Posted on 05/06/2021 6:05:29 PM PDT by NewJerseyJoe
Hello FReepers. Looking for any advice on negotiating the best price for a new car. (I'm getting a 2021 Honda CRV-EX, no options). I've put together an email (see following) that I will send to the local Honda dealers. Asking for any suggestions or wording to make it the most effective. Thanks in advance.
NEVER EVER EVER finance a car unless it's 0.0% over a short term.
I haven't financed a car in 30 years. I drive 2-3 year old SUV's that come off lease and have less than 36,000 miles on 'em. I always pay cash.
BTW: Any salesperson or finance guy at a dealership who says "a car is the second biggest investment you'll make in your life" is a complete moron and should be walked away from. A car is not an "investment" it's a depreciating asset that loses value quickly. Investments (good ones) don't do that.
Our salesman from 4 years ago keeps sending us emails and calling to see if we would be willing to trade in our 2017 Toyota Rav4 for a 2021. Very low miles and I know it is because they can sell it in a heartbeat. lol Doubt we will but you never know.
Car dealerships here, the lots are half full. It is crazy!
I don’t quite agree with everything you said. Certainly 0.0 financing is optimal. But sometimes the dealer will come down on the final sales price if you finance at a higher rate.
When you’re in the finance office and the finance manager is pushing garbage such as optional warranties and gap insurance and junk like that it’s hard to keep your head. But sometimes it’s better to take that 1.9% financing if the dealer is willing to knock an extra couple of thousand off the best price.
And then if they’ll come down another $5000 based on a 5% interest rate, take it. And then as you say refinance the balance right away with the credit union. Or just pay it off if you have the cash.
Best is if you just do the legwork online. You can find all dealers within the range you’d be willing to deal with. See who has the best prices, who has in stock the vehicle you want. Etc. Best is if you can find a few, including going a little more distance than you think you’re up for. Then realize their online sales director is probably the one best empowered to give you the best deal. Call them up and tell him or her you’ve been doing some online research and you’re interested in whatever specific car they have and if they can agree to whatever price you think is the best you can get that you will just come in and do the deal on the spot as agreed. Be clear that you need their absolutely all-fees-included price with it. That you won’t be schlepping their way without the deal agreed to, but if agreed to you will be in that day or the next morning, ready to go. There actually is a lowest price that they are allowed to sell/lease a vehicle, because I hit it once with a dealer. After they had delivered my car to the door, I had signed the paperwork, and they had gone home, their online sales director contacted me out of panic and needed me to overnight a signed deal for $50 more (without my actually needing to pay that), because it was below what they were allowed to send to Honda. Just beware, because if it is a sleasy dealer, they are at risk of trying to slip something more in when you go to complete the paperwork. Best is if it is a dealer nearby, so they can at least anticipate getting you as a service customer after the sale.
They literally make very little off the vehicle.
Most people think that when they have successfully negotiated their price they can relax.
That’s when the loan sharks move in.
https://duckduckgo.com/?q=video+don%27t+pay+cash+for+a+vehicle&t=brave&ia=web
Mrs. Slim got a Hyundai Kona last year and I can’t believe how much car it was for the money. I really want to check out their Santa Cruz when it comes out.
There are quite a few reviews already out on the Santa Cruz. It looks like a neat little toy truck. However they have not announced the pricing. And I’m afraid that will be the dealbreaker. I am not interested in spending $35,000 for a cute little toy truck.
Don’t get me wrong. I’m interested in the Santa Cruz. But I will cross shop it heavily against the new Ford Maverick when it comes out.
I’ve had a few trucks and like them. But I don’t need even a mid- size these days. Plus, better mileage would be great. My Nissan Frontier gets 16, and Mrs. Slim gets 37.
In the beginning of my very long I.T. career, I wrote software for car dealerships that did everything from manage the lot inventory, cost of the lot inventory including insurance, advertising cost, keeping the lot inventory clean, etc.., ran the service department and calculated the deal for each car sold, including running a credit check on a buyer and printing the contract and all related paperwork.
I cannot think of a scenario where the finance reserve (the amount of money a dealer gets from a bank for financing a deal with them) is greater than a $5,000 reduction in the price of the car.
1.9% financing is different typically because that's manufacturer financing which cost the dealer effectively nothing and they get a small percentage of that 1.9% finance reserve back from the manufacturer.
When manufacturers offer 1.9% financing there is very little negotiation on the price of the car. The manufacturer is carrying the burden of financing the vehicle at a very low rate while having to wait for their money over time.
Dealers make their money on the following:
- Accessories sold;
- Add-ons such as extended warranties, "paint protection", undercoating (which is worthless);
- Credit life/Accidental death "insurance" that pays off the vehicle in the event the buyer dies (this is ALWAYS a rip-off!);
- Holdback - the amount of money given to the dealer by the manufacturer for selling the car;
- Finance Reserve - the money the dealer gets for financing a deal through a bank or through manufacturer financing
Dealers absolutely HATE cash buyers because they don't get "free" money such as finance reserve, cash buyers seldom take out extended warranties, get "paint protector" or "fabric protector" applications, nor undercoating or have any reason to buy ridiculously priced short-term life insurance known as "credit life insurance" to pay off their car if they die.
One last thing:
Whenever a car salesman asks you "how much can you afford a month" ... don't answer. If you do, you've screwed yourself. That salesman and the dealer then become highly motivated to sell you the least amount of car for the maximum amount of money to "fit" your payment. They'll load that deal up with every add-on they can charge for too and typically not disclose what's included in the final sale price until the contract is signed.
Any time a dealer asks "how much can you afford" walk off the lot because they think you're stupid. That dealer's a shyster.
Like you, I do my own research and know exactly what model car I want and in what trim. I have my own financing ready to go. I'm not even that picky about price (though I do know what is fair). I'm okay with the sales rep getting a decent commission.
But they still make it a hassle. They try to sneak on things like VIN etching (total rip-off) and chintzy all-weather mats that I can get much cheaper (and better quality) online like with Weathertech. Or those infernal locking nuts that require a special key to get off. I don't plan on parking my car in Harlem and I want the ability to change out a flat tire on a wintry night without having to waste time hunting around for that special socket!
Then you always get the hard sell on the extended warranty (where they have their highest margins) and they try to make you feel stupid for turning it down. I don't need it because I never have plenty of money in my cash accounts - I can pay for an expensive repair every now and then and still come out way ahead of the game.
Why can't they just let a guy buy a car hassle-free! If that ever happened for me, that dealer would have a customer for life.
Anyway good luck and you didn't mention if you had a trade. If you do, take my advice and sell your old car privately or through some other outfit like CarMax (they give a decent price on used cars and cut you a check on the spot). Never trade your car in with the dealer that you are buying your new car from. They are very good at what they do and they will find a way to get over on you with the trade.
Also realize that when you pull into a dealer, once they get you inside, they have somebody doing a walk-around on the car you drove in there looking for blemishes and what not. They are already looking for an angle. Last time I bought a new car, I drove my wife's two-year old car in there and left my 6-year old car at home. I was able to get a decent price negotiated because they thought they were getting a sweet trade-in on the other end. Then I sold my 6-year-old car to CarMax and used the cash to add on to my downpayment.
Finally, never, ever finance your sales taxes and fees into a loan. Pay cash up front for all of that (as part of your downpayment) and only finance what's left on the car. Thirty percent should be the minimum you put down on a car and then no longer than a 60 month loan (48 month is better). That way, you are never upside down on your car and so don't have to worry about silly stuff like "gap insurance."
Plus I’m a bit down on Ford’s QC, my Mom’s 2019 Escape needed an engine replacement (done under warranty) due to a block casting flaw that dumped coolant into the oil.
Years ago I had a Nissan Frontier. A 2006 model which as you know there were no differences between 2005 through 2020. I am quite interested in the new 2022 Frontier when it’s released later this year.
Ford’s bringing back the Maverick name? OMG, I had one in the early 80’s. What a crap-box of a car, LOL!!
Yeah I understand what you’re saying. This new Ford Maverick that’s coming out? The base engine will be a 3 cylinder
I just can’t imagine that. However they will also offer a 2 L turbo 4 cylinder.
When it comes right down to it I would rather buy Japanese over American. Any day.
My Frontier is a 2006, which had the transmission cooler problem that dumped ATF into the cooling system and coolant into the transmission. My circumstances made me replace the transmission and radiator. Mileage was high enough that Nissan did nothing. Still it should make 200K.
Excellent advice on the trade-in and not rolling the sales tax into the deal and financing it.
The funky engines and billion speed transmissions is why I ruled out the new Bronco.
Had one with the 302 V8, peppy but unreliable.
You and me, we think alike. Back in my younger days I worked in dealer finance at a large regional bank. We used to book up to 1000 dealer loans per month. I also used to do floorplans at the dealerships. Wow did I learn a lot there. I never actually worked F&I at a dealership, I would never want to. But I used to see firsthand how they operate. And you’re right. That’s where the money is for a dealership. Not the sales price, not the service department, but the finance office.
The last time I was in a finance office I told the manager no I did not want his optional extended warranty. He kept pushing, as he should. I have no problem with them asking. But I did have a problem with them not taking no for an answer. I finally told him that I know every sales technique in the book. I’ve been a sales manager, I know how they operate. And I know that pushy salesman will keep pushing until they hear no seven times.
So I told him right then and there No. No. No. No. No. No. No.
Then he had the nerve to tell me why I said no. It’s a good thing I’m a little older than I used to be. I was very tempted to cause a situation where the cops would be called on me. But I did not.
True but most dealerships do their own financing and this is where they can make significant profit. For instance, they might get 3% rate from their financial partner but charge their customer 4.5% interest on a new car loan. That's 1.5% going right into their pockets. Even the much ballyhooed 0% financing allows the dealer to bake a little more in the cost of the car. The buyer is so excited over the 0% financing that they tend to lose focus on the total price.
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