Are car dealer scams and games a thing of the past?

[DrDeth]

@TSBG

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.

That’s not what we’re saying.

See, what they also do is extend the term of your loan. And higher interest.

Let us say you want a $20000 car- after downpayment and trade in.

Your CU offers you a 48 mo loan, @ 2.49% for $438/mo= $21000

The dealer offers you a 72 month loan, @ 5.49% (and I have seen 18% here) for $327/MO or $23544. And those are pretty std interest rates and loan periods.

[DrDeth]

@Moriarty

My car buying strategy, such as it is:

1. 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.
2. Ask the dealer - straight up - what their wholesale price on the car is; see if you can google it.
3. 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.
4. 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.
5. 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.
6. 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.
7. If you don’t get the price you wanted, play phone tag with both dealerships until you get the best price you can.
8. 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).

You can do this easier by just doing all that by email. The guy in charge of internet sales works on volume, so he is much more likely to go for it.

[DrDeth]

@FoieGrasIsEvil

2. 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.

Oh yes, they used to advertise some really nice short term leases, with great monthly payments… and $5000 up front.

[DrDeth]

@Crafter_Man

That’s because there’s not much money in selling cars. The real money is in financing.

When it comes down to it, car dealerships are in the business of making high-interest loans. That’s it. The cars are incidental.

And over priced service.

[sps49sd]

I helped my ex buy a new car; we ended up at a Honda dealership. Price agreed on before returning. The finance guy responded to my first rejection (we’re getting Honda because of it’s reputation; we shouldn’t need an extended warranty) with “well, $900,000 from our service department says otherwise”.

If I wasn’t confident in Honda’s reputation, I might’ve left then. That is a crazy assertion to make to a probable but still potential buyer.

The main reason I will NEVER buy an extended warranty is experience- I paid for one on my first new car in 1985, needed it just after the manufacturer warranty expired, and nobody answered the phone.

EVER.

I would call every so often for years out of curiosity. Never did I ever get anyone to pick up the phone.

[Chefguy]

@DrDeth

And over priced service.

Quite often the service department and the sales people have nothing to do with each other. Try getting your salesman to go over and kick some ass at the service department. They’ll just laugh at him.

[DrDeth]

@Chefguy

Quite often the service department and the sales people have nothing to do with each other. Try getting your salesman to go over and kick some ass at the service department. They’ll just laugh at him.

While that is often true, they are all on a P&L statement for the owner.

[DavidwithanR]

@Riemann

Yup, and in general in this kind of situation it’s better for the consumer for things to be unbundled. As I said in the other thread, I think consumers would be better served if the traditional salesman simply disappears - they add value for the dealership only if they can trick consumers into taking high-margin extras or financing with large hidden profits; they add little value for the consumer in assisting with the product itself, rather they are seen as an unpleasant and dishonest obstacle to be overcome in the buying process.

The consumer would be better served it the dealerships hired a few inexpensive clerks to deal with customer paperwork, and saved the money that the salespeople take out of the system. Publish a transparent catalog with car prices, making it easy for consumers to shop around comparing like with like; publish financing rates and lease rates separately, with strict regulation allowing customers to shop around for independent financing if they choose.

You don’t need the catalogue either. You just need price stickers. Real price stickers, nothing but the price, just like on a box of crackers. That’s the price, take it or leave it, you can pay that amount at the front desk and the car is yours.