Are you a bad Customer when buying cars? Why you must change!
Why do your care? It should be the salesman’s job to serve me! Well, truth is, if you lie, cheat, and treat the person you are working with like dirt then you can expect your experience to be long, unproductive, and reciprocated. In a previous post I discussed tips to spot a lying car salesman. Before you jump to conclusions did you do any of the following:
Stretch the truth about your credit score? Discuss the perfect condition of your door dinged trade-in?
Bring in an add and ask them to match it only to turn them down when they do?
Expect the salesman to sell the newest year model in high demand under invoice?
These are just a few things you can do to distill trust in the person you are working with. If the salesman does not have trust or respect for you, what is his incentive to give you the best deal? Sure he wants to sell you the car, but he is not going to give you his best deal.
Negotiation is a two way dialog that involves trust, respect, and strategy. I have always found it is better to be honest up front and strategically reveal the disadvantages of your position that you know are going to come up.
If you have a trade in that is upside down by $2K, no need to keep that information hidden and then act surprised when they tell the same thing. By carefully revealing the known disadvantages they can’t be used against you later in the negotiation and it lays down trust to your opponent. They will have less incentive to try to tweak the numbers in their benefit and it will save you time in your negotiations.
One of the biggest complaints you here about from car salesman is about customers that come in and demand the 0% APR, tell them they have good credit only to find out after the deal is negotiated that the customer has horrible credit and can’t qualify. In this case the customer has weakened their position and in all honesty would you want to give this person the best deal after they just wasted your time?
If you end up with a bad car salesman, remember you can always leave and find a good one, but make sure to ask yourself:
Was the car salesman bad because I was a bad customer?
This is very important, because there are great salesman that can appeal to bad customers. These salesman are very good at identifying these types of customers and have tactics that allow them to negotiate a far better deal for the dealership. The car salesman is not being dishonest of unethical, they are just playing a better game of negotiation and playing a bad customer’s emotions. Whenever emotions are used, you will lose. Whether it is in investing, purchasing a house, or buying a car. You must set your emotions aside, have your facts ready, and come to play the game.
Happy car shopping! Working to find you Value!
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Battle Royale! Low Car loan APR Vs. Cash Back?
0% financing is back and so are generous cash back offers. Knowing which one to take can save you money in the long run! Here is how to do it!
Some key questions to ask yourself:
1. How much can you afford each month or how much do you want to spend?
2. What is your credit score?
3. How long do you typically drive your cars?
Ok, with those out the way and saved for later lets do some comparing. Take a look at the Chevy Silverado which currently has $3,000 cash back, 0% apr for 60 months, or 1.9% apr for 72 months. Three great offers (offers found via edmunds.com). We will base the compare on the truck costing $25,000.
First calculate your payments and total cost of the car. If you don’t know how to calculate loan payments you can download our free loan tool for excel found in the left margin or use this quick and easy tool at Bankrate.com.
APR Amount Payment
0% $25,000 $416.67 (not including tax and fees) (60-months)
1.9% $25,000 $367.66 (not including tax and fees) (72-months)
Total Cost of car using 0% APR loan: $25,000 +tax and fees
Total Cost of car using 1.9% APR loan: $26,471.52 +tax and fees
Now for the hard part:
If you want to take the cash offer you will not get the special financing and be subjected to normal car loan rates. This also implies that your special car financing comes at a cost of $3,000. Your rate will be dependent on the bank offers and your credit score. The best advice here is to do research to see what banks are giving to average car loans from sites like Bankrate , Lending Tree, or Eloans. With great credit you should do better than the average and with poor credit you will do worse than the average.
Now, calculate your cost of the car based on a few interest rates and compare.
APR Amount (less rebate) Payment Total Cost of Car
5% $22,000 $413. $24,806.67 (not including tax and fees)
6% $22,000 $423.21 $25,392.34 (not including tax and fees)
In this example, for a 60-month loan with no down payment, you should take the rebate if you your interest rate is below 5%.
Alternative method is to calculate what the $3,000 equates to as an interest rate on a 60-month loan for $22,000. If you do your math correct you should get 5.3%. If your loan is better than 5.3% take it, otherwise go with the 0% apr.
Caution
Factors such as putting money down or adding accessories impact the results. If you put money down, you are going to pay less interest. For example, if you put $5,000 down on the 6% loan your total cost of the car is now $24,621 making it a better deal. However, you sacrifice $5,000 of cash which is a whole other topic.
Fees and other accessories also add to the price of the car, make sure to add them in when doing your compare.
Remember the questions up top? They now come into play. One method may be better, but if you can’t afford the payment then you will need to go with a different option. If you have done your homework, you will know how much the option costs you.
The other important question above is your credit score. Many of the good APR offers don’t apply with poor credit, so taking the cash rebate is a better deal.
For the last question, how long do you normally own a car? The longer you stretch out your loan the more likely it will become upside down (same holds for interest, the more you pay the less principle you apply on a monthly basis). If you know you flip cars every three years, consider taking a shorter loan or at least an option that puts your principle after three years close to the estimated value of the car (hint you will need an amortization schedule to figure that one out).
Happy car shopping! Finding you better deals!
10 Lies of a Dirty Car Salesman!
Lies, Lies, and more Lies. So you know everything there is to know about the car you plan on buying. From the true wholesale value to the estimated deprecation. You are armed with spreadsheets, references, ads, and competing bank interest or lease rates. So what is the one thing you are missing? How about a lie detector? That’s right, so here are ten sure fire signs your car salseman you are working with is feeding you to the scum:
1. “This is the lowest deal ever done in the history of this dealership” says the car salesman as he smiles and winks at you. Yeah right! This is your sign to push harder, you have not done good enough.
2. “This sale is the best they have had and it will never be repeated” says the manager of the dirty car salesman. If that is true then ask him to put that in writing and guarantee you that if a better deal ever comes along they will pay you the difference, and then say goodbye. The salesman obviously does not think your intelligent to speak out such nonsense.
3. The car salesman tells you he will give you private party blue book for your car. If they do, then you are paying to much somewhere else. Most dealers send cars to auction which is far less then private party blue book and the reason why they give you such a low amount on trade ins. Giving you Private Party blue book value is a losing proposition for them.
4. “We need 20% down”, says the car salesman. If this comes before they have checked your credit score get up an leave or tell him you want the car for $10 per month. No bank requires this unless you have horrible credit. They are conditioning you to make the real offers sound better. Your in for a long ride with this salesman if you don’t set him straight right away.
5. The words of a great Lying salsman: “We have a great 52-month loan” or substitute any loan that is different than 24,36,48, or 60 months. This is a big red flag! Off period loans are designed to maximize profits because people are usually not prepared to negotiate them. If you know how to, then by all means check the math and proceed, but if you don’t know how stay away.
6. “I have to check with my manager on that payment” says the eager car salesman. No they don’t. Fact is after they run your credit they have nice programs that tell them what various banks are going to loan you. If you are negotiating loan payments, you are losing the battle. You should always be negotiating the car price. For that they may need to check with the manager if you are driving a hard bargain. Once the price is determined, your car payment is a function of your credit score and any special promotions a bank is willing to give you. You need to know this information, if you do you will save yourself a lot of time and money negotiating your car.
7. “Residual values are set by the bank” said by the car salesman in the heat of negotiation. Well this is true, however, is that what they are giving you in your lease? A tactic that is used in leases is to up the payment and giving you a lower residual value at the end of the lease. This does you no good, it just means you are renting the car higher than what you should be renting it for. You should know the approximate residual value. I have not found any sites that reveal this information for free, but a good approximation is looking at the used car market 3 and 4 years out. A typical care can lose about 40% over the first four years ( 20% in the first year and then 7-10% in each subsequent years). By the way never do a 60-month lease. 36-month leases are optimal in most cases. More to come on leasing cars in future posts.
8. “This deal is only available today!” Probably not true unless it is a factory special that expires. If you have done your homework you will know this already and be able to know if the salesman if lying to you.
9. “We can’t match the same deal the other dealer has!” Probably not true. If it is, then leave and go to the other dealer.
10. “Our dealer sells the most cars and gets the best pricing from the manufacturer!” Hmm, it is funny that every dealer I have walked into says this. Perhaps they all sell the same amount of cars. If they are claiming this ask them to back up their offer. If you find a lower price have them give you the difference, after all they are suppose to get the biggest discount right?
Here is the good news. For every bad car salesman there is a great one! Key is to find them and work your deal. If you do get a bad salesman simply ask to work with someone else. If we all did this perhaps we could weed out the bad salesman and change the car buying experience.
At the end of the day, be careful about statements that seem strange or don’t correspond with your research. The more prepared you are the better you will spot the good from the bad and walk away with a great deal.
Finding you value in car shopping!
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