Trading in the max....thoughts are there
it's about to turn off topic
07-15-2005, 12:21 PM
#42
Member
Join Date: Apr 2005
Posts: 94
Okay guys, everybody here is either a financial genuis and an astute "shove it to the dealer" genuis or you are all blowing smoke.
Why you ask (or didn't).
1) All dealerships make money on every car they sell, no dealer takes a $3400+ loss on a vehicle and I don't care if you are a family member of the people that own the dealership. Doesn't happen. If your a really good negotiator and the dealer really wants to move the unit you picked (old age unit, bonus unit, etc.) he will sell at pure cost which includes giving up the holdback money in the deal. I've even seen some deals go $500 to $1000 back of pure cost when the dealer really, really wants to move the unit you picked or "snake" another dealers sale, but these deals are very few and far between. As for taking these 3 and 4k losses you all swear you got the dealers to take is pure fantasy.
2) You feel you got this great deal because the dealer made you think that by using all the tricks of the trade. Every dealer, except the one price dealers, work you on what is known as a "four square" in order to find your hot button which will help them fool you into thinking you got something over on them. The four squares are 1) price, 2) down payment amount, 3) trade in dollars (if you have a trade) and finally 4) payment. Once they know you hot button and your ready to buy, THEY GOT YOU. Just so you know, dealers just "LOVE" payment buyers as they basically work you on payment and never really disclose what you are paying for the car till the very end and by that time you are so happy that they reached your payment that you don't care what you paid for the car. Boy, do dealers make money on you guys. Never ever negotiate a car deal on payment. Always remember, your payment is based on the final negotiated price, your trade or down payment, length of the load and most important, your credit rating.
3) I could go on and on, but the one rule to follow in any deal is always start with Price and stay on it. Everything else in the deal is beyond your control. Your payment is a function of the amount financed, length of loan and YOUR interest rate. Everything other than price is basically fixed.
4) Before you go to a dealer, do your homework. Figure out the best price for the vehicle, what you trade is really worth, what kind of interest % you qualify for, and what you are able to handle as a monthly payment. The monthly payment you can afford is really important. It keeps you from looking at 30k cars for $300 a month with nothing down. Believe me, these do not exist on a standard buy.
5) I can't figure out you accounting methods when you start quoting these fabulous payment terms you all seem to be getting. I've got a degree in accounting and I'm stumped. A 28k 72mth note with no interest works out to 389 a month. A 28k 72 mth note at 7% works out to 477 a month. Therefore, I'm confused as I don't remember when they changed the laws of finance. Guess I'll have to go back to school and relearn everything, or, go to work for Enron or Worldcom.
Smoke, I know your happy with your deal which is just what the dealership wanted you to think. They worked you on the four square and found you buttons to be trade in value and payment. Bet they worked you real hard getting that 6k down stroke, as "cash is king" to a dealership.
Your deal:
34K list - they sold you the car at list. Again, you were a payment buyer not a price buyer.
Over allowance on trade $3,400 - your other hot button, get you our of your old note. Basically this was your discount. Acually a very nice discount, but you didn't "steal" the car like you think. Without your $3400 over allowance the dealer would have simply discounted your $3400 off the car making it price at 30,600. However, if he had done that and stuck to your 6200 trade in value you would have walked. However, the deal is the same, 34k and pay off your car, or, 30.6k and add back the $3400 you were upside down in your trade. It's still 34k no matter how you do it. They just made you feel better by using the over allowance method which was one of your hot buttons. As for your payment, still can't figure out how you got to 370 a month on a 28k, 72 mth note at 7%. Must be some sort of new accounting rules out there that I don't know about!!!! As for the 6k down, bet you didn't want to put that much down, but they worked you on payment and the only way to get there was more money down. You didn't think they were going to drop the price another 6k just to help you out did you? No offense, but dealers love guys like you. Surprised they didn't get you on an extended warranty and dealer services like paint/fabric prot., side door mouldings, etc. (dealer profit called tick tack and wack). As for your financing, if you didn't do your homework and get a commitment from your bank, they probably got you for a 1/2 to 1 1/2 points above their buy rate. If you do your homework get them to match their buy rate, they still make $250 flat, but that's reasonable and you didn't pay for it, the bank taking the loan did.
Again, I'm just amazed at how all of you are smarter than the professionals and know everything about the "car" business. GUESS I JUST FELL OFF THE TURNIP TRUCK. SHAME ON ME...........
Why you ask (or didn't).
1) All dealerships make money on every car they sell, no dealer takes a $3400+ loss on a vehicle and I don't care if you are a family member of the people that own the dealership. Doesn't happen. If your a really good negotiator and the dealer really wants to move the unit you picked (old age unit, bonus unit, etc.) he will sell at pure cost which includes giving up the holdback money in the deal. I've even seen some deals go $500 to $1000 back of pure cost when the dealer really, really wants to move the unit you picked or "snake" another dealers sale, but these deals are very few and far between. As for taking these 3 and 4k losses you all swear you got the dealers to take is pure fantasy.
2) You feel you got this great deal because the dealer made you think that by using all the tricks of the trade. Every dealer, except the one price dealers, work you on what is known as a "four square" in order to find your hot button which will help them fool you into thinking you got something over on them. The four squares are 1) price, 2) down payment amount, 3) trade in dollars (if you have a trade) and finally 4) payment. Once they know you hot button and your ready to buy, THEY GOT YOU. Just so you know, dealers just "LOVE" payment buyers as they basically work you on payment and never really disclose what you are paying for the car till the very end and by that time you are so happy that they reached your payment that you don't care what you paid for the car. Boy, do dealers make money on you guys. Never ever negotiate a car deal on payment. Always remember, your payment is based on the final negotiated price, your trade or down payment, length of the load and most important, your credit rating.
3) I could go on and on, but the one rule to follow in any deal is always start with Price and stay on it. Everything else in the deal is beyond your control. Your payment is a function of the amount financed, length of loan and YOUR interest rate. Everything other than price is basically fixed.
4) Before you go to a dealer, do your homework. Figure out the best price for the vehicle, what you trade is really worth, what kind of interest % you qualify for, and what you are able to handle as a monthly payment. The monthly payment you can afford is really important. It keeps you from looking at 30k cars for $300 a month with nothing down. Believe me, these do not exist on a standard buy.
5) I can't figure out you accounting methods when you start quoting these fabulous payment terms you all seem to be getting. I've got a degree in accounting and I'm stumped. A 28k 72mth note with no interest works out to 389 a month. A 28k 72 mth note at 7% works out to 477 a month. Therefore, I'm confused as I don't remember when they changed the laws of finance. Guess I'll have to go back to school and relearn everything, or, go to work for Enron or Worldcom.
Smoke, I know your happy with your deal which is just what the dealership wanted you to think. They worked you on the four square and found you buttons to be trade in value and payment. Bet they worked you real hard getting that 6k down stroke, as "cash is king" to a dealership.
Your deal:
34K list - they sold you the car at list. Again, you were a payment buyer not a price buyer.
Over allowance on trade $3,400 - your other hot button, get you our of your old note. Basically this was your discount. Acually a very nice discount, but you didn't "steal" the car like you think. Without your $3400 over allowance the dealer would have simply discounted your $3400 off the car making it price at 30,600. However, if he had done that and stuck to your 6200 trade in value you would have walked. However, the deal is the same, 34k and pay off your car, or, 30.6k and add back the $3400 you were upside down in your trade. It's still 34k no matter how you do it. They just made you feel better by using the over allowance method which was one of your hot buttons. As for your payment, still can't figure out how you got to 370 a month on a 28k, 72 mth note at 7%. Must be some sort of new accounting rules out there that I don't know about!!!! As for the 6k down, bet you didn't want to put that much down, but they worked you on payment and the only way to get there was more money down. You didn't think they were going to drop the price another 6k just to help you out did you? No offense, but dealers love guys like you. Surprised they didn't get you on an extended warranty and dealer services like paint/fabric prot., side door mouldings, etc. (dealer profit called tick tack and wack). As for your financing, if you didn't do your homework and get a commitment from your bank, they probably got you for a 1/2 to 1 1/2 points above their buy rate. If you do your homework get them to match their buy rate, they still make $250 flat, but that's reasonable and you didn't pay for it, the bank taking the loan did.
Again, I'm just amazed at how all of you are smarter than the professionals and know everything about the "car" business. GUESS I JUST FELL OFF THE TURNIP TRUCK. SHAME ON ME...........
07-15-2005, 03:15 PM
#43
jinsatx,
That was awesome. It took me a while before I realized all the mistakes I made after buying my first car. I'm really looking forward to the next time I'm in the market for a new car. Theres SOOOOO many things I'm gonna do differently. I can honestly say I was once a victim of the paint protection gimmick. I guess most people have to learn the hard way.
That was awesome. It took me a while before I realized all the mistakes I made after buying my first car. I'm really looking forward to the next time I'm in the market for a new car. Theres SOOOOO many things I'm gonna do differently. I can honestly say I was once a victim of the paint protection gimmick. I guess most people have to learn the hard way.
07-15-2005, 04:15 PM
#44
Member
Join Date: Apr 2005
Posts: 94
Clayman88,
Thank you. Believe me, when we're young we all make mistakes, but anything that doesn't kill us makes us stronger. I made mine in buying cars many times when I was young and in those days, before simple interest notes, you could really get screwed. Sure hope I've opened some eyes here and given some valuable advice. I'm not trying to be a smart ***, but to play some devils advocate and try and educate some of you for your next go round at the "stealership" as you like to call them. Just remember going to a dealership is similar to going to Vegas. All the odds favor the house. However, unlike Vegas, if you educate yourself and are realistic on what $$$$ buy, and are prepared to do a little wheeling and dealing you can somewhat level the playing field. Also, remember the dealer is in business to make money, just be sure he only gets his fair share and not most of your hide. Believe me, if you get greedy or think you've out smarted them, the've got you and you just don't know it. It's really a game, so just learn how to play.
If you are uncomfortable wheeling and dealing, try a one price dealership. They look to make a fair profit on everybody and not a homerun or a loser depending on your negotiating skills. Actually you can find some deals at these dealers, you just got to look at every car they've got to find one that the've put a bounty on to move it out. I've seen exactly the same equipped cars with a difference of a grand or more in price. Most of them are honest to a fault as they can't over allow on your trade since they promise to buy it at the quoted trade in for 72 hours regardless of whether you buy from them or not. It's simply find a car with a price you like, get your trade appraised (actually you can haggle the trade some but not much as for my previous mentioned reason) and if you like the deal, buy. If not walk, no games, no pressure no BS. Me, I like the thrill of the hunt, but believe it or not, the two Max's I just bought came from a one price dealer. Just so happened he had two older age 05's on the lot he wanted gone and they suited my wife and me just fine. He discounted the hell out of those two units and we haggled some over the trades, but the deals were done in 30 minutes and they were better than I could do at the "beatem up" dealers even with all my years of experience. Oh maybe I could have saved another couple hundred a car, but the grief wouldn't have been worth it.
Just in case any of you are wondering, NO I AM NOT A CAR SALESMAN NOR AM I AFFILIATED WITH ANY DEALERS OR MANUFACTURERS. Got a degree in accounting and have been in the computer field for over 30 years. Over the years when I've reached computer/management burnout (some of you will relate to that), I sometimes venture into other fields for a while. One of those was working for a local multi-manufacturer dealership setting up employee buy programs at small to medium companies so they could get the same no hassle deals some large companies, credit unions and buying services got. Interesting program, but even more interesting was being part of management and seeing all the tricks used to get your money on both the front end, sale, and back end, finance, of a car deal. If you think new car deals can be a hassle, you don't even want to know how they get you on used cars. As for practicing what I preach, I work about 20 to 30 deals a year for friends and co-workers so they don't get screwed. Keeps the blood flowing and I don't have to buy one for me just to get the thrill of the hunt.
In closing, just remember the dealer is in business to make money. He is smarter than you because he's got the real numbers and won't just give one away. Just do your homework, concentrate on PRICE, and remember the saying - "if it looks to good to be true, it probably is".
Thank you. Believe me, when we're young we all make mistakes, but anything that doesn't kill us makes us stronger. I made mine in buying cars many times when I was young and in those days, before simple interest notes, you could really get screwed. Sure hope I've opened some eyes here and given some valuable advice. I'm not trying to be a smart ***, but to play some devils advocate and try and educate some of you for your next go round at the "stealership" as you like to call them. Just remember going to a dealership is similar to going to Vegas. All the odds favor the house. However, unlike Vegas, if you educate yourself and are realistic on what $$$$ buy, and are prepared to do a little wheeling and dealing you can somewhat level the playing field. Also, remember the dealer is in business to make money, just be sure he only gets his fair share and not most of your hide. Believe me, if you get greedy or think you've out smarted them, the've got you and you just don't know it. It's really a game, so just learn how to play.
If you are uncomfortable wheeling and dealing, try a one price dealership. They look to make a fair profit on everybody and not a homerun or a loser depending on your negotiating skills. Actually you can find some deals at these dealers, you just got to look at every car they've got to find one that the've put a bounty on to move it out. I've seen exactly the same equipped cars with a difference of a grand or more in price. Most of them are honest to a fault as they can't over allow on your trade since they promise to buy it at the quoted trade in for 72 hours regardless of whether you buy from them or not. It's simply find a car with a price you like, get your trade appraised (actually you can haggle the trade some but not much as for my previous mentioned reason) and if you like the deal, buy. If not walk, no games, no pressure no BS. Me, I like the thrill of the hunt, but believe it or not, the two Max's I just bought came from a one price dealer. Just so happened he had two older age 05's on the lot he wanted gone and they suited my wife and me just fine. He discounted the hell out of those two units and we haggled some over the trades, but the deals were done in 30 minutes and they were better than I could do at the "beatem up" dealers even with all my years of experience. Oh maybe I could have saved another couple hundred a car, but the grief wouldn't have been worth it.
Just in case any of you are wondering, NO I AM NOT A CAR SALESMAN NOR AM I AFFILIATED WITH ANY DEALERS OR MANUFACTURERS. Got a degree in accounting and have been in the computer field for over 30 years. Over the years when I've reached computer/management burnout (some of you will relate to that), I sometimes venture into other fields for a while. One of those was working for a local multi-manufacturer dealership setting up employee buy programs at small to medium companies so they could get the same no hassle deals some large companies, credit unions and buying services got. Interesting program, but even more interesting was being part of management and seeing all the tricks used to get your money on both the front end, sale, and back end, finance, of a car deal. If you think new car deals can be a hassle, you don't even want to know how they get you on used cars. As for practicing what I preach, I work about 20 to 30 deals a year for friends and co-workers so they don't get screwed. Keeps the blood flowing and I don't have to buy one for me just to get the thrill of the hunt.
In closing, just remember the dealer is in business to make money. He is smarter than you because he's got the real numbers and won't just give one away. Just do your homework, concentrate on PRICE, and remember the saying - "if it looks to good to be true, it probably is".
07-15-2005, 09:06 PM
#45
Newbie just Registered
Join Date: May 2005
Location: LA/OC, CA
Posts: 2,795
Originally Posted by jinsatx
rhmax,
Sorry but you are wrong about the way interest is calculated on todays car notes. All car notes are "simple interest" notes where you only pay interest on the remaining balance as you pay off your note. This is where the APY or annual percentage rate figure comes from as it is based on the declining balance. Simply put, most car notes and mortages break the interest charges down to a daily rate and apply that rate each day to the balance of the note on each day. Therefore, if you pay your car payment a few days early each month, you will actually pay it off early as more of the payment goes to principle rather than interest and if you pay a few days after each month, you will be paying longer as there is more "'daily" interest. For those of you with 6 year notes paying a little more a few months a year could reduce your note to a 66 month note with very little "pian" on your part. Just skip the extra six pack every so often and own your car faster.
Sorry but you are wrong about the way interest is calculated on todays car notes. All car notes are "simple interest" notes where you only pay interest on the remaining balance as you pay off your note. This is where the APY or annual percentage rate figure comes from as it is based on the declining balance. Simply put, most car notes and mortages break the interest charges down to a daily rate and apply that rate each day to the balance of the note on each day. Therefore, if you pay your car payment a few days early each month, you will actually pay it off early as more of the payment goes to principle rather than interest and if you pay a few days after each month, you will be paying longer as there is more "'daily" interest. For those of you with 6 year notes paying a little more a few months a year could reduce your note to a 66 month note with very little "pian" on your part. Just skip the extra six pack every so often and own your car faster.
This is not helping anybody. I apologize if I ticked you guys off.
07-15-2005, 10:21 PM
#47
Newbie just Registered
Join Date: May 2005
Location: LA/OC, CA
Posts: 2,795
Originally Posted by jinsatx
Rhmax.
Thank you, I stand corrected. If I had to guess she's probably a loan officer or mortage banker.
Thank you, I stand corrected. If I had to guess she's probably a loan officer or mortage banker.
Do you need any home loans 
07-15-2005, 10:40 PM
#48
Member
Join Date: Apr 2005
Posts: 94
Rhmax,
Not too rough, kind of a sparing session I would say. Nope don't need any more mortages. Got two houses and mortages on both. However, one has only got two years to go and I actually owe more on my Max than I do on that house. All I have to do now is resist the urge to re-mortage and use the money on a couple of new Lexus GS400's. JUST KIDDING!!!!!!!!
Not too rough, kind of a sparing session I would say. Nope don't need any more mortages. Got two houses and mortages on both. However, one has only got two years to go and I actually owe more on my Max than I do on that house. All I have to do now is resist the urge to re-mortage and use the money on a couple of new Lexus GS400's. JUST KIDDING!!!!!!!!
07-15-2005, 11:22 PM
#49
Newbie just Registered
Join Date: May 2005
Location: LA/OC, CA
Posts: 2,795
Originally Posted by jinsatx
Rhmax,
Not too rough, kind of a sparing session I would say. Nope don't need any more mortages. Got two houses and mortages on both. However, one has only got two years to go and I actually owe more on my Max than I do on that house. All I have to do now is resist the urge to re-mortage and use the money on a couple of new Lexus GS400's. JUST KIDDING!!!!!!!!
Not too rough, kind of a sparing session I would say. Nope don't need any more mortages. Got two houses and mortages on both. However, one has only got two years to go and I actually owe more on my Max than I do on that house. All I have to do now is resist the urge to re-mortage and use the money on a couple of new Lexus GS400's. JUST KIDDING!!!!!!!!
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