How to not get screwed by a dealership

[SpeedDemon350]

Wow wish I woulda known this before getting my eclipse. Does this apply for used cars to?

[THE_SilverBullet]

Very good info!

I would like to ask a few questions if its ok.

First, my ex-boss used to sell cars in the past and I remember him mentioning to me that dealers will list the sticker price about 8-10% higher, which leaves them room for profit/haggling. So if a car was $20,000 sticker price, you could haggle $2000 (but they wouldnt accept $2000 less because then they would not have any profit), but you could haggle down to $18500 or $19000, is this accurate or correct?

Second, if I have a trade-in (such as my 2000 3G GT), wouldnt I be better off selling it privately to get more money for it? If I sell it to the dealer for trade-in, they're not going to give me full price, because they have to take the time to make any minor repairs, inspect it, then sell it for higher then they gave me for trade-in so they can still make a little profit on it. Correct?

Third, are "car buying services" a good idea? My credit union offers a car buying service for like $200 but they supposedly find the car with the options you want, the color, etc, but do not know how good a deal you can get on the price though. Any input?

Thanks alot!

[Inferno]

Jeff, I could really use some assistance here.

I went to look at this RX-8, and did the normal test drive and number crunching. I actually got the salesman to give me a copy of the "worksheet" so I can review it and give him a call to finalize the deal or not, but after the number crunching, I feel like I'm getting ripped off.

I am trying to scan that worksheet so you can actually see all the work and such, but my scanner isn't cooperating at the moment, so I'm going to give you the numbers for now.

-We "decided" the price of the car will be $12,757.
-I get nailed with a $347 sales tax.
-He wants to give me $7700 for my 2003 Mazdaspeed Protége, in great shape, stock, and has 44.4k miles on it. This is already a strike one for me, since I still owe $9492 on it.
-He wants to me to put a down payment of $2500 (Strike two, I really doesn't want to put more than $1500 down).
-All in all, the number to be financed is $12500.

Here is the reason I walked out:
1.) They offered only $7700 for my Protége. I was expecting at least $8500-$9000.
2.) They want too much down payment. I don't want to put down more than $1500.
3.)The RX-8 itself is questionable. Most of the information is in the Autotrader link, but I would like to add some things I noticed when inspecting the car: The left taillight has massive condensation inside, I'm guessing the seal is bad? Another thing is that the ground effect kit, front and both side fender pieces, have paint chipping off. However, the salesman told me that these issues will be addressed and is included in the price.

Can you please give me some feedback on how to make the deal more "fair" or am I just being stubborn about trading my car in? This is my first time trying to purchase a car on my own, so I'd like to know how I'm doing.

[Jabber]

After researching your trade in amount, both of you guys are off by a little bit. Manheim (auction site website which tells ddealers what recent ones have sold for at auction) has a small sampling, but the fair trade-in amount should be between 8-8.5k assuming good condition, clean title, etc.

The RX8 shows a value of about 10,500 assuming no accidents. If it was in a previous accident, the value drops by 1-2k. After reconditioning, transportation costs from the auction, buy fees, etc, figure they own it for 11,250-11,500. So they are not asking for alot of profit. But, since I can't see if it was, you'll have to be my eyes and ears. Did you check for paintwork on the edge of the hood near the cowl? How about the edges of the trunk and fenders? If you run your fingers along those, you shouldn't feel any paint lines or sharp edges, it should be as smooth as paint in the middle of a hood. If you feel an edge, it was re-painted for whatever reason, and you should walk away.

The reason he wants you to put down 2,500 is to cover the difference between your trade in and the payoff plus taxes. NADA guide is what most banks use to figure the amount they will lend on a car. NADA shows 10,600. Most banks will give 120% of NADA so this shows me the max they will loan is 12,720. That is why they want the 2500 down. All of these numbers assume good credit. Banks will adjust the amount borrowed based on credit score.

If you really want the car, and have walked around it for previous damage (the condensation in taillights is fairly common to alot of cars and doesn't really scare me), tell them that you are only willing to put down $1,500. Tell them you have a friend that looked both cars up on Manheim (like the steam rollers from christmas time). He says the RX8 is a fair price and is giving you some profit, but you are light on my trade by $1,000. "If you want me to do the deal, right now, use $1,500 with an amount to finance of $12,500".

That is how I would go about it if I were you.

Cliffs:

1) Walk around the car real good to insure no previous damage.
2) Offer 14k out the door and you'll put 1,500 down to finance 12,500. That is a fair deal to both you and them, assuming no damage on either car. If they offer to split it, go ahead and do it. But, that should be the MOST you pay. Don't cave in for one or two hundred bucks.

[Jabber]

Originally Posted by THE_SilverBullet

Very good info!

I would like to ask a few questions if its ok.

First, my ex-boss used to sell cars in the past and I remember him mentioning to me that dealers will list the sticker price about 8-10% higher, which leaves them room for profit/haggling. So if a car was $20,000 sticker price, you could haggle $2000 (but they wouldnt accept $2000 less because then they would not have any profit), but you could haggle down to $18500 or $19000, is this accurate or correct?

Second, if I have a trade-in (such as my 2000 3G GT), wouldnt I be better off selling it privately to get more money for it? If I sell it to the dealer for trade-in, they're not going to give me full price, because they have to take the time to make any minor repairs, inspect it, then sell it for higher then they gave me for trade-in so they can still make a little profit on it. Correct?

Third, are "car buying services" a good idea? My credit union offers a car buying service for like $200 but they supposedly find the car with the options you want, the color, etc, but do not know how good a deal you can get on the price though. Any input?

Thanks alot!

Sorry, just saw this now.

Dealers are not allowed to change NEW car stickers. We can add an "addendum" sticker and charge whatever we want for whatever item. It has to be displayed right next to the Monroney Label. Used cars we can do whatever we want with. The latest trend seems to be marking up a car 2,000-2,500 regardless of price. This usually doesn't apply to internet deal. Most internets deals are marked up a max of $500. Why? Simple. I have 6 seconds to get your attention since you can search 100's of cars with the click of a mouse. The fastest way to get your attention is with price. Drop the price down to close to our bottom line and roll the dice. If I leave it marked up by 2,000 and I'm the highest one online, what are the chances of me getting a call on it? SLIM.

Selling privately will always get you more money. But is it worth having to spend money to advertise it, getting phone calls at all hours, having people wanting to joyride it with no intention of buying, etc, worth it? Some say yes, others say no. That is totally up to you. But, in general, you will get more if you sold it off the curb than by trading it in.

Car-buying services are a HUGE joke in the industry. Dealers pay for the leads through credit unions. You don't necessarily get the best deal just because you are using your credit union. Since the dealers pay the credit union to send you in, and there is nothing in writing that says I have to sell you the car for xx dollars, it works great for dealers. If you do have a credit union where they say you can buy it for $100 over invoice or something similiar, there will always be a dealer that will beat that number. So it isn't the lowest price out there.

[Inferno]

Originally Posted by Jabber

That is how I would go about it if I were you.

Cliffs:

1) Walk around the car real good to insure no previous damage.
2) Offer 14k out the door and you'll put 1,500 down to finance 12,500. That is a fair deal to both you and them, assuming no damage on either car. If they offer to split it, go ahead and do it. But, that should be the MOST you pay. Don't cave in for one or two hundred bucks.

Thanks, I really appreciate the advice. Let's see how all this goes tomorrow.

[Inferno]

I proposed that offer to them, and ended up getting my trade-in adjusted to $8000 but now $13100 has to be financed. I think I'm going to play the Wait Game on this one.

[Cuse]

So you got them to accept the $1,500 down and got $300 more for your trade? I guess that's not bad, but it isn't overly impressive either.

I would wait too. Doesn't seem like a good deal to me.

[Jabber]

Originally Posted by Inferno

I proposed that offer to them, and ended up getting my trade-in adjusted to $8000 but now $13100 has to be financed. I think I'm going to play the Wait Game on this one.

Yeah, play the wait game. I assume since you made a counter offer on the car that it doesn't show signs of an accident (and don't go by Carfax, not all states report accidents to them)?

Believe me, at every dealer, there is always a few hundred dollars worth of room. If they want the business, they will call you.