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.
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Any Questions for a Car Dealer?

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Comments

  • rroyce10rroyce10 Member Posts: 9,332
    .... You still didn't answer the post about cutting the front end .. what's up.?

    Terry.
  • alfoxalfox Member Posts: 708
    that information available on the web (from reputable sites) about auto MSRP and invoice pricing is about 90% accurate or better for the same reason I'm utterly positive that the Navy didn't shoot down that airliner off Long Island. The reason is that there are too many sources who are in competition with each other for them all to be in a conspiracy together. Someone would give it away, and reveal the conspiracy.

    While the salespeople and dealers in TH have remarked on the incorrect invoice prices people bring into their stores, they have explained that usually the error was made by the customer, usually didn't include ad charges, forgot destination, misunderstood holdback, whatever. They have said that the invoice prices are usually fairly accurate within a few dollars. I'm confident working with numbers like that.
  • rroyce10rroyce10 Member Posts: 9,332
    ..... I am a dealer, and I won't lose a dime whether the consumer knows or doesn't know the invoice from this site or any other ..

    Edmunds is accurate to a few dollars, the only thing they miss is, the Ad fee's. And that's based on geographic area's, zones and regions. It would be kinda tuff for them to keep up with that stuff, considering it's a hard enough for Dealers to keep up with it. And that's based on different programs that can be changed by the manufacturers about every 3 to 6 weeks ..

    For the new posters here .. we have been down this road.

    Terry.
  • rroyce10rroyce10 Member Posts: 9,332
    ...... Are you sure about that Airline thing ..?

    My next door neighbors brother-in-laws sister, knew a guy that use to deliver the peanuts to the vending machine across the street from the airport -- and he heard from the guy that owns the shoe shine shop down the street, that he had heard from a vender from the airport, who heard from a guy that knows a guy, that had a friend .....

    Terry :-)))
  • landru2landru2 Member Posts: 638
    I could fax anyone about 20 pages and they would have the pricing information on every Ford model. It doesn't take much imagination to see how easy it would be to get this information.
  • brianw220brianw220 Member Posts: 38
    The original suggestion was to lower the agreed upon price by $250 but bump the rate to a level which would pay the dealer a $500 reserve, thereby THEORETICALLY increasing the dealer's take by $250. The customer would then re-fi at their credit union at a low rate having never paid the marked up rate just netting the $250 "discount" he worked out with the F & I dept. I'm sure you can see why this wouldn't work.
  • stebustebu Member Posts: 204
    "... who heard from a guy that knows a guy, that had a friend..."

    I KNOW THAT GUY!!! ;-)

    But seriously, you mentioned the geographic variance of ad fees. What happens when a car is traded between dealers who are working with different fee rates. For instance, my last car was a trade between a dealership in MA and one in CT that were 150 miles apart. Is it all just a wash in a case like this?

    For that matter when you talk about area's, zones, and regions are you talking about diffences that could exist for dealers down the road from one another or are these localities typically delineated by more traditional boundries like state lines and regions like Mid-Atlantic, New England, or what?
  • abtsellerabtseller Member Posts: 291
    the other makes, but we don't DT Toyotas outside of the SET region, despite the fact that we border two states in other regions.

    Ed
  • alfoxalfox Member Posts: 708
    Hence the conspiracy theory deflates.

    Terry - I spent 6 years on my uncle's ships. The most laughable theory was that a destroyer accidentally shot it down and everyone on board was sworn to secrecy. Yeah right. That's a secret that would last about 30 minutes. Now, about that shoe shine shop - you know, don't you, that it is a front business for the NSA....

    ;^)
  • rroyce10rroyce10 Member Posts: 9,332
    .... I know how you Govt. types work .. on every trip I go on, I take an extra 14/15 pairs of shoes, just so I can hang out at the Shoe shine shop, to get all the secrets --- I know whats going on .!

    Terry :-))
  • rroyce10rroyce10 Member Posts: 9,332
    .... Ed pretty much covered it .. being in the SE region, we wouldn't trade outside for a vehicle, it's not worth the time or the paper work or the possibility that a forward "charge back" might be coming .. unless it was a real deal high end vehicle, like a CL500 or something like that.

    Terry.
  • rmbaxterrmbaxter Member Posts: 9
    I went with my mother-in-law to New Jersey from New York last night to purchase a 02 Millenia S for $29,500. When we looked over the paper work he had prepared we noticed a couple of fees; $197.50 Doc fee, $157.75 (optional NJ ins) fee, and $250.00 vehicle registration fee. My question is how do you get the dealer to drop the fee when the fees come printed in the contract. My second question is when a new car is purchased the loan calculation used should be simple interest. If I'm wrong in my assumption by all means let me know. I also calculated the payments of the car using a simple interst calculator on the internet and got a price of $544/month with $3000 down payment. The dealer did his calculation and gave us a number of $590/month. I asked him why the payment was so high and he told me they do not use simple interest in their calculation. Please shed some light on the subject. I am extremely aggravated with these dealers giving you a low price then tacking on exorbitant fees and also miscalculating the monthly payments in their favor.
  • mirthmirth Member Posts: 1,212
    If the fees are printed in the contract, have them lower the price of the car. Easy.

    Car financing is a simple interest deal, unless maybe it's a lease.

    Finally, I thought Millenias had a huge dealer incentive and were going for like $24-25k? Terry?
  • robr2robr2 Member Posts: 8,805
    ...simple interest? Always been compound interest afaik.
  • golicgolic Member Posts: 714
    They couldn't be using the old rule of 7/8 can they???
  • rmbaxterrmbaxter Member Posts: 9
    I was under the impression all financing for a new car was calculated using simple interest. After I told the dealer what the payments ought to be using the internet calculations, I was told they do not use simple interest. If not simple interest, then what?????
  • audia8qaudia8q Member Posts: 3,138
    They do have a 5000 dealer incentive...but if the posters mom took the 0% financing they do not get the dealer incentive. it's either / or.

    But I was kinda wondering about the numbers too...usually the 0% isnt as good as the $5000.
  • robr2robr2 Member Posts: 8,805
    ...why don't you post the principal amount, interest rate, and # of months and anyone here with a financial calculator (including me) should be able to give you a good estimate.
  • rmbaxterrmbaxter Member Posts: 9
    $29500 purchase price
    8.25% sales tax
    $3000 down payment
    4.9% interest rate
    60 months

    I did the calc. and got $544.70/month
  • golicgolic Member Posts: 714
    I came up with finance of $28,933.75 and agree to your payment of $544.69. Total interest over life of loan is $3,747.65.

    Do I understand right, this is with $5000 incentive? If that is correct, you save $1,252,35 (5000 - 3747.65) over taking the 0% deal. Pay off sooner and save more.
  • rmbaxterrmbaxter Member Posts: 9
    Thanx, The incentive is either ther rebate or the 0% int but not combined. Had to take the finance because the credit score was not high enough to get 0%. Taking the $5000 rebate would mean I would have to go to a outside finance and the rates would be higher than 4.9%
  • caramocaramo Member Posts: 93
    Seems strange that one can qualify for 4.9%, a very good rate, and not qualify for zero percent. Must be much tougher restrictions on Mazda's zero percent offer than GM.
  • robr2robr2 Member Posts: 8,805
    ...as per my HP12C, my numbers match yours exactly: $544.69 for 60 months with principal of $28,993.75 and 4.9% rate.

    I still don't buy this as simple interest though. If it were simple interest, the principal of $28,993.75 would be multiplied by 4.9% totalling $30,414.44 making the payment $506.91.

    Confirm their variables and Good Luck rmbaxter.
  • mirthmirth Member Posts: 1,212
    You're right - compound interest. My bad.
  • robr2robr2 Member Posts: 8,805
    ...I always think I know all the answers - sometimes I need confirmation!!

    :-)
  • golicgolic Member Posts: 714
    A "simple interest" loan is one where the interest is compounded on a monthly basis, or each payment period as you make payments. There is no disadvantage to paying off the loan early.


    Another loan type is called the rule of 78's. This is where there is a "penalty" for paying off early.


    See article from bankrate.com


    Never accept a loan like this. You should apply for a loan at "peoplefirst.com" advertised on Edmunds. If dealer can't match tell them to take a hike. Most will though.


    http://www.bankrate.com/brm/news/auto/20010827a.asp

  • jaserbjaserb Member Posts: 820
    "Why couldn't I reach the final price on a car with the salesperson, then cut a deal with the F&I guy in which I agree that the dealer can write the loan at a higher interest rate than I could qualify for, and net themselves, say an extra $500 (provided there's no pre-payment penalty)? In return, they give me a reduced price on the car of $250. I then simply refi the loan at my CU at a very low rate, saving myself the $500. Net savings to me $250. Net increased gross to the dealer: $250. Would that work?"

    That's almost exactly what I did on my last purchase, only it was structured as a rebate. I accepted a (much) higher interest rate from Hyundai Motor Finance than I could qualify for, with the understanding that I could re-finance after 5 payments - presumably when the dealer is square with the lender. I got half the rebate when I picked up the car, the other half after 5 payments, which is how they keep people from refinancing right away. The day I picked up the second check I drove straight to the CU and did the re-fi.
    The dealer I bought my Santa Fe from does this all the time, and it can turn out to be a good deal for everyone involved. The dealer made plenty of front and back end money, and I got a great price on the car.

    -Jason
  • robr2robr2 Member Posts: 8,805
    ...now that's a good way to foster manufacturer/dealer relations!!

    LOL
  • jaserbjaserb Member Posts: 820
  • zueslewiszueslewis Member Posts: 2,353
    BTW - The Rule of 78 is illegal by federal law in automotive arenas.

    It used to wreak havoc on consumers, especially those who would double up on payments, hoping to pay the loan off sooner, finding that they'd only scratched the surface of the principle.
  • jaserbjaserb Member Posts: 820
    Since the rates are higher just the first 5 payments comes out to a decent chunk of change for them. Plus I'm sure enough people are either too lazy / forget / are unable to refinance, so they make plenty of dough on them.

    Heck, my brother is still paying $300+ a month at like 12% to Ford Motor Credit on a '99 Escort with dealer installed A/C! Could he have re-fi'ed at a better rate? Sure. Have we told him to do so? Yup. Just hasn't ever gotten around to it, though.

    -Jason
  • golicgolic Member Posts: 714
    my understanding rule of 78s is illegal on consumer loans greater than 60 months.

    Only 17 states have passed laws agianst loans of less the 60 months.
    States outlawing use of the Rule of 78s formula in installment loans of five years and less:
    Arizona Michigan
    Delaware Minnesota
    Idaho Nebraska
    Iowa Nevada
    Kansas New Hampshire
    Maine New York
    Maryland Oregon
    Massachusetts South Dakota
    Vermont

    source: according to bankrate.com
  • robr2robr2 Member Posts: 8,805
    ...I would suspect that what HMF makes on interest in 5 months is less than the amount they paid the dealer. The dealer made more than the $500 kickback to you from HMF - why else would he give you $500?
  • mark156mark156 Member Posts: 1,915
    Oh.... that brings back memories. The year was 1984 and I bought a new Peugeot 505 STI (Black/mink leather) At the time I think my interest rate was 12%. I didn't think about the interest rate too much because I could afford the payment. When I bought my first home I wanted to refinance the Peugeot and I think my rate went up to 14%. Now, I would never pay interest unless it was deductible in some way. Age and experience does a funny thing to ya! LOL

    M.
    2010 Land Rover LR4, 2013 Honda CR-V, 2009 Bentley GTC, 1990 MB 500SL, 2001 MB S500, 2007 Lincoln TC, 1964 RR Silver Cloud III, 1995 MB E320 Cab., 2015 Prevost Liberty Coach
  • porknbeansporknbeans Member Posts: 465
    Good to see you around.
    Porknbeans

    Grand High Poobah
    The Fraternal Order of Procrastinators
  • zueslewiszueslewis Member Posts: 2,353
    F&I is my primary background, if I can help with anything.
  • zueslewiszueslewis Member Posts: 2,353
    they're going to spank you.
  • parks34parks34 Member Posts: 5
    Today I went to order a GMC Envoy. I had invoice prices and destination fees, etc., in advance. However, I was surprised by the request for a $639 advertising fee. While I anticipated that I might have to pay some advertising fee, this seems very high.

    Is this normal? Is it negotiable? Do I have to pay it?

    I'm assuming I will pay envoice price or about $200 above or below. Over $600 in additional advertising fee seems high. I live in Mid-Atlantic area. I have to order to get a vehicle with desired options.

    Thanks
  • zueslewiszueslewis Member Posts: 2,353
    or a separate dealer charge?

    If it's an invoice entry, then it's legitimate. I would expect a little higher ad fee in your region versus the Deep South or Northwestern areas.

    It's a shame, and I mean no offense, when people dissect a vehicle invoice in order to pay $200 over on a $30,000 rig, but they'll gladly pay 400% profit at Gordon's Jewelers or 150% at a department store without questioning it. It boggles my mind.
  • parks34parks34 Member Posts: 5
    Re: Gordons Jewelers and Department Store statement.

    Years and years of a screwed up pricing system have come back to haunt car dealers. At most other stores, you pay the price on the tag. Very few people ever pay the price on the sticker of a car. The games that dealerships put their customers through in the past were just incredible.

    25 years of car shopping has conditioned me to assume that a car dealer intends to rip me off from the minute I walk into the showroom. That is the fault of past dealers' practices, but it can't be erased overnight.

    After visiting over 20 dealerships in the last few months, that's still the case quite often. Just today, a salesman told me the price of the car didn't matter, only my monthly payment amount was important. Huh?

    I don't want to digress too far from my original question, because I still want to hear other answers, but I've had so many salesmen try to rip me off, that I approach buying a car differently than almost any other product. While I agree that car dealers deserve to make a reasonable profit like anyone else, I don't trust them to do only that.

    You must remember that sleazy car sales tactics and ambiguous pricing have conditioned a generation of buyers. It's the dealers' own fault.
  • bretfrazbretfraz Member Posts: 2,021
    Most car shoppers are now aware of what types of tricks dealers will pull on them. The massive number of books, articles, and websites telling people about dealer tactics have prepped them to look for even the slightest abnormality during new car price dealing.

    But those same car shoppers are blissfully ignorant when it comes to jewelery or furniture shopping. If you knew how badly you were ripped off when you bought your wife's engagement ring or how badly she was ripped off when she ordered that new sofa, you'd be just as angry.

    The only diff here is that there are no websites or books or articles educating you on how to spot jewelery store scams (can you really spot a fake Rolex? Are you smart enough to spot a switched diamond? I'm betting not). And most people can't tell a top quality leather chair from a crummy one. Sure, you think you know but your knowledge is not based on hard facts or well-researched info.

    So before you cry to the world about getting shanked on a car deal have a close look at that diamond ring and that leather recliner. Chances are very very good you were ripped off much worse than any car deal.
  • sonjaabsonjaab Member Posts: 1,057
    The BOSS is was out shopping for a recliner
    today ! Who knows what she will pay ! I no
    care as long as shes HAPPY !LOL........geo
  • afk_xafk_x Member Posts: 393
    Too funny geo...
  • zueslewiszueslewis Member Posts: 2,353
    bear in mind that the majority of consumers shopping for a car lie about some or many aspects of their proposed intentions.

    I have been lied to repeatedly by businessmen with wives and 2.5 kids, who make $100,000 a year. I've had a pastor lie to me because he didn't want to tell me he was comparing prices. I don't mind, of course, comparing against anyone's deal - let me beat everyone's deal and end this shopping thing for you.

    I've had people downright lie about the title status of their car (when it was really a rebuilt, salvage or water damaged car, they said it was "clean"), whether or not they have a payoff and whether or not they have a trade or more than one trade.

    All I'm saying - now that I'm out of the car business, I can certainly attest that the mistrust goes both ways, and I dare say the majority of dealers are not out to screw the consumer, although a much larger portion of consumers aren't honorable in their intentions.
  • rroyce10rroyce10 Member Posts: 9,332
    ..... Insult too injury, of all the folks that stick their heads into a dealership .. the folks with the worst credit is Attorneys, Dr's and Ministers. But they do have some great stories .. but no help there. .l.o.l..

    Terry.
  • parks34parks34 Member Posts: 5
    I agree that the markups on funiture, clothing, and many other goods are absurd; however, when I go to the furniture store, I know that on that day, I'm going to pay the same price for that recliner as everyone else who comes into the store.

    As for Zues' comments that one shouldn't worry about a $600 fee on a $30,000 car, $600 out of pocket has the same value whether it's on a $30,000 purchase or a $1,000 purchase.

    What's a better deal, 50% off a $10 product, or $5 off a $30,000 car? Sorry friend, but it's five bucks either way.

    Would you pay an additional advertising fee on every six pack? (Perhaps for the Coors Light "Twins" adds it would be worth it!)

    Unfortunately, as I feared, my original question about advertising fees will be ignored. If anyone reading this can address it, I would appreciate it.

    Thanks
  • isellhondasisellhondas Member Posts: 20,342
    I'm the wrong guy to ask since we don't charge advertising fees.

    You did say something interesting. I think a lot of people are simply terrified that just maybe, someone else may have paid less for the same car then the did.

    That aspect bothers them more than anything else.

    Personally, I don't care...if I think I got a good value for my dollar, I don't care what enyone else did. But, that's me!
  • landru2landru2 Member Posts: 638
    So it's not that the price may be too high. The problem is that someone else may have paid less. I wonder if that person paying less is also upset about it.
  • zueslewiszueslewis Member Posts: 2,353
    advertising fee, the manufacturer does. It's not negotiable. It's a fixed fee, just like transportation. The car business is, through several reasons, disclosing every aspect of monetary transactions from the plant to the dealer. Just because these items are disclosed, doesn't mean they aren't part of the invoice price of the vehicle and of course, you have to pay them. The dealer does.

    Just like JC Penneys pays a portion of the invoice price on a pair of Levis for advertising. That part isn't disclosed to teh consumer, though, and it's not something you have an option on paying.
  • sonjaabsonjaab Member Posts: 1,057
    Boss bought one yesterday ! NO idea what
    she paid..don't care...I know its a Lazy Boy
    and it matches the rest of the house !
    She got FREE mop and glow pkg,set up &
    delivery ! Loaded up too... bun warmers,
    vibes, slide outs ! She paid NO sales tax !
    LOL...I wonder if our neighbor got one for
    less ? (sweating and wringing hands !)
    I said wait till monday we will go to
    Canada and shop ! 40% plus exchange rate
    and we can go to casino and spend what
    we save !LOL>>>>>>>>>>>>>>GEO

    BTW: She REFUSED to pay DOC fees,
    mudflaps, pinstripes & ad fees...
    now back to cars !
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