, can't wait to share it: "OK, no problem. I'll tell you what -- I'll give you two weeks to pay it. Interest free, no problem, you can take the car now and come back then, everything will be good."
I shake my head, and look down at my feet. "I'm really sorry, but I'm just a college student with a part-time job, I haven't got that kinda cash. I won't be able to pay you in two weeks."
He's still smiling, though. "Listen, I'll tell you what, because I like you -- I can give you a month -- a whole month to pay me back. No interest, no charges, nothing, just pay me that little bit of money in a month from now. You can take the car today, I can give you the keys right away."
I'm still pretty morose. "You know, I just haven't got that money. The last thing that I'd want to do is to tell you that I'm going to pay you in a month and then not do it, that would be wrong and I don't want to play any games with you. I'm sorry, but I just can't afford that money."
Now he and the fleet manager stand up. "Well, son, I'm sorry, but we just can't sell you the car at that price, we'd be losing money and I can't afford to do that..."
Meanwhile, I stand up, too, and smile. "Well, guys, that's really too bad. I guess I just can't afford to buy a car from you today. But I do appreciate all the time that you've spent with me, that was really nice of you to do that and to try to help me out. So you have a good one, OK?"
Now, I've headed out the side door of the showroom, so that I'd have a nice long walk out of the driveway, then down the street where I could be viewed from the showroom floor for a good thirty seconds or so. Needless to say, I had just made it a bit down the sidewalk when the fleet guy comes running up behind me to tell me that I had a deal, after all.
After that, the F&I process was mercifully short. Can't imagine why that was...
Morals of the story:
-Don't assume that a deal is a deal until you've signed it, that the numbers match and that the vehicle has the same VIN number as the one on the contract. Don't relax until you're done -- the F&I guy's job is to catch you off guard, once you've thought that you've finished, and to layer the deal with more charges. You may not yet have a deal, even if you thought you did.
-No need to get indignant. If they play music, dance. It's a game, enjoy and parry, there's rarely a need to get combative and hostile (and if you do act hostile, make sure that it is a gambit on your part, not genuine anger. If you truly lose your cool, you've lost the game.) You can say no and avoid their BS tactics without getting defensive or hostile.
-Use "the walk" if you need to, but not until the other party has invested in your deal. For any salesperson, there is a point of no return, at which point he can taste your cash, and the walk will be much more effective if you delay it until you've passed that threshhold.
-Turn your disadvantage into an advantage. Instead of viewing my then-youth as a viable excuse to get taken, I used it to my advantage, in this case by playing up my age as a viable excuse to avoid his nibble, but without any apparent hostility. (I didn't argue about wrong or right, just pointed to my complete inability to meet his "reasonable" demands.)
-Don't always respond to a number with a number. You don't need to allow the other party to dictate the flow of the discussion by pushing up the numbers when they don't need to be pushed. You can often gain a concession without offering a specific counter of your own.
I then monitor the Prices Paid forum and run a search on my city over the last six months. I look for exact same vehicle ie 2006 Pilot AWD, and will adjust for options etc.
I put a spreadsheet together and focus on the median. The problem with the prices paid forum is you don't get the full picture, I think some of the "too good to be true" post are either embellishments or their trade was undervalued or they did not get the best finanace deal.
I used to purchase the Consumer Reports data but found it was so close to the Edmunds info it was not worth the $20 they charge.
Next, I work my professional relationships. I have a client who buys about 10-15 cars a year for his sales staff. He has been buying cars for 15+ years and he usually deals directly with the owner or the SM. I call him and ask if he has bought my car recently or could he make a call and get me "a bottom".
I then try and find a poster on edmunds who sells the car and pick his brain.
From all of my research I found the Pilots were going for under invoice and at best $700 under.
So I started sending emails about 5 days prior to the end of the month and giving my full name, phone number and saying I will buy this car for this price prior to the end of the month. All I would get is lets come in and talk except from one guy who replied with a counter.
I called up and said I wanted this price and since he is closer to me than dealer X (the dealer my client gave me) I would buy from him. He said he would match PLUS destination I said ummm dealer X has destination included (not a lie) Internet guy yells at me and says nooo way. I said way. He said come in, I'll make it happen.
OK, I am leasing so I now do my research and car_man gives me the Honda promotion for Pilots and and edmunds poster helps me out and confirms the residual and promo rate and even gives me the no securiy deposit money factor.
I take my current vehicle to Carmax where I get an offer to buy my vehicle which is good for 7 days or 300 miles. I talk to Terry on the RWTIV board and based on my description he tells me at best I can get low 6's for my car. Carmax gives me a buy price at $6,500.
I take my car to another buyer and he offers $6,000.
I go to the dealer early on Saturday figuring I am going to pull a bobst, I want the car at my price and if they are not going to deal, I will get up and leave and go to dealer X. To my surprise, he asks me what the price I will pay. I say $29,588 and he agrees.
Now he wants $350 for wheel locks and mudguards. I say no way jose, take them off. He pulls out the book tells me there is no money in the deal, why won't I let him make a profit. He asks if i want to see his invoice. I candidly tell him I really don't care, if this is a money loser, I apologize and I dont want to waste his time, but I need to get to dealer X, since they are a 1/2 hour away.
We go back and forth and hour for on hour on this, and he agrees to take them off. Now, socal you will be proud. Here is where I nibble. They close in an hour and started cleaning the car. I tell him, If they take the mudgaurds off, I want a different car, because I am sure they put holes in the body to install the mudguards and I don't want holes in the body. He is really annoyed, leaves and 15 minutes comes back and tells me its late and he is just going to leave on the wheel locks and mudguards - no charge.
Now we do the lease, long story short, I pull out my laptop where I built a lease calculator spreadsheet. The Honda money factor was something like 0.00094 aprroximately 2.4% interest. They come back with a money factor of 5%. I tell them I want Honda's super preferred money factor and brought my 3 agency FICO score to prove I qualify for the best rate.
He leaves and comes back and they "forgot" about the special money factor and there lease payment is still high. I find the price is $500 to high, I show him my spreadsheet showing what the lease payment is with our agreed price, etc and that I am not leasing the car for a penny more than this payment. He leaves and 10 minutes later comes back and agrees.
Now, I said I know this may not be the best deal for your dealership, so I will tell you what. You can have my car, carmax offered my $7,500 and I have the docs to prove it (ok here is the only time I lied as carmax only offered $6,500 and pulled a bluff). Match it and its yours. Well, 20 minutes later they came back and said OK at $7,500. Here was my only error, I should have let them offer me a price first. The fact they agreed means I left some money on the table. And I saw my old car on the used car lot for $11,995 two days later.
F&I- 15 minutes, very straightforward no trying to sell more.
So, the whole process took 3.5 hours from walk in to drive off. And the thing I learned is go into a dealership with your terms. Know what you will pay and don't waiver. Figure your lease payment or car payment and let them come to you.
My last 2 purchases (both Hondas) fell into this catagory, with different details
On our Odyssey, when the '05s were still newish and pretty hot tickets (low supply), I had a deal in place from the internet (not local), on a future allocation unit. We decided to visit the local guys again just before Xmas (my favorite time to buy it seems, having done it 2 years in a row), plus my wife was having second thoughts about her color choice.
Well, turns out the had the exact color/model fresh off the truck, only test driven by us, etc. It was Kismet. Anyway, we decide that if we can get a good deal, we'll have an early Xmas (the internet van would not have arrived until ~February). They of course start at MSRP, hot van, yada yada yada.
So, I simply tell them that I happened to luck into this internet deal (no longer being offered at that time, but I was locked in), but if they matched it (or were close), I would prefer to buy right now, take it home today, all that good stuff. They conferred at the big desk, came back at ~$300 more, so I said sure. Quick and painless, plus they had already added stripes/locks/cargo tray, so basically it was a wash, and I saved the trip to Mass. to get the other one.
So, I did not "need" this van. If they said sticker or nothing, I would have walked out, and been happy to take a 4 hour trip to save 2K. Local guy sold a car (still about $700 over invoice IIRC), and the internet guy was happy, because he sold my alloc unit for a lot more money!
Walking out the door really is the most powerful negotiating tool sometimes, or at least being prepared to do so takes the pressure off. That, and answering honestly (and convincingly) Yes when they ask "if I can do this price, will you take it right now" Even had the wife with me, so couldn't use that dodge!
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
I am proud. Outstanding gamesmanship, really nice!
Good job on hunting down the special programs, too. Here's a link that you all might find interesting about that:
"Auto dealers don't always share extra incentives with shoppers" (USA Today)
Auto dealerships often don't tell buyers that rebates or cheap loans are available, says widely followed publication Consumer Reports. A dealers' trade group says that's nonsense.
The monthly magazine said Tuesday that its survey of thousands of car buyers earlier this year showed that 40% of those who bought vehicles that had rebates weren't told of the rebates, and 60% of those who bought vehicles on which low-interest loans were available weren't told of them.
Interestingly enough, it would seem that our poster JenRN was among the 40%. (It seems that the first dealer tempted her with the low-rate financing, but didn't let her know about the possibiity of a rebate. After a haggle and taking the rebate in lieu of the financing, she got lower payments on the same term, in spite of the higher interest rate, because the purchase price reduction offset the rate difference.)
I also was considering a Subaru, and had that deal on the table to fall back on if the Honda fell through. Plus, just ask my wife, but I didn't need a car inthe first place!
So, I looked at the Accord, decide it was my first choice (also was the last leftover brand new '05, and a 5 speed stick - a real winner!). I had my "sure lets do it" number in place (6.5K + trade IIRC), from top $ for the trade (per Terry, also 1-1.5K more than I was getting offered at other dealers). And invoice - dealer cash ($700), pluas IIRC 1.5kish off for the model year change.
SO, I basically did a semi-Bobst on them.
THey made first offer in the 8.5 range. I dropped my 6.5. They looked pained, showed numbers on how much they were using, all that stuff. I, being magnanimus (and having set my max $ a bit higher) graciously came up to 6.8, while they came kicking and screaming down to 7.8.
At this point, they seemed dug in, so I left to "think it over" By the time I got home, I had messages on the cell and the home phone was ringing. A few calls back/forth (some with the sales manger), and he came down to 7.1 (after a brief stop at "7.5, absolutely final), but the 7.1 was good for that night only.
So, to wrap up my long short story, I went back at about 8:00, and by 10:00 was driving the new wheels. I feel I did well on both ends, they cleared out a left over before it became a lot queen, everyone wins.
Oh, and they promptly put my tC on the lot, asking more than I paid for it (and over sticker for a new '06).
Again, I could easily have walked away and kept my car or bought a Sube, which worked to my favor. Instead, I traded in my car for ~2K less than I paid for it 18 months earlier (and many fruitless trips to the dealer to resolve noise issues), and got a sweet Accord that only I ever test drove for 3.5-4.5K off sticker (depending on whos trade value you use).
Maybe there were a few $$ left to squeeze, but I doubt there were too many, and in any case, I was happy with the end result. The SM though looked like he had gas pains.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
My 2003 Trailblazer lease is up and i'm not leasing that car again. Good car, no issues, horrific mpg.
I try sedans, but i am a SUV kind of guy. I check out the equinox/torrent, but they want in the 400's for a 36/15k lease...yeah right.
I check out the rav4's. they want 2000 over msrp...yeah right.
So, i am on my way to the dent wizard to get the big dent out of my fender, and decide, well let me check out the escape on the drive over.
i get to the ford dealer on a thursday 11 am. place is dead. i find a sweet sales lady. tell her i am here to check out the escape.
we test drive, go back inside, she talks to the sales manager and tells me he said that he wants to move some car's today.
me: but i have one payment left, i dont want to make double payment this month.
sm: ford will waive your first payment this month
me: hmmmm
me: but i have to get the dent taken out before i turn this car in
sm: how much are u paying
me: 200
sm: we'll do it for a 100
me: hmmm, so what are the cap costs, money factor, residual?
sm: 300 under invoice;1.25%;49% plus rebates
so basically the most expensive car of the three was the cheapest (by $70 dollars a month!).
so for all my strategies, and internet buying and number crunching, and getting ready for battle, i was in the right place at the right time.
i still can't believe i leased a car this way and i don't recommend it.
That's part of it, but not all of it.
In large part, I think that many of you grossly overestimate how fast and easy it can be to achieve reductions, if you manage things properly. For example, in my last car negotiation, I managed to slice off the final $400-500 in about 10-15 minutes' time. An easy dance that put me well below the range that I'm supposed to have paid for this car according to various forum comments I've read, TMV, etc.
Now, I don't know about you, but I think that investing that kind of time in order to get that result is a pretty fine return on investment. How many of you earn $1,800 per hour doing whatever it is that you do?
And honestly, is time so valuable for most of us that it isn't worth spending an hour to get even $100-200? I'd bet that most of you don't have employers who would value your time at that rate, and I doubt that having an additional hour at home is going to justify leaving that kind of cash on the table. In any case, if you find the sales process entertaining, there's no particular need to be in a rush to cut it short. (Think of all that great free coffee...)
1997 Honda Accord: Went to Fairfax Honda, offered $17300 OTD, they declined, so we left. Next day called Tysons Honda, offered $17400, they accepted, went there, paid for car, drove it home.
1999 Honda Accord: Went to a couple dealers, offered prices around $20200, none accepted. Went to Landmark Honda, offered $20300, they declined, we got up to leave, they accepted, paid for car, drove it home.
2003 Acura RSX: Went to Pohanka Acura, offered $20500, they declined, walked out, they come out to the parking lot to say they accept, paid for car, drove it home.
2005 Honda Accord: Went to Fairfax Honda, offered $20800, they declined, we walked out and started to get in our car, the salesman came out and said they accepted, paid for car, drove it home.
The reason we bought so many cars is that we gave a few to our kids. Life isn't easy for young people in our high-priced area, but our kids are making good decisions with their lives and that makes us very happy.
How come you keep raising your price at every new dealer?
I always thought you kept at your same "one-price" at each dealer.
In your first example, if you were willing to pay Hendrick $150 more, why not save some gas and give Mt. Vernon the same opportunity?
On the new car side well that is a little different. We only have three new car models right now and the Range Rover Sport almost always goes for MSRP. We will usually throw in a few hundred dollars of accesories or Land Rover Gear.
For Range Rovers well we always start at sticker and will give up a couple of thousand. No matter which way you cut it though you are gonna pay 73,000 plus because there are no rebates and we don't give away our products.
For LR3's if there are rebates, there are only rebates on V6 models and any left over 2005 models, we take those off the top plus a little bit more. Same thing though we don't give away our product so unless you are on a special car don't expect any huge deals.
Well, since the first price had failed, I figured I had better increase it a little when I try somewhere else.
"In your first example, if you were willing to pay Hendrick $150 more, why not save some gas and give Mt. Vernon the same opportunity?"
I wasn't sure the price of $13600 at Mt. Vernon had failed until I left and drove away. As you can see in my last three car purchases, I never know for sure that my offer has been rejected until I get in my car and drive away.
One dealer had a fully loaded Accent that was the prior years model (this was early on in model year) So it was a year old new. Only problem was that while the new models had a $500 rebate this one didn't.
Sticker was around 13,250 (low 13's) invoice was around $1K less and with the rebates people were pretty much paying $2-300 below invoice. So I was looking at $12K for this car as the normal selling price. But since this was the last model year I would be looking at at least an additional $500 off simple because it was the only 2002 car on a lot full of 2003's. So we are looking at $11,500 for this car.
Now we started talking to the salesman and after a little banter (each trying to get the other to name a price) the sales man blinks first and give the price of $11,700 Bingo we had our car, but I didn't tell the salesman that, I hemmed and hawed a bit and he came down to $11,500. I then countered with $11,250, the salesman walks away comes back in a few minutes says they can't accept my offer and the lowest they can do is $11,400. We accept under the condition that we inspect and test drive the car and it meets our expectations. All in all it took maybe 20-25 minutes.
When we were with the finance guy we rejected each and every "plus sale" presented to us. We filled out the credit app and were told what the best payment we could get with the term and down payment we wanted. Since it was higher than what we would pay at the bank I told him I wanted the payment under 'X' amount and I will not pay a penny more for a down payment nor would I extend the term of the loan. He said he couldn't do it so we said we will pay cash then. So we used our bank loan for the purchase.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
But to be sure shop around and see if any other dealer is giving similar prices.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The answer to why that may happen is simple. The guy that offers $500 under may benefit the dealership more in the long run. Here are a few people that I like to sell cars to regardless of price: insurance agents, loan officers, realtors, teachers, etc.
Dealers advertise on radio, tv, newspapers everyday. Sometimes selling a car is the best advertising a dealer can buy for a small amount of money.
Second purchase, 1999 - 3 year old Ford Escort, 50K, $8300 plus taxes and fees and ext. warranty. Probably at market value, perhaps a bit above, but not very much (e few hundreds maybe). Car was great, no repairs for three years
Third purchase, 2003 - new Subaru Impreza WRX; 23.5K plus taxes, fees and ext. warranty. It was about the invoice for car still relatively "hot" (about 1.5K less than Edmunds TMV and carsdirect at the time), not very, but definitely not cold. Trade for Escort was KBB "good", where it was more fair than good cond. Added some accessories for close to retail. Method: three email requests to dealers with very specific option/accessory packages, quick follow-ups with fully disclosed (all fees, no BS) faxed offers from all three dealers.
Eliminated one (similar price, too far, too high fee). Came to first, took less than 30 minutes to get a trade offer - amount not what I wanted, so went to the other guy. He offered for trade what I wanted and beat the nominal offer price by $200 (total savings over first guy - about $700). I was quite committed to wait a week for a "cooloff", but I knew that was it, so signed the papers. The F&I guy annoyed me a bit with his push for the warranty - lied a bit about the price if I "don't buy it today", I budged but it came out OK - I already used some of its added "perks".
So you can see, there is a good progress here. There is a distinct possibility I still left some money on the table, but I got my goal, i.e. I got what I came for. Ironically, I service my car in the other place (for convenience mostly) and they seem to have no problem with those other dealer stickers: always get a loaner when available, very professional, courteous. All those stories of "have to buy where you plan service" are perhaps true in Honda/Toyota/Chevy land - not here.
Dealer experience in both places was just fantastic: no BS, no pressure, sort of "here it is, we know it is your money and you have to think about it - when you ready come and see us". Takes a lot of self-assurance to do that. Totally different mindset than say your friendly Southern Florida HonYota dealer (or any domestic for that matter).
Since then I visited several dealerships for tests (just to see what may be my next vehicle, plus when the gas prices spiked up I briefly thought of getting into economy box). Between "upscale" dealers (Saab, Audi, here also Subaru) and say "regular" (Mazda, Ford, Toyota, Kia, Pontiac) there are light years apart in customer treatment, manners, behavior of sales staff. Whenever I went to a latter, even though it was just a market test drive and they weren't really pushing me to make a deal "today", as it would have been futile anyway, it just did not click: the cars on their lots loaded with stupid junk (proverbial paint sealants, etc.), showroom look, and mentioned manners, I always had a feeling I had to take a long shower after I go home. All those creepy questions about a payment (when I told them it would not be a problem because I can afford any payment in this range, they would still try to commit me into something), and foremost - lack of real knowledge about their product. I often knew more about that vehicle than they did (and I wasn't buying!). The former - nothing of this: complete focus on the product demonstration, some chat about possibilities, full respect to my time and money and moreover understanding that it is not milk I am seeing here.
It will take me a lot of effort to convince myself to buy anything less than Subaru again (as it is here a border brand between "regular" and "upscale"). I will see what I will do when I am ready to buy again.
2018 430i Gran Coupe
I say, "I want us both to come away happy from this deal. I really respect what you do, and understand you are under alot of pressure and that you need to make a decent living. Let's see how much we can come down on this price."
Then I mention I have several hundred dollars in cash on me and several hundred more at home, ten minutes away. For each hundred dollars he knocks off the price, I will split the difference with him - *giving him fifty dollars in cash*. This means that he knocks a thousand dollars off the closing number, I give him 500 dollars, netting me 500 dollars in savings.
Am I being a bad boy? I can't be the only one to come up with this as a way to save money on a used car deal.
Peter
If so, I'd say that you give that up. A sales process usually involves 2-3 people -- the salesperson, the sales manager, and F&I. I'm not sure how you would possibly pull that off, given that you have two other sets of eyes looking at the deal, with the sales manager approving the price and F&I doing the paperwork.
I wouldn't worry about that, anyway, you'd be leaving more money on the table than you had to by doing that. I think that customers would be better off if they stopped trying to find shortcuts to negotiation, and instead learned about using the current process to their advantage. There's no point in trying to reinvent the wheel when the wheels already work well enough, if you let them.
A. The dealer is getting the price of the vehicle any way you slice it, your check, you loan check, etc.
B. The dealership will be making less money, since there will be no profit from them financing your vehicle for you.
These must be the same people who will pay HR Block the equivalnet of about 300% (not a typo) in interest so they can take advantage of the Rapid Refund of their income taxes.
I really struggle with peoples view of cash.
Highly unethical at best. I wouldn't deal with a salesman that would do this. One question that will be in the back of my mind is, if he is doing this to his employer whom he has an ongoing relationship with, what crap is he pulling on me?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I think it comes from that day and age when you could do a cash deal off the books, and avoid paying sales taxes. The merchant also liked it because he could reduce his income tax liability from not booking the deal.
Things have changed, though, and now the dealership would actually prefer you to obtain financing from the F&I department or else lease the car. This has actually been true for decades, but it takes awhile for the word to get out...
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Please, please, please dont try that....you may feel like you have good intentions and are trying to save a few dollars and make everyone happy BUT that is not the case.
It would come off as if you were shady, unethical and would try anything to save a dollar or two...if you said that to me, I really dont know how I would respond but know that I would not have any respect for anything you said from that point onward.
by the way, if it was not clear, the answer would be NO BUT THANK YOU ANYWAY.
I feel I am doing the dealer a favor just by buying a car from them. Doing it by cash is in my interest not the dealers.
These must be the same people who will pay HR Block the equivalnet of about 300% (not a typo) in interest so they can take advantage of the Rapid Refund of their income taxes.
I have worked those trenches for many a year. I can tell you that the vast majority of those people are living paycheck to paycjech and are counting on those refunds to pay this months rent. Its not as much as their cash views but that they need the money right now.
FWIW most of those people have already had their taxes done by now, they usually get their taxes done as soon as they get their paperwork.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Make sure you are prepared to pay the salesperson bills when he gets fired and bail money when he is arrested...If I caught a salesperson or any other employee taking cash for discounts they would be fired immediately and possible arrested for stealing/fraud.
For those not following:
Pretend you are at Wal-Mart. You see a five dollar box of cereal you want, but only have 3.50 you can spend on it. A person working at the store says, "well, I can knock four dollars off the price for you, but you have to give me two dollars in exchange". You pay him the two dollars, and at check-out you pay one dollar at the register.
The end result is that you have paid three dollars, in total, for the cereal.
I don't see how a salesperson could be arrested unless there is something in his contract that specifically addresses this subject. Obviously he would be fired if we are found out. That's why he wouldn't tell anyone, and neither would I. This is a way of us both 'sticking it to the man', as it were.
Perhaps I would ask the salesperson if he could help me find a legitimate way of discounting the car in exchange for doing this deal. He would know more about this than me. Perhaps he knows of a cigarette burn under the seat. Perhaps he knows something else - something more significant that I might have missed without his expertise. I am telling him I am ready to pay for that expertise.
Car sales people are often undervalued and underpaid. There is alot of turnover at large lots. I wonder if the sales' person's loyalty lies with the management of the dealership - which does not hesitate to humiliate and nag if sales are not happening fast enough - or with me, the person with cash in hand and a desire to get the deal done.
If prices are negotiable then I don't see how my discount plan is different from "#1 dealership in the county" discounts and the like. We would be leaving the dealership out and I would be paying a commission directly to the sales person. That's it. I can't see how any lawyer could prosecute either one of us, I can't see how a police officer would arrest us. I *can* certainly see how a sales professional could be fired, however, for disclosing the details of such a commission.
I'm guessing he probably wouldn't disclose, if he/she accepts. The only one who loses is them in that case, not me.
Perhaps this strategy would be better put to use on a large lot with yucky managers. Shouldn't be too hard to find!
Peter
I think your approach is very friendly and approachable, and as a salesperson it would be a breath of fresh air if someone told me that at the beginning of negotiations.
BUT, I would feel very uncomfortable taking cash compensation. I could lose my job, its unethical and as tempting as it is it just is wrong. I know there are salespeople out there who make $50 dollars minis and have 6 kids to feed and would take it for those reasons, but I could not. I have accepted, hockey tickets, basketball tickets, free dinners, gift baskets, wine, a designer sample dress (cust worked at garmet district) but that was after the sale as a thank you. I am not down with the PAYOLA schemes.
If I was the salesperson, I would flat out refuse this because of two reasons:
1) Illegal and unethical
2) How do I know that you are not a mystery shopper representing the owner?
At this point, I think there is more wiggle room than the sales person is letting on, because they are experiencing pressure from the dealership. Becuase they have to secure the top commission from the pay structure given to them when they got hired.
The question is - are dealerships ethical? Everyone is fine with them being shady, everyone accepts it as if a fact of life. We have seen countless discussion topics on the horrors of negotiating based on monthly payments, tacking on extras without letting the consumer know, and ultimately - *allowing the consumer to overpay for the car*.
If they are generally unethical in that sense then what I'm suggesting is not. If someone offers me a fair deal on the car I want, (and I know what one is, since I've done all the research) then I don't need to use this method. I came up with this based on the idea that it is impossible for the sales person to act on both his and my best interests.
Peter
You want to find a guy who wants to "stick it to the man." A salesman who has Noooo problem screwing his employer, the guy who puts bread on his table.
And you somehow think that this guy who has never met you before is not going to try and screw you? *rattle*
I might not want to hand over the spiff, until you finished the deal.
-The salesman is committing fraud, this is akin to putting his hand in the till. He probably won't want to defraud his employer, because he could easily be caught,
-The sales process doesn't just include one person. The sales manager knows the agreed-upon sales price, because he must approve the deal.
-If you've negotiated a deal with $1,000 worth of spread, then you've done a poor job of negotiating. Your method assures you of paying too much.
I suppose that you could negotiate the deal, and then choose to pay the sales guy a "tip" on top of the sales price, but why would you do that? You'd be paying a premium for absolutely no reason, and you obviously wouldn't be paying the absolute lowest price if you did that.
(Incidentally, I've read on some forums about people who have taken to tipping the mechanics in the service department, in the hopes of getting better service. Makes me want to reach through my monitor and give them a swift kick for setting such a poor precedent.)
If a customer is friendly approachable and lets me do my job, I am going to get that person the best deal possible with or without a tip.
This is the way I look at it and I always have and managers do not agree with me, but it helps me get in my zone:
From the meet and greet and presentation of product and facitlity, I represent the dealership. From when the customer and I sit down at my desk, I represent the customer. I will work hard for my customer to do all I can to make him or her happy in a way that pleases my superiors also. I am the one that has a story to the F&I guy about why her credit went south for 2 years, why they only have 2 grand down instead of 4 ect ect..... so regardless of cash spiff, I am not going to work anyharder to get a deal done. IF A DEAL CAN BE MADE IT WILL BE MADE, IF IT MAKES SENSE IT WILL BE DONE.
I believe in tipping when people go above what I would expect as normal and customary.
Or take last night for example. I went in to the dealer to pick up my Plates. Their service center is open until midnight, so I walked over to the guy at the desk to ask a question. He saw my plates and asked me if I wanted a porter to put them on.
Now, I can work a screwdriver, but since I knew our discussion would last more than 5 minutes, I let him. Well this guy just berates this porter who was in his teens.
We finish our convo, I walk out to my car, the porter is out there, nice kid, very polite. We chat and just seemed like a good kid and hard worker and saved me the time of going home and messing with the plates. So, I tipped him.
Did he do anything above and beyond, no. But he was younge polite and I sure had a long day working for that particular service guy and thought he deserved a little something. *shrugs*
There is a big difference between the two. Wal-Mart has set, non-negotiable prices. The Wal-Mart example is theft because it is like taking money out of the register. Selling the item for $5 and then taking $4 out isn't much different that selling it for $1 and getting a kickback.
The car sales is a completely different matter, the selling price of the car is negotiable and cab vary greatly at times. Plus the sale usually has to be approved by a manager or the owner, especially if it is below asking price.
Suppose a $16K car was sold at $15K with the salesman pocketing $500 under the table. It would be hard to prove that a theft occurred because at any time that car could have been sold for $15K. While it certainly unethical you would be hard pressed to prove theft.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
(totally tounge in cheek but feeling kinda spunkee today)
If the salesman had given you their best price what makes you think there is a better price? If you negotiated properly there wouldn't be a better price to have, not one that you can get in any reasonable time.
The question is - are dealerships ethical?
Some are, some are not. Does the fact that there are unethical dealerships out there justify you being unethical? If your wondering the answer is no.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Some are, some are not. Does the fact that there are unethical dealerships out there justify you being unethical? If your wondering the answer is no.
Good point...This is exactly the type of customer who I would avoid selling a car to....if the guy is willing to risk somebody getting fired and possibly arrested to enhance his own pocket I could only image the problems that could pop up down the road...would the guy come in with the CSI survey in his hand and say for $100 I will give you a perfect score? Would he try to pay off everyone in service to get a discount? where would it end?
But I would say more dealerships are ethical, than not ethical. Even those who were not ethical at one time are now. With privacy acts, full disclosure, truth in lending ect ect....
Google Galpin Ford and you will see beyond selling mop and slop for 200 dollars.
Bobst, you were in and out (purchasing 5 vehilces)in the time it took me to test drive one. Boring... but efficient.
british, please don't tip 20%-25%...I'm just getting over the standard tipping percent going from 10% to 15% from about 20 years ago.
Recent thread smells a bit trollish...with someone having an agenda against "the man". But, an entertaining thread it is.
I was buying a new Xterra for my wife last year. The purchase went really well, then we went "in the box". Before the F&I guy even got started, I said, look, I've only got one card to play here. If I don't like what you offer, I'll just pay cash. After that, I got the tier-one loan rate, he didn't even mention credit life, etc. I wanted the extended warranty because it came with road-side, which Nissan doesn't offer. He gave us the warranty for cheap, and the whole thing was painless.
I guess you can't try this unless you really are prepared to pay cash, and our credit is squeaky clean so that probably influenced how he dealt with us as well.
Just like others have stated, the salesperson is not the one signing off on the deal. The salesperson is just presenting the deal for approval and I just want him to submit the lowest possible deal he thinks might fly. Given the amount is rather small, certainly less than $500. I don’t have to declare anything to the IRS. If the salesperson receives too many of these, he might be liable to the IRS.
The way I see it to each their own. If you’re comfortable working deals like this than do it. If you don’t think it’s the right thing to do, then don’t. I’ll always know it’s an option and may try it again if the situation fits the bill.
I am not a troll! I really wanted to bounce this idea off of you all and really wanted to hear what you all think. I wasn't trying to get people all fussed because its entertaining, although I agree with jipster, it has been!
And as long as we are accusing me of trollish behavior, here is what I think about the issue of "ethics".
If business is business, than I am simply doing what I can to get to the lowest number the fastest way. Dealerships try to do the opposite for the sake of "business" and we've all accepted that so I don't see what the difference is. It is worth underlining what kauzins said: becuase the price has to be approved by management there isn't any ripping offedness possible! I am only trying to go into the F&I office with the lowest number the sales person can get away with. This tactic still allows the dealership to make a profit!
Anyways, we'll see if I get into a situation with a sales guy that warrants bringing out my wallet, notebook and pen. If I don't, so be it. If I do, the worst that can happen is a no. I've seen lots of dealerships in my area that have the vehicle I need in stock!
Peter
If the sales manager approved a deal at $X, and you slipped the salesman $500 under the table, then guess what? You overpaid by $500.
My earlier point is that you should be capable of negotiating that deal yourself. Obviously, the sales manager didn't have a problem making the sale at $X, which means you should have been able to get away with paying $X without paying a dime more. Sorry, but I think that you got blindsided, and were too busy thinking that you had end-run the system to realize that you got gamed yourself.
Still at that timing is important. If the salesman and dealership just made quota good luck in getting that great deal.
Given the amount is rather small, certainly less than $500. I don’t have to declare anything to the IRS.
Ah, yes you do. Not declaring any income, regardless of source or amount it tax evasion and illegal.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
No, no! What happens is you negotiate for five hundred off the final price, and you give the sales guy 250. You've paid 250 less for the vehicle.
Peter