Originally posted by dspii
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In many cases today, the true dealer cost of the vehicle and the MSRP are actually fairly close....a lot closer than years past. Profit isn't a bad word, but I clearly understand the buyers remorse...been down that road. The money/profit for most dealers is in financing, trade-ins and extra's like contracts. Remember some dealers won't deviate very far from the MSRP on hot and popular cars, as with many imports.
Capital One limits the LTV (loan to value) to about 110% on their loans. The way this works is the dealer must fax Capital One a copy of their invoice (not the MSRP), and your loan cannot be more than 110% of the invoice price i.e...a car with an invoice amount of $20,000 cannot be financed for more than $22,000 including taxes, title, docs and the other small stuff. This helps limit the dealers ability to take advantage of the consumer. This also gives you, the consumer, a little extra power in negotiating the out-the-door price. If your loan can't be more than 110% the invoice price, you can give the dealer cash to make up the difference or negotiate the price farther south so you fit under the cap. If they say they can't move, get up and go somewhere else...remember you have a check, which is like having cash, stand tall and proud.
To maximize you buying experience, I suggest the following for those who feel like their getting the shaft as soon as they walk onto the dealer lot. This is from my experience only.
- If you have the Capital One check, tell them so they know up front that your loan cannot be more than the LTV ratio. This way you'll know real soon if they are going to want a cash down payment. And if your unwilling to give up the cash, go elsewhere, believe me, someone in your town would be happy to take your money within your terms.
- Research, research, research......and research all aspects of buying a car, consumer reports is a good investment
- Seperate your needs from your wants, tough but doable
- Set a max on your monthly payment, don't forget your insurance costs will likely go up adding to the monthly payment factor
- If you have a trade-in, research the private party value and compare to what you owe, then sell your car, release the lien and use any extra money as a down payment.
- Everyone knows someone that works for a car company or a supplier, use this as a way to get a great deal with no negotiating. Friends and family, employees, supplier and vendors are all offered some type of discounting. In most cases the price is set on the dealers invoice. No negotiating.
In my case, I finally had a chance to have all the cards in my favor. I had a check from Capital One, I utilized the Ford A-Z plan and I sold my old car. Basically, with my discount I was given a set price (well below dealer invoice), no negotiations what-so-ever. I wrote the dealer a check and blew of all his extra's, refused to have him try and find me a lower rate (3.8% is low enough considering my BK). It took more time to set up the SYNC than to do the paperwork.
How can you sell your car and not use it as the trade-in? Trading your old car at the dealer is convenient and easy, but it will cost you, sometimes big money. If your not underwater on your loan, maybe it is an acceptable cost for the ease. If you are underwater on your loan, the oh-shit factor is inserted here.....you might be stuck or if your willing to pay more, but someone has to take the loss and believe me it won't be the dealer. If you know what your car is worth, you stand a better chance of getting more, but not much more using it as a trade-in. They have to make a profit somewhere.
Explore the possibilities, if you sell your car, can you find a ride for a few days or borrow another car. Clearing liens and titles takes some time, if the dealer has to do it, expect them to be paid for their time. If you own your car outright, all the better, sell it and buy another.
Just because you see the perfect car today doesn't mean you have to jump on it, that will cost you money. Trust me, if you have the Capital One check, the dealer will find you your perfect car after you sell yours, albeit, you may have to wait a few days, but they will find it.
I knew exactly the model, color and package that I wanted that utilized the biggest rebates and lowest cost-of-ownership, the salesman work hard for several days, but found exactly what I expected. If he couldn't, I had a check and was free to go elsewhere....I was in the drivers seat, finally.
The best advice is know exactly what you can afford, a car off the dealers lot is not an investment, your uncles '68 Corvette is. Maximize your buying power and remember knowledge is power. If you can, sell your own car to maximize your return. Focus on the cash rebates....popular this time of year for current or last years models. Just because you can get a $30,000 car with that check doesn't mean you have to use all of it....remember the less you use, the less that payment will be.
If you have your ducks in a row, your experience will be much better and you will come out knowing you got a fair deal. The dealer has to make a profit or they will close their doors. What you can do is to minimize the amount of profit they stand to make from you.
Research, research and more research will provide the knowledge you need to make a good buying decision and maximize your dollar.
Capital One limits the LTV (loan to value) to about 110% on their loans. The way this works is the dealer must fax Capital One a copy of their invoice (not the MSRP), and your loan cannot be more than 110% of the invoice price i.e...a car with an invoice amount of $20,000 cannot be financed for more than $22,000 including taxes, title, docs and the other small stuff. This helps limit the dealers ability to take advantage of the consumer. This also gives you, the consumer, a little extra power in negotiating the out-the-door price. If your loan can't be more than 110% the invoice price, you can give the dealer cash to make up the difference or negotiate the price farther south so you fit under the cap. If they say they can't move, get up and go somewhere else...remember you have a check, which is like having cash, stand tall and proud.
To maximize you buying experience, I suggest the following for those who feel like their getting the shaft as soon as they walk onto the dealer lot. This is from my experience only.
- If you have the Capital One check, tell them so they know up front that your loan cannot be more than the LTV ratio. This way you'll know real soon if they are going to want a cash down payment. And if your unwilling to give up the cash, go elsewhere, believe me, someone in your town would be happy to take your money within your terms.
- Research, research, research......and research all aspects of buying a car, consumer reports is a good investment
- Seperate your needs from your wants, tough but doable
- Set a max on your monthly payment, don't forget your insurance costs will likely go up adding to the monthly payment factor
- If you have a trade-in, research the private party value and compare to what you owe, then sell your car, release the lien and use any extra money as a down payment.
- Everyone knows someone that works for a car company or a supplier, use this as a way to get a great deal with no negotiating. Friends and family, employees, supplier and vendors are all offered some type of discounting. In most cases the price is set on the dealers invoice. No negotiating.
In my case, I finally had a chance to have all the cards in my favor. I had a check from Capital One, I utilized the Ford A-Z plan and I sold my old car. Basically, with my discount I was given a set price (well below dealer invoice), no negotiations what-so-ever. I wrote the dealer a check and blew of all his extra's, refused to have him try and find me a lower rate (3.8% is low enough considering my BK). It took more time to set up the SYNC than to do the paperwork.
How can you sell your car and not use it as the trade-in? Trading your old car at the dealer is convenient and easy, but it will cost you, sometimes big money. If your not underwater on your loan, maybe it is an acceptable cost for the ease. If you are underwater on your loan, the oh-shit factor is inserted here.....you might be stuck or if your willing to pay more, but someone has to take the loss and believe me it won't be the dealer. If you know what your car is worth, you stand a better chance of getting more, but not much more using it as a trade-in. They have to make a profit somewhere.
Explore the possibilities, if you sell your car, can you find a ride for a few days or borrow another car. Clearing liens and titles takes some time, if the dealer has to do it, expect them to be paid for their time. If you own your car outright, all the better, sell it and buy another.
Just because you see the perfect car today doesn't mean you have to jump on it, that will cost you money. Trust me, if you have the Capital One check, the dealer will find you your perfect car after you sell yours, albeit, you may have to wait a few days, but they will find it.
I knew exactly the model, color and package that I wanted that utilized the biggest rebates and lowest cost-of-ownership, the salesman work hard for several days, but found exactly what I expected. If he couldn't, I had a check and was free to go elsewhere....I was in the drivers seat, finally.
The best advice is know exactly what you can afford, a car off the dealers lot is not an investment, your uncles '68 Corvette is. Maximize your buying power and remember knowledge is power. If you can, sell your own car to maximize your return. Focus on the cash rebates....popular this time of year for current or last years models. Just because you can get a $30,000 car with that check doesn't mean you have to use all of it....remember the less you use, the less that payment will be.
If you have your ducks in a row, your experience will be much better and you will come out knowing you got a fair deal. The dealer has to make a profit or they will close their doors. What you can do is to minimize the amount of profit they stand to make from you.
Research, research and more research will provide the knowledge you need to make a good buying decision and maximize your dollar.