I’m never buying another Hyundai even though the cars themselves are mechanically great just because of their deceptive business practices.
I think we’re being a little hard on the idea of “affordable monthly payment.” Yes of course one pays more for the car if it’s financed, but for someone who needs a car ad doesn’t have the–let’s say–$10,000 required to pay cash, but could afford a certain monthly payment, it doesn’t do much good to shake a finger and admonish them to save it up instead.
Leases can be very cool. Last 2 cars I got the dealer was authorized by the manufacturer to knock $6,000 of the sales price (or whatever it is they call it in a lease) of each one to get the monthly payment as low as possible. They weren’t offering any such incentives on purchases. After 3 months we were able to refinance the cars, allowing us to apply that $6,000 as though the dealer HAD incentivized the purchase.
And passing up GAP insurance is just foolish.
Your second post definitely explains their attitude. It’s Honda, they’re volume cars, they aren’t marked up very much anyway compared to the big 3’s cars (hey, just like Subaru! Ask me how many of my customers believe me when I tell them that?) and it sounds like that dealer was the only game in town and knew it.
It does happen more often than people believe, especially on used cars since I only have one of the 2013 Zorch Torch Model X 5-Speed with only 23,000 miles on it because they aren’t making them any more! Also happens on new cars this time of the year on outgoing model year cars as the supply of those dwindles as well, ESPECIALLY on heavily incentivized vehicles. I have had several sets of customers leave in a huff because I sold “their” car two days after they left to “think about it”. How dare I take a sure sale over an unlikely one! The nerve!
It’s the same with Subarus. Average duration of ownership is 7.2 years, the cars last forever. But that’s no reason not to try to do everything you can to put together a deal for someone. Win some, lose some. Sell the car, move on to the next.
I agree that not everyone is in the same situation and has money down for immediate equity/to secure financing, or great credit to get a great rate, etc. But it’s the truth that you shouldn’t shop for a car on a payment, because then all the dealer will do to get you there (if your credit supports it) is to take the loan out further to get the payment down. Then you not only pay more interest because the rate is higher, you pay more interest because the loan is longer too.
I agree that leases are pretty cool. Most auto sales people lease cars in fact. I just got out of a lease. Of course, we qualify for employee pricing so that’s not the fairest comparison, but still. We qualify for that for a conventional loan too. There certainly are some pretty wild lease programs out there depending on manufacturer/dealer.
That’s another nice thing about leases: GAP insurance always included!
Just be sure to know whether you get any protection already from your car insurance company. GAP insurance may be superfluous.
I like leases; as already noted, they mean that you have a new car every few years (and in today’s day and age, new cars may have technology that makes a newer vehicle noticeably improved from an older one) which will always be under warranty. Bad things - a mileage limit (in my current job, I drive too much for a lease), the obligation to repair damage (although I’ve never been dinged for turning in a lease with a some scratches), and you’ll always have a car payment.
It’s just a matter of preference and driving habits. I think, though, that one of the reasons people presume that leasing is a scam is because dealerships regularly advertise the lease price (Because, I assume, it’s typically lower than a car payment on an equivalent vehicle). So, there’s suspicion that it is a “scam” price, since it sounds better than what is typically available and because people presume something is “missing” (there is; you don’t get to own the car when you are done).
My car buying strategy, such as it is:
- Figure out what car I like, test drive it, but do not, ever ever ever, buy it at the same time you test drive it.
- Ask the dealer - straight up - what their wholesale price on the car is; see if you can google it.
- About a week before the end of the month, go to another dealership and tell them that you want to buy the car - request the wholesale price, or a little bit lower.
- No matter how much they try to “4 square” the numbers, insist we talk about the total price of the car; not how it will be financed, not what the monthly numbers are, but the total price.
- If you do this right, eventually somebody in management will come out of the back and explain that they can’t sell the car at the price you want. Usually they will bring you some paperwork to show you it’s “actual wholesale price”. Say, “too bad” and leave.
- On the last weekend of the month, go back to the original guy you test drove with. Tell him you’ll do the deal today if he can sell it to you for whatever bottom line price that you walked out on at the other dealer.
- If you don’t get the price you wanted, play phone tag with both dealerships until you get the best price you can.
- Now, come in and discuss financing, trade, etc. Resist the offers to add extras once you are in the back signing papers.
I’m not saying it will work for you, but I’m usually ok with whatever I end up paying (and I tend to get rid of cars every 3 years, either because I’m trading in (I’ve owned 2 cars) or I’m at lease end).
The thing about “special” advertised lease prices that you have to be careful of are:
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Be aware it’s almost always on a base model car, and most of those “crazy” lease payments are on a base model of a base (ie, subcompact) TYPE of car as well. If you opt for…er, options, then you’re going to pay more a month for the car. Simple.
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Money due at signing. Many radio or TV advertised lease specials boldly advertise the price per month, make awesome claims about the car and manufacturer, then “disclaimer guy that talks too fast to be humanly understood” comes on at the end and garbles out some amount of money due at signing. You MUST pay that to get to the advertised payment (and your credit has to qualify for it too, as it’s assuming a Tier 1 loan). This is usually your taxes, fees and first payment rolled together. Most dealers will let you slide on taxes and fees and ask only for your first payment due at signing, some will waive it all, but ALL of them are rolling that into your financing, so that $199/month lease payment you came in on goes away.
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Fine print. ALWAYS look for fine print in advertising (on anything, really). A lease special on a specific unit in stock will have a disclaimer in fine print “one at this price” and have a tiny stock number typed somewhere in the ad. That literally means they have only ONE car they are putting that special on (and they typically lose money doing it, hoping to make it up on everyone else that comes in on it and is sold something else). Always call ahead to see if that car is still there or ask immediately upon arrival if it’s still there before you do anything if that’s the car you want. Again, this is typically a car bereft of options that’s a base model.
Just FYI.
I wasn’t saying don’t get a loan to buy a car, I was saying don’t buy a car based on “monthly payment”. See below
The monthly payment is broadly based on three things; the price of the car, the length of the loan, and the interest rate. While interest rates are important, they are NOT the reason you don’t negotiate based on monthly payment.
Let’s say the dealer has a car that is listed for $10,000. If I negotiate with the dealer and agree to purchase that car for $9,900 then that is the amount I will be getting a loan for. (plus taxes, fees, etc). I then negotiate the financing. For the purposes of this example, 2% interest rate and 60 months. My monthly payment would be $174.
Now let’s say I want to buy the same car, but instead of negotiating the price of the car, I negotiate the monthly payment. I tell the dealer I want that car for no more than $174 a month. He says sure and sets me up with a 72 month loan at 2% (keeping the interest rate the same just for purposes of example). That works out to paying $11,750 for the car.
I’m not sure how clearly I expressed the concept. The point is negotiate the price of the car first, and then negotiate the financing. DO NOT buy a car based solely on the monthly payment.
Here’s a reason to get a lease. Suppose you’re a young, single guy who just got a high paying job. You’ve got money to burn and you want women to know it. So you rent a BMW or Mercedes for a couple years. BMWs have some of the worst depreciation and maintenance costs, but with a lease, you’re insulated from that. You could keep a second car for those commutes to work if you live far so you don’t exceed the miles on the agreement. Just bring the Beamer when it’s time to date.
In 2-3 years, if you do things right, you’re going to be needing a car that has room for kids in the back and will need to start shopping for a minivan or Prius anyways. Which you should buy used like any fiscally responsible adult, and pay cash or a loan interest, low dollar amount loan from a bank if you have to.
I don’t think that’s really price fixing. IME, buying/leasing Hondas, the prices/deals/sales are all set my their corporate office and anywhere you go in the same region, you’ll get the same price. Look at any Honda’s website or newspaper ad and compare it to the next one, they’re all the same. The only time I’ve ever seen a difference was, and this was years ago, the down payment would be a little different, but it was just rolled into the monthly payments, which they’ll do anyways, if you ask them.
The one thing about it that’s nice is that if you want a Honda, you don’t have to go to 6 Honda dealers trying to get a good deal.
Now, a slight update on my post above. I was planning to go in today and pick up the new car. She had asked me to text her when I’m ready since it was her day off. Come today, I have a horrible migraine. I can hardly walk, much less drive. I was hoping it would go away by the afternoon, but so far it hasn’t. At some point in the day, she called my phone 3 times, in a row and when I finally picked up she wanted to know what time I’d be there. I explained the situation, told her I’d be in tomorrow. Then I get a text that reads “If I was you, I’d come in today, because tomorrow is the end of the month and we get very very busy. when can you come in because I’m here on my day off for you”. That kinda annoyed me. Partially because if they’re going to be soooper busy and they can hardly keep these cars in stock, why is she putting so much effort into my particular sale and also, she’s trying to guilt me in to coming now by changing what we agreed upon yesterday.
I keep reminding myself that she’s clearly very new at this (she can’t be more than 19 or 20), so a few rookie mistakes can be forgiven and the only thing I’ve singed is a paper agreeing to a price, haven’t even put money down on it yet. If I decide to walk I can.
Also, it seems like it doesn’t take much effort to make them sweat, a 24 hour breather could come in handy. However, if I do feel better, I may go take care of it tonight anyway.
I can’t help but wonder if the terrible reputation for dishonesty that car dealers have is working against them here.
Ideally, people who want to drive new cars more often would get leases, and people who would rather save money and drive older cars would buy the cars coming off-lease.
But that’s often not what you see. You (often) see people willing to spend more buying cars outright and trading them in often, and you see many others buying cars new and keeping them until the wheels fall off.
“Buy a car new and drive it into the ground” sort of makes sense for the more frugal-minded, but “buy a car off lease that comes with a solid warranty and drive it into the ground”. Why pay extra for those years of new-car depreciation if you don’t care that much about it?
Because you don’t trust the dealer. You don’t trust him to accurately represent the used car, and the potential leasers don’t trust them to lease a car.
When I think about getting a lease, I see all the benefits that you mentioned. The new car, the simplified cashflow, the option to take it at the end. But I’m never going to do it. Because I also see that I’m dealing with a much more complicated arrangement, with more financial levers and a complicated set of fine print and then in 2-3 years I have to do it again. Fuck no.
It took me and my wife 3+ hours to buy our last car new. And we had already (theoretically) negotiated the price beforehand! Because they know that if they dick you around for hours then lots of people lose their will to resist whatever bullshit they’re pushing.
It’s cool that you don’t want to lease, really it is. Also, you could easily amend that first sentence to read “I can’t help but wonder if the terrible reputation for dishonesty that car manufacturers have is working against them here”.
I wonder if it’s a coincidence that manufacturers will not disclose to dealers the next month’s incentives and changes until the first of the month? Could it be to foster a “buy now or miss out on xxx!!” culture? If I as a salesperson knew the customer would save an equal amount of money early the next month rather than today with less hassle, I’d clue them in on it, and if I got found out, I’d be fired.
The reality is that some of these lease specials are crafted by manufacturer (corporate) bean counters and then foisted upon dealers. Dealers do their own ads, of course (like the stock number ad I mentioned) but remember: none of these ads lie.
You can always find exactly what incentives you qualify for, etc on your own. The ad mentioning one stock number didn’t lie: “We have one available at this price!”, but of course they are counting on people not seeing that or remembering it (or naturally, just hoping we’ll honor that deal on another car we have…usually, we won’t. We might get close, but that’s it…generally speaking). Yes, that’s a little skeevy. But not exactly dishonest.
Anyway, if you find a good salesperson that really does work for you because he wants to build his referral base (like me), selling a brand you like, then keep them.
What does that mean?
They could just give all the sales staff access to the same data. On their phones, even.
“If I could sell you the car for that price, would you buy it today?” and similar lines of insincere bullshit.
Giving everyone access to the data might reveal things to sales people that the dealership may not want them to know. It could also open the door for sales people to share the information with friends or the internet. I’m pretty sure that having one person approving deals reduces the possibility of someone inadvertently selling a car at a loss. These are guesses, as I’ve never seen the sales manager’s data. Perhaps FoieGrasIsEvil can shed some light.
Could be. I haven’t had the experience with car manufacturers, so I don’t know. I have had experience with car salesmen, and they seem to be far worse (on average) than any other salesmen I’ve dealt with.
I might want to lease if it didn’t seem like such a minefield. I have no problem with the concept. I’ve leased other things (houses) in the past, and it’s a relatively straightforward process. The problem isn’t the lease, it’s the way it’s sold (and I want to emphasize that that’s not unique to car leases, it’s unique to car sales of any kind. The problems are simply magnified with leases). I spend way more on housing than I do on cars, but somehow it’s possible to buy and rent housing in a much more straightforward and transparent process. Can you imagine going to rent a house and the landlord pulls out a 4-square and asks you what kind of monthly rent you’re looking for, or trying to haggle over the fact that there’s new carpeting?
You seem like an honest fellow. I’m sure there are more out there like you. But it mostly hasn’t been my experience.
Is that insincere? Seems like a reasonable question to me attempting to figure out what price you’re willing to pay. I guess you could counter with “If you present me with a contract for that price, I’ll let you know.”
Manufacturers don’t actually have a terrible reputation though. Dealers do. Does this work against you as an honest dealer? Of course. Are you screwed over by your manufacturers? I’ll take your word on that, but since nobody but dealers knows about it it doesn’t hurt the manufacturer’s reputation and it certainly doesn’t help yours.
So nobody trusts the poor dealers, justified or not, and we’re disinclined to touch their ‘gently used’ previously-leased cars with a ten foot pole. Buying a brand new car and running it into the ground for the win!
Dealers could alleviate the “buy now” pressure if they wanted to. What stops them, or you for that matter, from telling shoppers that “This incentive expires at the end of the month but, for as long as I’ve worked here, every time the old incentives expire the automaker rolls out new incentives the next day. The automakers never tells us in advance what those new incentives will be. Sometimes those incentives got better on a particular model and sometimes they were not as good”?
Here’s a sleazy tactic that still exists. We bought a car last year. We’d walked into the dealership with our own financing from our credit union. The dealership tried in vain to get us to rewrite the loan through their office, on THEIR terms that were a year longer and two thousand dollars more. They said, “Oh, we work with them, we can do that right here!” Something was off so I called the bank and the manager called them and said to knock it off. However, even after we left, they kept calling for us to “come sign some paperwork”. Yeah, eff you. Tried to sell us inflated GAP insurance, too, which we got through the credit union. The car’s been great, though.
Concord (CA) Chevrolet finance guy grabbed the check from my credit union, wrote the dealership’s name in the Pay To line, and wanted me to sign it before entering the price. Then he told me I had to apply for a loan through them:
It’s a state law (oh? Which one?)
For my protection (no, I have my loan already, from my CU of 27 years, see?)
For their protection if my loan fell through (Bye, thanks for wasting everyone’s time!)
The guy in the adjacent office came after me, said he was the GM, and said it is the law. Bull.
I heard later that the flimsy justification is IDing the buyer, but I had IDs, passport, and anything else. And found another dealer that sold me the car.
Leases? That goes under ‘if it didn’t getthe dealer more of my money, they wouldn’t do it’.
Ha. It’s more like getting the manufacturer more money by getting you to buy a car every three years. The only way it gets the dealer more money is an increase in return business if the customer has a good experience with their first lease.
And to the poster above, leases really aren’t all that complicated other than calculating depreciation, cap costs, acquisition fees and the money factors. But don’t worry about any of that, just sign here!
It’s a pressure tactic. Why do I need to tell you I’ll buy the car from you today? Maybe I want to think about it some more, perhaps I want to see if the other dealer can better the price.
So my answer in such situations is “Maybe.” Make of that what you will. 