New Car Buying Advice?

[siff]

Remember as well that the dealership gets a kickback for every car sold - so even selling at "a loss" makes them money. Again, as was said earlier, do your homework, find out what your model goes for on average, buy at the end of the month to get a deal.

 

[DeacHoops]

Eh, it's rarely true 0% financing. Usually it is 0% financing or $X cash back, such that X is the cost of the financing.

And "dealer invoice" as the desired target is the biggest racket going right now. The dealer's invoice usually has almost nothing to do with how much the dealership actually pays for the car when viewed in light of their entire floorplan financing credits, other than a starting point for their calculations. It is a pure smokescreen. Pay what you think is a fair price for the car and get on with your life. At the end of the day, everyone thinks they got a good price. I've rarely heard anyone say "I got ripped on that deal."

i hear both things, but people are generally wrong, no matter which way they believe it went. a lot of people really believe dealerships make tons of money on new cars (spoiler: they don't), and then there's a lot of people who believe that if they pay under invoice, they must have gotten a damn good deal (spoiler: they probably didn't).

but again, it is really easy to figure out approximately how much dealerships are paying for new cars. try to control for the cost of extras (spoilers, navigation, etc), and then just see what the average cost is in your area. on fords, odds are that their margin is about $1k. new cars are easy to figure out if you just put the time into a little online research.

 

[lbE08]

so if i'm still making payments on my car but am interested on trading it in towards something different, how does that work?

 

[DeacHoops]

Remember as well that the dealership gets a kickback for every car sold - so even selling at "a loss" makes them money. Again, as was said earlier, do your homework, find out what your model goes for on average, buy at the end of the month to get a deal.

it's not just at the end of the month. a lot incentives are based on the quarter, not the month. the end of the last month of the quarter is always the best deal.

 

[lbE08]

...i know that seems like a dumb question/something i should understand more than i do.... but i don't.

 

[DeacHoops]

so if i'm still making payments on my car but am interested on trading it in towards something different, how does that work?

depends on whether it's worth more or less than what you still owe.

 

[lbE08]

depends on whether it's worth more or less than what you still owe.

let's say it's worth more

 

[DeacHoops]

let's say it's worth more

assuming you'd rather trade in than just sell it yourself, then it'll just come off of the price of the new car. same thing as if you had a fully paid for car, and used it as a trade in.

 

[siff]

it's not just at the end of the month. a lot incentives are based on the quarter, not the month. the end of the last month of the quarter is always the best deal.

Yes, true - but if you have to buy in the next couple of weeks, waiting until month's end makes sense.

 

[DCDeac]

Don't overcomplicate it. Your car is worth $X. Your buyout today is $Y. That's really all that matters. After that, it's just about how close to X you really feel like coming. Trading it in is simple but a guaranteed screw job. Selling it privately nets the most cash but is the biggest pain in the ass. Carmax is often a nice medium.

 

[94Deac]

i hear both things, but people are generally wrong, no matter which way they believe it went. a lot of people really believe dealerships make tons of money on new cars (spoiler: they don't), and then there's a lot of people who believe that if they pay under invoice, they must have gotten a damn good deal (spoiler: they probably didn't).

but again, it is really easy to figure out approximately how much dealerships are paying for new cars. try to control for the cost of extras (spoilers, navigation, etc), and then just see what the average cost is in your area. on fords, odds are that their margin is about $1k. new cars are easy to figure out if you just put the time into a little online research.

Absolutely. And to add: the dealer's margin on used cars is much greater. New or used, the end of the month is always the best time to stroll into a dealer's lot. Spring and summer are busier, so the end of the cold-weather months are generally more favorable to buyers. The dealer I most recently bought from had been talking to me and sending me listings for a year. I finally went in (on the very last day of the month) and told him I just wanted to see a certain car. I had a stack of research and knew what I wanted to pay but I had no intention of buying. He was so interested in making the sale, he knocked a couple thousand off the car and boosted the trade-in offer by almost the same amount. Just remember that you don't want to discuss anything at the salesman's desk when he gets up- go outside or elsewhere in the showroom. It is a common practice to have audio at desks so you can be heard when he's not there. Also, the more time you can spend there, the better deal you may get. I spent 5 hours to finally get the deal I wanted. And it's always best to have your financing or payment situation arranged before you go. Let them know that up front but say that you're willing to look at what financing terms they're willing to offer you.

 

[HeltonCreek]

I know the dealership made money on both my purchase and my trade (they wouldn't have made the deal if they weren't) but I feel like I got as good a deal as possible and better than some other places I spoke to in the last week.

 

[Deacon923]

my last two car buys were done totally differently - one was a used car that I negotiated almost entirely by email, and the other was a new car that I negotiated entirely in person (with my kids running wild in an almost empty cavernous dealership late on a Sunday night - weird). Both went pretty well and I was satisfied with the deal I got. I'm not arrogant enough to think that I screwed the dealership, I'm sure they found a way to make money and I'm fine with that. I think I probably sliced their margin a little more on the used car deal but that was back in 2008 when they were pretty desperate to make sales.

 

[DeacHoops]

I know the dealership made money on both my purchase and my trade (they wouldn't have made the deal if they weren't) but I feel like I got as good a deal as possible and better than some other places I spoke to in the last week.

well that's also not entirely true. dealerships lose money on deals all the time. i obviously don't know about your particular car. but it's quite possible they lost money on it. my point was that basing your assumption on invoice isn't the right way to go. if you don't get your car for below invoice, you got ripped off. everybody gets it below invoice.

 

[DeacWatcher]

well that's also not entirely true. dealerships lose money on deals all the time. i obviously don't know about your particular car. but it's quite possible they lost money on it. my point was that basing your assumption on invoice isn't the right way to go. if you don't get your car for below invoice, you got ripped off. everybody gets it below invoice.

Does the factory (say Ford) reimburse the dealer or give them something to make up for the loss?

 

[DeacHoops]

Does the factory (say Ford) reimburse the dealer or give them something to make up for the loss?

different manufacturers do it different ways. a lot of manufacturers offer factory rebates. this is the main reason that most people are getting their cars for below invoice. the dealership still makes money in the end because the manufacturer is giving them the factory bonus money. sometimes this takes the form of a quota. like bmw will give the dealership a bunch of money if they hit 150 new cars this month. that's why the dealership gets desperate towards the end of the month and the prices are lower. because it's an all or nothing thing. if they don't hit 150, they aren't getting anything. so they're willing to lose a bunch of money on a few cars in order to get all of that cash incentive.

in other cases, no, the dealership doesn't get anything from the manufacturer. however, fixed operations (parts/service/body shop) is where dealerships make the bulk of their money. in a well-run dealership, the goal is greater than 100% "fixed absorption." which just means that fixed operations covers 100% of the costs to run the dealership. anything they make on a new/used car is just icing on the cake. so since fixed operations are a result of cars sold at that particular dealership, most dealerships are willing to lose a bit on the front end in order to get several years worth of service gross out of the customer.

 

[Deacon923]

Does the factory (say Ford) reimburse the dealer or give them something to make up for the loss?

not exactly. The factory is always providing incentives to the dealers to move cars, i.e. giving the dealer $1,000 for every one of last year's model they can sell. That means the dealer is factoring that cash into their cost on the back end. That's why "invoice" is usually not a real number. But if a dealer is desperate to move some cars because their inventory is getting old and the interest charges are adding up (they all borrow all the money to buy their inventory, it's called "floor plan financing" for some reason), they may take a loss on a car to get it off their lot even with the factory cash. They will try to make it up by selling your trade in at a profit. A thriving dealership that is well run rarely gets that desperate, though - you're not going to get that kind of deal from a Flow Motors type of establishment unless you're buying a real dog of a car that NOBODY wants.

ETA DeacHoops explained it better.

 

[iodeac]

Bumping this thread back to the top. I have a 2000 Honda Accord that I bought in 2003 and I'm looking at a new Subaru Forester. The MSRP of the one I really want is roughly 27,000. The sales price (is that the same as invoice price?) is 25,555. How do I find out how much the dealer actually paid for the car? Also, they're offering me $1500 for my Accord, which has about 173K miles on it. I walked away and told them I wanted to crunch the numbers, but in reality I really want to negotiate a little and have no idea how to start. What's a reasonable amount to expect them to take off the car to make a sale?

 

[SkyDivingDeacon]

Have no idea if this has been said, but I highly recommend a VW Jetta or Passat Turbo Diesel/TDi

Awesome cars that weigh as much as a truck. Get consistent 47 mpg on the highway, and got 2.99% financing without any money down. Now the credit union is offering 1.99%! Lock it in before rates start to tick up!

 

[West End Deac]

You can find some good info (incl price paid) on the Edmunds forums: http://townhall-talk.edmunds.com/di...e=Subaru&model=Forester&ed_makeindex=.ef17adb

Invoice used to be dealer paid, but manufacturer kickbacks and bonuses have muddied the waters a bit. Occasionally, info on these kickbacks will appear in the forums. My experience is to know what you are willing to pay and work from there, accepting that someone may get the same car for a few hundred less tomorrow (happens all the time with everyday purchases). If you know exactly what you want don't be afraid to shop dealers. I'm in WS and have purchased via email negotiations in CLT.

Bumping this thread back to the top. I have a 2000 Honda Accord that I bought in 2003 and I'm looking at a new Subaru Forester. The MSRP of the one I really want is roughly 27,000. The sales price (is that the same as invoice price?) is 25,555. How do I find out how much the dealer actually paid for the car? Also, they're offering me $1500 for my Accord, which has about 173K miles on it. I walked away and told them I wanted to crunch the numbers, but in reality I really want to negotiate a little and have no idea how to start. What's a reasonable amount to expect them to take off the car to make a sale?