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Latest information on Car Dealer Trends & Deals

Archive: Car Dealer Insider Scoop

Before you sign the contract: Please Check! Or Else…

No secret that the times are tough for car dealers. The weak economy means people are not buying, the high oil prices means there is a big inventory of big ticket gas guzzlers taking up space, and the weak dollar means that imports cost a lot more than what they used to.

This means car dealers are left with making less car sales, and buying cars for a lot more money than what they used to pay for imports.

While most dealers have bit the bullet, and making less money this lean period, some have resorted to “creative” ways to make up for their losses. Unfortunately, a small percentage of these “creative” ways means sneaking some extra charges to customers just before they sign the contract.

Its important to review , and understand your contract with the dealer before you sign anything. “Bad” intentioned car dealers will start “acting up” if they notice you reading the full line contracts and asking questions. Don’t be afraid to take your time. Make sure the car is being sold to you at the right, agreed upon price, that you are paying the right amounts for any added parts or services, and that any “delivery charges” are reasonable. If you are getting a car loan, make sure your interest rate is correct, and if you are leasing a car, that the mileage allowance agreement, service agreement etc for the years is correct.

An interesting article on this can be found here.

Top 10 Reasons why most of us suck at negotiating with car dealers

Here is why we suck at getting the best deal at car dealers.

1) In our lives, we don’t have a chance to practice car buying, while the car dealers practice selling cars everyday.

2) We don’t know the cost price of new cars, car insurance, car extended warranties, car loans and car extras. With this apathy we don’t know a car bargain even if it stares us in the face.

3) We buy on “relationships with the car dealers”. And car dealers who can say and act the way that makes us “trust them” wins the sale. We must buy on facts. Every car dealer has his business in mind instead of making “saving you on your new car” as a priority.

4) We don’t shop around between multiple car dealers.

5) We are impatient when it comes to buying cars. We sometimes need to buy right now, instead of the best time to buy: Month ends, when there is a sale.

6) We are not flexible in considering other car makes and models in the same automobile type group.

7) We are scared to “ask” the dealer for a bigger discount if that “angers” the dealer. Many people think they are inconveniencing the dealer if they are persistent and the car dealer starts acting dis-interested in doing the deal. Remember it usually is a show.

8 ) We don’t do our homework, ie do online car shopping, car research, talking to friends who know about cars etc. Most people don’t know that a car dealer makes $1000-$3000 even if they sell the car at invoice.

9) We have too much confidence in ourselves, because we think buying cars is just like buying a shirt.

10) Many people are afraid to walk away from a bad deal ignoring their gut instinct.

What do you think? is there #11 on why we suck at getting a great car deal?

Car Dealers & Mind readers

Do you play poker? Are you any good? A good poker player knows how to read his or her opponent. You can’t rely on getting good cards to play your hand each time. A successful poker player also reads the other person’s mind, and goes in strong if he senses a weak hand. It’s a science, just see how many repeat players make it to the final table at poker tournaments.

Where am I getting with this? Well, selling cars is like a game of poker for some car dealers. They try to read your thoughts, cater to your doubts and profit from your ignorance on matters related to car buying. If you are a person just looking to lowest car price, they can easily sell you a new car at the lowest price you think possible, and then make money giving you a low price on your trade-in, a high interest on your car loan, extra costs for your service plan etc. Car dealers practice talking to customers every day and they have gotten pretty good at their game.

So what is your best defense? Preparation of course! You can find out your dealer’s poker hand before even talking to the dealer. While they don’t know what you can afford, or how much you know about car buying, you can know everything about their business, the car, and go in knowing what a bargain looks like. Check out my insider tips here: Car buying tips

With all the knowledge you will find out at the link above it will make you a great mind reader at car dealers.

Car dealers and Social Networks

As far apart as those 2 worlds seem to be, they are becoming closer than anyone can imagine. Before internet or even during the time when most people in communities could not read, mankind “educated” themselves before doing anything new by asking around their friends and peers. Well fast forward a few hundred days or years, today this natural tendency has manifested itself into online social communities, and more and more people are turning to these communities before they finalize on buying a particular type of car. Car dealers and manufacturers have noticed this trend and are creating online communities addressing this medium to win people’s trust in their brand.

Smart move car dealers!! Kudds to the dealers who are taking on awareness of brand approach.

Here is an excellent article by a web author to drive home the point. He pretty much lists examples of car makes using this trend and reaping benefits of this new channel.. GM, Saturn, Chevy

Beware of “How much monthly payment can you afford?”

This innocent question has been misused to charge customers higher for cars.

Here is how the misuse happens.
Lets say you can afford to pay $300 a month on your new car.
Great!
1) With a car loan at 5% a year over 5 years you can afford to pay the car dealer about:$14,600 (Before taxes)
2) With a car loan at 7% a year over 5 years you can afford to pay the car dealer about: $13,900 (Before taxes) for the same car.

A) There have been cases reported where the car dealer sells the buyer a cheaper car at $13,900 and give the the buyer a higher interest loan at $300 a month. Why? Because the dealer also makes more money selling the higher interest loan to the buyer.

B) Another method that has been used is the dealer gives the buyer a big discount on the price of the car, only to set the buyer up with a higher interest loan. Note the dealer makes up for the “discount” by increasing his or her commissions on the car loan.

C) Another variation of this I have seen is when the car dealer tells the buyer, at the time of closing the deal, that they want to give something to the buyer for “free” at the same monthly payment. How do that do that? Well, they give you $1000 worth of say undercoating “free” then they drop the interest rate on your loan before you sign the papers, and use the extra loan money you can get for the same monthly payment to pay for your “free” gift.

Moral of the story. Never ever negotiate a car deal with a car dealer thinking about how much you can afford to pay each month. You need to do that calculation at home first. I even encourage you to get a pre-approved loan for a website or your bank before you talk to a dealer so you go into a dealership only ready to negotiate the other aspects of car buying.

Here is a great auto loan calculator to figure this out for yourself.

How I saved $400 on my 30k service for my 2005 Toyota Highlander

I was shocked that i actually was able to save so much on my 30k service. I called my neighborhood Toyota dealer and got a really high quote. Since I am all about shopping around, I called a few more places and was amazed to see that car service companies like Precision Tune, Quality Care etc were able to beat that price by over $200. I decided to investigate why there was such a big price difference, and went online to see what car maintenance  work was really required as per the manufacturer’s guidelines. Got some real good information from their site. It turned out that I only need to do the very basic care, and a whole bunch of inspections at this 30k milestone. Armed with this information I re-called the non-dealer car service providers and the best quote came to $60 + tax.  Of course the inspection revealed i had to flush my steering fluid with cost me an additional $50, but hell, I saved more than what I was initially quoted.  On further investigation i found that with the first quote they were going to do a whole lot more  maintenance than what is necessary.  Moral of the story , it pays to question quotes, and shop around.

Your perfect car!

the perfect car

Wow such a lofty concept.. but just like perfect anything,…it’s a different definition perfection for every person. Irregardless, the process of deciding on anyone’s perfect car is the same. You need to answer some very basic questions. In order of this suggested priority.

1) What can I afford?
a. Determine a price range for the desired car. If you plan to get a loan find out what monthly loan you can afford.

2) Lease or own?
a. If you plan to lease, you can choose car makes of lesser quality, since you wont have to worry about bearing the cost of repairs or ownership once the car gets old.

3) What car features are a must have?
a. Moonroof? 4WD? Super Gas milage? Standard, automatic?

4) Car quality
a. A good quality make costs more than the lesser quality makes for the same features.
b. If you plan to own, its better to spend a little more for a better quality make, as you will land up spending less in the long run. If you plan to lease, see #2 above

5) Availability of bargains, incentives, special loans etc
a. The more you have to spend, the more features, or quality you can get for the same amount of money. Eg. If you are choosing between a Honda civic and a Toyota corolla, go for the Honda civic if they are giving you some specials with the purchase.

6) Find out if you have any car purchase associated discounts on car loans, extended warranties or service plans if you are in the market for these things.

7) Finally the most important decision maker to find your perfect car is what you feel you are getting for the money you are spending. Sometimes its ok to spend a little more than you are comfortable for a quality product that will keep you happy with your purchase.

For more tips on how to buy cars at a super low price check our my cars below invoice section.

New Car Buying Employee/Friends/Family Discount

One of my friends recently bought a new car and  shopped  around via her phone  having used her  buddy’s car buying service (ps.  her buddy being me.)  . She told the dealers that her best buddy is in the car business and that she was looking to only buy her car if she can get the car below invoice price. After two car dealers rejected her proposal, the third one who had 3 cars that she liked agreed to her proposal. Of course she did go around to multiple dealerships test driving various vehicles, and had determined exactly what she wanted before doing her telephone shopping. What surprised me was the ease of her getting the friends and family discount once she made it clear that she knew how the car dealer insider deals are all about, and that she qualifies. Kuddos to you buddy. (I have been asked to keep her name anonymous. )

Moral of the story: If you have a friend or family member in the car business, definitely have them shop a car for you, or at lease use their leverage of being an auto dealer industry  insider to get you an awesome deal.

Can you buy a new car with a credit card?

Not quite! The only thing my Lexus car dealer let me put on my credit card the last time i purchased a new car was the tax. The rest of the amount had to be paid by other means. Anycase, putting $3000 on my credit card earned me miles and also enabled me to defer spending $3000 for another 30 days. I have never heard of a car dealer allowing anyone to put the whole car on a credit card. If you have, would love to hear your story. Also, the car dealer rater give you a car loan himself (via his loan provider) than have you benefit the credit card companies. The biggest motivation for the dealer to do this is of course that fact that the car dealer has to pay the credit card companies 2.5% of the amount just to provide you a convenience of enabling you to pay by your plastic. That is money right out of the car dealers pocket.  Bottom line is that its worth asking the dealer what he/she is ready to do. In today’s economic times many car dealers are ready to go the extra mile to close the sale. Good luck!

2009 Best new car deals by Forbes

Car bargains are everywhere in this economic downturn, but every insight we have into the great deals out there saves us a few extra hundred dollars of our hard earned money. I found the following Forbes compilation interesting. You should check it out. This lineup shows some great car deals in the market today in a fun format. Enjoy!

Oh don’t forget, while these are great deals, you will always get a better deal using my insider tips on getting a better discount.


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