Dealer Tried To Pull a Quick One

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Originally Posted By: 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!





That last sentence is sooooo true!!
 
Originally Posted By: CivicFan
The dealers get a commission from the banks. If my memory serves me right, it was a lump sum in the neighborhood of 1% of the financed amount for a bank I worked with.


Dealerships are allowed to "bump" your interest rate up to 3 points from the actual rate you are approved for and that extra amount goes to their commission. Always a good idea to ask if the rate quoted to you is the "actual" bank quoted rate. The dealership I used to work for was caught playing this game.
 
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I do my buying over the Internet. Most car dealers have good websites. Let's you see what they have. Shop the cars with the color/options I want. Dealer internet salesperson emails back the price and we go from there. Do this with a few dealers and make a deal. Drive to the dealer, sign a few papers and drive off with only a few words other than pleasantries spoken.

Of course in my area no matter what car you want multiple dealers are not that far away so a choice is easy as is a great selection.
 
If you've read that Edmunds (I think) article where the guy went "undercover" as a car salesman, you'll see he heard lots of complaints that internet buying was "killing them."

Interesting aside: When I got my Fit, I asked my salesman (the same one who sold me an Odyssey 3 months before), to email me quotes. He seemed very hesitant to do so. He kept telling me ballpark figures and said "just come by and we'll work it out." But I insisted that I get some numbers so I could show them to my wife and wasn't coming by before then. Well, when the numbers came, they were sent from the email of the internet sales manager. I thought it was a bit odd. Then, when I was signing the paperwork on the car, I saw where both my salesman AND the internet sales manager were listed as my salesman.
 
Originally Posted By: 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!


You're a bigger man than me. My girlfriend and parents won't let me near car lots. I've walked out several times when they try and pull that stuff and I don't walk out hoping to get a better deal from them later on, I walk out to keep from pounding them.

I was looking for a used truck a year and a half ago and on a 16,000 truck with me putting $8,000 down, payments somehow came out to $590 for 5 years! When I was shown the figures I got up without saying a word and walked out. That dealership was out of business 3 months later.

Forgot, congrats on the great deal!
 
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Originally Posted By: BuickGN
. . .
You're a bigger man than me. My girlfriend and parents won't let me near car lots. I've walked out several times when they try and pull that stuff and I don't walk out hoping to get a better deal from them later on, I walk out to keep from pounding them.

I was looking for a used truck a year and a half ago and on a 16,000 truck with me putting $8,000 down, payments somehow came out to $590 for 5 years! When I was shown the figures I got up without saying a word and walked out. That dealership was out of business 3 months later.

Forgot, congrats on the great deal!


Next time, stay and pound them! I'll represent you on the Battery/Assault charge for half-price!!! It would be worth it just to see one of these snakes beaten into submission.
cheers3.gif
 
Originally Posted By: ekpolk
Originally Posted By: BuickGN
. . .
You're a bigger man than me. My girlfriend and parents won't let me near car lots. I've walked out several times when they try and pull that stuff and I don't walk out hoping to get a better deal from them later on, I walk out to keep from pounding them.

I was looking for a used truck a year and a half ago and on a 16,000 truck with me putting $8,000 down, payments somehow came out to $590 for 5 years! When I was shown the figures I got up without saying a word and walked out. That dealership was out of business 3 months later.

Forgot, congrats on the great deal!


Next time, stay and pound them! I'll represent you on the Battery/Assault charge for half-price!!! It would be worth it just to see one of these snakes beaten into submission.
cheers3.gif



I appreciate it lol. Suddenly your 20wt argument style makes sense.
LOL.gif
I don't do that kind of thing anymore now that I'm in my 30s. The temper is still there but I know when to walk away...quickly. All it took was one time in court and I was cured. I remember as a kid feeling sorry for the way my father treated car salesmen. Now I understand why. I mean, I always start out nice and give them the chance to do the right thing but it always ends the same.

I've always had the idea to buy a dealership and run it 100% honestly with salespeople that aren't pushy. I worked for a little hole in the wall trans shop in my early years and the owner was one of the most honest people I've ever known. That shop had a 3 week waiting list while others around it were going out of business. No advertisements either, just word of mouth.
 
Originally Posted By: KrisZ
Good stories so far, but there are a lot of customers that try to pull a "fast one" on dealers as well.

Here is a link to some funny stories from a guy that is a manager (I think) of a used car lot.

Look for posts from a user named Cord, truly funny and at the same time unbelieveble stuff:

Buying stories from a salesman's perspective


Great stories by Cord. This one is my personal favorite.

"Here's a great one from a couple months ago involving our favorite customers from post #126. I'll copy the post here so you don't have to search.


Quote
Another update from the "truck tires slip on ice" people, and this one ended with an unexpected (but entertaining) twist.

We check our voice mail messages first thing in the morning and there is a rambling, barely coherent message from a woman talking about the brakes on her truck. The voice sounds familiar but she doesn't give her name or leave a number so we hit erase and continue the day.

Half an hour later one of the service advisers calls up explaining that Mr. So-and-so is here and he is complaining that he bought a truck a while ago and the tires and the brakes are no good. The adviser is told that both the brakes and tires were fine when they left the dealership and that we will not be doing any free work for these people.

Two minutes later two trucks (dad in one and mom and two kids in the other) come roaring around the building and the whole family comes into the office. He starts to complain that the tires and brakes are no good, blah, blah, blah. He is told that there is nothing wrong with either and that they will not be getting anything for free. He is also reminded that when the deal was done part of the payment involved a post-dated cheque for $500 and that the wife had subsequently told us that we could not cash it because they had used the money to replace the tires that "slipped on the ice." He was told that obviously no new tires were purchased and that we weren't very happy about being lied to. At that, the dad jumps up and storms out, yelling at no one in particular, "Take the plates off, we're just going to park it!"

So we watch as they get into their trucks. They had driven into a relatively narrow lane and the dad made a big show of turning his compact truck around and after about 5 or 6 forward and back maneuvers was now nose to nose with his wife's truck. Her truck was too big to turn around so she began to reverse slowly. The impatient dad kept gunning his engine and ended up pushing his wife's truck until they were clear of the lane. Then he turned onto the street with squealing tires and the wife followed.

As we watched, chuckling amongst ourselves, we notice one of their kids running through our lot waving in the direction of his rapidly disappearing parents. These people had driven away without their kid! He couldn't have been more than 4 or 5. He ran after his parents the length of the car lot but to no avail. One of our guys went outside and called him back and took him inside where he would be safe. The parents wouldn't answer their cell phone but sure enough, about 15 minutes later, the mother drives through and grabs her kid.

Funny and sad all at the same time.

Now that the stage is set...

One morning last fall we get a visit from our friend Mr. Einstein (not his real name ) from the episode above. We greet him with, "How are you today Mr Einstein?" In his usual subtle way, he responds with a bellow, "You can apologize for trying to kill me!" Time to close the office door ....

Mr. Einstein proceeds to tell us about how his truck had just gone up in flames in his driveway. We express genuine shock and concern wondering if anyone was hurt. A basic "No," is the answer. We ask how badly it was damaged and it was hard to keep a straight face as he inventoried the damage:
"Hood, GONE!"
"Seats, GONE!"
"Tires, GONE!"
"Dashboard, GONE!"

I mention that it sounds like it was a really hot fire and ask him if there was any damage to his house. "Naw, I'd moved it away from the house before it went up." Hmmm...

Then he got down to business. "A fireman said it might have started from the a wiring harness. So the way I see it you owe me a new truck."

He is diplomatically told that he needs to deal with his insurance company regarding his loss and that getting a new truck from us won't happen unless he wants to pay for another one.

He makes a few comments along the lines of, "you sell me a killer truck and you won't give me a new one, blah, blah, blah." When he realizes he is getting nowhere he spins on his heel and storms out just like he did last time. He'd even parked in the same spot as last time and had to do the same back and forth manoevering before he could drive off. We have a bit of a chuckle, shake our heads and continue on with our day.

The next morning we get a phone call. The other manager motions to the phone's display which reads "Mr. Einstein" and says to me, "this should be interesting." As I listen to one side of the conversation, I'm a little confused. I hear the manager saying things like, "Which legal firm did you say you were with?" and "It seems to me that as a lawyer you would know that you are not entitled to that." I'm wondering who the heck he's talking to.

When he hangs up the phone he says, "you won't believe this. It was Mrs. Einstein pretending to be a lawyer!" She was saying things like,"You have violated our rights by selling us ... I mean, the Einsteins a faulty truck and you are required to provide a new one." This provides us no end of laughs for that day.

But there's more. After a week or so, we hear from the lender that had financed the truck that the Einsteins had no insurance. It is a requirement of the loan, but apparently they cancelled it shortly after they got the truck. So now they have no truck, have no insurance, and are still responsible for the loan amount and have to deal with whatever recourse the lender has for not carrying insurance.

It is pure speculation on my part but I believe that Mr. Einstein deliberatly set his truck on fire hoping to get a replacement through insurance. Unfortunately, I believe he forgot that he had cancelled his insurance and then hatched up his little paralegal scheme in a desperate attempt to get a new truck.

I wonder if some day that kid will wish that his parents had never come back for him."
 
Thanks Critic. After reading this thread I went back to the financial papers for the car our family bought three years ago and guess what! They did the same to us. Only if I was three years older then. Oh well it was the first car we bought in years and didn't know any better.
 
Originally Posted By: BuickGN
.. the owner was one of the most honest people I've ever known. That shop had a 3 week waiting list while others around it were going out of business. No advertisements either, just word of mouth.


That's my idea of a sustainable business model. Sometimes I think it wouldn't transfer to dealerships, but then I see crooked ones going out of business, and the employer for our poster MrCritical, who follows your model, doing well (apparently), so possibly there is hope.
 
Originally Posted By: wapacz
If dealer took the future value of the 5000 at the interest rate and subtracted it form the future value of the loan it would have worked out fine.

Any ways purely in the interest since she would have not payed more. As she would have payed back 5000 dollars of the loan before there was a chance for the interest accrue on that $5000. Also she would be paying the loan back at a faster rate due to the higher payment amount. Which means she would actually pay less interest overall.



Having a whole 300 level math class on the subject of interest comes in handy sometime.

I'm not sure if I am understanding you correctly. On the first attempt, the dealer was trying to finance $15k while calculating the interest based on a $20k loan. In that case, how would a higher monthly payment help my friend repay the loan more quickly?

Originally Posted By: rat
Originally Posted By: CivicFan
The dealers get a commission from the banks. If my memory serves me right, it was a lump sum in the neighborhood of 1% of the financed amount for a bank I worked with.


Dealerships are allowed to "bump" your interest rate up to 3 points from the actual rate you are approved for and that extra amount goes to their commission. Always a good idea to ask if the rate quoted to you is the "actual" bank quoted rate. The dealership I used to work for was caught playing this game.


Yes, it's called an add-on interest rate. In fact, on my friend's sales contract it lists the add-on interest rate as 2.05%. Luckily, they did not push that this time.

FinanceDocument.jpg



Originally Posted By: dorkiedoode
Thanks Critic. After reading this thread I went back to the financial papers for the car our family bought three years ago and guess what! They did the same to us. Only if I was three years older then. Oh well it was the first car we bought in years and didn't know any better.

Wow, and I thought I was the only one. Sorry to hear!
 
LOL.gif
at Mr. Einstein.

Originally Posted By: benjamming
I mention that it sounds like it was a really hot fire and ask him if there was any damage to his house. "Naw, I'd moved it away from the house before it went up." Hmmm...


Very unsuspicious.
 
From the Cord thread:

"Actual transcript of a conversation I had on Saturday:

Customer: Why is this payment so much higher than the tag in the window?

Me: Because we have to account for the lien on your trade.

Customer: The lean on my trade?! You could fix that with a new shock for $100!"
 
Originally Posted By: 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.


I think that's a line of [censored]. The rough rule of thumb one can use for a 60 month loan is $200/month for every $10K financed. So if they were really trying to finance $20.4K, the payment would have been over $400/mo. I suspect they had other things packed into the loan or figured it with the wrong interest rate.

Changing the amount financed by about $5K, if I understand what you were saying would make more than a $10/mo difference. That would be more like a $100/mo difference.
Originally Posted By: The Critic


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 how could financing $5000 more only cost an additional $600 in payments. I think there was some other "mistake" such as trying to sell some additional services, or not having the out the door price calculated correctly.

I.E. they put the OTD price as the sales price of the car and then added on all the fees again. Notice, there are over $300 in fees and what not. A few more fees and added in the wrong place will get you close to $600 in additional payments.

I suspect THAT is closer to what happened than the story about the amount financing being off by $5000. The numbers don't add up for that to be the right answer.

Originally Posted By: The Critic


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!


Yes, do the math before, take a laptop with spreadsheet if you have to etc.

I have a pretty good mind for where the numbers should be, yet I'm not sure I would have caught a $10/month difference, so double and triple check the numbers.

The best thing is to take someone who is not emotionally invested in the car, so they can be objective.

That's what the dealerships do. Salesmen are invested in selling. The sales manager is a little more objective. So if that strategy works for the dealer, why not bring in your own objective party?
 
Originally Posted By: javacontour
So how could financing $5000 more only cost an additional $600 in payments. I think there was some other "mistake" such as trying to sell some additional services, or not having the out the door price calculated correctly.

I.E. they put the OTD price as the sales price of the car and then added on all the fees again. Notice, there are over $300 in fees and what not. A few more fees and added in the wrong place will get you close to $600 in additional payments.

I suspect THAT is closer to what happened than the story about the amount financing being off by $5000. The numbers don't add up for that to be the right answer.


Sorry for being unclear. The additional $600 in payments is due to the additional interest of financing $20k instead of $15k. In both cases, the salespeople were financing $15k. It's just that the first time, they were trying to charge her for the interest of a $20k loan.

Does that make any sense?
 
Still doesn't add up.

Interest on the $15,4 financed in the example is $1575.00, so interest on an additional $5000 is going to be less than $600 proportionally speaking. I know I'm estimating, but it's not an additional $600 in interest.

So I believe something else was at play. They just told you it was an error in calculating the interest/payment.

I don't think the software lets them do it that way.
 
Javacontour makes sense. The loan principal would have been the wrong amount if they did not deduct the down payment from the gross charges. That would have been a major faux pas. But stranger things happen.
 
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