Does a decent down payment get you any leverage with car dealerships?

[Pricetag]

I have to buy a car. My experience at buying cars in the past has not been very fun--I'm a car salesman's nocturnal emission. By the time I step foot on a lot, I just want it to be over with.

I'm going to be buying a used car in the range of about $12,000 to $15,000. If I pay $3,000 down, does it gain me any leverage with the dealer? Do they get anything out of it?

[badger]

Based on this (http://financialplan.about.com/od/savingmoney/a/newcarmistakes.htm), you are on the right track!


Buying new versus used. A vehicle is not an investment. Vehicles depreciate in value quickly, so when you buy a new vehicle, you can expect it to continuously decrease in value. In fact, a new car typically decreases in value by 25%-40% in the first two years. The best thing you can do is to let someone else take the initial 40% hit and buy a slightly used vehicle that is a year or two old.

Years ago, there was a good reason to buy new, and that was for the warranty. Today, most vehicles have longer warranties that can still be in effect even if you buy a car that is a few years old. In addition, you can often opt to purchase an extended warranty which is typically far cheaper than the value the car lost in the first year or two.


Putting $0 down. There are a lot of incentives when it comes to buying a car, and you can often put yourself in a brand new vehicle of your choice with no money down. Sounds great, right? Not so fast. Remember, vehicles depreciate rapidly, so if you finance the full purchase price, you often find yourself upside down on the loan immediately.

Being upside down simply means that you owe more than the car is worth. Remember, there are taxes and other fees that go into a new car purchase, and they are typically rolled into the loan if you don’t put anything down. That means as soon as you drive it off the lot, you owe more money to the bank or dealership than the vehicle is actually worth.

This is a very bad idea if you intend on selling or trading the car in before the loan is paid off. If after three years you need to get a new vehicle and you owe $10,000 while the car is only worth $8,000, you will have to either pay $2,000 out of your pocket, or finance that into your new loan. It may feel good to walk out of the dealership with a brand new car without having to fork over a dime up front, but it will cost you.

[pphilfran]

You don't tell them diddly chit...

You ask for their best price than tell them you are going to other places....make em beg....

[8timechamps]

Don't mention what you're putting down until after a price (you are comfortable with) has been reached. Do your research.

The few times I've financed a car, I've gotten the loan ahead of time (from my credit union). The LAST thing I want to do is deal with a car dealership finance office for 3 hours after I've decided on a car.

[olevetonahill]

Arrange your OWN financing BEFORE ya ever go looking. If you try to use a dealers financing yer Credit score will take a big hit. They submit yer App to every lender in the country

[yermom]

do your homework before you get there. be ready to walk.

the less you put down, the more they make on you. the only thing the down payment really gives you is the ability to afford a more expensive car by dropping your payments

talk to them about total price, not monthly payments. 72 mos vs. 60 or 48 mos equals a lot more extra money paid into interest

[C&CDean]

In a word...no. Keep your cash for other ****. Peem me and let me know what you're looking for.

[yermom]

i can't decide if i like Ford Dean more than USPS Dean or not :biggrin:

[C&CDean]

Actually, it's Ford, Lincoln, Cadillac, Dodge, Jeep, Buick, GMC Dean. Everything but Chevy.

[jkjsooner]

Putting $0 down. There are a lot of incentives when it comes to buying a car, and you can often put yourself in a brand new vehicle of your choice with no money down. Sounds great, right? Not so fast. Remember, vehicles depreciate rapidly, so if you finance the full purchase price, you often find yourself upside down on the loan immediately.

This part makes no sense to me. Let's say you don't put anything down and keep the $3000. Who cares if you're upside down if you have $3000 sitting in the bank? The logic there is flawed.

Now, if you can get a better deal by putting $3000 down or if you're paying a high interest rate then you need to consider putting it down.

For my last car I got 0% interest on a 3 year loan. I had money to put down but why? So I wouldn't be upside down? Who gives a darn. If I had to sell I could have used the $3000 or so I didn't pay on the car to make up the difference.

[Lott's Bandana]

Wait till the end of the month.

Dealers are much more willing to negotiate when they have been looking at their month's numbers and are trying to reach the next carrot.

Also, don't limit yourself to big franchise dealers when looking for a used vehicle. Many of the mid-sized independents have excellent vehicles and hundreds of loyal, repeat customers. You often deal with the owner who has been there a long time, vs a big franchise dealer that the managers and salesmen have often not been there very long. Lots of turnover in the biz.

Tulsa has dozens of these type dealers. Peem me if you want to know a few of the good ones.

[cleller]

I really keyed on the way you mentioned that as soon as you set foot on the lot, you just want it to be over with. Seems like I've heard that is common, and deadly.
I've always had the best luck doing most of the actual business on the phone. It seems to shift the balance of power. When they have you on the lot, you're on their turf, gives them confidence.
When talking on the phone its like they take a "what the heck" attitude. They might rather make a so-so deal, because you're so close to slipping away.

Hey, maybe you could get lucky and bump into someone on a trusted sports fan website....Nah, what are the odds?

I've also never financed or traded in with a dealer. Strictly cash transaction with the dealer.

[hawaii 5-0]

All car dealerships have an Internet representative.

Do your homework. Learn the true value of the car. Haggle online before to set foot on the lot.

My last car was a new one and the deal was struck before I got there.

5-0

[8timechamps]

Five professions that it pays to have trusted family/friends (In no particular order):

1. Doctor/Medicine
2. Mechanic
3. Auto sales/broker
4. Finance :D
5. Law

Of course there are plenty of others, but those are the top of my list.

[Sooner5030]

i tend not to borrow if not needed but that is an emotional thing. If you can predict that we will have 5 years of moderate inflation and your APR is very low then sometimes it is best to borrow the money. You're borrowing x basket of goods but paying back .8x basket of goods + interest. Interest rates should reflect risks + time value of money....but with current rates that is not always the case.

Not to turn this into a political thread but if it looks like we will inflate our way out of our problems.....you should borrow money.....especially for unimproved vacant land.

[XingTheRubicon]

Putting 3 grand down means the dealer can gross up to 3 grand more because banks will only lend 115% of NADA trade (depending on mileage and year)


As Vet said, get your financing done before you go.


FYI, I know a wholesaler that can get you $500 over auction price on any used vehicle you want. You can run a carfax and have checked out before you buy as well. I helped my nephew buy a truck a few months back and it was 2 grand less than Knippelmier and Bob Howard for the same truck (less miles) and the truck is perfect. You just tell him what you want. PM me if you want his number.

[texaspokieokie]

Actually, it's Ford, Lincoln, Cadillac, Dodge, Jeep, Buick, GMC Dean. Everything but Chevy.excluding chevy means no vette. including gmc means some vehicles same as chevy.

[OULenexaman]

I have to buy a car. My experience at buying cars in the past has not been very fun--I'm a car salesman's nocturnal emission. By the time I step foot on a lot, I just want it to be over with.

I'm going to be buying a used car in the range of about $12,000 to $15,000. If I pay $3,000 down, does it gain me any leverage with the dealer? Do they get anything out of it? zero leverage...it's actually the opposite. Your what's called a lay down. Might as well assume the position.

[badger]

btw, the few times I've grabbed the latest edition of Consumer Reports at the airport, they've advertised some service where they sell you the dealer price of any make or model so that you know what the dealer paid for the vehicle. Anyone ever use this, or use anything like this?

In general, how far off is the sticker price/sale price from what the dealer pays?

[OULenexaman]

you can find dealer invoice online.....but it still contains what is called holdback. Imports never contained holdback for years but they do now....the amount of markup between MSRP and invoice dropped a lot over the years in low to mid range pricing.....now your bigger ticket items it increases a substantial amount. I do not miss the car business one bit.

[badger]

you can find dealer invoice online.....but it still contains what is called holdback. Imports never contained holdback for years but they do now....the amount of markup between MSRP and invoice dropped a lot over the years in low to mid range pricing.....now your bigger ticket items it increases a substantial amount. I do not miss the car business one bit.

You used to sell cars? What was it like?

[texaspokieokie]

we just pay cash.

[Penguin]

I just do like the po' folks do. I go to a dealership offering "bad credit ok" deals. I get a car for no money down, then I keep the car for 3 or 4 months and not make any payments. Then, the repo man cometh and then I go get another car.

New car every 4 months. No money out of my pocket. Ironclad plan, baby!

[yermom]

where do i subscribe to your newsletter?

[OULenexaman]

You used to sell cars? What was it like? When the oil business went kaput in the mid 80's some of us became car salesman.....others became waiters. I did well and moved up the ladder pretty fast.....after a year I was F&I for many years....used car manager....new car manager. All the horse****. Long hours....always open on most holidays. Rampant cocaine use....it sucked. I had to jump out and regain a real life.

[badger]

When the oil business went kaput in the mid 80's some of us became car salesman.....others became waiters. I did well and moved up the ladder pretty fast.....after a year I was F&I for many years....used car manager....new car manager. All the horse****. Long hours....always open on most holidays. Rampant cocaine use....it sucked. I had to jump out and regain a real life.

LOL. You know those companies where you sell sh!t on the side of a real job to make extra income? I've heard that people that do that become the "makeup lady" or the "hat lady" or the "kitchenware lady" because everytime you see them, you know they're going to try to sell you stuff that you don't want or need, so what do you do? Avoid eye contact, or just avoid them, period.

I hope I never go that route. I've done retail, and that was bad enough.

[OULenexaman]

on the upside....it paid....ALOT!!

[yermom]

i looked at doing it last fall. i got the hard sell on just going in to "training"

[delhalew]

Pricetag, if you don't get a hookup on here, this will prove to be VERY important. Summon every once of stubborn prick residing in your soul.

This has worked for me.

1:Research. Decide what you WANT to pay, not what you are willing to pay.
2:When you visit a lot, KNOW that you are leaving with nothing more than a business card. You are leaving no matter how good the deal seems.
3: Over the course of the week you discuss with the sales rep what he is willing to do to get you in the exact model/color you want.

By the end of this, the sales rep will be on suicide watch, and you will be extremely annoyed with the process, BUT...

Last time I bought a vehicle, I got a Silverado crewcab for $6500 less than sticker after taxes, fees, ect. That's 3 thousand less than his "best" price on the lot. He bumped me up to the LT package, towing, fancy electronics package, spray bed liner, rally bars...ridiculous.

One thing I did, I insisted on NOT having the 20 in. wheels which come on almost every LT. Seems wierd right? This dude knew what he was dealing with, but he sold a truck. I just took control of the game.

Be the master of your universe when you go in there.

[badger]

A few years ago I remember a friend shopping for a used car only to find that depreciation on some models was so low that it was almost worth it to buy a new one instead of a few years old one.

Fact or crap?

[yermom]

in some cases, i can see that being true, but more an exception than the rule thing

[8timechamps]

on the upside....it paid....ALOT!!

One of my son's youth baseball coaches is a salesman (not at a big brand dealership, but a really good used car dealer), and it appears that the guy is making a ton of money. It could be all appearance, but just to keep up his appearance he has to have some cash. He's been doing it a long time, so I guess he's pretty good at it...which, like anything, is probably the key to his success.

What does an average salesperson make a year?

[OULenexaman]

A few years ago I remember a friend shopping for a used car only to find that depreciation on some models was so low that it was almost worth it to buy a new one instead of a few years old one.

Fact or crap? crap.....the mark up in used car asking price will be 3 to 4 times what it is on new. That's why you can see such a small difference. Someone deep in the car biz is gonna see me letting every cat out of the bag here and come kick my arse.

[C&CDean]

There's lots of $$ to be made in the car biz. Trust me. There's a reason why I unretired. The sweet thing is that I don't have/need to work. I couldn't imagine being like most of the poor, dumb bastards who work in the car business for their only living. 6 days a week, 12+ hours a day, work all holidays 'cept Christmas, Thanksgiving, and NY. It's not conducive to maintaining a happy family/personal life if it's your day job...

I do it for a) $$, b) I semi-enjoy it, c) I get smoking deals on new trucks, d) I get to drive pretty much everything that has wheels on it. Today, I drove a 1929 Ford pick-up, a 2012 Ford F-350, a Dodge 3500, and a Dodge Challenger. Shelby's, Roush's, CTSV Caddys, Boss 302s, GTs, Chargers, Challengers, and all sorts of other stuff.

[OULenexaman]

One of my son's youth baseball coaches is a salesman (not at a big brand dealership, but a really good used car dealer), and it appears that the guy is making a ton of money. It could be all appearance, but just to keep up his appearance he has to have some cash. He's been doing it a long time, so I guess he's pretty good at it...which, like anything, is probably the key to his success.

What does an average salesperson make a year? varies.....You can go from hero to zero in 1 month..back in 86 I averaged 5 to 6K a month....I had 2 guys average 9K a month working for me in 93 and 94....profit margin is WAY higher in used. They work off of ACV (actual cash value) and not from a manufactures invoice with a set MSRP. Hence they try to bring in the trade or the auction unit at the lowest possible ACV.

[badger]

There's lots of $$ to be made in the car biz. Trust me.

Trust Rhett... too soon? Well, it happened in 2005 so I think the healing's over :D

My next door neighbor is a car salesman. I hardly ever talk to him, but he drives a shiny new car home every day. He might not it, but rather, does "research" for salesmanship or something, so that he can say how kick arse the Cadillac is by having driven it a lot, heh.

[8timechamps]

varies.....You can go from hero to zero in 1 month..back in 86 I averaged 5 to 6K a month....I had 2 guys average 9K a month working for me in 93 and 94....profit margin is WAY higher in used. They work off of ACV (actual cash value) and not from a manufactures invoice with a set MSRP. Hence they try to bring in the trade or the auction unit at the lowest possible ACV.

Interesting. That's some really good money back in the mid 80s!

You or Dean (or both) can answer this question, I always wondered how they could do the "push, pull or drag in your POS" for 3k+ trade-in? Is it all because of the mark-up from invoice, so they know they can make it back?

[C&CDean]

I can't answer those types of questions because I'm in a unique little niche of the business - in fact the place I work is probably the only dealership/s to have someone doing what I do, and I only dabble in sales when a friend wants a vehicle.

I manage a group of drivers and truck/trailer drivers and also take long trailer trips to pick up/drop off exotics or high-dollar vehicles. I get paid a decent salary for running the drivers, and also get paid by the mile when I choose to drive. All dealerships have old farts who drive, but not too many have someone who exclusively handles the drivers. I am responsible for 2 dealerships in the same town. My gig is pretty much being a geriatric day care manager with a bunch of stressed out salesmen and managers who rely on my old farts.

[8timechamps]

I can't answer those types of questions because I'm in a unique little niche of the business - in fact the place I work is probably the only dealership/s to have someone doing what I do, and I only dabble in sales when a friend wants a vehicle.

I manage a group of drivers and truck/trailer drivers and also take long trailer trips to pick up/drop off exotics or high-dollar vehicles. I get paid a decent salary for running the drivers, and also get paid by the mile when I choose to drive. All dealerships have old farts who drive, but not too many have someone who exclusively handles the drivers. I am responsible for 2 dealerships in the same town. My gig is pretty much being a geriatric day care manager with a bunch of stressed out salesmen and managers who rely on my old farts.

Here I was thinking you were wheeling and dealing on the lot. You've got a nice little gig there. That's something I could do after I "retire", just for the reasons you mentioned earlier.

[AlboSooner]

I've always purchased used cars from private individuals.

[Boarder]

Actually, it's Ford, Lincoln, Cadillac, Dodge, Jeep, Buick, GMC Dean. Everything but Chevy.

How about Audi?

[OULenexaman]

I can't answer those types of questions because I'm in a unique little niche of the business - in fact the place I work is probably the only dealership/s to have someone doing what I do, and I only dabble in sales when a friend wants a vehicle.

I manage a group of drivers and truck/trailer drivers and also take long trailer trips to pick up/drop off exotics or high-dollar vehicles. I get paid a decent salary for running the drivers, and also get paid by the mile when I choose to drive. All dealerships have old farts who drive, but not too many have someone who exclusively handles the drivers. I am responsible for 2 dealerships in the same town. My gig is pretty much being a geriatric day care manager with a bunch of stressed out salesmen and managers who rely on my old farts. So they obviously are doing a ****load of dealer trades. Which of course the added expense is passed on to you know who but they are not actually aware of it.

[OULenexaman]

Interesting. That's some really good money back in the mid 80s!

You or Dean (or both) can answer this question, I always wondered how they could do the "push, pull or drag in your POS" for 3k+ trade-in? Is it all because of the mark-up from invoice, so they know they can make it back? That was always obtained by aftermarket items added to the vehicle and what was called a MSRP addendum sticker. Nothing but bull**** that would inflate the MSRP. Couple that with a discount close to invoice along with the manufactures holdback to the dealer and they still make money. Then there is the backend money to be made. In the disclaimer of that add you will sometimes see dealer financing required. Some models do not apply. And other kinds of horse****.

[badger]

I've always purchased used cars from private individuals.

Funny... we purchased a used house from private individuals :D

[C&CDean]

How about Audi?

Heh. What's funny is we sell a bunch of used BMWs, Mercedes, etc. and every one of them has to get picked up within a few days for some type of service. I ain't lying either. We've got salesmen who won't touch them. One Mercedes SUV has been driven back and forth to the Mercedes shop in Edmond at least 10 times in the past month. Can't get one of the brake lights to turn off, passenger window won't roll down, and they can't get the brakes to quit squealing. You'd think after the 10th trip they'd figure it out.

[OklaPony]

Having grown up around the car biz, I was able to buy new vehicles at actual cost for most of my life. Once that ended I stopped buying new vehicles, period. You can't beat the depreciation except in a few rare cases even buying on the cheap like I was. In my opinion the best value lies in approximately 1 year old vehicles that are still under warranty.

For instance, I got an '07 Expy 4WD XLT with 24000 miles on it in May of '08 for $17900.00. Everyone thought I was batsh!t crazy for buying one of these when fuel was 3.4X per gallon but it had crushed the SUV market so bad that I couldn't possibly lose on the deal. I did a ton of research until I decided on exactly which vehicle I wanted, which colors and trim levels I'd accept, how far I'd go to get it, and was super picky about the condition. I kept tabs on all the major search services that were available at the time and when this one popped up in Illinois I pretty much made the deal the same day, flew up on the following Saturday (dealer contributed $100.00 of the fare), they picked me up and off we went.

Now, if you don't have the luxury of time to do all this then, as somebody else so eloquently stated, you may have to assume the position.

[stoops the eternal pimp]

I never put money down..I look until I find a price that is right and a little less than trade value and then I buy...I buy all my cars in the Dallas area, mostly cars off of lease..Bought a 2007 Acura MDX Tech Package for 20k in 2010 and just sold it for 20k. While I was there i picked up an 06 Touareg for 12k and will probably sell it next year..

My advice is look at some of the higher end places for a vehicle that doesn't fit the lot it is on..I bought a 2008 regency badlander off of a cadillac and hummer lot and sold it 2 years later for 2k over what I paid..Good deals are out there but it takes a while sometimes.

[LASooner]

http://www.wimp.com/buycar/

[Sooner_Bob]

Actually, it's Ford, Lincoln, Cadillac, Dodge, Jeep, Buick, GMC Dean. Everything but Chevy.

You're working at a car dealership now?

Dang. I guess I've missed a few things around here . . .

[Sooner_Bob]

I never put money down..I look until I find a price that is right and a little less than trade value and then I buy...I buy all my cars in the Dallas area, mostly cars off of lease..Bought a 2007 Acura MDX Tech Package for 20k in 2010 and just sold it for 20k. While I was there i picked up an 06 Touareg for 12k and will probably sell it next year..

My advice is look at some of the higher end places for a vehicle that doesn't fit the lot it is on..I bought a 2008 regency badlander off of a cadillac and hummer lot and sold it 2 years later for 2k over what I paid..Good deals are out there but it takes a while sometimes.

Same dealerships?