Credit an Issue? Don't Do this then - Financial Car Buying Tip

    Perhaps credit is an issue for you. We've all been down on our luck before but if you have been making efforts to build your credit score don't blow it now. Now that you have built up or reestablished enough credit to get a loan it's time to do some research and find out which lenders in your area who specialize in not so perfect credit. As Always. I will preach finding your own financing before you go to buy a car. If credit is an issue. Your options are going to be narrow.

  What you are going to want to look for is a lender who specializes in secondary auto credit. Second chance auto credit is what it is referred to as well. Some stores will claim to specialize in second chance credit. While they may. They just simply have a finance Manager working for them with a long established relationship with the secondary lenders in the area. Unfortunately, a second chance credit finance manager can be one of the biggest slimeballs in the business you have ever met. They can be real good at putting you at their mercy real quick. Basically, hurt your feelings about your finances and make you feel damn lucky if you even get a car at all. I witnessed this time and time again and it made me sick. Watching a family who desperately needs a vehicle and has credit issues paying an absolute premium for what they drove out of the lot in. It was disgusting. Disgusting to know that the finance manager just got them approved through a lender they could have just gone to themselves and been approved. Approved for 1,2,3.......hell, who knows how many less interest points than the second chance credit jerk quoted at the dealer. A second chance finance guy usually has little problems in ripping someone's head off with a few extra interest points because he will establish himself as an authority in bad credit and present it as a "this is just the way it is" kind of thing. Profiting off of desperation to put it simply. Don't find yourself being so desperate to get a car that you ignore everything it takes to get there. Such as interest rates and price of the vehicle. My point is here. A second chance credit officer is no more or less of a middle man than any other finance manager. They themselves can't approve shit. They get on the phone with the banks and plead and beg for a low rate they can build some profit for themselves onto just like the others. You can cut this goof out of the deal just as well as a regular finance manager. Save yourself the trouble. You don't want to even meet a second chance finance manager at a dealer. There is a good chance he or she is living high off the hog and they are not your friend.

  I will tell you what I would do though if I had credit issues and I required second chance financing. What you want to find out is who that second chance guy is dealing with. Since these loans are high risk for lenders they will bought through local lenders. I would do some searches for second chance credit in the area I lived and start there. I would make some phone calls and try to assess which ones sound promising and then visit the ones I choose. If you are able to get a pre-approval through any of them. You will then know what you can buy. Once pre-approval has been achieved that lender will give you the criteria your new/used vehicle must meet. Such as the year, miles, price, etc. The car you are buying is that lender's collateral so it is likely there will be some somewhat strict conditions you may have to meet in terms of the vehicle you choose. So let's say. At this point for example. I have been approved for a loan and I have to find a vehicle that is a 2007 or newer with less than 50k miles and I can buy for $15,000. Those are vague conditions but it will be something like that. Now I at least know what types of vehicles I can truly shop. What I wouldn't want to do though is reveal to any dealer that I require second chance financing. Even though I am already pre-approved at this point. Letting the dealer know I am going through second chance financing could potentially kill a lot of negotiating power and just the overall seriousness I am taken with. Once I found a vehicle that may work for me I would then let my salesman know I was ready to work up a deal on it. At this point a good salesman will begin to poke and prod at your finances if he hasn't already. I would kindly let him know I have already made arrangements and I am pre-approved. He may go on to say things like " with whom, may I ask?" or "maybe we should take a look at your credit, maybe we could do better." Replying with something like "no thank you, I am plenty confident in my sources" may get him or her to back off a bit. The reality is this is your business and you don't have to share it with anyone. Keep your finances to yourself. If he wants to make a sale he will play by your rules. You simply want to get a purchase order for the car you want to buy so you can take it back to your lender to see if it meets the conditions they have set for your auto loan. Hopefully, at this point all is well and your lender approves your purchase sending you back to get your car. Now once you go back to the store to go through the finance office the financial cat will be out of the bag and they will know who you are getting your loan through simply because the lienholder will have to be typed on your paperwork somewhere. At this point it's ok if they know this. We've already bypassed the problem areas for someone with bad credit at the dealer. Which are getting hooked in by the second chance finance manager and losing our negotiating power with a salesman.

  Another great car buying tip I can give in terms of credit is DO NOT run around town to 20 different dealers and let them run inquiries on your credit (I don't want you to let a store run your credit period). This WILL drop you credit score. It makes you look like a trigger happy loose canon on paper and lenders don't want to see this. Not running more than a half a dozen inquiries within a month or so shouldn't hurt anything though. Remember that these dealers all get their loans through the same source and people all to often get the misconception that there is something "magical" one store can do for you that another cannot.

  Having bad credit is bad enough. That last thing anyone needs when trying to build their FICO score back up is a car they paid too much for with an inflated interest rate keeping your monthly payment higher than it needs to be. Do some research on second chance credit in your area. Make an educated decision on which ones sound the strongest. Avoid as many multiple credit inquiries in a small time frame as possible. Keep your credit siuation to yourself though the negotiating process and you have done everything you can as a person with bad credit can do to still get a good deal on a car. The main objective here is not to put yourself at the dealer's mercy. Trust me. If they know credit is an issue. They will play off of it if they can.

Read More

Valuable Car Buying Tip - Don't make a pest of yourself

  If there is one car buying tip that I can give that is going to hold true anywhere it is to not make a pest of yourself. If you have already read through my glossary of car dealership terms. This is where the strokes, yanks, squirrels, and spooks come out to play. Don't put yourself in this category because a good salesman doesn't forget shit! I sure didn't.

  It's no secret that a car salesman is paid on commission. Their time is literally money and that is how they look at it. Now is it okay to go in and work some numbers to go home and sleep on it afterwords? Absolutely. It's when you repeatedly show up on a weekly or monthly basis to expect that "things have changed." At any store I worked at there was always a notorious group of people who did this. I never could understand this demographic of people.  Their customer loyalty is usually terrible. When I say customer loyalty I mean they wouldn't even ask for the salesman they previously worked with. This is just flat out rude and bad etiquette. Unless you had a salesman that was truly a creep. I wouldn't ever recommend doing this. Moves like this will get you remembered by all of the staff very quickly and when you do truly want some help and you are ready to buy they are going to scatter like mice. Now you're thinking "well if they want my business they will help me." Yeah ok, go in with that attitude and let me know where that gets you. You have to remember that those salesman are still your liaison between you and the manager. Salesman are humans with a patience threshold just like anyone else. If you have been in periodically over months and have talked to 3 salesman. I as a salesman would have known there is no money to be made off of this person and I wouldn't want to help them even for the lousy hundred bucks I would get for it. Worse yet, if you had already dealt with someone else the odds are I would be splitting that lousy "mini" deal with another associate. Further taking away any incentive for me to assist them.

No One Likes a Pest

  I am going to give you a real example of one guy that stands out in my mind over the years from selling cars. I was working at the biggest Toyota store in town. Actually one of the higher ranking stores in the Chicago Region. This dude was such a repeat offender that we had all affectionately named him Tacoma Bob. Anytime Tacoma Bob pulled up out front you could expect to hear cracks in the showroom like "oh great, what's this spook want?" I was the first unlucky son of a bitch to work a deal with him. He owned a decent old 4x2 Ford ranger he was real proud of and wanted ungodly money for. He was wanting to trade it in for a new Toyota Tacoma. I spent a few hours with this quirky old fart just to be $4000 away from a car deal in the end. When you are selling a new car at invoice and giving the most for their trade you can there is little hope at this point with a spread like that. The guy was simply unrealistic. However, he would come in every few weeks or few months and yank someone else's chain. Hell if I still had the guys paperwork I would pull the new unlucky salesman aside if he didn't know who this guy was already and warn him about what the guy expected. After Tacoma Bob did this a few times just about every sales associate (about 20 of us) knew who he was and what he was up to. None of us would go talk to him anymore if he came in. We ignored him until he left. If he did snag one of us. We would just say "haven't you been in here before, who were you working with?" Once he finally realized we were onto him. He stopped showing up. Maybe someone else earned his business. To that we could only say "thank God and good riddance!" My point is that even if he did eventually buy he made such a nuisance of himself that we didn't give one shit where he bought a car. My manager didn't care either because he saw it as someone just needlessly tying up his sales staff's time. The old saying that "the customer is always right" loses it's luster if you make a pain in the ass of yourself.

  I wanted to share that story with you because I don't want you to be this person. Chances are that if a store has really taken the time to work some numbers with you and "walks" you in the end. They have put their best foot forward and let you leave with a figure they are comfortable with you shopping them against. Car dealers don't like to let money walk out the door. So if they do, there is likely very little in it for them at this point. The fact is. Deals don't get better over time. If there is a trade-in involved it will only get worse. Trade-ins depreciate by the DAY. You could also lose some factory rebate cash on a new car if you let things spill over into the next month and they take those rebates away. I will say about the only instance where you are going to see things get better on an old car deal is if you are on a new car that sees better incentives down the road or if you have had your eye on an aged pre-owned unit that they desperately need to unload.

  The most important points to take from this article are as follows. Deals will not get better over time unless you run into a few of the factors I mentioned in the last paragraph. Salesman will remember your face better than you think. Always ask for the same salesman. Doing otherwise is a blatant form of disrespect at a car dealership. Understand that "walking" a customer is a good sign that a store has done the best they can. Hanging out at car dealerships and not buying cars will gain you notoriety as a stroke and you will only be remembered as a liar and not a buyer. This is a very simple car buying tip anyone can follow. Trust me on this.

Read More

The Dealership Fleet Manager

  I want to talk briefly about a car dealership's fleet manager. I will go right out on a limb and say that the fleet manager at a car dealership may be one way to cut through some red tape at a car dealership. Sometimes you may be able to find out who this is by looking through a store's website but may be easier to find by making a phone call.

  Who is this guy or gal? Well it is a designated person or persons at a dealership who for the most part sell multiple vehicles to businesses or other elite folks the store has dealt with for many years. The truth is. They can sell to you just as well. It's one of those ask and you shall receive things. I will warn you that the results could vary greatly from store to store. Notice they don't make a big effort to let the public know they exist, and for good reason.

  Will you get a better deal by going through one. Maybe, not by light years though if you do. The truth is if the consumer has done their homework (and most do anymore). They will get just as good of a deal on the sales floor. Whether it is a fleet purchase or not. A dealer can only go so low on a car. New cars are ADVERTISED at or a few hundred above invoice pricing all the time now. With that said. Given all of the invoice figures broadcasted online for the world to see. Most stores have already pulled their pants down on new car prices so you can still expect to buy that new car you want for around invoice just like you would from a fleet manager. I can tell you right now that as a former Internet Manager the competition is so stiff out there anymore that the deals I gave on new cars were every bit as good as a fleet manager. I would not be surprised if the fleet manager and Internet Manager were not the same person at a lot of stores anymore. It would only make sense.

  What you can expect to not get from a fleet manager is world class service. I personally dealt with a fleet manager at one store and he was also our General Manager. He was busy a lot and I could tell the fleet sales were a bittersweet burden to him. Most of which were sold over the phone and when they showed up to get their car it was referred to as a courtesy delivery. At which they were practically thrown the keys and waved goodbye to. Perhaps this is exactly what you want though. My advise. If you want to go this route. Do yourself a favor and know what the hell you want before you stop in or call. This person does not want to pop cars open all day long , let alone show or test drive any.

  I wanted to mention the fleet manager because I was astounded at how many sites claim this is the best way to buy a new car. If you are a construction company and need ten trucks, by all means. NOT as an individual though. I want you to have a look at this informational site I found on buying cars. The gentleman claims to be a former general manager at a car dealership and goes on to say blogs like mine are bunk and the easiest way to buy a car is through the fleet manager. However, he quickly proceeds to tell me to buy his $30 money saving "system" and he will guarantees to save me $5k if I buy it. Ok what? You tell me right out of the gate that the best way to buy a new car is from a feet manager.......but buy your system? You lost me. The guarantee fascinates me as well. How in the hell is anyone going to prove they DIDN'T save $5k? I love how he plays the "role" of the saint as far as car buying tips goes too. If he truly was a general manager then he is obviously trying to replace that six figure income he once had somehow. He has just chosen to do it $30 at a time. Still "sellin'" aren't we? I decided to call him out simply based on the needless ball busting he is throwing my way in his video. Is my blog ad supported? You're damn right it is. The difference is, I GIVE AWAY what he is selling. Running ads on a website is no crime, selling information online that is already free should be. I lost a few minutes of my life listening to all of the incoherent bullshit this guy had to say as he was glancing down looking at his script on his desk and swallowing uncomfortably. I am going to go as far to say he probably was never a general manager anywhere. That's a pretty lucrative position to be in to just leave and try to match the potential earnings from home selling information. I just want you to keep your 30 bucks. All the helpful information you need to save money on a car purchase can be found on my blog or others like mine.

  Just for fun I am going to give you a taste of what things are really like at the dealership. As I mentioned before my General Manager was the fleet manager at one of the stores I worked for. If I wasn't selling a car, I was greeting customers at the door looking for an up. Frequently, people would come in looking for the General Manager and I could just about bet on how he would react to each one. If I were to have went to his office and told him someone was here to see the fleet manager the conversation would go something like this. Cover the kid's eyes. This is going to get ugly. "Who the fuck is it!?" he would say. I usually got a name and would have then said "John Public, he asked for the fleet manager." He would then have probably said "well ok, am I supposed to know this person? Did they say if they had an appointment? I don't know who the fuck they are!" I would have said "They didn't mention it." He then would have said "well I don't have time for this shit, he can sit his ass down and buy a fucking car from a salesman just like everyone else. Tell him to have a seat and I will go out in a minute and say hi." Which he would, and then tell the customer he will take care of them on the numbers and turn him over to a salesman. So there you have it. That is the type of magnificent scenario you can come to expect if you go asking for a fleet manager. People playing hot potato with your ass.


  In closing, the fleet manager could be a way for you to get a good deal on a new car. It is no magic bullet though. There is NO magic bullet to buying a car. I don't particularly care for any claims that there is. The information I provide is to merely give an edge. The keyword being edge. Whatever you do. Don't beat a salesman down to nothing and ask for the fleet manager to see what he can do. You may be disappointed to find it's not any better than your salesman's last offer was. Why? Because every one who can sell a car in the building is still pulling their best price from the same place, upper management. Not only that. A move like that is likely to draw up a lot of disgust and get you taken with a grain of salt. The fleet manager is there if you want to go that route, however I do not endorse this for the sake of good service. Walking through the door asking for the fleet manager as a random customer buying one car is going to send out a warning shot and rub everyone wrong real quick in my opinion. If there was anything we hated at the store it was someone coming in acting like a big shot, when they weren't.

Read More

Choosing a Salesman

  As I have mentioned before I think that the Internet Sales department is a good way to cut through a lot of red tape but then again maybe you saw his picture online and he looks like an asshole that makes too much money. So you want someone else. 

Beware of this much "Ice" on any salesman's hand

  A lot of dealerships anymore are going to have a website. Many now will list their roster of employees and may even list a little information about each. Take a look through each one of them. A picture is worth a thousand words. If there is a salesman of the month listed you might want to stay away from him. He didn't get that title by helping to keep the lot look good and lined up that month. You might want to find the "new guy." Chances are the younger, newer guy is more afraid to talk to you then you are to him. In this case he will be just following his manager's lead and it will be more like you just buying a car from a manager. It was the older veterans who usually consistently got high gross profit deals. They're sharp as a tack and are great at tailoring any conversation to earn trust. I worked with one old timer who smoked cigars all day and smelled like a pile of assholes but could sweet talk his way through an interrogation at Guantanamo Bay if he had to. You will find the younger more inexperienced salesman to stumble on their words and make mistakes. They're not as quick to answer back and when they do it comes out as a mouthful of shit. I used to enjoy listening to some of the "green peas" from around the corner and all of the stupid stuff they would say.

  This sounds mean, but you want to try to find the biggest coward they allowed to work there. Every store has one. Research the staff online before heading in if possible and should you choose a salesman, make sure you ask for him when you get there. Otherwise, Mr. salesman of the month will start up a conversation with you that you won't have the heart to stop. If you do walk into the showroom without a salesman. Look for that lazy lump on the computer or playing with his phone. Simply because he likely avoids confrontation or he would be outside on the lot or waiting by the phone like he should be. Any salesman I worked with that were distracted easy from their job were definitely not the best salesman we had. Now the guy on the lot telling you to roll down your window, look out! He's goooooood.

Read More

Tricks of the "Trade" - Trade-in that is

  I want to share with you a few tactics I used over the years and some that I saw my fellow associates use as well in regards to devaluing someone's trade-in. I have already mentioned the used car trade-in in various entries so far but I want to go over a few situations you may be presented with in regards to your trade-in value.

  Dealers usually do a damn fine job of emphazing why their car is the best one you will find like it and your trade-in, well just isn't worth quite what you thought it was. This is done for obvious reasons, profit. The less they can convince you your trade is worth, the more money they will make whether it is on the deal where they take it in on trade or whether it's the deal where they resell your trade. They want to own your vehicle for as much as possible, put as little money in it as possible, and sell it for as much as possible. That is the nature of the beast, and a hungry beast it is.

  I am not proud of any of this by any means but here are some things to watch for. Frequently, before I would even approach a customer about their trade-in value. I would build myself a little arsenal of information to back my numbers up. I would sneak off to another office and use the computer to compare book values. I would use KBB.com or NADA.com, and sometimes even Edmunds appraisal tool. The object was to find one if not more that were in my favor or at least close enough for me to use. Generally actual trade-in values were probably closer to NADA or Edmunds figure. KBB is usually inflated so I liked using those for the car I was selling. I would then print of some relevant help from one of these valid sources and head over to my customer with a deal worksheet with some figures. After I would knock them out of their chair with what I thought their trade was worth, I would simply act surpised and pull out my printouts and go on about how I thought we were being more than fair. I would show my printouts and go on about how often the values were updated and how NADA was the preferred source of financial institutions so it has to be right. Even after all of this it still was not uncommon for me to get resistance. We would then get into the actual condition of their vehicle and perhaps how strong the market was on their vehicle. I would sometimes tell them their particular car was not selling well, even though it was a flat out lie. If their vehicle needed some things I would begin itemizing it and putting a dollar amount on them just to make things sound worse than they were. Terrible, I know. I would even ask a bunch of questions to get them to second guess their trade. Such as. If it had been rustproofed? Had it been smoked in? Were they the only owner? Did it have factory warranty left? Anything to convince them I might have a hard time reselling their car and I didn't want it that bad. The fact is none of these really have an impact on your trade-in value. With the exception maybe of the smoking if it's really nasty. These are just things to make you feel like your trade could be worth less. Miles, make, model, equipment, condition, and year about cover it.

  Know the condition of your vehicle. Most used vehicles fall into the average category if everything works as it should and there is no signifiigant issues anywhere on the car. The excellent category is based closely on "mint" and most cars won't fit this criteria. Then there is usually fair and poor which is when you are getting into issues such as rust and features not working properly or not at all. With that said as long as you are reasonable with yourself about the actual condition of your car don't let someone tell you otherwise. They list the criteria that has to be met for each category for both you and your salesman to see. This means to also not let your salesman tell you his car is in excellent condition when it isn't.

They're all worth something

  Make sure your salesman is always comparing apple to apples. All to often I would choose the sources which favored the trade and the selling vehicle whether they were the same or not. I would just wait to see if they called me out on it and worry about it then. In which case I would usually just play dumb and go from there. What I mean is if your salesman is using KBB to justfy trade, be sure he uses KBB to justify his car too. Double check any equipment he may have "forgotten" to select when getting his online bid for your car too.

  They will ding you for cars that are out of season too so expect that. My best advise for this is to trade it at the best time of year for that particular type of vehicle. Cleanliness shouldn't be a big factor either. I didn't ever play that card much though myself. Lot's of people worry they don't get as much if their car is filthy or not. The fact is that if an hourly kid washing cars out back has to spend an extra two hours to prepare your car for the lot, is peanuts to them. They know how well a car will clean up by looking at it so don't think this would ever impact a number by even hundreds of dollars.

  Tires are a big deal though.We could quickly devalue a trade if it needed tires. They cost lots of money, even to a dealer. So if you need tires you can expect this. Most car dealers can put new tires on most cars for less than $300-$400 if they have a good source. Upwards of $500- $600 if its an SUV. Just don't let them tell you they need to spend $800-$1000 on tires to get your vehicle road ready because they will most likely try.

  They may tell you they think something catostophic may be getting ready to happen to scare you out of it. Just remember, they're salesman, not mechanics. If they did get a mechanic to look at something on it, remember, that mechanic is a form of salesman. If they take that car in on trade, he want's that job. If you run into any of these situations then you may want to have someone you know and trust look at your car to verify this. Just make sure you tell your mechanic you are planning to trade it in so he doesn't work up a bill of shit you don't really need. Wrenching on cars is where they make their money, not on advise. So you need to let them know what your intentions are.

  The main thing is to watch out for anything done to devalue your trade-in. They are going to be very biased so just make sure they are playing fair. If they are giving you a song and a dance, chances are that is all that it is.

Read More

The Car Buying Services

  I had the pleasure of dealing with a few of these services over the years. Services of which play the role of the "good guy" when it comes to you buying your next car. From a marketing perspective it's absolutely brilliant. I mean, directly playing off of the general public hatred toward car dealerships and the sleazy stigma of a dealer? Pure poetry but it's also not very nice and really just throws them right into the same bag as the car dealer. I think you could really debate the legitimacy of such a service because in the end you are still going on the same thing, some other guy's word.

  In my opinion you are just adding a second salesman to the deal. Now TWO guys wanna get paid instead of one. Generally I believe there is a flat fee for these services and one in particular told me he got paid $500 per sale for the service. I can also say that in most all circumstances they seemed quick to form an "alliance" with me once they were sure I had what they needed.

  They are supposed to get a car for you at a price you wouldn't be able too, right? Really all they are doing is playing the good cop and since this is a car negotiating service it is very easy for them to find out truly what that customer can afford and where they want to be. They automatically have the buyers trust so the buyer pours their heart out to them on how much they can really afford. If the negotiator sees he may not be able to satisfy the expectations once again he is trusted so it is easier for him to educate and "bump" the buyers expectations. Basically they get given answers from the buyer that I had to pry for and more or less share that with someone like me over the phone when the negotiating happened. Then based on research you or I could find we would feel each other out and ultimately work up a deal. I almost always felt like the people could have gotten a just as good if not better deal had they just came in and did it themselves. The deals were never bad but they were never amazing either.

  The point is if it's a good deal you are after. You are just adding a middle man and paying for it. If you do your research well, there is no tool available to them that isn't to you. They still have to negotiate too and it's more likely they will pal up with the store to make their life easier. Just remember there is nothing magical about these negotiators and they are people just like you and me.

  On the other hand. Maybe you don't seek them to save you money. Maybe you work 3rd shift or you are just a very busy person. Perhaps just the general confrontation conflicts with your personality. Maybe you don't even know what you need to buy a car, think of it like having an attorney to guide you through the process. Just remember, prosecutors and attorneys have lunch and sometimes went to school together. I cannot completely take it away from them though. I did some searches and Cartelligent looks very professional and also aid in locating if there is something in particular you cannot find. I am not posting a link because while I do not endorse them, that is just an example of one. I just wanted to point out that I never saw anyone get any spectacular savings using one, and that's excluding what they paid to have the negotiating done.

  Bottom line. Wanna save money......don't waste your money here. If you are one to pay for convenience it makes perfect sense.

Read More

Easy Way to Cut Through Some Red Tape at a Car Dealer

In the age of information technology we now live in the Internet Sales industry has absolutely blown up for car dealers. Sites like YouTube, social networking sites like Facebook and Twitter , and free classified listings such as Craigslist are making it easier for stores to reach a larger audience than ever before. I myself held this position at one of the stores I worked for and to be honest the amount of inquiries I had to deal with on certain days was quite staggering. It was an extremely fast paced job and for that simple reason I usually had to just "put my best foot forward" when I received an inquiry and just hope. Not to mention that if they were contacting me about a vehicle I had it was fairly safe to assume they were doing the same thing with other stores. As a result of this I very seldom jacked with or tried to play games with anyone on the price of the car if they asked. This was especially true on the new cars. Dealers own new cars for the same money and getting price quotes online for a new car quickly turns into a battle between stores of which one is going to take a $50 deal. It is probably the best way to pit stores against each other on new cars. Now I would often get questioned by upper management when I needed our "best price" on whether or not they were coming in. It took some haggling on my part usually with my manager but I usually got the job done. After all, if the Internet manager cannot give you a reason to physically come in. There is no chance they are going to sell you a car. You will also frequently find that the price you see on a dealership's website may be different than the number coming out of the salesman's mouth out on the lot. Salesman generally carry a price sheet where the sale price is listed for every car but if he is a real savvy salesman he may quote you a number $1,000 or possibly more over that. If he is good at this. I can assure you his manager absolutely loves him.

 So what have we learned? Deal with an Internet Manager at a high volume store and he is going to likely going to give you his best shot first or at least close to it. He is short on time and his time is money. He knows how much competition he is up against and wants any deal he can get. No matter how small.

Read More

Cash as a Negotiator

 From time to time I would get the buyer who was say something like "see if your manager will take (dollar amount) cash?" Maybe you heard dad or grandpa say this way back in the day but it isn't even worth mentioning these days. Before the days of technology we now live in. Where money has just become another number in a hard drive. Throwing the word "cash" into an offer was definitely a negotiating tactic for the buyer. However, because of wire transfer of funds it is likely that if you were to finance that the store will see their money in the bank as fast if not faster than if you paid cash. Let alone they would rather not even count out $25,000 and have it in the building. To be quite honest, the impact "cash" had in negotiating a car deal is the opposite of what it used to be. Dealers make quite a bit on the "back end" (interest rate profit, extended warranties,etc) and they would RATHER hear you are financing. Finance officers who figure your rates make profit off of the interest points they add above the "buy rate" (their "cost" of the rate) of your loan. For example. They phone into the bank you are financing through and "massage" the loan officer into a nice low buy rate they can add a rate point or two to make themselves a nice little profit and keep things looking good on paper for you while still making that financial institution some good money too.

 Is it fair to say the "cash" offer never works anymore. Not at all. It would all depend on where you are buying from. If you are at a small, shady, one man operation corner lot and the owner is ready to go have a drink after work on a Friday afternoon. "Cash" may perk that guy's ears but even the smallest of stores still make their money on financing as well. As far as a private purchase goes. It means everything for obvious reasons. The megastore that makes millions a year off of interest could care less.

 So the moral of the story is "cash" = less potential profit on the back end of the deal . With this said. Throwing them a bone during the negotiating of the price of the car that you may (even though you really aren't) be financing could make them ease up on the price of the car a bit in hopes of making money off of you on the back end. I have worked plenty of deals where my manager dropped his pants on the price of the car more than he normally would because we knew they were finacing. Using this outdated tactic is most likely to just make you sound as if you have not bought a car for 30 years.

Read More

To Trade or Not to Trade... That is the Question

 Dealers frequently use what is called The Black Book when determining the trade value of your vehicle. Or at least reference it I should say. The Black Book is a little pocket book about the size of a calculator and is a weekly publication that dealers frequently subscribe to. Chances are if you look around in a used car manager or general manager's office you may spot one of these tucked away on the desk somewhere. Nowadays in addition to that they will also reference such sources online such as Manheim.com or Ove.com . These are auction sites that the dealers have access to so they can see what vehicles like yours are currently bringing at these mysterious auctions you seem to always be hearing about.

 Let me start off by saying you will most likely NEVER get what you really want for your trade in at a dealership. They may be able to "show" you what you are wanting for your trade in if they have you locked in on the right car. Which is one with a substantial markup that is capable of absorbing some of that money you want for your trade. There is a good chance the salesman will even use the word "show" when he is discussing your trade in value. Which since I don't sell cars anymore looking back, I was an idiot to ever say it. Let me explain. When a salesman first appraises your car he is going to typically fill out what is called an appraisal form or ACV form. This form is not meant for your eyes to see after the car has been appraised. The salesman may go over it with you in regards to equipment and any of your personal information they may want to put on it such as names and contact info but after that, you'll probably never see it again. ACV is always going to be abbreviated on any form that refers to it but if that store has any brains they wouldn't put it on any paperwork at all the customer sees. The last store I worked for did but most people don't know what it means or they just assume it doesn't have anything to do with the sales figures. ACV stands for "actual cash value." The number to which your car is actually worth to that store and the actual dollar amount that it will hit the books for after the sale.

Is it time to trade in that car?

 So what does ACV have to do with your car deal. It is very simple actually. I am going to use some theoretical numbers and explain this very easily. Lets say you are buying a $25,000 car. In this case we are going to say its used. We will say they own that car for $21,500 . $3,500 markup. You have a trade in that you would be happy getting $12,000 for. However, you did your research and you also think you can buy the car you are wanting for $23,500. So you want $12,000 for yours and want to pay no more than $23,500 for theirs. Salesman then appraises your car and he sits down with the figures. He's gonna low-ball you to test the waters. He may say something like "We're going to show you $10,500 for your trade and we will knock $500 off the car. That what you were thinking?" You say "No , not even close." He then says "Well, what were you hoping for? Is it the price of the car? Is it the trade?" This is where you laugh and say "both." This is where the chess game begins. What you are not seeing at this point is the ACV of your car. Now I wouldn't suggest ever saying "so what's my ACV?" They will just think you're a jerk and be cynical towards you for it most likely. You can keep your eye open or listen for it though and keep is as a silver bullet for later if things don't go as planned. By all rights your ACV card may say $11,000. In this case he is holding back on you. Some guys are incredible at holding back on trade, some rarely if ever do it. They are usually the good guys in the biz. Lets say that your car is worth $11,000 ACV. Based on the numbers he gave you, all he did is discount the car to look like a sweetheart and charged you the discount out of your actual trade in value. That $3,500 markup is still on the table. "What could we do to earn your business today?" he then says. You then say "Well I was hoping for $12,000 for mine and I have seen the same car you are selling for $23,500." He will likely then give you the old "Let me see what I can do" and go to his manager for rehashing.  This time he comes back with "The manager said he would put $500 more into your car and sell the car for $24,000 , he's really just trying to put this deal together." Ok so we're getting close. They are truly giving you what ACV (even though you don't know what ACV is) and you are within $500 of where you want to be on the car you are purchasing. However, with the numbers we are using there is still $2,500 on the table. Pretty typical used car profit really. Now I cannot tell you what they are going to own a certain car for. That is impossible. Is it wrong for them to make a profit? Absolutely not. Is it wrong for them to make big profits for overpricing cars and "dragging" (industry term) trades. Hell yes. In this case, with the numbers given you are $1,500 from where you truly want to be. On a five year loan that could be about $30 a month. At this point if you play your cards right. There is probably a good shot you could still get what you want. Most dealers will do a $1000 deal just to roll a unit. Sometimes less if it is an aged unit they are paying interest on and they just want the damn thing gone. If there are tumbleweeds blowing through the showroom that day that can be a big factor too. You just have to decide how much hardball you want to play. They can still "show" you that $12,000 for your trade. It just means they are getting a profit of only $1,500 when selling the car for $24,000 with an ACV of $11,000.

  I want to clear up a bit of what I think is a misconception about trading cars in. At least depending on what state you are in. I heard people say to me a lot in regards to trades "well, my neighbor said he would give me $15,000 for my car and you are only giving me $14,500." Now bear in mind, I sold in Illinois. Which means at a rate of 6.25% you won't pay that tax on the $14,500 going toward your purchase. This is a tax savings of $906.25. So at this point you are actually, in theory getting $406.25 more for your car than Joe down the street wants to give you. People overlook this all to often and it can usually be to a persons benefit to trade if it is worth a substantial amount and the tax savings is high. There are a few states that do not offer trade credit. At this time I know what they are but this post will be up for years and that could change so see if your state offers it before you head in. Also, same thing with tax in general. Some states don't collect on car deals period so please do your research on this.

  Does that car of yours need some work? Maybye you cracked a bumper skin at the supermarket or you have not gotten around to change that pesky 02 sensor keeping your check engine light on. Check to see what the dealer will give you for it and see how much they are penalizing your vehicle before you go dumping a bunch of money into it. All dealers will take any mechanical or superficial repairs into consideration when taking your vehicle on trade. Dealers have their resources for making all of these repairs. Internally within the store or not. In the end they get repairs made for as little money out of their pocket as they can. Don't rack your brain over small issues with your trade-in. There is a good chance that dealer can bring it up to par cheaper than you or I could go have it done for. Just don't put $3000 into your car to see a higher return when you trade it in. It most likely will not happen this way.
 The best I can say is do your research on NADA.com and KBB.com and decide before you go in what you are willing to pay for their car or receive for your trade. Averages between the two are reasonable expectations from what I saw over the years. Also, remember these salesman low-ball you. So when they ask what you want for your car, HIGH-ball them! If you really want $12,000, say $12,500 or $13,000. Low-ball them on their car too. Sure maybe they will chuckle or perhaps you may offend them a bit. Salesman have pretty tough skin so it isn't likely. The bottom line is it doesn't hurt to ask. They make their big money on people who don't ask. The absolute worst that is going to happen is they will say no. If the money is there and they want the deal, they'll do it. Period. Below is a list of general pointers that I hope you also find helpful. Also, if I lost you in the figures at all on this lay it out on some paper to perhaps help you to understand it better. Gosh, I LOVE giving this stuff away. Please pass it on.

• Best times to put a good deal together are when business is slow. Store owners hate to have a "no sale" day. If you are the only one there you are in the spotlight and that manager is hungry for a deal no matter how small.
• If you cannot reach an agreement in regards to trade, this will blow their mind. Ask them if they call other stores for "buy bids." Car dealerships have relationships with each other and another store that carries "your model" of car may put more into the ACV. In this case the store you are buying from is still taking your car in on trade but they have another store lined up to buy it for the "buy bid" amount. The fact that you know what a "buy bid" is will send  warning shot over the store that this isn't your first rodeo. Chances are they may just cave in and step it up on your car even if they do get "buy bids" from other stores.
• That car you have had your eye on has been there for months. Ask for a carfax and make sure people aren't afraid of it for some reason. Dealers usually don't want cars on their lot for more than 60 days especially when they are floor planned. Floor planned is when the dealer's bank owns the car and they pay interest on them everyday. Trading in towards an "aged unit" could get you a really good deal.
• Last days of the month or even last day of the year could get stores to step it up on trade. Dealers live by the month and they want as many units on the books as possible at the end of those months.
• Trades are seasonal. Don't trade in your convertibles in the winter. They will bring below book values. Same with 4X4 bringing all the money with a foot of snow on the ground. You get the picture.
• They're just cars. Unless it is something really rare that is bringing good money. Don't let anyone push you into a deal that doesn't feel good. There are plenty of Camrys, Tauruses, and Impalas to go around.

Read More