7 Ways Dealers Make You Pay Extra

[Rambit]

Some very valid points here to consider on your next purchase. I've just now decided not to have my Jeep undercoated and rust proofed. I'm paying cash, so the financing scheme won't apply to me, ESPECIALLY the 0 down/0% financing rip off!!!



1. Mixing negotiations. Sales people like to combine the vehicle price, trade-in, and/or financing negotiation, often asking you what you can afford to pay per month. This gives them more latitude to provide a favorable figure in one area while inflating figures in other areas. In the end, this could cost you more overall.
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2. 0 down, 0 interest, 0 payments for one year. This may sound good, but there are downsides that can cost you money. After the first year, you still owe all the monthly payments youve delayed, often at a higher-than-necessary interest rate. In short, you end up owing much more than the sticker price on a vehicle that is now a used car.
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3. The leasing game. Many leasing customers assume that the monthly payment the salesperson quotes is a nonnegotiable figure. Thats not true. The figure is often based on a vehicles sticker price with no discount, and can be negotiated just as if you were buying the car. In fact, to keep the transaction simple, you can negotiate the vehicle price before mentioning that you want to lease.

4. Financing and your credit score. Dealers like to arrange the financing for your vehicle because it gives them another source of profit. But the interest rate they offer may be higher than you could get elsewhere. Dont make financing a purchase-time decision. Before visiting the dealership, make sure you know how youll pay for the vehicle. Call ahead to find out what the dealers rate is, and compare it with what you could get from banks, credit unions, or other lending institutions. If you are preapproved for a loan, you can keep the financial arrangements out of the negotiations.

5. Loading on the options. Salespeople will sometimes try to make up for a low price on a vehicle by talking you into a lot of optional equipment. Do your homework, so you know what options you want and which you can live without. Many options are available separately, but others can only be bought as part of a package. Consider these carefully. Option packages can make you pay for features you dont need to get a few you want. Its best to choose a vehicle trim level that gives you most of the options you want, then add other options separately. If a model doesnt have the features at the price you want, consider another.

6. Extras you dont need. Another profit source for dealers is extras such as rustproofing, fabric protection, paint sealant, and etching your Vehicle Identification Number (VIN) on windows to deter thieves. Sometimes, these types of charges will simply appear on your bill of sale without anyone having mentioned them to you. Dont waste your money. What could cost the dealer about $90 can cost you $1,000 or more.

7. The question of extended warranties. At some point in the buying process, the dealerships financing manager will try to sell you an extended warranty, which can cost hundreds of dollars. Consumer Reports does not recommend buying an extended warranty unless you plan on keeping a trouble-prone vehicle for an extended time after the original warranty runs out. Most manufacturer warranties are sufficient, with bumper-to-bumper coverage of at least three years or 36,000 miles and powertrain coverage thats often longer. If you want an extended warranty, ones offered by the auto manufacturer are typically better than those offered by third-party companies.

FULL STORY HERE

Bernie

[pimp mobile]

nice write up.

[fadertoo]

And I'll give you one more: Administrative Fees.

One of the first things I'll mention in a negotiation is that the price I'm negotiating is bottom line. The only add-ons I'll accept are State mandated: tax, tag, and title fees. I don't care how they fill out the bill of sale above it, but my price is all I'm paying for the car. Admin fees are just another way of adding on profit. If you went to the supermarket and picked up a loaf of bread marked $2.19, and they told you at the checkout that didn't include their admin fee of a nickel, would you say, "Oh, sure. Fine?" Every business has administrative costs. They cover them in their price of the product.

Another is, if they ask you if you have a trade, say you're selling it privately. Negotiate the price of the new car as if you are. Know what your trade is worth. After you agree on the new car price, you can still ask "If I did trade, what would you give me for mine?" Only then do you know what you're paying for the new car and what they're allowing for yours.

[Rambit]

Originally Posted by fadertoo

Another is, if they ask you if you have a trade, say you're selling it privately. Negotiate the price of the new car as if you are. Know what your trade is worth. After you agree on the new car price, you can still ask "If I did trade, what would you give me for mine?" Only then do you know what you're paying for the new car and what they're allowing for yours.

That's a great tip! I think that's the biggest thing that bugs me. Seems like they always have two prices in mind, with trade and without trade. A lot of people don't realize is it's the difference you're paying for the new car minus what they give you for your old one, which is usually a very lowball price and you're getting next to nothing for the old one. Of course at best they will only give you a wholesale offer for your old car so they can make money on both.

I've tried making deals like that, but they always tell me they can't do it if they subtract a fair trade in price, so they renegotiate the offer. They either try to bump the new one up or lower the trade in, so again you're stuck paying the difference. That's why I always sell privately, but I find most people can't be bothered and just accept it just to get into a new car and be done with it.

Bernie

[kevenj]

Originally Posted by Rambit

That's why I always sell privately, but I find most people can't be bothered and just accept it just to get into a new car and be done with it.

Bernie

The reason most trade in rather than sell privately is not that they cannot be bothered; it is because they are upside down on the trade. They could still sell privately of course but they would have to have the cash to pay the difference and most people that put themselves in that position don't have the means to do that. About 8 years ago when I bought my Thunderbird SC used from a private seller, we agreed on a price of $4,500 - - but owner still owed $6,300 on it, and had to borrow the difference from his father so he could sell the car and get out of the payment! Trading in is the only way for many people to deal with this issue since the dealer can just "roll over" the negative equity into the new loan. This of course perpetuates the cycle every time it is done until the negative equity is too great and they are forced to actually keep a vehicle long enough to pay off the loan!

It goes back to my rule about financing cars:

(1) Don't finance cars !!

(2) If you ignore rule (1) at least make a down payment big enough to avoid being upside down when the car is 3 or 4 years old.

[Rambit]

Originally Posted by kevenj

It goes back to my rule about buying cars:

(1) Don't finance cars !!

(2) If you ignore rule (1), put at least 25% down so you won't be upside
down during the loan term.

Couldn't agree with you more, but the sad fact is no one listens. Everyone wants a new car at any cost, not what they can afford. I was like that, but my wife MADE me see the light. Look at how many posts are here from upside down owners trying to get out from under their cars.

It's the old Champaigne appetite with a beer income syndrome. I drove used cars most of my life till about 15 years ago because owning a house was more important to me. Well, I lied, my wife actually...haha. I always wanted a new car!!!...haha.

Bernie

[CJ7VFR]

It's the old Champaigne appetite with a beer income syndrome.

Thats also why alot of dealers will "let" you take the new car home for the
weekend to "try out".

They know that once you get a taste of that new car smell, the tightness of
fit and finish, the shiny paint, and all the other do-dads that a new car comes
with, that you will be hooked, and want it, and you are at their mercy at
that point.

If your lucky enough not to be upside down on the current car loan, it can benefit you to trade
it in because you will not have to pay state sales tax on the trade in value.
At least in New Jersey its that way.

That can save you a few bucks.

But in the long run, I think people can get more for their old car selling it,
and that would more than make up for the difference in a few hundred bucks
sales tax.

But like you guys are saying, most people are either lazy, or just want out, and
don't care to have the hassle of selling an old car themselves, and its just a
convienence to trade it in.

Jim

[The Gunslinger]

Hmm. I'm looking at buying a 2009-model 300C (I'm waiting for the revised 5.7 HEMI ), and in the meantime bought a Citroen as a very nice interim car. Hopefully by the time 2009 rolls by, I'll be making enough to afford the substantially larger loan for the 300C. However, the C4 will still have several years left on it's loan. Theoretically I'd apply to my bank to extend my loan by 30-odd-thousand dollars to make up the difference, and swap the asset security over to the 300C. I'll probably opt to trade-in with the dealership, and put my foot down on $25k for the C4. How far into the Dream-Land of Bollocks is that idea? Serious question.

[fadertoo]

Originally Posted by kevenj

It goes back to my rule about financing cars:

(1) Don't finance cars !!

(2) If you ignore rule (1) at least make a down payment big enough to avoid being upside down when the car is 3 or 4 years old.

One of the smartest financial moves I think I ever made was what I did when I paid my last car off. I opened a money market account specifically for the purpose, and kept right on making car payments into it. (Actually, I upped them about $60 a month.) Three years later, I traded for my C with the proceeds from the saving account and the value of my trade. I left the lot with 50% equity in my new car and payments lower than what I'd been saving each month. I'm still paying what I had been, though, and little more here and there to get it paid off faster. Those that want to trade every couple or three years, however, will always need addtional funds from some source, even if it comes from saving payments equal to financing for 24 - 36 months.

[Rambit]

Originally Posted by fadertoo

One of the smartest financial moves I think I ever made was what I did when I paid my last car off. I opened a money market account specifically for the purpose, and kept right on making car payments into it. (Actually, I upped them about $60 a month.) Three years later, I traded for my C with the proceeds from the saving account and the value of my trade. I left the lot with 50% equity in my new car and payments lower than what I'd been saving each month. I'm still paying what I had been, though, and little more here and there to get it paid off faster. Those that want to trade every couple or three years, however, will always need addtional funds from some source, even if it comes from saving payments equal to financing for 24 - 36 months.

Another SMART move!!!

Bernie