Car Buying Tips

Originally Posted by SeattleLion

There have been a lot of threads detailing bad buying and service experience with Nissan dealers. It makes sense to consider what we can do to fight back.

Why do dealers employ shady practices?
This is the most interesting question. In virtually every other industry retailers have worked to clean up their acts and have tried to consitently put the customer first. Why don't car dealers?


The answer is actually pretty simple. A car dealer has at least two years to "repair" damage sales caused since most people don't buy cars that often. That alone doesn't explain it. The other factors include:

1. Car manufacturers are generally unwilling to act on customer complaints. Nissan has a complaint line, but in most cases they just say "sorry, that is a dealer issue". Try to go up the food chain at Nissan. You can't. Is it Japanese culture? I don't know, but I had a similar problem with Toyota. Surprisingly, American car companies are a bit easier to reach.
   In America, car companies do not own the dealerships. Therefore, they have no hiring/firing power
2. Car salesmen operate on a quota system. Most of their pay is sales commission. If they don't sell a car, they don't make money. In addition, many dealerships will fire a salesman that doesn't sell a minimum number of cars each month. To a car salesman, life depends on selling no matter what they have to do. True
3. Dealerships improve their profit margin on things most customers don't even understand. Virtually every bank that provides auto loans through dealers allows the dealer to "mark up" loans; that is, the dealer can increase the interest percentage and receive additional money from the bank. For example, the bank offers the dealer a 5% loan on a car you want to buy. The "finance manager" tells the salesman to "try for 8%". The salesman gives you a story about problems with your credit and says that his manager went to bat for you and got you a real deal on financing; only 8%. The bank and the dealer split the extra 3% you pay. True
   
   Another scam is the "extended warranty". These items carry hefty markups and can add hundreds of dollars to the profit on your sale. Generally they are a bad deal. Depends on how much you paid. Things like tire assure are awesome. At cost, the tires for a sport packacke 370Z are roughly $380 (stock ones). I had ablowout the other night, and because of tire assure I paid nothing to get it replaced, mount and balanced. Tire assure stickers for around $500, verses the almost $400 a tire.
4. Customer loyalty costs money. Remember, car dealers are businesses. They calculate how much they stand to make on future sales if you leave happy. If the cost to their bottom line to make a deal with you is less than how much they stand to make later, then they will stop worrying about your future business and just try to get you to drive out with a car. There is no calculated system. Its basically all guessing lol
5. "Invoice" price for a car is not really what the dealer is paying. Car companies know that invoice prices are published widely on the web. They are not dumb. Yes, the invoice price is real, but then there are additional discounts: advertising, early purchase, volume, etc. The thing is thats never reflected in the salespersons pay, so they usually dont even tell the salesperson. And believe it or not most salespeople arent privy to those secret incentives, most dont even get to see the invoice.

The most important thing to remember is that the car dealership is a business. It isn't your friend. If the salseman, service manager, or dealer owner can convince you that he is your friend, that works very well. Your guard is down. Let's take a look at how this plays out.

First of all, the manufacturer and dealer want you to fall in love with the car. We know that works. We're here. When you are in love you don't think straight. You just want the object of that love; in this case a nice shiny Z. That's why the first thing a car salesman will do is "take your temperature" -- see how far gone you are for the car. Next, he will try to get you to fall head over heels for the car. Beautiful brochures, nice test drive, lots of conversation about how the really cool people love Z's. Sound familiar?
Of course, you're spending tens of thousands of dollars on something, it should be an emotional experience.

At the same time a good salesman will try to make you his friend. He wants you to believe he is on your side. He reinforces this by taking your offer to "his manager". In the manager's office you can see him arguing on your behalf. If you think that is what is really happening, you are sunk. In fact, the sales manager is checking the auction price for your trade, asking the salesman if he thinks you will go for "add on's", and is pulling some credit reports to get an idea on financing.
Actually, the managers usually ARE fighting with the salesperson. There are many times when I wen to the desk and said "they want this price, and they only take this" and the manager said "show them this anyway". EVERY MANAGER IS DIFFERENT
About financing. Most banks have rules that allow a dealer to place a loan without even calling the bank. It works this way: the dealer has a chart of credit scores; for example 700-780 and then a base interest rate, say 4%. The manager checks your score with the bank's favorite credit bureau and sees you can get a 4% loan. He tells the salesman to offer a loan at 7%.
TRUE

The salesman comes back from the managers office with a big smile and says that you can get the car for only $400 a month. Note that the conversation has moved from the actual price to your finance payment. Apparently lots of people never go any further. They think that they can afford $400 a month and close the deal right there. They never even ask what the term of the loan is or how much they are paying in interest. The thing is, the most important part of a car deal is payment. If you tell me through out the car deal youll only pay invocie, but then I show you at invoice the payments still $50 more a month than you want to pay, you just wasted your time. Plus, if a dealer knows they have to reach a certain price, they can overallow on your trade. The thing is, though, they usually have to have the sales directors permission, and if its a big overallowance they may even have to get the GM involved.

Next stop is the finance manager's office. This is where the dealer can make the big bucks. Here you are talked into warranties, upholstery treatments, rust proofing, etc. If the fiance manager senses that you are really far gone for the car, he or she will explain that the loan needs to be confirmed by the bank and will type away on the computer. With a sad face, she tells you that the bank is concerned about your loan. "They are worried that with this payment you will not be able to afford necessary maintenance or repairs. But, if you sign up for prepaid maintenance and an extended warranty, they will go ahead with the loan. This will cost an extrea $75 a month. For $475 a month the car can be yours. Many people just say yes, sign the papers, and drive away. They don't even know how much the car really cost. Most dealerships dont do this anymore because they can get sued.

[*]Be reasonable. While you are trying to make the best deal you can, remember that the dealer needs to make money too. Your goal should be to make a fair deal. A deal that looks too good to be true probably is.[/LIST]This is what I have learned after over 40 years of car buying. It really works. I will say that I paid a fair price for my Z. I probably could have saved another hundred or two by going to a dealer I liked less. But I give points (and dollars) to a dealer that treats me fairly.
We appreciate the compassion

That brings me to the last point. Trust your instinct. If something bothers you about a dealer, walk away. If you feel positive, then follow the steps above, make the best deal you can, and feel good about your new car. Good advice

All this holds true about used cars too. Though in that sort of deal you really need an independent inspection before you lay down a deposit. In a used car deal you need to know what you are buying. You should never rely on the dealer's statements, even if they are in writing. Remember, if the dealer lies, you will have to go to court. That costs money and time. Better to be sure before you buy. TRUE

Originally Posted by somatic

Put some notes in there

Originally Posted by SeattleLion

Some dealers claim to have been there for 40 or 50 years. Well, they have, but the dealership changed owners every few years. It's not how long the dealer has been there, but how long it has been owned by the same people.