what Terry's trying to say is that it's impossible to mark up a loan by 12 points - 5 pts with Ford, max 3 pts with just about everybody else.
There's no proof that this guy qualified for 11.99%, except a claim made in the article by the author, who, I'll bet, knows very little to nothing (somewhere in that range) about automotive financing.
Pretty damged irresponsible to make a claim like that with no proof - nevermind that it's impossible to do.
"There's no proof that this guy qualified for 11.99%, except a claim made in the article by the author, who, I'll bet, knows very little to nothing (somewhere in that range) about automotive financing."
Exactly, drift. I love that article, if only for the laughs. "The 11.99% he qualified for...". My first thought, was a) qualified for that according to whom? and b) how/where did they get that info? To me, it sounds like puffery and in any case, if they DID mark it up that high (which, I have no doubt they did NOT), anyone who would pay it is just plain stupid. No offense to stupid people, but c'mon! $300/mo for 60 mos for an $11000 car? How can anyone think that's right?
This just shows that you need to do the homework before ANY major purchase. Also being a state of Tennessee employee I would have hoped he could read the truth in lending statement ( which I'm sure he didn't) and unless I've got horrible credit or just coming off of bankruptcy 24% would seem a mite high to me.:-) It looks like if they are discriminating against anyone it's the uneducated and/or lazy to me.
I have a question for you all. As an example I will use a Saab 9-5 aero.
Two years ago in December, I saw on Edmund's TMV that the Saab was heavily discounted and selling at approximately $32000. Not bad at all considering the MSRP was around $39000 at the time. This would be a 2003 model year selling in December 2002. (02 models were even cheaper...)
A quick check at used dealer prices for 2002 or 2003 Saab 9-5 Aeros will reveal two things. 1) There are hardly any for sale. 2) They ask a whopping $30k-35k for them!
I don't know about you people, but this seems to me like a very easy way of making a profit for a car dealerships? I mean, think about it. You sell the car for $32000, then two years later you get it back on a trade spending about $25000 on it, only to turn it around and sell it for a whopping $32000 again. Ka-ching! The dealer made money on the first sale, and a lot of money the second time around. Guess who got screwed?
Currently Volvo has a $3500 incentive going on some of their S60s.
As a potential used car buyer, is there any way I can find out what the vehicle of my choice originally sold for? Would DMV have records for this sort of thing, and can anyone access them?
"You sell the car for $32000, then two years later you get it back on a trade spending about $25000 on it, only to turn it around and sell it for a whopping $32000 again. Ka-ching!"
No. 1st of all, nobody pays $25k for a two-year old car that was $32 new on the street. Ultra-clean, low-mileage Toyota Tundra or 4Runner, maybe -- not a Saab.
2ndly, the "asking price" is just that. There are two reasons dealers have ridiculous prices on their used cars: (i) obviously, to sucker people and (ii) to have something to "work with" for the yahoos who are thousands of dollars upside down and only care about trade-in allowance.
(i) is going to work only in rare cases and turns many people off; (ii) happens all the time.
The car business is a truly goofy one. It's easy to make a small fortune in used cars -- or to lose a large one. Compared to other resale businesses, the profit margins are pretty thin -- usually 10-15%, IF the dealer knows his stuff. The reason it works is the steady flow of supply and demand; the merchandise is easy to get and -- considering it's a big-ticket item -- fairly easy to sell to a HUGE pool of buyers.
But if your main business tools are an excel spread sheet and a NADA blue book, you're in for a rough ride. You really need to know what sells and what cars are worth in your town. Hang around the Town Hall for awhile, and you will likely develop a healthy respect for those who make it in automotive sales...
that people in business make profit? WOW!!! i wasnt aware!
did you know that a mcdonalds cheeseburger has a sales cost of $0.06? the bun costs $.02, the meat is another $0.02, the cheese is yet another penny, and condiments round it all out.
i think we all get screwed paying as much as $0.79 for it! how can they get away with it?!?!
Steine13, I have hung around the Town Hall quite a bit and I do have a very good idea of what the cars I'm interested in sell for in my area. But, I'm afraid you're missing my point.
Sometimes cars are heavily discounted (usually right before a new model year of the car is about to be released, or at the end of the year.) These discounted prices are not reflected anywhere when a couple of years down the road they appear as used vehicles for sale.
Blue Book example: 2003 Saab 9-5 Aero, 18k miles on odometer, suggested retail value $32k.
The thing is, brand spanking new back in late 2002, you could pick this car up for approximately $35k. Blue Book doesn't take into account that the car was sold for less than MSRP. It doesn't say: "If the car was purchased for MSRP back in the day for $39k, then today it's worth $32k. But if it was one of the discounted cars that sold for $35k, then today it's only worth $29k."
When I go into a car dealership looking for a gently used car, I would definately want to know if the car I'm looking at was originally sold for $39k or $35k. It makes a huge differance on what I think it should be worth now (and granted, they may chose not to sell it to me because my offer is too low - I've had that happen a couple of times).
That's why I wonder if there's anywhere I could find out what a used car originally sold for when it was new.
"It makes a huge differance on what I think it should be worth now"
key words..."i think"
would you go to a surgeon and tell him that a hernia operation should only cost $x,xxx because his cost is less?
if the car you are looking at is worth less to you, then you shouldnt buy it. also, original selling price has nothing to do with resale value. the contributing factors are these:
- CURRENT market prices (not the ones 2 years ago) - supply of the vehicle in your market - demand of them in the same market (this is a big factor if the new ones are not incentivised much)
i hope this helps. i dont mean to insult anyone, but if i offered $5k on a 1 year old altima, they would ask how i came to that figure. if i used your logic and said "thats what i think its worth", i would be laughed out of the dealership.
If 2 cars are manufactured on the same day and one sell with a rebate of say $3k, then the other cars value will automatically drop by at least $3k.It's not a case of you paid less originally so it is worth less at trade in.
So if car A sells on April 30 2002 for 35k and the identical Car B sells for 32k on May 1 2003 with a rebate. They will both be worth the same amount today if thew are both in the same condition.
I have noticed the same phenomenon that Larsca posted, That one or even two year old cars can be listed for way over what the rebated/discounted new cars are selling for.
Depending on how much the used car manager is in a used car for, they may or may not agree to even consider selling the used car for the same price as a discounted/rebated new car let alone discount the used car relative to the selling price of the new car. Maybe I'm missing something here because new car prices and one or two year old used car prices are only weakly correlated.
These dealerships must be selling these used cars to someone, otherwise the used cars would stack up as buyers realized that a one or two year old car is no bargain.
In my opinion, I should be able to negotiate around 15 to 20 percent per year off of the very lowest new car price (give or take some depending on the model and the market for that model). So if I can buy a new model at say $32k, I would like to think that I could negotiate the one year old car down to around $25-28k (or so) and the two year old car down to around $21-23k (or so).
A dealership is free to sell their used cars at whatever price that they want. However if they expect any business from me then they'll have to discount the one or two year old car relative to what new cars are selling for.
As far as finding out what a car sold for one or two years ago - well that is not relevant to the current market. Prices change with time and the once hot/must have car is now being discounted (eg. PT Cruiser/Thunderbird).
I received a signed PO stating a specific cash price for a new vehicle. The salesman stated this was before the rebate and pointed out where the rebate would be deducted on the PO. The dealership owner signed the PO. I then went to the F&I guy who gave me a dealership deal worksheet showing the cash down as being the price (as in the PO) minus the rebate and plus tax/doc fee/plates. I also have a spreadsheet faxed from the F&I guy showing my different financing options. This also shows the PO price then deducts the rebate and adds the tax/doc fee/plates. They (salesman, F&I guy and dealership owner) are all now saying they made a mistake. The price provided to me already included the rebate and they are now quoting a price $1650 higher than the price in the PO (= invoice price). Are they legally obligated to honor the original price given I have a signed PO? I put a deposit, but have not completed financing or taken possession of vehicle. Any thoughts?
on the used Saab debacle - using an "asking price" at a dealership, especially a high line dealer, as a basis for comparison against other prices in the market is downright foolish and a waste of time.
Looking at an asking price on anything shows no bearing on what the item actually sold for.
That used $32,000 Saab would probably sell for $25-26k, perhaps lower if miled or otherwise not perfect.
If you were referring to my post you need to go back and read what I posted. I never said asking price.
Sometimes you can negotiate until you are blue in the face and you'd get a better price on the new car rather than the one year old car. Or at best a price that didn't reflect the miles and age discount on the used car relative to the incentivized new car. That was my point.
I find two things very interesting about Mr. Waters "high rate".
1. If that rate was so bad and he qualified for 11.9%, why did he never refinance at his bank or credit union for a better rate?
2. If you look at the deal recap, we see the dealership only made $300 profit on the car they sold. Most likely Mr. Waters was not only fixated on the payement, but also on the price. The dealership had to make up the profit somewhere in the deal. In this case, they made profit on the F&I portion instead of the car.
not sure what they can legally do, but from a business POV, they should honor the deal as written and signed. They can eat the $1,650 as a lesson learned, or take it out of the hide of whoever screwed up.
Not sure if you have a legally binding contract, but the dealer probably knows that most people will back down (either pay the higher price or tear up the deal) before they will sue to get the price on the PO. Might be a good case for small claims court, but would cost more to sue them then you are saving.
This is when a lawyer in the family comes in handy (a little letterhead can often go a long way) if you feel that you are legally in the right.
Of course, if it was an honest mistake, than you might want to undo the deal anyway, since if the shoe was on the other foot (you signed a PO that forgot the rebate), you would raise holy heck to get a refund.
The documents are simply evidence of a contract. They do not in and of themselves constitute the contract. If you have documentation that evidences a certain price, you likely have a contract that would be enforceable. As alluded to in the other posts however, the cost/benefit of enforcing it would be the $64 question. What about seeing if the dealer would split the difference? I realize $1600 aint small change for most folks but the cost to carry out any legal options is going to be higher.
The other option you could try is walk that paperwork to another dealer and see if they'll bite....I aint called weasel for nothing
1. Tell them to honor the original deal or you'll walk (with your deposit). 2. Renegotiate the deal to a higher price but still a good deal. 3. Pay the new price.
I don't think there's any way to "force" them to honor the original deal. And frankly, if they're giving you trouble over their "mistake", I'd walk.
All I have to do is wait for 5 years, and the dealership will GIVE me a car? I mean they should sell it 20 percent less for each year after its year of manufacture, right? Better, yet, when I get a customer who thinks their 5-year-old trade is worth a blue ton, I can just reference your post and tell them they should give it to me free. Cool, thanks!
if it is a five year old Saab, the jasmith is correct.. It should be free after five years.. After 8 years, you have to pay to get rid of it, as you will come out ahead counting maintenance.
The forum is called "Any Questions for a Car Dealer?", but how do I know who is the dealer and who is not? And will I get a straight answer with no insulting comments regardless of how stupid the question might be?
Just a question. I would love to get to know how dealers think and work. This forum i think could be very useful to alot of ppl if it's honest. Thanks for reading.
First off I'm a short timer around these boards ( only been hanging here a little over a year). I'm not a dealer ( or in the biz) but there are a couple who frequent these boards. There are also several VERY knowledgeable salespeople who I would buy from in a second if they were in my area. They are very helpful. As long as a question is sincere and not asked arguementitvely you should be fine. The pros on these boards really do like to help that's why they come. When people who are posers or give out bad info you will know they will be questioned/set upon for trying to give out bad info or perpetuate an old stereotype that is no longer the norm but the exception. i hope this helps.
You can check the poster's profile, which will generally tell you who is a dealer/salesperson. Or if you spend a few minutes reading past posts you'll figure out pretty quickly who's a dealer. No guarantees on the insulting comments.
Well, just talked to the dealer. I counter-offered with a higher than original, but lower than cost price. He goes on and on about how he can't go that low. He's not a big-time Acura, Lexus, etc. dealer who can do that. Blah, blah, blah. I tell him that's too bad. I didn't want to have to go to Ford and the Better Business Bureau (not threat-like). He immediately tries to prevent that by asking how could I think they would sell the car that at that price and not have it include the rebate? How??? Because your salesman and finance guy put it in black and white. (The finance guy had faxed me the full PO with all the details clearly showing that the rebate was not included in the quoted price. Just doesn't have my signature on it cuz it was done after I left the dealership). Err, so I tell him, that's fine, I'll be in to pick up my deposit. He says, "Oh, I have your check right here. I can email it or tear it up." Ha! Doesn't want me tainting his other customers. Told him I would be in to pick it up tonight. Not too happy about the way it all turned out, but I think I will be happy in the long run that I didn't cave.
"There are also several VERY knowledgeable salespeople who I would buy from in a second if they were in my area" - Does anyone come into the board here and ask to meet the dealer who seems to be honest if they are in their area?
jasmith52! Yes, finally an intelligent person who actually understood what I meant and probably isn't a car dealer. I should have known stepping into this forum that there would be car dealers in here voicing their opinions. And of course, they'll be the total opposite of mine since they are the enemy... Well, you know what I mean.
Saab was just one example. And the Blue Book is just a tool. Anyone getting all antsy about those things probably didn't get the point I was trying to make.
As jasmith52 pointed out, very often you see brand new cars selling for less than a one year old with 10k miles on it.
Since so many people got so hung up on Saabs, let's move on to the Infiniti G35 coupe. This car brand spanking new with the options I want on it goes for about $34k. Yet, I keep seeing Infiniti dealers selling their 6 months to 1 year old G35 coupes with the same options and 10k miles on them for MORE THAN NEW! Why? That's what I don't understand, since you'd have to be STUPID to buy a used car for more than a new one would cost you.
I would like to know why dealers do this? Does anyone know?
This: "Yes, finally an intelligent person who actually understood what I meant and probably isn't a car dealer." is uncalled for.
I'm not a car dealer, but my opinion differs from yours, because I'm educated with over 15,000 auction purchases, sales, and trade-in evaluations, but I'm not "intelligent", according to you?
If you'll reread my posts, you'll see that "asking" price is not something you should ever make purchase decisions or market judgements against.
It's a cold day in July when someone actually comes in and pays "asking" price.
Gee, the discussion is titled "Any ?'s for a car dealer" and you're just now realizing that you "should have known there would be car dealers(your enemy) in here." I think I've identified your problem. Dealers don't view you as an enemy. Without customers; salespeople, mechanics, office personnel, factory employees, parts vendors, lenders and a host of others wouldn't be able to feed their families. Customers are far from our enemies. Look around your community. I'll gurantee you that car dealers are some of the most frequent sponsors of little league baseball, football, school fundraisers, United Way and many other charities right in your own backyard. Your "enemy" generates more local sales tax dollars than most businesses in your area. You benefit more than you could possibly imagine from the dealers in your community -- even if you never buy a car from them or use their service department. Yet you begrudge them every dollar they EARN, assuming they're fleecing you on used cars because you feel they have some obligation to sell their products for cost. I can almost guarantee you that a car dealer operates on a much smaller profit margin than whatever business you're in. Dealers aren't your enemy, but customers can often be their own worst enemy.
I just posted an observation about SOME new and used TRANSACTION prices being apparantly out of whack. I believe that this may sometimes be the case. I'm sure that you sales people have seen cases like this.
Some of you guys just like to argue without thinking through whatever you are posting.
Brianw220: Sorry you jumped to the wrong conclusion. The 15-20 percent depreciation per year is not a net value off the MSRP it's a declining balance model. This simple model actually works fairly well but it clearly is just a model. For your info with this model a 5 year old car depreciating 15 percent a year will sell for around 44 percent of the original selling price (or so) - not zero. A 5 year old car depreciating 20 percent a year will sell for about 33 percent of the original sales price. I have yet to find any dealers selling 5 year old cars for zero but don't I wish.
So I should be getting 7-8 year old cars for free. Hey -- I'll take a 97 or 98 for free. It's rare to find a vehicle with a 44 percent 60 month residual.
Well....in a small defense of jasmith... he did say it was a rough rule of thumb, and he said as a percentage of selling price, not MSRP. And using his system, you will never get to zero, since you are only coming down 20% of the current value each year.
I sorta feel like Jack Handy ( how's that for an old SNL reference:-)? Keitarou- You can see in their profiles where most are from.
larsca- Once again difference between "asking" price and "sale" price can be quite different and if the dealerships can find people who are willing to pay more for a used vehicle then a new one why wouldn't they sell it for that? You and I may think it's nuts but there are some customers out there who want to do it they should be able to. Also insulting folks who are trying to give you answers to the questions you are asking is not the best way to go about it trust me. :-) Just because you don't understand how they are able to do this doesn't make it wrong or them the enemy. I was insulted by that and I'm not even in the biz.
brianw- deep breaths. Don't blow a gasket. Not worth it.
kyfdx- Look all I know is that someone owes me a free car somehow. It's on the internet now so it must be true. So you'd better not tell me no.... :-)
Some years ago I lived in the U.K. The market there is a little different from N. America. I looked at data published in something called Glass's guide and found that if you plotted the value of a vehicle compared with it's cost new against time it followed very closely a graph of the form y = mx + c. This, for the non-mathematicians among us, is the equation for a straight line.
To give an example I found that the equation for a Mercedes Benz was something like y = -0.075x + 0.85 whereas for a Ford Escort it was more like y = -0.065x + 0.69. In both cases x is the number of years old that the car is and y (that you calculate given x) represents the retained value at x years old (a number between 0 and 1 representing 0 - 100%. What surprised me most was what a good fit a straight line of this form was to actual values quoted in the book (correlation coefficient very close to 1)
The question is how do you interpret this result? Bear in mind here that the U.K. market is different from N America but the way that I interpreted it is that an Escort drops to 69% of it's new value the moment it drives off the lot (c.f. MB at 85%) and then loses roughly 6.5% (c.f. MB at 7.5%) of it's initial value every year thereafter. Furthermore you can extrapolate out to where the formula indicates zero value and find that a car is typically almost worthless when it is the 10-12 year old range.
Note that the numbers I have quoted were not actual numbers but numbers invented to give an idea of the process although the fact that MBs lose value more slowly that Fords for example at sale time but then faster on a per year basis is accurate.
I don't know anything about the UK car market,Nor do I claim to be a statistician, Furthermore I don't claim to be an expert or anything on this depreciation stuff, but here's some thoughts:
I'll have to take your word on the statistical correlation with the price points. You might want to look at more cars than just two cause it may just be a fluke. I do know that you can fit a straight line to anything even if the data is random. So be cautious of statistical correlation(s).
If Fords are anything in the UK like they are in the US then they have to be significantly discounted with rebates, low interest rates, and other incentives to move the metal. Mercedes, on the other hand, sell at closer to MSRP. So your linear model(s) intercept points probably reflect actual transaction prices less some drive-off-the-lot discount.
You didn't mention what type of Mercedes car that you analyzed so I'll assume that the Mercedes is an upscale model relative to the Ford Escort. Economy cars like the Ford are known to hold their value better than upscale cars (who wants an old luxury car ?). Therefore I'll attribute the larger slope (faster depreciation) of the Mercedes to the fact that it is a luxury car.
I have some relatives in Austrailia, and because car prices are about twice over there as they are here, people tend to keep their cars longer and fix them when they break. It's all relative economics. Therefore used car prices in AUS tend to stay higher than you would think compared to relative US prices. Whether or not in AUS or the UK cars depreciate in a linear fashion is then the question. Your data seem to support that they do fit a linear model.
In the US it doesn't cost all that much more to drive relatively new cars cause it costs plenty to pay labor and parts to fix the used cars when they break. All I know is that cars depreciate in the US faster when they are new. Therefore the declining balance model (which clearly is not linear) isn't a bad fit for used car prices in the US.
........ The market changes for many reasons, geographics, color, options, miles, condition, how many are being built, demand, style, what's hot, what's not, etc, etc .....
Saabs, well uhm, their kinda all dressed up with no place to go .. how many 9-5's were built and sold last year in the USA, 2,200/2,300 .? .. and depending on where you live, they might be in demand (cough), SCal is a hot spot for them, certain area's of Florida, but with a tiny volume being produced, the buying market has to be bigger and in certain area's and certain dealers might get a certain premium ... the person that takes the beating is the "I can't live without it customer" and when they go to trade it, well what can I say, it's not pretty .l.o.l...
Now the G35's, thats a whole different deal, well built, well priced, should run with little or no service problems, most will be hammering the streets with 150/180k, Nissan/Infiniti did a great job, built and sold 8,000 last year and probably will see 30,0 big ones this year and probably another 14/15,0 in just coupes, now thats a market .... then there's Saab, they just don't build enough to make a difference in quality or style to the real deal market ....
As far as prices are concerned, were back to: area of the country, time of the year, options and demand .. that being said, there is 3 prices when someone sells a car .. there is an *asking* price (anyone can ask anything they want) .. there is an *liking* price (an amount you would feel comfortable with, not crazy about it, but comfortable with) .. and there is a *taking* price (down to the seeds and stems, not crazy about and certainly not comfortable with it, but it has to go -or- make a planter out of it) .. it's your call.
but like I always say: Always buy and drive what YOU like ...............
........ Sounds like a unfortunate situation .. sometimes humans make mistakes, just ask Colonel Kerry .. if the dealer could have made the deal with just enough daylight, he would have kept it together .. but no dealer (furniture, boat, jewelry, appliance, auto, etc) is going to take a $1,600 beating just for the grins and glory ......
Although I haven't seen this situation posted in the last few days, I wonder how it is that dealers allow trades to be "sprung" on them.
For example, a customer tells a dealer two or three times during negotiations that he will not trade his current vehicle, he just wants the best price on the new vehicle and he will sell his car himself. Later, it seems to happen often where he changes his mind and messes up the deal.
Can you tell the customer when he says he will not trade, "Okay, that is the way I will handle this transaction. We will not from this point forward consider or accept your trade. We are only discussing your purchase of the new car. Is that how you wish to proceed?
Has that been tried, and does it ever work? Enquiring minds want to know.
It can be the easiest quickest way to squash a deal .. folks think if they "hide" the trade the deal will work in their favor, it has nothing to do with "their favor", it has to do with Real value of their vehicle ..
Most of these folks will read Nada, call the Credit Union, KBB, Edmunds, whatever and pick the highest figure (did you ever know someone to pick the lowest figure.? .l.o.l.) of course they forget you can see the air in their tires, the 58,000 miles on a 2year old vehicle doesn't help it and when they backed down and hit the neighbors garage and did $1,900 worth of damage and repaint, and of course all these sources forgot to deduct for that - sooooo, in their mind there thinking $18,000 for that quality trade, in reality it's worth $14,0 maybe $15,0 on a good day, thats when the @&#$ hit's the fan and the customer thinks they are being robbed, they always shoot the messenger, it's human nature ..
It's not til' they have been to the 2nd or 3rd dealer, or they have shifted gears and moved to another type vehicle .. believe me, I have seen folks "swear" they were going to purchase a new Infiniti and 2wks later (and $3,000 in rebates) they have bought something else, nobody makes it harder on themselves than the buyer ............. ;(
While your approach would be nice no dealer in his/her right mind is going to kick a customer out for "springing a trade" on them. Customer will simply get a true wholesale # for their car, whether they like it or not. It happens quite frequently.
I have yet to find a way to accurately predict resale values for cars. May as well ask your broker to tell you what Microsoft will be worth in 3 yrs. Edmunds, Kelley, etc are just reference guides nothing more. It ultimately comes down to the guy w/ the checkbook. Case in point, we traded for a BMW 7 series and a Toyota Truck recently. The bimmer was bid $7,000 below Kelley wholesale and the Toyota $500 over Kelley wholesale. Saabs are a beating waiting to happen, but so are some bimmers.
Comments
There's no proof that this guy qualified for 11.99%, except a claim made in the article by the author, who, I'll bet, knows very little to nothing (somewhere in that range) about automotive financing.
Pretty damged irresponsible to make a claim like that with no proof - nevermind that it's impossible to do.
E-mail me if you have any dealer fraud questions.
Exactly, drift. I love that article, if only for the laughs. "The 11.99% he qualified for...". My first thought, was a) qualified for that according to whom? and b) how/where did they get that info? To me, it sounds like puffery and in any case, if they DID mark it up that high (which, I have no doubt they did NOT), anyone who would pay it is just plain stupid. No offense to stupid people, but c'mon! $300/mo for 60 mos for an $11000 car? How can anyone think that's right?
nevermind what his score was when he bought the car.
p.s. ford credit doesnt go over 18.99 total. if they approve at that buy rate, then the F&I guy just plain loses.
It looks like if they are discriminating against anyone it's the uneducated and/or lazy to me.
Just my .02
Duncan
Two years ago in December, I saw on Edmund's TMV that the Saab was heavily discounted and selling at approximately $32000. Not bad at all considering the MSRP was around $39000 at the time. This would be a 2003 model year selling in December 2002. (02 models were even cheaper...)
A quick check at used dealer prices for 2002 or 2003 Saab 9-5 Aeros will reveal two things. 1) There are hardly any for sale. 2) They ask a whopping $30k-35k for them!
I don't know about you people, but this seems to me like a very easy way of making a profit for a car dealerships? I mean, think about it. You sell the car for $32000, then two years later you get it back on a trade spending about $25000 on it, only to turn it around and sell it for a whopping $32000 again. Ka-ching! The dealer made money on the first sale, and a lot of money the second time around. Guess who got screwed?
Currently Volvo has a $3500 incentive going on some of their S60s.
As a potential used car buyer, is there any way I can find out what the vehicle of my choice originally sold for? Would DMV have records for this sort of thing, and can anyone access them?
No.
1st of all, nobody pays $25k for a two-year old car that was $32 new on the street. Ultra-clean, low-mileage Toyota Tundra or 4Runner, maybe -- not a Saab.
2ndly, the "asking price" is just that. There are two reasons dealers have ridiculous prices on their used cars: (i) obviously, to sucker people and (ii) to have something to "work with" for the yahoos who are thousands of dollars upside down and only care about trade-in allowance.
(i) is going to work only in rare cases and turns many people off; (ii) happens all the time.
The car business is a truly goofy one. It's easy to make a small fortune in used cars -- or to lose a large one. Compared to other resale businesses, the profit margins are pretty thin -- usually 10-15%, IF the dealer knows his stuff. The reason it works is the steady flow of supply and demand; the merchandise is easy to get and -- considering it's a big-ticket item -- fairly easy to sell to a HUGE pool of buyers.
But if your main business tools are an excel spread sheet and a NADA blue book, you're in for a rough ride. You really need to know what sells and what cars are worth in your town. Hang around the Town Hall for awhile, and you will likely develop a healthy respect for those who make it in automotive sales...
-Mathias
Duncan
that people in business make profit? WOW!!! i wasnt aware!
did you know that a mcdonalds cheeseburger has a sales cost of $0.06? the bun costs $.02, the meat is another $0.02, the cheese is yet another penny, and condiments round it all out.
i think we all get screwed paying as much as $0.79 for it! how can they get away with it?!?!
i think i will call nightline!
Sometimes cars are heavily discounted (usually right before a new model year of the car is about to be released, or at the end of the year.) These discounted prices are not reflected anywhere when a couple of years down the road they appear as used vehicles for sale.
Blue Book example: 2003 Saab 9-5 Aero, 18k miles on odometer, suggested retail value $32k.
The thing is, brand spanking new back in late 2002, you could pick this car up for approximately $35k. Blue Book doesn't take into account that the car was sold for less than MSRP. It doesn't say: "If the car was purchased for MSRP back in the day for $39k, then today it's worth $32k. But if it was one of the discounted cars that sold for $35k, then today it's only worth $29k."
When I go into a car dealership looking for a gently used car, I would definately want to know if the car I'm looking at was originally sold for $39k or $35k. It makes a huge differance on what I think it should be worth now (and granted, they may chose not to sell it to me because my offer is too low - I've had that happen a couple of times).
That's why I wonder if there's anywhere I could find out what a used car originally sold for when it was new.
key words..."i think"
would you go to a surgeon and tell him that a hernia operation should only cost $x,xxx because his cost is less?
if the car you are looking at is worth less to you, then you shouldnt buy it. also, original selling price has nothing to do with resale value. the contributing factors are these:
- CURRENT market prices (not the ones 2 years ago)
- supply of the vehicle in your market
- demand of them in the same market (this is a big factor if the new ones are not incentivised much)
i hope this helps. i dont mean to insult anyone, but if i offered $5k on a 1 year old altima, they would ask how i came to that figure. if i used your logic and said "thats what i think its worth", i would be laughed out of the dealership.
So if car A sells on April 30 2002 for 35k and the identical Car B sells for 32k on May 1 2003 with a rebate. They will both be worth the same amount today if thew are both in the same condition.
I quit trying to analyze the car market a long time ago and just started understanding it, instead - less stress, better sleep, etc.
hah! I have yet to see "a book" buy a car, whether it be KBB, Edmunds, NADA, etc... they can say what they want, but they don't write the checks.
Depending on how much the used car manager is in a used car for, they may or may not agree to even consider selling the used car for the same price as a discounted/rebated new car let alone discount the used car relative to the selling price of the new car. Maybe I'm missing something here because new car prices and one or two year old used car prices are only weakly correlated.
These dealerships must be selling these used cars to someone, otherwise the used cars would stack up as buyers realized that a one or two year old car is no bargain.
In my opinion, I should be able to negotiate around 15 to 20 percent per year off of the very lowest new car price (give or take some depending on the model and the market for that model). So if I can buy a new model at say $32k, I would like to think that I could negotiate the one year old car down to around $25-28k (or so) and the two year old car down to around $21-23k (or so).
A dealership is free to sell their used cars at whatever price that they want. However if they expect any business from me then they'll have to discount the one or two year old car relative to what new cars are selling for.
As far as finding out what a car sold for one or two years ago - well that is not relevant to the current market. Prices change with time and the once hot/must have car is now being discounted (eg. PT Cruiser/Thunderbird).
Looking at an asking price on anything shows no bearing on what the item actually sold for.
That used $32,000 Saab would probably sell for $25-26k, perhaps lower if miled or otherwise not perfect.
If you were referring to my post you need to go back and read what I posted. I never said asking price.
Sometimes you can negotiate until you are blue in the face and you'd get a better price on the new car rather than the one year old car. Or at best a price that didn't reflect the miles and age discount on the used car relative to the incentivized new car. That was my point.
just making sure it wasn't missed with all this fascinating talk of Saab resale values.
'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
1. If that rate was so bad and he qualified for 11.9%, why did he never refinance at his bank or credit union for a better rate?
2. If you look at the deal recap, we see the dealership only made $300 profit on the car they sold. Most likely Mr. Waters was not only fixated on the payement, but also on the price. The dealership had to make up the profit somewhere in the deal. In this case, they made profit on the F&I portion instead of the car.
Dean
Not sure if you have a legally binding contract, but the dealer probably knows that most people will back down (either pay the higher price or tear up the deal) before they will sue to get the price on the PO. Might be a good case for small claims court, but would cost more to sue them then you are saving.
This is when a lawyer in the family comes in handy (a little letterhead can often go a long way) if you feel that you are legally in the right.
Of course, if it was an honest mistake, than you might want to undo the deal anyway, since if the shoe was on the other foot (you signed a PO that forgot the rebate), you would raise holy heck to get a refund.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
The other option you could try is walk that paperwork to another dealer and see if they'll bite....I aint called weasel for nothing
1. Tell them to honor the original deal or you'll walk (with your deposit).
2. Renegotiate the deal to a higher price but still a good deal.
3. Pay the new price.
I don't think there's any way to "force" them to honor the original deal. And frankly, if they're giving you trouble over their "mistake", I'd walk.
I'd rather start over and do a deal with someone else.
regards,
kyfdx
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I'm new and would like to ask a question here.
The forum is called "Any Questions for a Car Dealer?", but how do I know who is the dealer and who is not? And will I get a straight answer with no insulting comments regardless of how stupid the question might be?
Just a question. I would love to get to know how dealers think and work. This forum i think could be very useful to alot of ppl if it's honest. Thanks for reading.
As long as a question is sincere and not asked arguementitvely you should be fine. The pros on these boards really do like to help that's why they come.
When people who are posers or give out bad info you will know they will be questioned/set upon for trying to give out bad info or perpetuate an old stereotype that is no longer the norm but the exception.
i hope this helps.
Duncan
I guess some creative comment can be welcomed.
Thanks for your answers.
Saab was just one example. And the Blue Book is just a tool. Anyone getting all antsy about those things probably didn't get the point I was trying to make.
As jasmith52 pointed out, very often you see brand new cars selling for less than a one year old with 10k miles on it.
Since so many people got so hung up on Saabs, let's move on to the Infiniti G35 coupe. This car brand spanking new with the options I want on it goes for about $34k. Yet, I keep seeing Infiniti dealers selling their 6 months to 1 year old G35 coupes with the same options and 10k miles on them for MORE THAN NEW! Why? That's what I don't understand, since you'd have to be STUPID to buy a used car for more than a new one would cost you.
I would like to know why dealers do this? Does anyone know?
This: "Yes, finally an intelligent person who actually understood what I meant and probably isn't a car dealer." is uncalled for.
I'm not a car dealer, but my opinion differs from yours, because I'm educated with over 15,000 auction purchases, sales, and trade-in evaluations, but I'm not "intelligent", according to you?
If you'll reread my posts, you'll see that "asking" price is not something you should ever make purchase decisions or market judgements against.
It's a cold day in July when someone actually comes in and pays "asking" price.
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I just posted an observation about SOME new and used TRANSACTION prices being apparantly out of whack. I believe that this may sometimes be the case. I'm sure that you sales people have seen cases like this.
Some of you guys just like to argue without thinking through whatever you are posting.
Brianw220: Sorry you jumped to the wrong conclusion. The 15-20 percent depreciation per year is not a net value off the MSRP it's a declining balance model. This simple model actually works fairly well but it clearly is just a model. For your info with this model a 5 year old car depreciating 15 percent a year will sell for around 44 percent of the original selling price (or so) - not zero. A 5 year old car depreciating 20 percent a year will sell for about 33 percent of the original sales price. I have yet to find any dealers selling 5 year old cars for zero but don't I wish.
So....NO FREE CARS!!
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Keitarou- You can see in their profiles where most are from.
larsca- Once again difference between "asking" price and "sale" price can be quite different and if the dealerships can find people who are willing to pay more for a used vehicle then a new one why wouldn't they sell it for that? You and I may think it's nuts but there are some customers out there who want to do it they should be able to. Also insulting folks who are trying to give you answers to the questions you are asking is not the best way to go about it trust me. :-) Just because you don't understand how they are able to do this doesn't make it wrong or them the enemy. I was insulted by that and I'm not even in the biz.
brianw- deep breaths. Don't blow a gasket. Not worth it.
kyfdx- Look all I know is that someone owes me a free car somehow. It's on the internet now so it must be true. So you'd better not tell me no.... :-)
And I'm spent.
Duncan
y = mx + c. This, for the non-mathematicians among us, is the equation for a straight line.
To give an example I found that the equation for a Mercedes Benz was something like
y = -0.075x + 0.85
whereas for a Ford Escort it was more like
y = -0.065x + 0.69. In both cases x is the number of years old that the car is and y (that you calculate given x) represents the retained value at x years old (a number between 0 and 1 representing 0 - 100%.
What surprised me most was what a good fit a straight line of this form was to actual values quoted in the book (correlation coefficient very close to 1)
The question is how do you interpret this result? Bear in mind here that the U.K. market is different from N America but the way that I interpreted it is that an Escort drops to 69% of it's new value the moment it drives off the lot (c.f. MB at 85%) and then loses roughly 6.5% (c.f. MB at 7.5%) of it's initial value every year thereafter. Furthermore you can extrapolate out to where the formula indicates zero value and find that a car is typically almost worthless when it is the 10-12 year old range.
Note that the numbers I have quoted were not actual numbers but numbers invented to give an idea of the process although the fact that MBs lose value more slowly that Fords for example at sale time but then faster on a per year basis is accurate.
hmmm...tell me...what tipped you off?
was it...well...maybe...the TITLE?!?!?!?!
I don't know anything about the UK car market,Nor do I claim to be a statistician, Furthermore I don't claim to be an expert or anything on this depreciation stuff, but here's some thoughts:
I'll have to take your word on the statistical correlation with the price points. You might want to look at more cars than just two cause it may just be a fluke. I do know that you can fit a straight line to anything even if the data is random. So be cautious of statistical correlation(s).
If Fords are anything in the UK like they are in the US then they have to be significantly discounted with rebates, low interest rates, and other incentives to move the metal. Mercedes, on the other hand, sell at closer to MSRP. So your linear model(s) intercept points probably reflect actual transaction prices less some drive-off-the-lot discount.
You didn't mention what type of Mercedes car that you analyzed so I'll assume that the Mercedes is an upscale model relative to the Ford Escort. Economy cars like the Ford are known to hold their value better than upscale cars (who wants an old luxury car ?). Therefore I'll attribute the larger slope (faster depreciation) of the Mercedes to the fact that it is a luxury car.
I have some relatives in Austrailia, and because car prices are about twice over there as they are here, people tend to keep their cars longer and fix them when they break. It's all relative economics. Therefore used car prices in AUS tend to stay higher than you would think compared to relative US prices. Whether or not in AUS or the UK cars depreciate in a linear fashion is then the question. Your data seem to support that they do fit a linear model.
In the US it doesn't cost all that much more to drive relatively new cars cause it costs plenty to pay labor and parts to fix the used cars when they break. All I know is that cars depreciate in the US faster when they are new. Therefore the declining balance model (which clearly is not linear) isn't a bad fit for used car prices in the US.
Saabs, well uhm, their kinda all dressed up with no place to go .. how many 9-5's were built and sold last year in the USA, 2,200/2,300 .? .. and depending on where you live, they might be in demand (cough), SCal is a hot spot for them, certain area's of Florida, but with a tiny volume being produced, the buying market has to be bigger and in certain area's and certain dealers might get a certain premium ... the person that takes the beating is the "I can't live without it customer" and when they go to trade it, well what can I say, it's not pretty .l.o.l...
Now the G35's, thats a whole different deal, well built, well priced, should run with little or no service problems, most will be hammering the streets with 150/180k, Nissan/Infiniti did a great job, built and sold 8,000 last year and probably will see 30,0 big ones this year and probably another 14/15,0 in just coupes, now thats a market .... then there's Saab, they just don't build enough to make a difference in quality or style to the real deal market ....
As far as prices are concerned, were back to: area of the country, time of the year, options and demand .. that being said, there is 3 prices when someone sells a car .. there is an *asking* price (anyone can ask anything they want) .. there is an *liking* price (an amount you would feel comfortable with, not crazy about it, but comfortable with) .. and there is a *taking* price (down to the seeds and stems, not crazy about and certainly not comfortable with it, but it has to go -or- make a planter out of it) .. it's your call.
but like I always say: Always buy and drive what YOU like ...............
Terry.
Terry.
For example, a customer tells a dealer two or three times during negotiations that he will not trade his current vehicle, he just wants the best price on the new vehicle and he will sell his car himself. Later, it seems to happen often where he changes his mind and messes up the deal.
Can you tell the customer when he says he will not trade, "Okay, that is the way I will handle this transaction. We will not from this point forward consider or accept your trade. We are only discussing your purchase of the new car. Is that how you wish to proceed?
Has that been tried, and does it ever work? Enquiring minds want to know.
It can be the easiest quickest way to squash a deal .. folks think if they "hide" the trade the deal will work in their favor, it has nothing to do with "their favor", it has to do with Real value of their vehicle ..
Most of these folks will read Nada, call the Credit Union, KBB, Edmunds, whatever and pick the highest figure (did you ever know someone to pick the lowest figure.? .l.o.l.) of course they forget you can see the air in their tires, the 58,000 miles on a 2year old vehicle doesn't help it and when they backed down and hit the neighbors garage and did $1,900 worth of damage and repaint, and of course all these sources forgot to deduct for that - sooooo, in their mind there thinking $18,000 for that quality trade, in reality it's worth $14,0 maybe $15,0 on a good day, thats when the @&#$ hit's the fan and the customer thinks they are being robbed, they always shoot the messenger, it's human nature ..
It's not til' they have been to the 2nd or 3rd dealer, or they have shifted gears and moved to another type vehicle .. believe me, I have seen folks "swear" they were going to purchase a new Infiniti and 2wks later (and $3,000 in rebates) they have bought something else, nobody makes it harder on themselves than the buyer ............. ;(
Terry.
While your approach would be nice no dealer in his/her right mind is going to kick a customer out for "springing a trade" on them.
Customer will simply get a true wholesale # for their car, whether they like it or not.
It happens quite frequently.
I have yet to find a way to accurately predict resale values for cars. May as well ask your broker to tell you what Microsoft will be worth in 3 yrs. Edmunds, Kelley, etc are just reference guides nothing more. It ultimately comes down to the guy w/ the checkbook.
Case in point, we traded for a BMW 7 series and a Toyota Truck recently. The bimmer was bid $7,000 below Kelley wholesale and the Toyota $500 over Kelley wholesale.
Saabs are a beating waiting to happen, but so are some bimmers.