On 8/11/2011 5:25 PM, email@example.com wrote:
1999: i bought my last car with a credit union loan because it was fast
and cheap. that week got a credit card offer in the mail. 0% loan for 12
months, no fee loan transfer. paid off the CU loan that month onto the
credit card. didn't pay any interest for a year, paid off the car in
that year, so it cost me $0 in interest for a year.
2001: built a new house. paid for all materials for construction on my
visa, then gave the bills to the bank to pay off each month. this paid
for multiple trips to Europe and the Caribbean and got cash back.
those years are long gone, i'm afraid.
How you will pay for the vehicle should be a separate discussion that
takes place after you've negotiated the price of the vehicle. People
tend to assume that dealers prefer cash, but that's not a given. If
they have in-house financing and persuade you to use it, they'll make
more money with your loan. How you plan to pay will a factor they use
when negotiating the purchase price with you (the infamous example is
the standard salesman question, "How much do you want your monthly
payment to be?" You reply: you will decide to buy based on the final,
actual price of the vehicle, not by the monthly payment.)
Be non-committal and tell them you won't decide on how you'll pay for
it until after you settle on the purchase price. If they do finance,
they may specifically make an offer contingent on your financing with
them. Run the numbers and see if it's worth your while. If you were
planning on financing, compare their rates and terms to other lenders.
If you can buy the loan cheaper elsewhere, tell them so. They may be
able to negotiate that, too.
Same for trade-ins - don't bring up your desire to do a trade until
you've negotiated the best price you can get for the vehicle you'll be
buying. Negotiate the trade-in value afterwards. You should have done
your research beforehand to assess the fair trade value, decide what
you'll take for it, and what you'll do if you and the dealer can't
agree on the trade.
To sum up: all of these factors (purchase, payment/financing, and
trade-in) are separate transactions. Mixing them up will confuse
things, which almost always works to the dealer's advantage. So don't
And remember, you must always be prepared to walk away...and you need
to make that clear. Or they'll steamroll you.
[snip various considerations when negotiating with car dealers]
To that, I'd add: and mean it. If you tell the salesman you're going to leave
unless the deal gets better, and it doesn't, and you *don't* leave, you've
lost *all* negotiating leverage.
The last time I walked out on a car salesman, I hadn't gotten a mile down the
road when his boss called me on my cell with a better deal. I wound up buying
the car for about 10% less than *that*.
Absolutely. Dealers often get pissed when you refuse to talk about payments,
With my truck, they were pushing financing. I'd already lined it up from my
CU, but told them the number they had to beat. They said they might be able
to if I had spotless credit. "Go for it". They did, so I used their
financing. I don't care that they made money, as long as they saved mine.
All good advice. In fact, when you start out looking, convince yourself that
you will *not*, under any circumstances, buy that day. Do the research,
decide what you want, and the absolute maximum you're willing to pay, *BEFORE*
talking price. If anyone pushes you out of your comfort zone, walk. If you
get emotional or attached to the vehicle, walk. You're talking serious money.
They really do want it. All. ;-)
If the dealer would rather get paid cash for the car (for what-ever
reason - cash flow, etc) then wouldn't it make sense during the
negotiation to tell the dealer you intend to pay cash? Wouldn't that
work in your favor if the dealer wants your cash and therefore would be
more likely to negotiate a lower price?
If the dealer is assuming you're going to be making payments, and if
there's some additional cost for him that he needs to take into account
and he's factoring that into the price, and then when you arrive at a
price and tell him you're paying cash - haven't you shot yourself in the
I really would like to know if, all else being equal, if (new) car
dealers like to see cash-paying customers.
Dealer would PREFER you finance through them- it is a profit center for
them. Some dealers charge more for cash customers, since there is no
ongoing profit. How-to books I have read said to finance through them,
then walk in a week later and pay it off.
I hate car dealers, and will try to avoid buying from them ever again if
at all possible. Auction or private-party, like I used to do, before the
last two purchases. Both left me slightly bow-legged. In my mind, I knew
exactly what they are doing, put after an hour of the BS, I just wanted
out of there so bad (which is exactly what they were counting on, of
Jeez, others have explained it already. They make money on the financing. You
pay cash (or finance elsewhere - same thing) and they lose that free lunch.
You really don't think dealers finance the cars themselves (well, some do but
they're more like the rent-to-own types than real dealers)?
Hmm. I don't think they make (much) money on the financing - I think they
sell the paper within 24 hours, maybe for a small profit.
Imagine the overhead - and the risk - necessary to handle the financing for
a few hundred sales a year. If I owned the dealership, I'd shed that grief
in a heartbeat.
For a few years, GMAC made more money for General Motors than the
manufacturing/sales division of the company did. Same with Ford Motors
Then GM sold off their "cash cow" to Cerberes corp - the same company
that bought Chrysler from Daimler before Fiat jumped in.
Except for the "rent-to-own" types, they never carry the paper. Why would
they? They *do* get a kickback from the banks, though.
I know places that will carry paper, on (well) used cars. But they usually
have their money out of the deal before it rolls off the lot. A
manufacturer's dealer? No, they won't carry paper, but they will probably
make more money filling out the bank's paperwork than they will selling the
That may have been true 20+ years ago, because it's my impression that
cars are much more reliable (or durable) than they used to be.
My 11-year-old '00 Chrysler 300m is still running with the original
factory battery fer christ sakes. Just about the only thing I do beyond
putting gas in the tank is give it an oil change twice a year.
Over the past decade new cars have become almost "maintainence free".
See, the problem here is that once you get past the ridiculously-long
standard warranty (what - 5 years, 100k miles?) there's absolutely no
garantee that the owner of the car (which could be the second owner by
then) is going to have the car serviced at the same dealership that sold
the car. And by serviced, I mean the dinky stuff, like oil and fluid
changes, tire rotations, wiper blades, brake pads, emissions tests,
etc. You're not going to cover your payroll selling that stuff.
Only once they become 5 to 10 years old. Unless they need collision
work - which isin't typically done at a dealership.
And much more predictibly over-priced compared to independant or chain
I'll go you one better than that.
I mentioned earlier in this thread the '84 LeSabre that we bought in '91. In
the fall of '97 it needed a new battery -- turned out the battery in it was
the original. Date code showed it was manufactured in Nov '83.
That's you. Many people take their car in to the dealership every 8,000
miles (or whatever) for the factory-recommended "maintenance" once-over
(check the oil in the differential, adjust the outside rear-view mirrors,
Virtually ALL dealerships cover their payroll (plus rent, insurance,
utilities, maintenance, taxes, and everything else) from parts and service.
Independent and chain shops cannot do everything a dealership can do. Cars
are more reliable than ever before and they have more proprietary parts than
ever before, parts and diagnostic equipment that are not readily available
to the neighborhood mechanic. I'll wager most independent shops say at least
once a day "You'll have to go to the dealership for that..."
Used to be - but you can fire a cannon through many dealership service
departments today and not hit anything or anyone. 80% absorption today
is pretty darn good for an american car dealer.
Sadly (for them) you can pretty well fire a cannon through the
showroom without hitting anyone too.
Even a lot of 10 or 15 year old cars only need service 3 times a year
these days - and very little even then.
Many "chain" shops may post a lower rate - but STILL cost you more
over-all than a dealer shop.
And MANY independents can do just about everything the dealers can do
(and some even "sub" work for dealers).
I know an independent shop did all the alignments for 2 (large)
Yes, there are a lot of "dealer only" parts - and SOME diagnostic
equipment that independents can't get or afford to have - and SOME of
that cannot be worked around.. Some - but very little.
That's probably quite true today due to the parlous times in which we live.
Nevertheless, it is still an economic and business goal that the dealership
should rely on parts and service to keep the place running.
Interestingly, the dealership I was taking my car to, told me to take it
somewhere else because they would be too expensive for an exhaust system. They
were sure right! [*] So I did, and have been ever since. ;-)
[*] The dealer said the entire exhaust system needed replacing. The place I
took it, and have since, replaced everything behind the CC, for about 10% of
what the dealer wanted.
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