Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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Stories from the Sales Frontlines
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It doesn't matter what I'm selling, cars or stuff privately - I don't bet on what the future might bring, or if I'll score a higher price later. Cash "now" is the king. Money talks bs walks as they say.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
Boom, I did it with my X3 and others have mentioned doing it....a courtesy deal. The dealer just takes the car in so you can just pay taxes on the difference in value. Then the dealer sells the car to your friend or in this case the Costco guy for the agreed upon price. No warranty, no work to be done on the car. Mr Costco knows he is really buying the car privately, but is doing it through the dealership.
The advantage to you is the dealer gives you $21000 for your trade in, Mr Costco pays $22500, and the dealer hands you the extra $1500.
Advantage to Mr Costco is he gets a car for $22500 in good condition, which will cost $26000 by the time he buys it from the dealer.
Advantage to the dealer is they make a clean profit on the new car with no risk from a car they might not want to handle, or, they think they might not come out ahead on.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
A store would be crazy to do this.
While I don't think it is illegal, it definitely involves risk. I've heard of shops doing this for a small "fee." So they are still making some money for the effort, but they are not inspecting the car, recon'ing it, etc. But because they are still on record as the selling dealer, they are most certainly liable (as isell mentioned). At least that is the case here in NJ.
'11 GMC Sierra 1500; '98 Alfa 156 2.0TS; '08 Maser QP; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '11 Mini Cooper S
A store would be crazy to do this.
I am no accountant (snake is, right?), but wouldn't the dealership have to pay taxes on the Tahoe profit? (bougth from GG at $21ish, sold to Mr. Costco at $22.5k).
Too many headaches, I pass on that and sell it for $26k and make more profit.
I'm with snake, a store would be crazy to do it.
A stranger? I wouldn't even broach the subject.
I have heard of people trying to do this same thing, though. I don't get the advantage?
Dealer's on the hook for possible liability, but makes no (or little) money for the trouble.
Just a gut feel, but I think the Tahoe is going to end up in one of the dealership's other stores. Most of the Acura store's used vehicles seem to be in that under $20K range.....unless it's a used CPO Acura.
I'm dropping by the dealership tonight to drop off the 2nd set of Tahoe keys (which I forgot to give them). I'll see if it's anywhere around.
What do you mean "the dealer hands you the extra $1500?"
Or "Advantage to Mr Costco is he gets a car for $22500 in good condition, which will cost $26000 by the time he buys it from the dealer.
Is Mr. C paying $22,500 or $26,000?
Anyway, as the sales guys here are saying, sounds very shady if not out-and-out illegal.
Yet posters here seem to do this and encourage others to do the same thing!
Well I have good news for you. I still have that van (22 years old now). I'm sure you could steal it from me for that $4200.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
The dealership would have to pay taxes on their total profit which this deal would be included in.
I'm with snake, a store would be crazy to do it.
I didn't say that, I believe it was Isell that said that.
I just think its crazy just to be in the business of selling cars. But thats just me.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Mr. Tax man, we took the car as a trade-in and sold it as is to a non related individual. Here is the paperwork for both deals.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Funny you should mention that. I saw a van in someones driveway this weekend with a hand made "For Sale" sign on it. The sign said it was a 1980 model with an extended warranty. I kid you not the sign had "Extended Warranty" on it.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
On my wife's dark blue PT Crusier I thought a pinstripe would look good. I asked my body shop guy how much he would charge. He said he would throw it in free with a job he was doing on another car of mine. I think I paid him $20 because I felt guilty getting it for free.
Pinstripes must be almost 100% profit.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
It did have faded purple carpeting and where the vinyl is worn through there is something tan poking out of the seats...will that do? :lemon:
I've torn all the carpeting out along with the bed that was in there. Maybe we could do a separate deal on that. :P
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
can't believe you passed up the zero percent financing you can get if you buy a Camry.
It takes skill and patience to put them on and a lot of material go's to waste.
In the old days they actually hand painted them on using special brushes. It took a stedy hand and a good eye.
Now they use tape and it usually comes off after awhile.
Realized that after the edit window had ended. My bad.
I always remember the extra set of keys AFTER driving away too. I always feel bad and go in and give them to the dealer. Hate that when it happens with a rental car.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
I am not sure what the liability would be.........the car would be sold "as is".
As for tax implications, the car was purchased, the car was sold, and the difference goes to the buyer of the new car. Net profit is "zero", no taxes owing from the dealership. The buyer of the new car should pay taxes on the extra profit but I don't think the tax department would catch that one.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
My 89 Town Car had painted stripes. Not sure if they were done by hand or at the factory with some sort of tool.
Now they use tape and it usually comes off after awhile.
Yep, and everytime you wax the car it is a royal PITA to get off the excess that accumulates around them.
A few years back while looking at a car there was a dealer add-on for pinstriping at $299.00. My local body shop would do it for $35 (tape, of course, not painted).
2025 Ram 1500 Laramie 4x4 / 2023 Mercedes EQE 350 4Matic
Have you ever been drilled on a stand in court by a tough trial lawyer?
You can take your chances if you want to. We run a squeaky clean operation.
Now, if the dealer is wholesaling to another trader that would be a different story.
2013 LX 570 2016 LS 460
Dealer has exactly the same tax (and other) liability.
The dealer effectively just decided to make no money on that particular transaction, in order to make the bigger deal (the new car sale) happen.
Just a real skinny deal because they had a guaranteed sale, no recon costs, and no carrying costs.
But, if there is a requirement for the dealer to warranty the vehicle, then yes, they would be assuming that. But, it is up to them to decide if they feel the risk of a payout is small enough to take.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
I suppose if the store did a safety inspection and made sure the car was up to snuff as far as brakes, tires lights etc it could be a legal transaction.
But what if in doing this it's discovered that the brakes are shot, the windshield is cracked and all four tires are bad along with worn out ball joints, then what?
Legal or not, there is liability involved and it's skirting the law.
And if by chance it were involved in an accident, and the car played a part, guess who is going to get sued? The deep pocket dealer, that's who.
The "think" and "would" words are the red flags for me. Once again I'm with isell on this one.
:confuse: :surprise: Where did that come from may I ask?
Richard
2013 LX 570 2016 LS 460
My neighbor bought a new ES a couple of months before everything blew up for Toyota and Lexus. He's been madder than a wet hen since. Like Mako, he hadn't driven it in awhile because of the fiasco, but I'm not aware of any issues he's had with it.
He tried to get the Lexus store to take it back. Of course, they said no.
My biggest issues with Toyota/Lexus is that they tried to hide their problems, and they tried to skirt U.S. safety rules & regs (even boasting about it by stating they saved millions by doing so). But, if the car works fine, get your money's worth and drive it. If there's even a hint that it might go haywire, send it to the dealership. Lexus stores around me offer courtesy pick up and delivery. Plus, they give you a car to use for warranty work.
houdini, I'm with you. All car buy/sell transactions should qualify for only paying taxes on the differences between the cost of the transaction. However, as isell points out, states see that as a reduction in tax revenue. It may be double taxation by collecting the full amount on taxes on both the new car, and the resale of the used car. Far be it from any politician to say they want less money coming in.
I had "Capitalism: A Love Story" by Michael Moore in my netflix cue. Watched it last week. Now, I'm not a big fan of Micheal Moore. But, he did have a point in this movie.....big money banks will find a way to be predatory. As he pointed out when the bank bailout was voted down by Congress (after an outcry by voters). Yet, it still went through even after being voted down by back room politicking.
A couple of years ago, when it looked like financially, our country was going sideways, and my 401K dropped, my stock portfolio dropped, I decided I was going to keep from paying interest.....in as many places as I could. I dumped my boat (which was more or less, an additional mortgage payment). I took those payments and accelerated my mortgage payments. I sent all my other credit cards packing, except my AMEX card, which I only use for business/travel expenses. No more gas cards. No more Sears cards. Whenever I could, I'd not finance a car (which I've stuck to).
But, I got lucky, as I'm not smart enough to have seen what was going to, and did, happen. I didn't have an adjustable rate mortgage. I didn't have a mountain of credit cards with high interest rates. I didn't plan it that way. Just the way things turned out.
To stay on topic, 0% financing by Toyota is a good deal. But, those who could use it most, probably won't qualify. Acura offered me special financing. I didn't look into it because I wasn't interested. But, I think it was 1.9%. Heck, if I could get 1.9% on my CDs, I'd feel fortunate. No thanks on "special financing".
Another "rant over".
It's a great saying if you think about it, but I like the one about...you don't get wealthy by worrying about the cost of stuff (or was it retail price.....that's a classic, hope Mako can repeat it).
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Cars are sold on an "as is" basis from car lots every day. I don't think that is skirting the law.
In my case the car was sold to a family member so that might make a difference. The dealership did a safety and did all the documentation. I wasn't trying to make a profit....the dealer could have fixed the trade in up and put it on their lot for more money, but they did a safety and a 3 year warranty and added that to the trade in amount. They made the money on the new car and they moved a trade in really fast and have a chance of getting another family into bmws, which is good PR.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
The "think" and "would" words are the red flags for me. Once again I'm with isell on this one
I am not saying to do anything illegal or that this transaction is illegal. If you make a profit on your trade in you should be reporting it. It is the same as if you buy back a car from a lease, and then sell it for more money. You should declare that as income. I am just saying be honest and report it, but I don't think the tax department has an easy way to actually trace those transactions, so, I am guessing, many people buy back a leased car for say $20,000, then sell it privately for $24000. They paid taxes on the $20000, but the difference is profit which I am guessing should become income and be taxed.
Snake, where are you when we need you?
By the way, I am not an authority on any of this, it is just a good common sense guess.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Sounds like fun to watch!
Toronto Auto Watch .com
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Being a marketing guy, this doesn't entice any potential customers to set foot in the dealership. I think most of us here would agree that the very first activity anyone in the market for a car makes is on line.
The more information a dealership puts on line, I'd think the better it would be for them to get people to actually come into their stores.
I like that Toronto dealership's approach.
Richard
2025 Ram 1500 Laramie 4x4 / 2023 Mercedes EQE 350 4Matic
I haven't shopped Toyota or Lexus in a long time. Don't know how they do it.
Infiniti stores seem to be pretty good as far as posting wht they have sitting on their lots, too...colors, options, MSRP, etc.
Honda/Acura....seems to be up to the dealer how much (or how little) information they put on the dealer WEB site.
If GM and Ford can offer that kind of information, I don't see why the rest can't
There's a BMW store in my area (that's what they're called...."The BMW Store") who has pictures, sometimes videos, of both their new and used stock. If I were in the market for a BMW, that kind of information would be very useful. IT certainly beats tromping around a dealership's lot in the rain, or cold, or snow to see if they've got something you might want. And, I'd be much more inclined to visit a dealership who has that sort of information posted on their WEB site than one who doesn't (and I'm trying to guess at what it is they may, or may not have).
The fact that you didn't have a mountain of credit cards with high interest rates or an adjustable mortgage says that you are smart enough :P
That changes everything. You neglected to mention that in your original post. What you're describing is not a courtesy trade (most guys here understand that as the car changing hands w/o the dealer doing more than just passing the money difference from Mr. Costco to GG).
What you're describing is a really fast used car sale. The inspection and the warranty go a long way to address the concerns that we expressed about liability.
Not really. Can't say it's common sense when you leave out major things like a safety inspection and 3 year warranty. :shades:
Me too. It may be a psychological thing, but if they have that much info and detail on the web their store is most likely to be pretty good in terms of customer service, etc.
2025 Ram 1500 Laramie 4x4 / 2023 Mercedes EQE 350 4Matic
Now I was dumb enough to do all the wrong things but now if I use a credit card it's because I'm getting reward money and paying in full when the bill comes. I still need to improve matters (my daughter drowning the car doesn't help) but you can see the difference.