Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
A reporter would like to speak with you about your experience; please reach out to PR@Edmunds.com by 7/22 for details.
A reporter would like to speak with you about your experience; please reach out to PR@Edmunds.com by 7/22 for details.
Options
Purchasing Strategies - Questions & Success Stories
This discussion has been closed.
Comments
cc - rv
pmt = _______ - (cc + rv) * mf
n
Where mf (money factor) = i%yr / 2400
pmt = monthly payment
cc = "cap cost"
rv = residual value at the end of the lease
n = number of monthly payment
i%yr = 'notional' interest rate, this is not a true interest rate
You can see that if you reduce the "cap cost" (by making a downpayment) you will reduce the "interest" portion [(cc + rv) * mf] of the monthly payment as well as the principal portion.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
Review your vehicle
Until now I had thought it was exactly for reason I said before, but now I'm not so sure it is such a bad idea for people who would lease based on unsubsidized market rates. If money down also reduces finance charge portion and the money factor is somewhat high, it may be benificial to put some money upfront, even at marginal risk of losing some value due to a total after an accident.
2018 430i Gran Coupe
2018 430i Gran Coupe
If I went to Hertz or Avis, I wouldn't want to make a down payment unless it provided me with some great benefit, such as a ridiculously low rental rate that offset the down payment amount. But generally, these payments serve the interests of the lessor and dealer, not the lessee/ consumer.
High down payments on car leases effectively disguise the true cost of leasing, because the buyer's attention is focused on the monthly payment while ignoring the costs of initiating the lease. It's generally not a good deal for consumers, and it makes sense to avoid them unless they are understood in detail. (I particularly like how the terminology is changed to describe what could/should be called down payments, interest rates, etc., an obvious effort to make that much more confusing for the typical consumer.)
I wasn't really commenting on the rights or wrongs of making a down payment. Personally, I wouldn't make one. If you can't afford the monthly payments without making a large downpayment then you can't afford the car. It always surprises me that people who cannot afford such and such a monthly payement can come up with large downpayments.
Glad somebody said it! Let me follow up by saying if somebody can't afford to buy the car then they can't afford to lease it either.
It would seem to me that if I bought something and it was so great, they could sell it to me again for full pop.
I just thought this was amusing.
Customer retain is very important for many reasons, from which prestige is not the most important. This 500 bucks off gives you possibility to build a steady and more predictable revenue stream.
2018 430i Gran Coupe
Customer acquisition costs are much higher for new customers than for existing customers. The sellers and automakers have more data on their existing customer base (the existing owners are cheaper to reach) and a current relationship to be exploited, so it is easier to increase their "lifetime value". So it makes sense to keep existing customers in the family, rather than replace them.
Another aspect is that to lose a customer is to give a conquest to a competitor, which is something that large operators do not want. Automakers not only want you to buy from them, but they want you to not buy a competitor's products, because they don't want their rivals to get stronger at their expense. So again, it makes sense to reward your current owner's -- net-net, the loyalty incentives are cheaper than is acquiring a new buyer who may or may not prove to be loyal.
Hadn't really thought about a new car, but we decided to downsize from the Explorer to a Focus. We bought instead of leased this time around. Cut the payment by 45% (yeah, there are more payments, but it sure helped with the monthly cash flow) and almost doubled the gas mileage.
Lately, I've been getting flyers from my Saturn dealer, where we've bought 3 Saturns in the past 3 1/2 years, to trade in my '03 L300 on something new. Don't need a new car, and, at the moment, Saturn doesn't offer anything that I'm terribly interested in. But, by knowing that I'm a loyal customer, it doesn't hurt for them to spend whatever amount of money it costs to print and mail the flyer to me.
That's not true, and if you are a dealer, then you know that it isn't true.
A dealer doesn't invest $25k into a car with a $25k invoice, but only interest plus the floorplan fees, the latter of which might amount to $100 or less per car. It is those high margins relative to floor plan that permit a dealer to sell under invoice, and still generate return on equity.
not all dealers floorplan their cars. Some dealers only floor plan part of the inventory.
Yet you know that most dealers do floor plan their new car inventory.
The typical dealership business model is built on leverage (using other people's money to increase returns and reduce its own cash outlay) and effective inventory management, so it would generally be foolish not to use a floor plan, because using leverage (borrowed funds) increases ROE (return on equity). Rather than focus on exceptions, it would be more honest to focus on the rule.
This very website provides this data. Use Edmunds (and Kelley Blue Book, which should provide identical info) to research the cars of your choice.
And don't forget to check on incentives to both consumer and dealer, as well as the holdback.
Maybe they will. So what? You don't have to agree to pay them.
An OTD price is the EXACT amount you will have to pay. When we bought our 1997 Accord, I offered $17400 OTD over the phone. They accepted, so we drove to the dealer, paid exactly that amount, and drove the new car home. That's how it works.
Very common, remember the S in MSRP is "suggested". Most cars sell for way under the MSRP.
Are they going to try to "get me" with warranties and bogus add-ons?
They might but if they try use the magic word "NO".
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
This isn't related to the price, in general. They either will or won't try to get you with warranties and add-ons regardless of the price they've offered. In fact, if you go in ready to pay sticker, they probably just figure you for an Extra Deluxe Sucker who can be milked for everything.
OTD price is the "out the door" price and includes everything *including sales tax and registration fees*. When you're comparing prices keep in mind that MSRP does not include those fees.
Also note that, depending on where you live, Tax and Title fees may be significant, or they may be trivial. In Santa Clara county, CA, it came to about $1400 on a $15k car. In other states it's likely to be far less. So keep that in mind as you're searching for your car as well.
That's absolutely right, your style and techniques of negotiation affect the overall outcome.
The more compliant and willing to overpay that you show yourself to be, the more likely that efforts will be made to pull even more money from you later. Car sales are built around the technique of the "turnover", in which the salesperson gets what s/he can before turning you over to the sales manager, who in turn gets what s/he can before finalizing the price. Then, just when you think that you're finished and your guard may be down, the F&I person will then try to hit you up for even more.
If you blow it in the beginning, all you'll do is to get them to thinking that you can be squeezed for more. On the other hand, if you prove yourself to be a savvy buyer, the effort to pitch may still be made but the pressure will likely be reduced because they've given up on you and just want to get it over with. As Bob, etc. pointed out above, you're not compelled to buy anything additional that you don't want, no matter hard they may try to sell it.
So, I guesstimate the dealership is asking about 5-6k over what they paid for this vehicle. I can see the salespeople now, "You're offering 6k, the cars listed at $11,000...let's split the difference and make it 8.5k" :sick:
Yeah...that's what I'm saying. I was shocked that the dealership had it listed so high...and it was an ugly cloth interior at that(IMO).
I paid $7,200 out the door in April of 2004 for my 1999 Regal LS which only had 56,000 miles, leather seats, alloy wheels, auto climate control and in very good condition. This was at the same exact dealership. At that time they had my car originally listed at $8,999 and was marked down to $7,999
You're in the biz bigdvdubgirl. Any idea why a vehicle would be priced so high. I would never even look at a vehicle priced so much higher than it is reasonably worth.
And truth to be told to a willing there is no harm. One can stick a most ridiculous price they could come up with, we don't have to buy it if it's not worth it.
2018 430i Gran Coupe
You don't have to be in the business to answer that question:
They'd probably get it at some point.
I doubt that. They may be able to sell it for 7-8k...but not for that crazy price.
2018 430i Gran Coupe
I'm sure that you already know why -- because it's part of the negotiation process. If some poor dupe can be convinced that he beat the dealer by paying $9k, for example, then the buyer walks away happy even though he left significant cash on the table.
This goes back to the irrelevance of window stickers. Products have value ranges, regardless of whatever nonsense is put in writing or where that writing is posted, and a buyer should begin negotiating based upon realistic values, rather than inflated stickers. If the car is worth $5500-6000, for example (I didn't research that, by the way, I just chose that figure as an example), then you should pay no more than $5500-6000 for it, no matter how the deal is dressed up.
ex-rental Regals for $9995 and up !!!!!!!!!!!!!
If said vehicle is worth $5,500 and the dealershp is asking $11,000. I guess a good negotiation strategy would be to offer nothing...as in zero dollars. Then as a good will gesture to dealership you could offer to "split" the difference. That way both parties walk away from the deal happy.
I would test the waters talk to them and let them know that I know the real price of the car and that their price is bogus. I would then try to get them to produce a more reasonable figure. If they present a reasonable figure then I would start negotiating, if not I would walk. I mean if they know that I know that the car is priced about twice as much as its market price and only come down a little bit its not worth the time or effort to even try.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
But, my point is.. If the dealer has $5500 in the car, he wants to clear $7000-$7500 at minimum... Most people don't know what a car is worth, they judge their deal by the discount from asking price... I'd guess most dealers would list that car between $8900-$9900.. Yeah, $11K is stupid, but some buyer will think he is getting the deal of a lifetime when he pays $8500 for it.
Not to stereotype the typical Buick Regal buyer, but internet research may not be their strongest suit..
They really go for the carriage roof treatment and gold kit, though..
regards,
kyfdx
Edmunds Price Checker
Edmunds Lease Calculator
Did you get a good deal? Be sure to come back and share!
Edmunds Moderator
And not to further that stereotype, but most Buick Regal buyers aren't aware that there IS an internet. They might have just gotten electric typewriters within the past year.
Now, if you will excuse me...I need someone to change my diaper.
2018 430i Gran Coupe
While my folks don't own a Regal, they did their last car purchase ('03 Hyundai Sonata) using the internet quite a bit. Dad was 68 at the time and Mom was 65 when this happened.
Again, glad to see that "most" was used as a qualifier.
This seems to be the car I saw on the dealers lot the other day listed for $11,000. Though saying 70,000 miles is low seems to be a stretch. Though there was another 00 Regal on the lot that they could be referring to that was marked almost the same price.
Perhaps dealeships have a practice where the first 2 or 3 days a vehicle is on the lot they have a monstorous mark-up, then they drop price drastically giving the appearance the customer is getting a really good deal?
They are asking the top end as you had stated bigdubgirl. So, I imagine they would take mid to upper 6's without much problem. Low 6's for someone who knows how to grind.
Take it for what its worth but Carmax has the following '00 Buick Regals on their website.
A GS with 64K miles for $10,998
A LS with 33K miles for $11,998
and
A LS with 54K miles for $ 9,988
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D