Buying A New Car?

Two Lane

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Subject: Advice from a retired car salesman
Date: 10/1/2003 8:33 PM Eastern Daylight Time
From: ERonin36
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I sold new and used, cars and trucks for Chevrolet for over 25 years, but was forced to retire in 2000, when I found I was dying of liver cancer.

I am going to give you the inside of the new car business, what you choose to do with it, is up to you.

First of all, unless money is not one of your worries, do not go after the hottest selling models, which often have limited production, and expect a discount. For example, most Chevrolet dealerships, get less than 10 corvettes per year. They go for sticker, know it going in, and you won't get your feelings hurt when the dealerships refuses to negotiate. When the new body type first came in, Vetts were going, for an average of 20% over full factory sticker. I personally had a waiting list from previous customers who just had to have one of the new models, that took me over a year to fill. The boxer was another car that went for over sticker, there have been many such models throughout my 25 year selling career.

Never order a car from the factory from your dealer and expect a discount, the dealer looses his set up and cleanup fees, that average $700 to a $1,000, and more on the average car. You get your best deals on cars and trucks, setting on the lot. Also, the factory incentives, are only for the cars on the lot, as well. And you cannot have marginal credit and qualify for the factory, low interest rates that so many of the dealers are pushing now. These super low rates are good only for near perfect credit. You must have a 680 beacon and higher on your credit report to be approved.

Unfortunately, in the car business, those who can least afford to pay, pay the most, in both selling price and interest rates.

If your beacon score is 700 or more, your car loan will automatically be bought by nearly any bank in the US for the lowest rate that that bank is currently offering. You would think that all main line banks would offer the same rates for their new car loans, but sometimes the differences are astounding. Your best bet is to call your bank and ask them what their rate would be, before you go to the dealership. Be flexible of the model, and color and features, if you are looking to save the most money possible. When you agree upon the car, and selling price, between you and your salesman, and believe that in a dealership with seasoned sales people, the sales person has the authority on selling price, as long as it is not below invoice.

Getting a green salesman is about the worst thing that can happen to a consumer. He does not have the experience to set cost, or the knowledge to even give you a ball park payment. Why is that bad for the buyer? It means the kid, is running every 5 minutes to, either the sales manager, or a trainer, who is usually one of the top money makers in the dealership, and an old pro of pulling the most profit possible out of the buyer.

Buying a high ticket item, is very much like a chess match between you and your salesman. His job is to sell you a car at a price that you do not want to pay. He works on commission, and unless he hits a certain point, he gets what is called a mini deal and is paid $25 for all of the paper work that is involved in the average car sales. It is a lousy system for the consumer. Saturn has many dealerships where the salesperson is paid a flat, no matter what the car is sold for, so there is no reason for the salesman to knock your head off, as it is called in the business when a lot of profit is made on a single deal.

Every salesman that has any amount of time invested in the business, has a story where they have made $5,000 and more commission on a single sales. There are some people that do not seem to care what they are buying, or how much it costs.

Once you have agreed on price, your real challenge begins. You will be taken into the sales manager's office, and he or she will be an old pro, that was made manager because he was a top money maker as a salesman. If your beacon score is 700 plus, he knows his job will be easy, and it is his or her job to make even more profit for the dealership. He is well experienced is selling deals to the banks, and he knows what discount rate he can get you. Most of these people have sources in states throughout the country.

Like I said earlier, there is a lot of difference in interest rates from bank to bank. He will throw out a rate two to three points higher than he knows he can get you, closing you at this higher rate is pure profit for the dealership, and usually, even though it is illegal, a kick back in cash from the bank for bringing them a good credit customer. Believe it or not, 700 and higher beacons, are getting progressively less common every year, most people have too much credit card debt to have the top scores.

Good credit customers are a good lever to get the banks to buy the marginal credit deals. Not bad credit, but just not as good as they would like. A dealership will give the bank a couple of these perfect credit customers if they buy a couple of the marginals.

If your beacon score is below 600, you can forget negotiating, or even getting the car that you want. The finance companies insist that flakes, as they call bad credit people, buy a car that books out by the NADA, which means the car must have the loan value of the money they are putting up. There are many cars on the market that the mouse houses will not even buy the loans on, because they know the car is subject to break down long before they get their actual investment back. Usually it is a 10% down payment, plus 6 to 9 months of payments. Hyundai, Kia, and many of the Chysler products do not carry their loan value.

Then we have our after market products, mainly the rustproofing, is by far the worst offender. Since 1995, the manufacture have rust proofed their new cars, and guarantee them against rust through for 100,000 miles.Why would consumers buy additional rustproofing, who's guarantee runs out long before the factory rustproofing and it's guarantee? The crap cost less than $20 to put on, but some dealerships are selling it and paint protection for many hundreds of dollars. It is worthless, keep your money.

Are all new car dealers dishonest? NO, in fact most will give the consumer a fair shake, but you must be prepared when you walk in the door, and tell the salesman to leave you alone until you have found something that interests you. Ask for a card and they will page him or her when you are ready. It is the sales persons job to steer you toward the models they need to get rid of. They use rookie sales people for this job, and most don't have a clue anyway. REMEMBER, a rookie salesman means will you will actually be dealing with the sales manager. He is usually a shark.

You have a computer, contact the manufacture of the models that you like and ask what the CSI scores are for the dealerships that you are considering going to. CSI means customer satisfaction index, and it is arrived at by in-depth questionnaires filled out by new car customers who have bought a new car or truck at the dealership you are going to. If the score is below 95%, give or take a point or two either way, go somewhere else. If they couldn't please the customers before you, chances are they won't please you either. CSI is so important with General Motors dealerships, that all of the fast selling models are allocated by how high the dealership's CSI score is. Dealerships are in business to make money, if they cannot keep their score high, they have problems.

This guy is dying of liver cancer, but hoping to give someone helpful we're passing his e-mail along.

HTH :)