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Monday, April 21, 2014

Suggested Word Track For No-Haggle, No-Hassle Car-Buying

You can use this word track to buy a car online, via regular mail, over the telephone, or in person. I strongly recommend that you use online but I know that some car buyers, seniors like me, are not as comfortable with buying over the Internet. Using this word track in person can work, but it will be much more difficult and take a lot longer. Only a person with a very strong will, stamina, and a very thick skin should attempt this. I strongly recommend that you don’t.

(1)   Dear Car Salesman,  “Within the next two weeks (enter your own time frame), I will be purchasing (leasing) a (fill in the specific make, year, model and optional accessories).”  You should carefully research the vehicle that you decide to purchase using all sources of information available such as Consumer Reports. You should also test drive the car to be sure it feels and drives the way you want it to. It is vital that you not change your mind during the purchasing process. If you do change your mind, you must begin all over again. Never let a car salesman change your mind for you. That is one of their favorite ways to charge you more money than you had anticipated paying.

(2)   “Please quote me your lowest price on (your specific car). This price must be an out-the-door price with only state sales tax and the license tag fees paid to the state. To be sure there is no confusion, please understand that the only dollar amounts that I will pay in addition to the price you quoted are taxes and fees actually paid to the state government. I will not pay dealer fees by any name such as electronic filing fees, tag agency fees.”

(3)   “I understand that my request may not be one you wish to comply with because you are concerned that I will shop and compare your price with other car dealers. Your concerns are valid because this is exactly what I will do. You may be asking yourself, ‘why should I do this if I know that my lowest price may not be low enough and that I will show it to your competitor to get an even lower price?’ My answer is quite simple; you may have only a small chance of winning my business if you do give me your lowest price, but you will have ZERO chance of winning my business if you do not, because you will never hear from me again.”

(4)   “I will sell my trade-in to the highest bidder, just like I will buy my new car from the lowest bidder. I will also finance my car at the lowest interest bid by a bank or credit union. If you can meet or beat other dealers and banks, I will trade my car into you and/or finance with you.”

(5)   If you quote me your lowest out-the-door price and I come to your dealership to purchase my car, please don’t even think about: (A) Telling me that the car I specified was sold and that you would like to show me other cars just like it. (B) Telling me that the car I specified has some accessories/options that you installed like nitrogen in the tires, glass etch, pin stripes, floor mats, paint sealant, etc. (C) Telling me that you priced in rebates and incentives that I don’t qualify for like college graduate, military, customer loyalty, customer conquest, etc. (D) The price you quoted me is only valid if I finance my car through you. If you do any of these things, I will not only not buy from you, but I will report you to the Florida Department of Motor Vehicles, BBB, the County Office of Consumer Affairs, Florida Attorney General, and your manufacturer. “

(6)   “If everything goes well with no shenanigans, I will write a letter of commendation to your owner and manufacturer. I will also tell all of my friends, neighbors, relatives, work associates, and club members about my wonderful experience with you and your dealership. I will also post  recommendations on Google, Yelp, Facebook, and Twitter.”

(7)   The choice is yours and I hope that you see the benefits of selling me a car at the lowest price you can afford to give me. I also hope you can see the dangers of giving me a dishonest price so that you can get me into your dealership and try to charge me more than we agreed.”

(8)   I wish you the best of luck and I sincerely hope we can do business and have a long car buying and servicing relationship.”

Monday, April 07, 2014

The 3 Main Reasons You Overpay for a Car

Almost everyone that buys a new or used car looks at the purchase as a single transaction. But it’s not; it’s THREE transactions. Those are (1) Getting the lowest price for the used or new car you have decided to buy. (2) Getting the highest price when you sell your trade-in. (3) Getting the lowest interest rate when you finance your purchase.

Car dealers depend on you looking at the purchase of your car, the trading in of your old car and the financing as one transaction done with them. This allows them to sell you a new car at a very low price (even below their true cost) if they can get your trade-in for less than it’s really worth. The vernacular that car dealers use for this practice is “stealing the trade”. The same thing is true if they can finance your purchase at an interest rate higher than normal. Car dealers get “kick-backs” from banks when they charge an interest rate higher than the lowest interest rate the bank offers. In fact, car dealers make more money from the financing of cars than they do from the cars they sell.
Car dealers know that most prospective car buyers have a “hot button” when it comes to buying a car. With many it’s the monthly payment. With some it’s “How much can you allow me for my trade?” Some are mainly focused on the price of the car their buying. Some are actually focused only on how small a down payment they have to make. With others, it’s the lowest interest rate. The salesman’s job is to find your hot button. Once they know that, they can give you what you’re focused on, like high trade-in allowance, but still make a much bigger profit on the overall transaction than you should be willing to pay.

You’ve seen and heard the advertisement. “$3,000 Over Kelly Blue Book for your trade-in,  Minimum $10,000 trade-in if you can push, pull, or drag it in, or We need your (fill in the blank of any year-make-model) and will pay you $5,000 over book.” All those ads are designed to do are get you into the dealership based on your hot button. They can actually give you a high trade-in allowance just by marking up the car you’re buying enough to offset how much extra they give you for your trade. 
The same thing sort of trickery applies to any one single hot button. A low monthly payment can generate a huge amount of profit to the dealer with a long enough terms (84 months for example) or a high interest rate. A low price on the car you’re buying is offset by “stealing your trade”, allowing you thousands less than your trade is really worth. A low down payment leaves the door open too. You’ve all seen the 0% financing ads, but this means nothing if you overpay for the car you’re buying or let go of your trade for too little.

The only save way to get the lowest total transaction price is to negotiate each price separately…the car, the trade-in, and the financing. When you’re shopping for the lowest price for your car, tell the car dealers you don’t have a trade-in and you’re paying cash. When you’re shopping for the highest price on your trade-in, tell the car dealers that you don’t want to buy a car, just sell the one you have. When you are shopping for the lowest interest rate, check with you own bank or credit union and another bank or credit union for their best rate before you ask the dealer what his lowest rate is.
After you’re armed with all of this information, go to the car dealer who offered you the lowest price on the car you want to buy. Then ask him if he can meet or beat the highest price you have quoted on your trade-in. Similarly, ask if he can meet or beat the lowest rate you have on your financing. When you’ve done all this, you can be assured you have the best total transaction price. There’s one caveat on the trade-in. In Florida, you pay 6% sales tax on the difference between the trade in and the price of the car. Therefore the dealer you trade the car to can be 6% lower than the high bid on your trade from another dealer and still match it, because you will lose the sales tax savings if you sell your car to another dealer since you won’t have a trade.