Purchasing Strategies - Questions & Success Stories

jmonroe

Not worthy of the name Cadillac.

Rover,

I'm surprised at you, this was your opportunity to say BOTH. I know, I know, it was the end of the day.

I just couldn't resist.

jmonroe

jims63139

In Memphis, I have a 2004 Jeep Grand Cherokee 4X4 (never been off-road) with about 49K in very good condition, no accidents, no dents/scratches, interior very clean, never smoked in, dark purplish brown color exterior, charcoal cloth inside; fog lights and 10 disc changer. Second owner but service history is available and could use a set of tires soon. We are trying to trade on something easier on gas.
Knowing (at least i'm pretty sure in the assumption) that cars we are trying to trade for that the dealer has at most KBB fair to good condition $$ in, what is a reasonable trade for the Jeep and what is a reasonable profit for the dealer.
For example, we were trying to trade on a 2003 Altima 2.5S, light brown, 2 owner, clean car with some dings, scratches on bumper, new tires, alloys, ABS, SAB that atarted life as a Hertz rental, no service history available. CAr has 68K miles. Started out that we would owe them $800 and we walked after them offering to give $500 back. I don't think that was much of a deal considering that the KBB (excellent condition) value for the Altima is only $9000. So, please give me a reality check. Any help/opinions will be appreciated.
Thanks! Jim in Memphis

isellhondas

I had a senior manager who works for a "well known" software company come to see me.

Although he had a trememdous income, he also had a 4500.00/month house payment, a large boat payment and over 120,000 in revolving credit debt.

Yes, he was a "payment buyer".

Just scary!

Karen_S

A reporter seeks to interview anyone who recently bought a vehicle that was less expensive than their previous one, and was motivated to do so by the economy. Please respond to jfallon@edmunds.com by Monday, September 4, 2006, and be sure to include your daytime contact information and make/model information on the vehicles of interest.

jmonroe

Yes, he was a "payment buyer".

I know you have been in the biz for quite a while and to be this much in debt has to be an exception but I'm curious as to what percentage of people across the board are "payment buyers" vs. actual car buyers vs. lease customers.

I'm sure you have probably answered this at least once before but I've never heard it.

Also, from what I've observed, "payment buyers" graduate to lease customers which means eventually they don't own anything for the payments they make. Have I observed correctly?

Thanks,

jmonroe

mikefm58

" and over 120,000 in revolving credit debt. "

OMG.....$120K in credit card debt. That's the most I've ever heard of. That's about $2000 a month in just interest.

snakeweasel

OMG.....$120K in credit card debt. That's the most I've ever heard of.

I once saw just over $150K.

And to think I panicked when I almost hit $5K.

jmonroe

I once saw just over $150K.

snake,

Since your in that biz and see a lot of peoples finances, what kind of annual income does it take to get this kind of a credit line? I have a decent credit line but this makes me look like a homeless, living under a bridge kind of a guy.

Haven't talked for a while, whatcha been doin, countin your money?

jmonroe

kyfdx

I bet it doesn't take that high of an income..

I've always paid my credit cards off every month... never carried a balance or paid interest... and yet, I have two credit cards that between them have a higher credit limit than my annual salary...

Could probably get a couple more cards and double the credit line, if I wanted...

Don't they send credit apps to pets now.. :surprise:

jmonroe

Don't they send credit apps to pets now..

Yeah, your right. My parakeet got a couple last month alone. When I ask him what he wanted me to do with them he said "rip em up, that's what I done last Christmas when they sent me three of em."

So I did.

jmonroe

snakeweasel

Since your in that biz and see a lot of peoples finances, what kind of annual income does it take to get this kind of a credit line?

Not to much, get enough credit cards you can have credit limits up to and exceeding your annual salary (that is rare however). Generally speaking a single card having a credit limit of 1/5th your annual salary is rather high. My advice is don't accept high limit cards and try to keep the combined limit no more than two times your monthly salary (one months is even better) as not to get you in to deep.

The people I saw were lottery winners (almost 8 million) who I suspect are now working two jobs to make ends meet.

whatcha been doin, countin your money?

Yep every day I get up at 6:00 and start counting my money, 30 seconds later I am done and I take a shower. :shades:

isellhondas

Actually, we don't get that many "payment buyers". We get some but not as many as most places.

We are in a pretty upscale area so that makes a difference.

snapcracklepop

Quick question, what exactly does that mean? Does that mean that a person bases what he can buy based on a certain monthly amount like "I can only pay $500 a month for a car"?

I'm no 800 beacon but even as a 20 something year old I qualified for a decent rate and still managed to purchase the car I wanted.

That's so crazy to hear about $120k in debt!!!!

stickguy

that's what it is. Sure, some educated buyers (people with common sense) have a monthly budget, but they still negotiate the best deal on the car, and then evaluate payment options loan term) to fit their budget. Of course, the really clued in ones already know what laon amount they can afford, and don't look at 40K cars if they can only afford 20K!

So then, a payment buyer just cares that they can pay $399/month, and don't pay attention (usually) to whether they are getting a good or bad price, loan term, etc. Heck, sometimes they end up with a lease and don't even know it!

dino001

There is nothing wrong in being a payment buyer provided one is shopping for a particular vehicle (say Camry), particular term (say 48 months) and with particular "boundary" conditions (say 2000 cash plus trade). In that regard if one knows usual APR they will qualify, they can determine their payment range within $5/month. "Usual" payment buyer does exact opposite: has no idea what APR is, no sense what is lease what loan, etc. - all they can see is "per month" figure.

Some of those people are actually trying to do a "right thing". They know they are not "very good with money", so they try to restrict themselves by limiting monthly obligation. The problem is they usuall have no idea about the larger picture and at best end up overpaying (played by dealer) or at worst getting into something totally over their heads.

snakeweasel

You are right there is nothing wrong with being a payment buyer if you don't fall into the traps. That being extending the term, increasing the downpayment or getting stuck in a lease.

Many times people will find that they will be getting a much lower payment but its for a 72 month loan at a higher interest rate or they end up in a lease.

If your a payment buyer you have to really watch out whats going on and give a resounding "NO" if they ask for a larger downpayment, want to extend the loan term or get you into a lease. Unfortunately most people do not really know what $300 a month on a 60 month note will really get them.

thedude5

I have a question: this has happened quite a few times to me. I will go into a dealership with the invoice as X but the dealer's invoice will be 200+ dollars more expensive and they refuse to acknoledge mine, even though it came from edmunds. What should I do then? In some cases, its only $200 but in other cases this greatly affects the deal.

jmonroe

...I will go into a dealership with the invoice as X but the dealer's invoice will be 200+ dollars more expensive and they refuse to acknoledge mine, even though it came from edmunds.

I don't feel that you have to show a dealer any information that you have, regardless of where it comes from. You either let the dealer give you a price or you give him a price. Either you accept his price or he accepts yours and you don't spend more than 30 minutes deciding what you are going to do. It's really very simple.

What should I do then?

Assuming you have not come to an agreement, you go to another dealer and if necessary you go to another dealer and if necessary you ... If you can't get the price your research says you should pay then you will have to pay the going rate in your area. There isn't anything else you can do, other than buy a different car which in the end usually isn't as bad as you might first think.

It's your money, therefore you're the boss and you decide how much of it you want to spend and what you want to spend it on. Again, very simple.

The laws in this country won't allow you to put a gun to the dealers head and demand that he sells at your price just because it came from a very reputable source, even if it is Edmunds !

I'm going to bed.

jmonroe

thetrumphet

when you buy an used vehicle you're suppose to take it to a mechanic to have it checked up, however this can cost ~$50-%100, and if you're going to do this to 4-5 used cars you're interested in, it gets pretty expensive. is it fair to ask the seller to pay for the inspection?

jwilliams2

Sure it is. And don't forget to ask if you can be reimbursed for your gas and time to come see the car. The seller should be happy to pay these expenses for the 5-10 people interested in his car.
But seriously, if I were the seller I would offer to reduce the asking price by the cost of the inspection if you buy.

isellhondas

You asked the same question in another forum.

If I were selling a car in the paper, I would have no problem with someone having it inspected. I would bot, however take the car off the market while the prospective buyer made an appointment to get this done. If someone else came along, cash in hand who was less nervous about the condition of the car, I would sell it to them.

And,asking a seller to pay for the inspection that YOU feel is important would be out of the question.

isellhondas

I don't understand...why?

It's the prospectibe BUYER that feels the need for an inspection! Why should the seller pay for this?

nynewcar

OMG! I feel like a kid turned down for a prom date! Before I venture back out there, I need a pep talk.

The short story: Friday morning, I came in with a banker’s check. Salesman took it to “the desk,” came back a few minutes later and explained how they “need” another $438. I said thanks and got up to leave. He asked what I would do with the check. I said, well, I was hoping I would be leaving it with you, but if this is the case, I guess I’ll cancel it. And he let me walk!

I actually liked this salesman. He is the guy who gave us a test drive a couple of months ago, and he remembered me vaguely. He was a veteran, very no-nonsense, which I liked. He didn’t try to push the deal on me when I went for the test drive and he didn’t try to push on Friday either.

I'm not a psychologist, but my feeling was that the salesman would have taken our offer, and the “desk guy” shot it down. It was the beginning of the holiday weekend and my feeling was that they were hoping they could do better with other customers. On the other hand, this is a 2006 Accord and they have almost 30 of this model (same trim level) left in their inventory (according to the website which updates frequently), so I’m sure he must be trying to get them off the lot.

I think my offer was fair. Nonetheless – if the difference would have been $200, I would have pulled out my Visa and closed the deal without another word, with apologies to bobst. But it’s just not worth $400 more. Not to mention, they only have my second color choice. For that $400 + another few hundred, I could get an '07 and it would be my preferred color. I wouldn't mind waiting another 2-3 months, either.

I’m in the NYC metro area, so there’s a Honda dealer within a stone’s throw everywhere I turn. I will go out to Joisey (that’s New Jersey, in case any tourists are reading this :P ) tomorrow. I know a few dealers who still have the car I want, and two even have it in my first color choice.

But how do I handle the offer? As I said, I’m willing to raise it by $200. But should I add that to the initial offer, or should I offer the same as I did here, and let them “negotiate” with me over it?

Or am I being unrealistic? I’m starting to doubt myself because it was quite a surprise to see a dealer walk away from a bank check.

cccompson

The dealer didn't accept your offer? So what? Go find one who will. If none will, pay more or wait. It's really very simple.

british_rover

You totally missed the sarcasam there.

nynewcar

Well, yes, it is very simple. But I am mulling over how to handle it next time (tomorrow) to increase my chances of success.

I was hoping for some insight from more experienced buyers as to what the dealer's considerations might have been that made them turn me down, considering that they have quite a few cars in stock that they need to get rid of, and that my offer was fair and realistic, and in cash.

mikefm58

Paying with a cashiers check doesn't change the dealer's bottom line. They let you walk because you offerred less than their bottom line, plain and simple. You say there's plenty of other Honda dealers, well you know what to do then. If you leave empty handed after visiting a few more, increase your offer.

tidester

I need a pep talk.

Repeat after me ... "I am good enough. I am smart enough. And, doggone it, people like me!"

tidester, host

gimmegirl

Let me start by saying how much I appreciate having access to the hard-earned wisdom of all the posters. I have learned SO MUCH in just a few days of reading the various posts. I need your help in buying my next car.

My husband and I own a business, and our business will buy our next car. We live in the Washington DC area, and are willing to drive 500 miles (or more) to get a great deal on a car. In my view, a car is an appliance. It is not a reflection of my net worth, my income, my IQ, or my self image. It is an appliance. We can afford to buy a more expensive car than those on my list, but an expensive car isn’t important to me. I want: great gas mileage (in the 30s – not the 20s); great reliability; great price; great safety features; and great AC – and we want a manual transmission. I’m not interested in all kinds of gewgah gadgets, and I don’t care about color or styling. I had assumed that we would get a certified used car, but the new car prices aren’t that bad, so we are considering a certified used or a 2006 or possibly a 2007 of the following cars:

Honda Civic Compact Hybrid or the Insight Coupe; Honda Fit; Scion XA; Toyota Corolla; Toyota Matrix; Toyota Prius; and the Yaris. We aren’t so sure about the Ford Focus because of reliability; and the Subaru Impreza and the Saturn Ion don’t get great MPG. Only one coupe is on the list. We don’t have children and I rarely have anyone in my car other than myself and do not care about the comfort of the back seat. However, once a month, I deliver my magazine to my clients, and I load up the car with about 500 pounds of magazines. So, any suggestions? I really want to pay not much above invoice – is that a realistic expectation? We would like to get the car by the end of the year. Thank you all soooo much.

Just for jollies, I asked for and received an internet quote for a 2006 XA Scion manual from a local dealer for $13,320. That includes freight but not tax and tags. What kind of deal is this?

jipster

I said thanks and got up to leave.

Unless you have a lot of time on your hands, your situation is precisely why I don't care much for the "bobst" method of car purchasing. Now you have to start the whole process of locating a vehicle, test driving, schmoozing with the salesman, getting another check from the bank, etc.

But, that's the corner you paint yourself into when you make a take it or leave it offer.

Your first mistake was trying to purchase during the holiday weekend. I'm betting if you had waited till Tuesday they probably would have taken that offer. You may even end up getting a call from that dealership in a couple days saying they'll split the difference with you.

Despite claims to the contrary, unless a take it or leave it offer is made with a great deal of tact and decorum, it can be offensive to the salesperson. You show up with a certified check made out to the penny as if you are buying a loaf of bread at a grocery store. This is not good for the ego starved salesperson. As George Costanza from Sienfeld would say, "you have all the hand"...you have to give the dealership a little hand in the relationship... so they will be more likely to give you a good deal.

Anyhow, I suggest you go back in this discussion and read all of socala4's posts on this subject. That is if you are interested in getting a really good deal.

Or, you could just raise your offer $200 at another dealership, then another, then another...until you get the vehicle you want. Good luck.

snakeweasel

Salesman took it to “the desk,” came back a few minutes later and explained how they “need” another $438.

Did you reply "Now I have $438 reasons why I need a new dealer"?

My advice is to look around and see if there is another dealer that will take your money. But I would just for kicks (and to see if they would take it) go back with the check and say something like "Here is a cash sale, are you going to lose it for $438?".

Just remember that it will take time and effort to find another dealer and go through all of this again. So ask yourself is that worth $438 to me? Remember that it may take you 2 or 3 more dealers to make it work.

snakeweasel

My husband and I own a business, and our business will buy our next car.

If thats the case make sure this car is used only for business and that you have another car for personal use.

However, once a month, I deliver my magazine to my clients, and I load up the car with about 500 pounds of magazines. So, any suggestions?

Ok since you will be moving 500 pounds of magazines each month you may want to get a small wagon or hatchback. Make sure that it has plenty of room for your magazines. That being the case I would think that the Prius and the Yaris may not be the best fit for you.

isellhondas

I was in total agreement with you (imagine that!)until
I read your suggestion to go back and read socala's posts!

All a person would have to do is read one of his posts, since they all said the same thing!

mikefm58

Sorry jipster, but I have to disagree with you on a couple of your points.

Unless you have a lot of time on your hands

It takes only a couple of minutes of negotiations to determine whether you'll get the vehicle or not. If you're looking for something unique it could take some time. But the poster said there are plenty of Honda dealers close.

unless a take it or leave it offer is made with a great deal of tact and decorum, it can be offensive to the salesperson

It's also very easy to professionally say after making an offer.....and Sir, this is a firm offer as I don't care for back and forth negotiations. Granted the salesman might try to squeeze more out, but again just say.....Sir, my offer is firm.

nynewcar

Thanks for all the thoughtful comments, everyone! I’ll come back as soon as I finish my Daily Affirmation in front of the mirror, because doggone it, tidester’s right, LOL!

gimmegirl

Actually, it isn't nearly as difficult as it might sound. Our magazines come in boxes that weigh 44 pounds. My last sedan (Honda Accord LX 1988) was perfect. I place 5-7 boxes in the backseat and floor, and few extras in the trunk. I've rented subcompacts - a tiny Chevy a few steps up from a tricycle - and they worked just fine. I can only get so far in a day - and a small car holds enough.
All of the cars I listed will hold enough.

mrolind

there is a private seller selling a used 03 Accord EX-V6 coupe w/ all options except navigation system, 59000 miles, exterior looks very clean except for a few scratches on the front bumper. Inside is clean, leather was taken care of, however there are some oil stains behind the steering wheel and a few stains on the chairs. Seller is asking for $15,995. KBB lists excellent condition as 16.4k, good condition as 15.4k. Going to get the car inspected on Tuesday but he says anything that comes up he won't fix it and he won't decrease the price, so basically $16k is lowest he will go. However, the seller told me he has his own private dealership he owns and he said he worked as a Honda/Acura specialist in repairing cars for 15+ years and he strongly suggested us to bring the car to a Honda dealership to get is inspected, he'll make the appointments/arrangements, etc.. Maybe I'm just really paranoid but maybe he knows people in these Honda dealerships that might hide certain things that are wrong? I'm thinking of finding a different place to bring the car to, maybe even a Firestone or a National Tire and Battery and make my own arrangements and just telling him to bring the car to meet me there. And lastly, what kind of inspection should I get? just a basic quick checkup?

Thoughts?

pupkin

Is it normal for a dealer not to accept credit cards for a cash purchase of a new car? I was naively expecting to pay about $23,000 with a credit card (it has high enough limit) for more security and to get 1% cash back from the card. But the dealer wouldn't take it saying that it would cost them something like 4% (almost $1000) extra, and they would only take a certified/bank check or wire transfer. Is this reasonable? If it is, are there any potential issues with a wire transfer compared to a certified/bank check? (Wire transfer will be easier with my online checking account plus I avoid an extra trip to the dealer.) Many thanks!

cccompson

Yes, it's customary (and, IMHO, reasonable) for dealers to limit the amount of a transaction charged to a credit card, usually to $5000 or less. Think about that - four percent of five grand is $200 (although I believe the usual fee is three percent).

Just do the wire transfer if it's the easiest method for you although I'm not sure how that avoids an extra trip to the dealer because you have to pick the car up anyway.

pupkin

cccompson, thanks for the reply. They wouldn't start the registration (I need a new one) until the payment is receieved, so I would need two more trips with a check (one to bring the check, the other to pick up the car) vs. only one with a wire transfer (to pick up the car).

mikefm58

I would make my own arrangements. Check the yellow pages for "auto inspection" type places. I used one a few years ago, cost me $125 and they came out to where the car was. They were mobile.

bobst

After Labor Day, increase your offer by $38 and go back to the dealer and see if they will accept it. Please let us know what happens.

bobst

Offer tham a personal check. Ours have always been accepted. If they don't accept it, go somewhere else.

tidester

You may also be interested in this discussion: What's the best vehicle for my needs?

tidester, host

mrolind

do you think its necessary to even bring it to a body shop/paint shop?

nynewcar

Again, thanks, people, for all the thoughtful comments.

The Bobst approach, with some tweaking to accommodate my personality, works for me, especially since by nature I shy away from confrontation. I admire Socala’s views on negotiating, especially where he says that you want to have the dealer commit so much time that he’s vested in the deal’s success and will therefore make concessions that he might not make otherwise. But it’s not the right approach for me. I don’t have enough knowledge, not about this industry nor about negotiating, to pull it off, and it goes against my temperament.

The outcome was disappointing but otherwise the visit to the dealership went well, in a cordial atmosphere. Tact and decorum were present on both sides. Before I got up to leave, I told him that I was sorry it wouldn’t work out and that I had really hoped we could do business that day. He didn’t seem offended and I don’t think I burned any bridges. He even came out of the dealership with me and ended up helping me navigate out of a very tight parking spot.

Bobst, I’m intrigued – why $38? Frankly, I would feel odd offering that small an amount. Doesn’t it seem a bit smart-alecky, if they asked for $438, for me to offer them only the “$38”? I don't know if I could carry that off, I think I'd offer to split the difference, around $200. But I'm curious about your rationale.

nynewcar

Point well taken about shopping at the start of the holiday weekend. Lesson learned. I should've waited till Monday afternoon or even Tuesday morning.

I also agree with you about the "cost" of starting the process with another dealership. In my current situation, it is worthwhile to me, especially since at this point the dealer doesn't have my preferred color choice and one of the alternate dealers, in Jersey, supposedly does.

But there were times in my life when it would have cost me more than it was worth to spend a day chasing down $400 in "savings," and I wonder if at the time, I would have had the good sense to realize it.

A "really good deal," at this point, also takes into account the two offers I got for the '07. Is it still a "really good deal" if the '06 is less than $1,000 cheaper than the '07?

If I would add the entire $438 the dealer is asking for, that's what would happen, so I'm not sure it would be worth getting it at that price. What do you think?

nynewcar

Well, there are other factors that make me uncertain if adding $400 is worthwhile, detailed in my reply to jipster.

Did you reply "Now I have $438 reasons why I need a new dealer"?
Not really my style. Many years ago a good friend counseled me never to slam a door shut when you can close it gently. I found that to be good advice in a lot of situations.

fordfool

"The short story: Friday morning, I came in with a banker’s check. Salesman took it to “the desk,” came back a few minutes later and explained how they “need” another $438. I said thanks and got up to leave. He asked what I would do with the check. I said, well, I was hoping I would be leaving it with you, but if this is the case, I guess I’ll cancel it. And he let me walk!"

Prospects don't grow on trees, particularly prospects waving a bank check. When the salesman calls you (and he will), do you have a game-plan? What if he offers to split the difference?

I say I'm shopping my offer to other dealers. At that point the dealership takes my offer before someone else does. Always, as long as the offer was reasonable. Remember, the sales manager's job is to relieve you of as much money as he possibly can. Rejection of your initial offer is to be expected. When they understand that is also your final offer, you'll have a deal. Good luck.

jipster

... I'm not sure it would be worth getting at that price.

I would agree with that. Under the circumstances you've described I would hold out for the '07 Accord. But, if you plan on keeping 7 or more years, it probably wouldn't matter much. I would just make sure to get the vehicle and options that are important to you... at a competitive price you are comfortable with.

The main thing to do is take your time and not rush, which I don't believe you've done. You don't have to reply immediately to the dealer if they counter your "firm" or "take it or leave it" offer. Personally, I've read many posts where dealerships have told the customer that "this is the best they can do" ...but end up doing much better with the price. I think you could do the same, as you indicated in previous post, and raise your "firm" offer $100 or $200 to let the salesman save face. If they don't accept your one, and only one, counter offer... then you can walk. Of course you can always start $100-$200 less than you are willing to pay, so you're really not giving up anything.

Anyhow, just a few thoughts. Hope you get the car you want at a good price. Let us know how it turns out.

P.S I think bobst was pulling your leg on raising your offer $38. He gets a royalty check whenever someone uses his "bobst method" of car purchasing... so he may be a little disappointed.