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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Just answer each question honestly and be done with it.
- He's had numerous people come in, deeply upside down - in the past year, he's financed at least 3 people over $70,000 - each of them had been upside down multiple times, and kept rolling the debt over with new cars. One bought a Sonata, the other a used Accord (don't know the last one). He says people like that are fascinating in a morbid way - you can see exactly where they're headed, but can't quite believe what the banks will do for them... They all finance for looong terms, in an effort to get low interest rates.
- He's never had a lawyer come in who wasn't deeply in debt when he ran their credit reports. He said he'd tried to figure out what deep insight he should draw from this, but hadn't come up with anything yet
- He's also had lots of people come in who've been bankrupt (one guy twice in a row), who proceed to buy expensive cars at crazy interest rates (e.g. 28%!). He can't believe what some banks will finance. Again, more morbid fascination - almost wishing they'd come in again to buy another car in a year or two, just to see if their credit had improved or simply gotten even worse.
- He's had his pangs of conscience (along the lines of the earlier debate about whether dealers should stop people from bad decisions). With some of the worst cases, he's tried to give some general advice about getting credit counselling (without cratering the car deal of course), but has now given up, since he's come to the conclusion that nothing he says will ever make a bit of difference to people like that - unless it's to say that there isn't a bank that will finance them. In that case, that seems to get their attention...
-Last, but not least, he told me I wouldn't believe the market for cars under $1000 - the dealer practically buys them in bulk, makes razor think margins on them, but sells almost as many as they can get in, and given the volumes does OK off them. He respects a lot of those purchasers, believing that they are people who need a car for one reason or another, don't have a lot of money, but are smart enough to know that, and not put themselves deeply in debt.
Cheers,
Mike
This was definitely not a high end car - middle of the road. The only thing I can think of was they somehow found a buyer for my trade-in in the 36 hours or so from when I first came in to when I closed the deal (they claimed to have a buyer within 20 minutes of my arrival, but I thought it was just more of the BS they were already piling on.) Maybe it wasn't? :confuse:
The one thing I know is that on my invoice they specified the trade at $9,500, though it was worth much less - I had 3 other quotes ranging form $5500 to $7300, and their initial quote of $9500 magically shrunk to $8000 as we bargained on price - grr :mad: I assumed they did that to claim to any new buyer that they'd paid much more than they really had, and/or to hide any discounts they offered on the car itself.
At the time, they knew no one could beat them, since the sales manager told me he'd be happy to lend me a phone and have me call the other dealers - he was sure they couldn't even match it. Odd all around.
That's actually heartening, that apparently a sizeable number of people realize they can't afford a nice car, but will settle for a very cheap one to avoid living beyond their means.
As opposed to those others, who have to have the latest and greatest while digging themselves ever more deeply into a financial black hole. I remember isellhondas saying such people always want the top of the line models, with leather, sunroof, etc.
No bank will lend more moeny on a car than it is worth UNLESS the buyer has outatanding credit. You can only toll over so much negative equity. Slod, the looonger the term, the higher the interest rate will be.
And I don't know where any dealer could buy cars for under 1000.00. A thousand dollars will buy a junker. Even sleazy dealers have to make sure these cars pass a basic safery inspection.
I too, sell cars to people who shouldnt' be buying one. Some of these people live from paycheck to paycheck yet they HAVE to have the top of the line models. They HAVE to have leather, sunroofs etc. Trying to talk these people into buying something practical never works.
They sign up for 72 month contracts at payments they can barely afford.
What I can see happening is if the nice guys quoted you last month and the not so nice guys quoted you this month, maybe it's because Hyundai came up with some incentives this month that didn't exist last month.
And this way the second dealer could have used that money to put into your trade.
Second scenario:
Dealer #2 put another $1500 into your trade, and gave the Hyundai away at below cost to you (by discounting it another $1500).
There's dealers like that in our area where they'll give everything away and bury themselves in a trade. They usually have lousy customer service, and high turnover (cause the salesguys don'ty make any money).
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
I see it all the time here in Los Angeles. The trick as a buyer is to know, of course, which cars to avoid and which are decent. Ie - a Ford Aspire is a piece of junk in how it drives, but it's a reliable piece of junk(being a Kia before they got bought out)
But for someone who needs a basic commuter-box, it works and beat taking the bus.
Interesting business model. I would have thought that anything under $1K ought to have at least a 100% markup to allow for the almost inevitable mechanical problems that will show up immediately after the sale. Either that, or the expense of preparing the vehicle vehicle for sale in the first place. Surely, selling these things in bulk only widens the exposure?
I can certainly see dealers persuading some people that their old car is worth next to nothing, being able to certify some pretty easily, and then turning it around for $1000 or so. If they picked the cream of the "junker" crop, I could see them making a decent business of it. I also get the impression that a lot of people don't bother to take used cars to their own mechanic before buying, and as long as the dealer hasn't made any untoward promises about the car, any repairs should be purchasers' problem.
Heck, a few weeks ago, someone at work was bemoaning that the "Black book" value (what they seem to use for Canadian wholesale prices) for his old Saturn was all of $300 or so. It worked just fine apparently, but he was resigned to get little or nothing for it.
I will analyse things to the nth degree and get utterly mired in the details, paralysed and unable to see the forst for the trees! Of course, that's also a great form of procrastination when there's a decision to be made!
In many cases, it is not a matter of the people being smart enough not to put them into debt, but they just can't 1) get any credit and 2) can only raise a certain amount of cash.
When I have a fleet car available for under $3k, we ALWAYS have multiple bids.
Anybody who buys a used car and falls for the line, “look, I’ll show you, we have this much into it" deserves what they get. I’ve bought plenty of used cars and all I cared about was what was the going fare for that car and was that the price I wanted to pay for it.
You just gotta keep things simple.
BTW, about the survey, the best policy is to be honest. Just because you got a good deal, doesn’t mean the dealer went about it the right way but you knew that, right?
Good luck with your new ride.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Isn't taking your wife to Hooters a bit like taking a hamburger to a steak dinner??
I’ve thought about this a couple times myself.
It used to be that buyers had only to be concerned about dealing with dealerships but now the manufactures have jumped in and muddied up the waters for us, big time. As buyers we’ve all heard, all things being equal, the best time to buy was at the end of the day and better yet, at the end of the month not to mention those end of the year sales.
Now the like candy the manufactures keep throwing out incentives like rebates/low interest rates/no interest etc. etc. As a result, us buyers have now come to think if we don’t get any of these we’re being cheated. That’s bad enough but then the manufactures keep upping the ante with ever changing monthly increases of this candy.
So tell us, when is the best time to buy?
Things used to be so much simpler when all we had to do was keep an eye on you guys in the biz.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
With Hondas, I would say late August.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
The car manufactures, especially the domestics have created this monster and it was short term thinking at it's worst.
People just don't seem to realize that a 60,000 dollar vehicle should not lease for less then 900-1200 dollars a month UNLESS the manufacturer has some crazy incentives behind it.
We roll people out of here all the time out of equity with bad credit. If the banks didn't approve them we would go out of business. 70% of the people rolling down the road in a financed car are hooked, and the state I live in leads the country in BK's.
98% of the time I can get some one approved for financing the day they are discharged from a BK, worse case the day the discharge hits there Bureau. Is the rate high? Yes normally in the high teens or low 20's. But they earned that rate not me. Do I make more money on these loans? Why yes I do, because I have to work a heck of a lot harder on them then I do the guy with good credit. It takes me 10 minutes to process and get approved a deal with good credit. It takes me a couple days to do the other.
I compare it to this:
You and I have the exact same cars, are the same age, every thing is the same with the exception of, I had a DUI and you didn't. Who is going to pay more for insurance? I am cause I screwed up, and now I am going to pay for my screw up.
Now the folks that made out big time are the ones who bought a Ford last summer with ROTTEN, ROTTEN, credit and got 0% for 72 months
BAJHAAHAHAHAHA!
This is the greatest advice I have ever seen posted on this forum. ROFL!!
-Moo
You don't test wiper blades (normally) unless its raining.
I wrote the above to ask all the salepeople here... what is a customer to do if it is dark out? You can't do an honest delivery inspection without bright sunlight! Therefore... are you going to tell the customer to never buy a car when its cloudy, raining, or dark out? Wait till morning?
The dealer must allow some leeway for scratches that pop up in this circumstance (say... give the buyer 7 days).
Remember, we're in America, that means that people like to take advantage of any loopholes you give them. So, check your cars before you leave. If you have to pull it into the service bay in order to take a look, do so. Otherwards, if you find a scratch 10 minutes after you leave the lot, you're typically on your own.
-Moo
I guess desperate companies do desperate things.
Mortaging tomorrow for today's sales.
Do you have ANY idea how many after the fact scratches and rock chips we would be fixing???
We have a lighted delivery area where the lights are so bright, they show EVERYTHING but if a person is that worried they should probably buy during daylight hours.
See you look at it like that. To me what we did is bring around allot of people back into the market sooner then they would have been.
1. We have gotten some people established on a loan that there payment is actually going to principal and they are building credit.
2. Those people that were hooked when they went in are gaining equity
3. We put people in Fords that other wise wouldn't have been.
Allot of these Foreign Companies had better open there eyes. It won't be long till they are going to have to drop this smug "We are better then the world" attitude. And when it happens I am going to laugh my azz off. Toyota' and Nissan are already getting a good dose of what the recall world is. And if the media was not so rice burner bias we would hear allot more of it. Let Ford put a bunch of faulty Odometers in cars for 4 years like Honda did, you would never hear the end of it, but with Honda you have to google search the dang thing to find it. Heck if it was Ford the Government probably would have mandated that all those cars have to be sold mileage unknown. Why Honda doesn't I don't know.
Giving 0% for 72 months to inferior credit is nuts, any way you cut it. Those people got that credit for a reason, because they don't pay their bills - whether at their own fault or not, they did not pay the bills. What makes one hope that now they magically will - beats me. Some small percantage may - just got a new good-paying job, paid off their last late loan, etc. Majority - well, they were in deep and this new iron put them even deeper. Where is the logic?
2018 430i Gran Coupe
As far as the tires go take that up with Firestone
You keep talking about odometers. How do you know the same supplier doesn't make odometers for both companies?
Allowing 72 month ZERO INTEREST credit to people with bad credit is, indeed, a stupid decision that only sold some Fords when Fords weren't selling!
I have nothing against Fords. I have owned quite a few in my time. The truth of the market speaks for itself.
Most people don't worry about this.
1. I asked
2. There is not a class action law suit open on us right now like Honda has. You really think the blood suckers that have this class action going right now didn't check to see what Manufactures used the faulty odometers? And if Ford was using them that would have been the best thing that could have happened for ya because I would guess Ford put 3 to 4 times the vehichles on the road in 2004-2006 as Honda did.
BTW I am just yankin your chain, if you don't like it say something and I will leave ya alone.
most of them rentals :P
sorry, just had to say something!
anyways, back to your regularly scheduled banter!
-thene
Thene is right. A HUGE percentage of Ford cars are bought by the rental companies. When these get dumped en masse at the auctions a year later, the already dismal resale values on these get's even worse.
You make such a big deal over a small odometer problem. How many recalls do you think Ford has gone through?
Also, I wouldn't get too cocky. Tomorrow's news could be something much worse against Ford!
And, again, I have nothing against Fords. As USED cars they can be a heck of a lot of car for the dollars spent!
I agree that is great for those buyers. However, since you’re in the biz, you know that people with bad credit have it for a reason, not the least of which is wanting more than they have the ability to pay for.
I’m willing to bet most of these people, by far, will never have that car for 72 months where they could have taken advantage of that time to help get themselves out of debt. When there isn’t any ‘candy’ passed out in 2 or 3 years they’ll be right back to their old ways again. You’ll probably see some of them and they’ll have the most dumbfounded look on their faces when you tell them there isn’t any more ‘candy’ but they’ll buy anyway because they’re tired of looking at that old car they just have to get rid of. How many Leopards have you seen that changed their spots? It would be great if they could but history says it won’t happen.
Don’t get me wrong, I’m not blaming Ford for trying. They’re in a financial bind and are trying everything they can to boost sales and stay afloat, although, I don’t think this effort is going to work
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
I'm sorry, but what do you mean by "hooked"? Is that another way of saying "upside down"?
BTW, I'm with you on Fords vs. Hondas. At least Ford makes a machine with some soul. :surprise: :surprise:
heh! that ford taurus sure has some soul!!! wowie zowie!!
-thene
Didn't Mitsubishi do something like that a few years ago and became the repo-depot king? They moved a bunch of product with sub-prime loans to high credit risks and it bit them in the tushie.
Did he end up buying the Land Rover? :P
now i've heard that was ford's fault for improper tire inflation (firestone told them one PSI, but ford used another).
I don't where the blame belonged but it hurt both companies big time.
First, Firestone for making, producing, engineering, and selling bad tires.
Second, for Ford allowing, purchasing, and selling the tires installed on their vehicles.
These are heavy vehicles that get a lot of hard use.
In the cases I heard about the cars were loaded with people and luggage and the outside temperatures were very hot.
And, I'll bet the cars were being driven fast?
People are funny though. For a couple of months, we couldn't hardly give away a used Explorer. People forget quickly.
Depends on your wife. My wife would be like like taking prime rib to a steak joint.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D