Dealer Tried To Pull a Quick One

[The Critic]

My friend was in the market for a 2010 Mazda 3. I did all of the negotiating for her over-the-phone. The salesman and I had agreed on a price-- $18,307 + tax. Mind you, this is an excellent price as it was $1217 under invoice.

My friend went to the dealer with her mother and her mother's friend. My friend intended to put $5k down on the car. The salesman and the finance manager did the paperwork and came back with a monthly payment of $292/month.

Her mother's friend thought the monthly payment was a tad high and wanted to bargain with the salesman to see if she could get a better deal. I was originally against the idea as I thought I already had an excellent deal setup, but the idea turned out to be a good one.

Here's why. As it turned out, the dealer obtained the $292/mo figure because he had calculated the finance charges based on the out-the-door price of $20,399.25. In other words, he added the finance charges to $20,399.25, then subtracted $5,000, then divided the amount by 60 to obtain $292/mo.

Instead, since my friend was putting down 5k, the correct procedure would've been to take $20,399.25, subtract $5000, then calculate the finance charges based on $15,399.25.

So, after a few hours of back-and-forth, my friend got a "better deal," thanks to her mother's friend. This "better deal" included calculating the finance charges the CORRECT way as well as an additional $80 off the price of the car.

It was a very good thing that her mother's friend challenged the original $292/mo figure. With the correct financing, my friend's monthly payment is now $282/mo. Otherwise, my friend would have paid an extra $10/mo for five years-- which comes out to an additional $600.

So lesson learned? Be careful at the dealer. Luckily, in the end my friend still got an outrageously good deal on the car-- $18,227 + TTL, which is $1297 under invoice on a car that normally sells for $500 under invoice. Plus, the car only had 1 mile on it!

 

[chet2]

i just bought a new Pontiac G5 for wife and my total price ( doc fees title) was $9150.00 cuz of big rebates on G5 and G6 and 3084.00$ GM card discount...i will pay a robust 164 a month( 2500.00 down) for 48 months but i should have it paid off in a year...excellent car too, auto, power windows, electric PS which is outstanding, XM, onstar, hands free calling, great ride, responsive engine...i dont think people are aware of how good the domestics are now..one time i had a sleazy dealer screw up contract 4-5 times in their favor so you really have to look close...dont sign nothing dont give them nothing till you see contract

 

[Gary Allan]

..and they wonder why you want to shoot them ... How do they manage to have sensible interpersonal relationships where any bit of trust is involved? ..or is it that all the louses end up in auto sales ..

 

[demarpaint]

The finance managers are masters of deception, and unless you know the math it is real easy to get screwed. They "pack deals" too. A person comes in gets approved for a loan of lets say $18,000 and only needs $15,000. The finance manager will take the time to sell $3000 in extras, such as an extended warranty, and some other needless and unwanted items. Then sweet talk the customer on taking these items, or just push papers hoping the customer will sign them and leave. Most times all the paper work is done before the customer gets there, with the items "packed" nicely in already. Sadly their success rate for doing this is higher than you'd think.

 

[H2GURU]

Just another reason why purchasing a vehicle at Walmart will soon be a good idea. Foreign manufactuters are discussing this now and the places we call dealerships will soon be known as service ports. I'm sure the above example is just one of the ways you get porked w/o even realizing it? The days of the slick dudes in white shirts and too much gold jewelry are drawing 'nigh.

 

[Pablo]

I've had it even more blatant than that. Price IN WRITING they tried to jack back up. ("made a mistake") We walked. Another dealer gave us our price.

 

[demarpaint]

I was amazed at some of the tricks they'd pull, and even more amazed at the % of people that bought into it. Sub prime deals were the best for the Finance Managers. They'd try and borrow the most money that the bank would lend.

Here is where it got really interesting. The Sub-prime people (used cars) always got an extended warranty, vin etch, and some other creative little extras to use up all of their approval. Then if they barked they were told that the bank required they take an extended warranty, and the other essentials to protect their interest in the car.

They would tell the customer, "if the transmission goes do you have $3000-$5000 to replace it?" "The bank figures you have the $50 deductable for the warranty, so you will be able to continue to make payments." Most of the time you'd hear "OH". Now there were no published prices on extended warranties either, so 3 people would pay 3 different prices for the same extended warranty. What ever the market would allow. Don't forget the nice Finance Manager negotiated with the bank to lend the most possible amount of money for this nice customer. It was not uncommon to have thousands of extra $$$$$ to spend for the customer.

I was a good listener, and learner,I would listen to the Finance Manager when ever I could, they were without a doubt the biggest crooks in the dealership! Glad that is all in my past.

Now when I buy a car I am the dealerships worst nightmare, and I help family and friends avoid getting SCREWED!

 

[VNTS]

Simple solution, just pay cash for your car and you wont have to play their [censored] games. Also when you say cash, no trade it kind of sucks the wind out of their sail.

Only thing then is trying suck the invoice price out of them and for them to admit what the dealer incentives are. Edmunds usually covers your butt on that.

 

[demarpaint]

That's fine if you have the cash, sub-prime buyers don't have cash. The better way to negotiate is when you have cash and good credit. Don't mention trades, and tell them you want to finance, then get your price in writing. Do your homework, and know all incentives, rebates, cost, hold back, and floor plan assistance. Work your price from there.

Now if you have the cash, the little trick is to change your mind and pay cash for the car at the time you go to pick it up. They negotiate more for customers who want to finance because they have cash reserve money to play with and the possibility of making money in after sale. Boy do they hate negotiating a deal with someone who says they want to finance, then pays cash at the very end!

BTW my comments in the previous post were based more on used cars than new, but the basics still apply. It also shows how people with poor credit, buying used cars can become easy prey. Dealing with new cars is a lot easier.

 

[BrianWC]

Originally Posted By: Gary Allan
..and they wonder why you want to shoot them ... How do they manage to have sensible interpersonal relationships where any bit of trust is involved? ..or is it that all the louses end up in auto sales ..

They don't care if you want to shoot them! They just want your money!

Good job, Critic, on your part. And good thing that friend went along! I wish I'd brought you with me to buy my Fit, lol!

 

[punisher]

Originally Posted By: demarpaint
The finance managers are masters of deception, ...................


You now know how dealerships make the lion's share of profits. Some of our finance people would even shame a used car salesman.

 

[TooManyWheels]

I am amazed that people don't buy a cheap financial calculator so they can figure payments themselves, or run the numbers on an internet loan calculator before they go in. Do they not know these are available?

 

[Pablo]

Originally Posted By: TooManyWheels
I am amazed that people don't buy a cheap financial calculator so they can figure payments themselves, or run the numbers on an internet loan calculator before they go in. Do they not know these are available?


People don't think. It's even worse now, there seems to be a group of people who have convinced themselves "it's too hard to think".....scary [censored]. Mind you we are talking about methods so you don't need to know the math......I'm not sure why I even bother worrying.

 

[CivicFan]

Not everybody understands or likes dealing with the numbers. Even in the case of the OP, the person negotiated over the monthly payment amount. While in this case an important faux pas was discovered, in a lot of other cases they simply extend the term of the loan.

The car dealers may not be intellectually superior beings but they are experienced at taking advantage of their customer base. It always amazes me that such blatant fleecing of the people can flourish in a free market.

 

[demarpaint]

There are a handful of thinkers, and they ususally get good deals. Remember we're talking averages here, so basically for every 10 people that actually take title to a car, probably 3 of them get the best deal, the other 7 screw up somewhere along the line. Then there are the people who are so smart they're stupid.

Finance calculators are good, the problem is, (used cars I'll refer to), a good Finance Manager is not telling you your interest rate until you are sitting down with him. So knowing a payment is pretty tough, let alone knowing your rate. The deal is already packed, and now its his job to roll with your punches. Easily 70% of the people that bought cars fell prey to the Finance Shark. The Finance Managers I worked with were some of the biggest POS people on earth, but they were good at what they did!

A good finance manager is worth his weight in gold to a dealership. They get greedy and screw up too. But just like the casino in Vegas, the dealership is the house, and they win a lot more than they lose.


Now there are a few honest dealerships and Finance Managers, I just haven't met or worked for one. So I left, because they screw their help too!

 

[The_Jeff]

This new blood at the 11th hour was a superb move! Dealers like to beat you down and get you weary and complacent, then slither something like that in at the last second.

There's a 4-square chart for selling, Link, you have to cover all the bases or they'll gyp you on the last one.

The one thing I disagree on is if you have an amazingly bad trade in, you can still get blue book on it sometimes if the salesman wants to seal the deal. Something worth $200 at a junkyard can sometimes get $1500 at the dealer... even after driving home the best under invoice cash deal. (Don't mention the trade until late in the game) The salesman must not get penalized for a bad trade in appraisal.

 

[brianl703]

The last new car I bought, I got financing from the credit union where I work.

 

[wavinwayne]

When I purchased my VW in 2003, the dealer got me a better deal than I had pre-arranged with my credit union. They actually SAVED me money. That is rare, indeed.

 

[TooManyWheels]

Originally Posted By: wavinwayne
When I purchased my VW in 2003, the dealer got me a better deal than I had pre-arranged with my credit union. They actually SAVED me money. That is rare, indeed.


Same here, but I had researched and lined up my financing the same way I had researched the vehicle. Apparently that is an exception rather than the norm.

 

[BrianWC]

I had credit union financing lined up for my Odyssey when I went to buy. The finance guy begged to let them give me a better deal. That was a nice position to be in. I gave in since Honda financial has an easier to use online payment system than the local credit union.