Ask the Sales Rep.

[pathwaydon]

Hello people.

Have you ever really wanted to know..."What was the dealer/salesperson/service rep thinking?" Maybe we can have an open discussion about that.

I have been in the business for 6 years. 4 years at the same high volume Hyundai dealer in Ottawa(2nd highest sales in Canada). This is rare for a lot of people in this industry where dealerships see ALOT of turnover. Ihave been both a manager and sales rep. I love my job, I'm PROUD of it.

I've always wanted to know what my customers are really wanting to ask me. What could they be thinking or where did they get that idea? So maybe I'll be asking you a question, but really feel free to ask me one or more, without the sales pressure.

Or flame me if you like...whatever. LOL

I'm just hoping to have an open discussion about car buying and car selling from both points.

Thanks

[scat19]

Credit gets denied? Do you all giggle by the water cooler?

[adam c]

why don't you give younger people the time of day, i don't know any young people who go to car dealerships to 'hang out' i go there because i am interested in making a purchase not getting a cold shoulder and dirty looks (T&T Honda)

[pathwaydon]

Originally posted by scat19
Credit gets denied? Do you all giggle by the water cooler?

Credit is a tough one. Officially the finance manager isn't allowed to say anything to the rep other then to tell him that he can't get it approved. Unofficially, any salesperson that has been around for an extended period of time can usually sense this prior to the deal being made. If they were smart enough to tell the Finance Manager prior, there might have been a more open discussion between the F&I manager and the client. Unfortunately clients often keep that info close to the chest and hope for the best.

From the sales rep's point of view, they are mostly upset because an unapproved deal is a deal he/she doesn't get paid for. The priority of the Finance office is to roll the car and they SHOULD be working as hard as possible on it. Some F&I managers are lazy, but many customers become very defensive when the topic of their credit history is discussed.

Hope that answers it.

[vtec4life]

What percentage of people that you call back after not hearing from them for a while actually come back in and buy a car?

[pathwaydon]

Originally posted by adam c
why don't you give younger people the time of day, i don't know any young people who go to car dealerships to 'hang out' i go there because i am interested in making a purchase not getting a cold shoulder and dirty looks (T&T Honda)

I don't know that dealership in particular as I live in Ottawa but here's the scoop:

A younger person (19-25) often has one of 2 issues. One: They are more often then not going to need a parental co-signer for credit approval based not on bad credit but on the fact that the major lenders also take into consideration established credit history. Therefore many sales people look for the parent to be there as well because they feel like that will be a key element in putting together a solid deal.

Two: When a younger person is shopping for a new car it's a HUGE expense and alot of the time it's the first major purchase. This leads to alot of wishy washy/not able to make a decision for fear of making the wrong one etc...you have to remember, to people that are paid by commision time is money. The totallly wrong impression sales people have of younger shoppers is:

"This kid is going to take up my time, and either not be able to pull the trigger, need to talk to dad/mom/grandpa who ever before they can buy it OR the credit app won't go through. I'm going to talk to this other guy"

Again...this is the wrong attitude. You want the attention? Do some of the legwork before you go in. Get a copy of your credit report($15.00 online) so you know that you'lll either be approved or need a co-signer. If you need one, get that person to come along or at least say to the sales rep that you know and have already arranged for it. Be clear that YOU are the person making the decision and are ready to make it when you find the right car. Pick a dealer with a solid reputation. Check your local BBB.

If the deal does involve running the idea by a parent spouse or someone else. Go in with them! Nothing makes a sales rep walk the other way faster then a 20yr old guy coming in with baggy jeans hat on backwards and then asking to test drive that hot new sports car. Sorry, but that's the way it is. It's not right but a fact of life.

One other option you can try is many dealers have the option for pre-approval online through their website. Once the pre-approval is done someone from the dealer will call you and you won't have to sweat the sales people not paying attention to you.

I hope this helps.

[ExtraSlow]

Originally posted by adam c
why don't you give younger people the time of day, i don't know any young people who go to car dealerships to 'hang out' i go there because i am interested in making a purchase not getting a cold shoulder and dirty looks (T&T Honda)
Kinds the same. If it's a busy day, how do you chose which prospective customer to approach?
I know I got a lot better service when I took my wife along, which was annoying since I had tried to do a lot of the up front work before bringing her.

[pathwaydon]

Originally posted by vtec4life
What percentage of people that you call back after not hearing from them for a while actually come back in and buy a car?

Good question.

Follow up is key to making money in this business for the long term.

I would say that on average not enough sales people even call back after a week maybe 2. I think we saw a stat the other day that said 71% of people that start shopping on Friday have bought a new car by the following Thursday.

An actual percentage is tough. You'd have to be more specific. Past the 1 week point even with very tight follow up I'd say the return and sold rate is 10%.

The rest of the people either buy somewhere else, realize they can't buy a car right now, or buy the same product from a different dealer.

Can't win them all.

[pathwaydon]

Originally posted by ExtraSlow

Kinds the same. If it's a busy day, how do you chose which prospective customer to approach?
I know I got a lot better service when I took my wife along, which was annoying since I had tried to do a lot of the up front work before bringing her.

If it's a busy day, often I don't get to choose. They're flagging me down. Some Saturdays I have 2 or 3 on the go. I try not to do that though because it's not fair to the customer.

But generally you're 100% correct. If I see a young couple and a lone guy come in at the same time, I go for the couple because I assume all the decision makers are there today. There's not secret to it salespeople naturally gravitate towards what they believe to be a sale despite the fact that EVERY seminar I have been to instructs us not to do that.

Quite honestly, if you want the best service, talk to someone who bought the product you're interested in, find out where they bought it and if they know the name of the salesperson. Call and make an appointment WITH THAT SALESPERSON. I promise you, he/she will take you seriously because you called him, you're now a referral not just a walk in he/she can avoid. I promise you'll be serviced better.

[pathwaydon]

BUMP

[Redlyne_mr2]

Good answers pathwaydon, as a finance manager I'd be happy to answer any questions relating to the credit process.

[legendboy]

Originally posted by scat19
Credit gets denied? Do you all giggle by the water cooler?


yes and they call you a "roach"

[pathwaydon]

Originally posted by legendboy



yes and they call you a "roach"

Sometimes they use the phrase "credit flake" or flake.

But only with the clients that get upset at the dealer because THEY tried to either hide their bad credit and got found out or because they feel the dealer screwed them when they can't get approved.

[Proyecto2000]

Originally posted by adam c
why don't you give younger people the time of day, i don't know any young people who go to car dealerships to 'hang out' i go there because i am interested in making a purchase not getting a cold shoulder and dirty looks (T&T Honda)

Originally posted by ExtraSlow

Kinds the same. If it's a busy day, how do you chose which prospective customer to approach?
I know I got a lot better service when I took my wife along, which was annoying since I had tried to do a lot of the up front work before bringing her.

this aint a question, but the following happend to me at two dealerships:

I went to BMW at the Automall 3 years ago when I was looking to buy car. It was the middle of the day not a single person insight, except the 4 salesman that where smoking outside. So they see me walking around the used lot and 3 of them walk back inside and the other guy stays outside and just keeps looking in my direction, so I ask to see this used 3 series (it was like $14k) and he says that he will get some one to help me. I waited about 10 minutes for some one to come out and show me the car and no one showed.
Walked across the street to Infiniti and I had a guy come out and help me right away and I bought a car 30min later.

Then just last July, I go to Fish Creek Nissan and im looking at an Xterra and this old guy comes up and tells me if he can help me, I said that I was interested in buying an Xterra and I wanted to test drive one. Old guy looks at me and says "can you even afford it?". So I give the guy a WTF look and I said nice way to treat a customer and as I walked away I said "I probably make alot more money then you do pal."

Went to Calgary Subaru and I was treated completely different from the time I walked through the door and so I bought a new Forester.

I look pretty young, especially when im wearing a t-shirt and a ball cap, but how can you ignore a young guy that walks into a dealership these days? There is alot of young 20 somethings that make good coin working in Oil & IT.

[ZorroAMG]

Ignoring someone based on how they look or how old they are is shitty salesmanship, period.

I've done MAJOR deals with people you'd NEVER expect to deal on. You judge, you fail, IMO.

[KrisYYC]

Great thread. Thanks for starting it pathwaydon.


I have a finance related question:

Does having a downpayment significantly affect qualifying and the interest rate much?

Say if you can put 15-20% down cash.

Thanks

[sputnik]

Originally posted by ZorroAMG
Ignoring someone based on how they look or how old they are is shitty salesmanship, period.

I've done MAJOR deals with people you'd NEVER expect to deal on. You judge, you fail, IMO.

Most people that look rich... aren't.

[pathwaydon]

Originally posted by ZorroAMG
Ignoring someone based on how they look or how old they are is shitty salesmanship, period.

I've done MAJOR deals with people you'd NEVER expect to deal on. You judge, you fail, IMO.

I'm confused...is this directed at me? Because, I admitted in a previous post that this is a dangerous game to play.

[legendboy]

Originally posted by pathwaydon


Sometimes they use the phrase "credit flake" or flake.

But only with the clients that get upset at the dealer because THEY tried to either hide their bad credit and got found out or because they feel the dealer screwed them when they can't get approved.

well here in Alberta, they are roaches lol

[pathwaydon]

Originally posted by KrisYYC
Great thread. Thanks for starting it pathwaydon.


I have a finance related question:

Does having a downpayment significantly affect qualifying and the interest rate much?

Say if you can put 15-20% down cash.

Thanks

Good question.

Down payment might have some positive effect on whether or not the bank/finance institution will finance you based on the fact that you are putting up some risk as well. 20% would be a huge number and I rarely see that kind of cash down.

With regards to interest rate, that is usually related to the person's credit strength. The higher the risk you are then the worse the rate. It MIGHT and I mean MIGHT allow a bank to consider you for a 0% finance option should that option be available from the company and I've never seen 0% advertised on pre-owned vehicles only on new.

Now one thing you have to be aware of is that the less you finance, sometimes the higher the interest rate. If the bank is lending you less money, they will dictate that you pay higher interest because they still want to profit.

REMEMBER: This is the bank/finance company NOT the dealer.

Usually any amount below $10000 financed through a major lender will be at an interest rate of 9%-11.25%. Again this only applies if there are no "sub-vented" rates offered through the manufacturer.

Keep in mind that I work at a Hyundai store. Hyundai Canada does not have it's own finance compny(i.e. GMAC or Honda Canada Finance) so this information applies to the major banking institutions that do dealer lending.

I hope this helps.

[MintRacer]

Originally posted by legendboy


well here in Alberta, they are roaches lol

aka pipe dream

[Justing]

When purchasing a car, is it more beneficial for the dealer to have the purchaser buy with cash or through financing?

I offered a cash price to a dealer, thinking I may be able to get a deeper discount, but the salesman told me he prefers financing as the dealer makes more money.
Is this true?

[94boosted]

Originally posted by pathwaydon


I think we saw a stat the other day that said 71% of people that start shopping on Friday have bought a new car by the following Thursday.



Very true I had noticed that in my Car Salesman days they start at the beggining of the weekend and they want their car before the next weekend.

Props to you pathwaydon good info :thumbsup:

[pathwaydon]

Originally posted by legendboy


well here in Alberta, they are roaches lol

I don't know how there could be flakes or roaches in Alberta. According to my family everyone is an oil millionaire so even if credit is a problem don't you all just go out pull some gold off of the gold paved sidewalks?

LOL

[pathwaydon]

Originally posted by Justing
When purchasing a car, is it more beneficial for the dealer to have the purchaser buy with cash or through financing?

I offered a cash price to a dealer, thinking I may be able to get a deeper discount, but the salesman told me he prefers financing as the dealer makes more money.
Is this true?

I love this question.

First off, I've always been interested to know WHY clients think cash will get them a better deal.

Anyway. The dealer would very likely prefer that you finance for a couple of reasons. As long as the company isn't offering "sub-vented" financing then they want you to finance because there is a reserve, essentially a finders fee that the bank pays the dealer for bringing them a customer. Now before you get all hot under the collar about this remember. Your mortgage specialist get's kick backs from the bank. Your insurance agent gets a kickback from the Insurance company. Everyone is paying someone.

So if the dealer is down to the bones on a deal, as in he's making no profit from the car sale, then he wants to recoupe some of that money with the bank's kickback. So in fact, if you pay cash...he might not be making any profit. Believe it or not there are some dealers in Ontario that advertise both a cash price and a finance price, and the finance price is lower. Keep in mind, no one is in business to break even right?

So yes, the dealer makes money when you finance. But is that so bad?

[MintRacer]

Originally posted by pathwaydon


I love this question.

First off, I've always been interested to know WHY clients think cash will get them a better deal.

Anyway. The dealer would very likely prefer that you finance for a couple of reasons. As long as the company isn't offering "sub-vented" financing then they want you to finance because there is a reserve, essentially a finders fee that the bank pays the dealer for bringing them a customer. Now before you get all hot under the collar about this remember. Your mortgage specialist get's kick backs from the bank. Your insurance agent gets a kickback from the Insurance company. Everyone is paying someone.

So if the dealer is down to the bones on a deal, as in he's making no profit from the car sale, then he wants to recoupe some of that money with the bank's kickback. So in fact, if you pay cash...he might not be making any profit. Believe it or not there are some dealers in Ontario that advertise both a cash price and a finance price, and the finance price is lower. Keep in mind, no one is in business to break even right?

So yes, the dealer makes money when you finance. But is that so bad?

people think cash gets you a better deal because of East indian's and Chinese people

[Mibz]

They think it because, in other markets, specifically retail, it does.

In retail if you're paying cash/debit you'll get a bigger discount than if you pay via credit card due to the 1-3% overhead of using a CC. As well, retail salesmen don't have finance managers, they do all the paperwork themselves and any time spent filling that shit out and faxing it is time NOT spent with customers. No kickback from financing companies either.

I understand that cars are a totally different scenario, I just wanted to let you know where they might get that idea.

[Redlyne_mr2]

Originally posted by KrisYYC
Great thread. Thanks for starting it pathwaydon.


I have a finance related question:

Does having a downpayment significantly affect qualifying and the interest rate much?

Say if you can put 15-20% down cash.

Thanks
With certain manufactuters the more cash you put down the lower the interest rate. With Lexus for every $1000 you put down it buys down your interest rate .1% so technically you could buy your interest rate down to 0% if you wanted to, which we see quite often.

The more cash down the easier the approval as there is less risk involved.

[dr_jared88]

I think the reason most people think that cash will get you a better deal because they think the dealer is doing you a favor by taking payments. It's like if I sold someone something for $500 but I agreed to take $100/mo for 5 months. Well obviously I'd rather the $500 cash but I may be willing to sacrifice if I can't find another buyer.

People don't think of how the interest you pay is benefiting someone else.

[Justing]

Originally posted by MintRacer


people think cash gets you a better deal because of East indian's and Chinese people


how did you know i was a chineses. lol

yea old school chinese people don't finance/lease.
always cash...i just grew up that way haha




thanks for the answers guys, i thought the dealer would prefer a cheque for cash flow purposes.
Also, I expected the dealer to have to 'sell' the finance to the collection agency.
interesting stuff, thanks for the answers!

[max_boost]

Originally posted by ZorroAMG
Ignoring someone based on how they look or how old they are is shitty salesmanship, period.

I've done MAJOR deals with people you'd NEVER expect to deal on. You judge, you fail, IMO.

C'mon, in one way or another, we all judge. You know, first impression is everything haha

Well I think one way to change that attitude is, salespeople just need more training on how to deal with situations like this.

i.e. Guy is in the showroom walking around looking at a MB350 4matic, salesguy can just ask him small stuff like, what are you driving right now? Why are you interested in MB? Have you considered any other models etc? Tell him about the current lease/finance deals, see if he wants to pay cash etc. You know, test the customer's knowledge and get some background info on him etc.

At the end of the day it's a commission business so sales personnel is going to go after the customer who he/she thinks is most likely to buy.

[ZorroAMG]

pathwaydon, nah my comment wasn't directed at you...unless you DO that to clients haha :)

Max,

What about being nice to the young guy and taking the time because if HE doesn't buy, he may recommend you to others? THAT is what it's about. NOT being the judgemental dick so that you and your tweed jacket can get back to your cubicle and solitaire LOL

It's all about CS and networking....would you refuse to seat someone because they didn't look hungry? :)

[Proyecto2000]

Originally posted by MintRacer


people think cash gets you a better deal because of East indian's and Chinese people

but if you pay cash, you dont have to pay a dime on interest. :dunno:

[Wrinkly]

Originally posted by ZorroAMG
Max,

What about being nice to the young guy and taking the time because if HE doesn't buy, he may recommend you to others? THAT is what it's about. NOT being the judgemental dick so that you and your tweed jacket can get back to your cubicle and solitaire LOL

It's all about CS and networking....would you refuse to seat someone because they didn't look hungry? :)

Very true. There is so much more to it than whether a particular person is going to purchase. The way potential customers are treated at a dealership could hurt them later.

If I am ignored or treated poorly somewhere (even if I'm just browsing/killing time), then the chances I'll go back there when I am seriously shopping go WAY down; and of course, when talking about car buying with anyone else who's looking, my experience may put them off going there, too.

I was ignored on more than one occasion at the Volvo dealership (Richmond Road) when shopping for a vehicle. I was also ignored at Land Rover in the Auto Mall (again, more than once when there were plenty of sales people seemingly doing nothing and no other customers in sight).

Do they not want to SELL cars? I walked out and never went back. If they can't even be civilised enough to say hello to a potential customer, it speaks for the dealership as a whole in my opinion.

Also, my son relays his experiences of visits to local dealerships and how he is treated as a young guy. If he is treated poorly, then it's unlikely I will go there either.

Great thread, and food for thought for any car sales people reading it.

[pathwaydon]

Everyone seems to be getting a kick out of this thread so that's great.

I want to address the cash vs finance thing first.

What I think some folks are trying to say is that the dealer should want the money right away as opposed to collecting payments over time. I agree that would be preferable.

The truth however is that once the deal is made and the finance papers are signed, the bank/finance company funds the dealer the full amount within a day of you picking up your new car. The re-payment agreement is between the client and the bank not the client and the dealer.

What I'm trying to say is that as far as cash flow, the dealership gets the full amount right away no matter if you pay cash or finance.

I hope that clears things up.

Also there was a post about not paying interest if you pay cash. Again, I agree. But if you calculate the amount of interest over 5 years and then look at how much value the car loses (30% in the first year) is it really worth it?

Example:

Finance a new Sonata for 24k over 5 years total interest paid @ 3.2% is $2002.82

OR

Pay 24k in cash and lose 30% in the first year = $16800.00

I'm not telling anyone how to spend their money, but wouldn't 24k in a GIC for 5 years be a better investment, I'm certain you'd get that $2002 you paid in interest back.

[pathwaydon]

Originally posted by Wrinkly


Very true. There is so much more to it than whether a particular person is going to purchase. The way potential customers are treated at a dealership could hurt them later.

If I am ignored or treated poorly somewhere (even if I'm just browsing/killing time), then the chances I'll go back there when I am seriously shopping go WAY down; and of course, when talking about car buying with anyone else who's looking, my experience may put them off going there, too.

I was ignored on more than one occasion at the Volvo dealership (Richmond Road) when shopping for a vehicle. I was also ignored at Land Rover in the Auto Mall (again, more than once when there were plenty of sales people seemingly doing nothing and no other customers in sight).

Do they not want to SELL cars? I walked out and never went back. If they can't even be civilised enough to say hello to a potential customer, it speaks for the dealership as a whole in my opinion.

Also, my son relays his experiences of visits to local dealerships and how he is treated as a young guy. If he is treated poorly, then it's unlikely I will go there either.

Great thread, and food for thought for any car sales people reading it.

I agree. I guess the point I was trying to make is that people in the business aren't paid to give out information, so the natural progression is for them to spend the most time and energy on what they figure will make them money today. It isn't right but that's how they think. Closers eat. LOL

And actually all the training does focus on not pre-judging/pre-qualifying customers. In this case, it's not the training, it's the sales reps and the bad habits they develop.

[pathwaydon]

Originally posted by ZorroAMG
pathwaydon, nah my comment wasn't directed at you...unless you DO that to clients haha :)

Max,

What about being nice to the young guy and taking the time because if HE doesn't buy, he may recommend you to others? THAT is what it's about. NOT being the judgemental dick so that you and your tweed jacket can get back to your cubicle and solitaire LOL

It's all about CS and networking....would you refuse to seat someone because they didn't look hungry? :)

Hey believe me, I'm all for networking and repeat and referral business so I agree with you.

There are alot of time wasters in this business. I used to be one. The guy playing solitaire is one of two guys:

1. Rookie, doing it as a "job" he's not a pro and wil likely move on to something else. These people hurt the dealer most because the dealer pays all that money in advertising and then when people show up, this guy doesn't talk to them.

2. He's a pro. Meaning he's been at the same place for a long time might have a very good established customer base and gets the majority of his business from repeats or referrals. Now, this guy won't be playing solitaire, but even though he isn't with a customer it doesn't mean he is lazy. Maybe he has time dedicated to an appointment coming in. Or maybe he's working on selling his 2nd or 3rd car to the same household and he's putting a proposal together. My point is, he doesn't need walk in traffic to earn anymore because he's learned the secret.

[Masked Bandit]

Hey Dealer Man!

You stated earlier in the thread that all things being equal, dealerships prefer a financed deal as they get a kickback from the bank. Fair enough.

What I want to know is, what if I were to "finance" the vehicle with the dealer so they get their end, and then I pay off the loan the next week so I'm not paying interest. Are there any kind of penalties for paying a loan out early? What about fees to set up the loan in the first place?

Thanks

[topmade]

^^ Yeah there usually are penalties, but if you get 0% financing, then there is no real benefit from paying it off right away.

[Redlyne_mr2]

Originally posted by Masked Bandit
Hey Dealer Man!

You stated earlier in the thread that all things being equal, dealerships prefer a financed deal as they get a kickback from the bank. Fair enough.

What I want to know is, what if I were to "finance" the vehicle with the dealer so they get their end, and then I pay off the loan the next week so I'm not paying interest. Are there any kind of penalties for paying a loan out early? What about fees to set up the loan in the first place?

Thanks
Depends on the bank, certain banks have a clause in the contract that won't allow you to pay off the loan in the first 3, 6, 12 months. The banks I've dealt with (First Calgary, TD, Toyota Credit) don't charge any fees for paying out the contract early.

[KrisYYC]

^^ Yep.

My brothers loan was with TD and he was able to pay it off early without penalty. Not in 6 months, more like two years but still.

[Wrinkly]

Originally posted by Masked Bandit
Are there any kind of penalties for paying a loan out early? What about fees to set up the loan in the first place?

Thanks

This used to be the case - but not any more. The law was changed and you cannot be penalised for paying out a loan early.

As for the affect on the dealer - maybe Pathwaydon can answer that....

[rockanrepublic]

have you read confessions of a salesman. thoughts?

[Redlyne_mr2]

Originally posted by Wrinkly


This used to be the case - but not any more. The law was changed and you cannot be penalised for paying out a loan early.

As for the affect on the dealer - maybe Pathwaydon can answer that....
We still get our reserve (kick back) either way.

[kaput]

.

[SOAB]

no, you don't have to pay the total interest youwould have paid if you let the loan go to term. you would only pay the remaining principal amount + any interest accrued since your last payment.

[spike98]

I dont know if its 100% accurate but i believe your monthly rate is calculated with interest on the total amount borrowed. When you pay the loan off early you pay off the total principal owing and do not get charged any interest on the balance.

[Wrinkly]

Originally posted by kaput
When you guys refer to paying out a car loan early, does that include the total interest that you would have accrued/paid over the full term, or just up to the payout date? (Does that make sense?)

No - just the balance remaining. If you had to pay all the interest there'd be no point in paying the loan off; may as well keep your money in the bank.

[max_boost]

I have a question, is the finance manager's job as easy as it looks? lol

Take some credit info, fire it off to the banks, wait for approval, sign some documents, sell some undercoat, extended warranty, 6 figure salary.

:bigpimp:

[bubbley]

have u ever jerked it in a parked car on your lot?

[spankingmonkey]

i heard if the customer is a grizzled veteran about negotiating prices he can get a great deal.

if I remember correctly, you can get factory rebate and/or even get dealer rebate or something if you play your cards right.

so my question is, if the dealer is gonna bring the price down where are they deducting it from. I know the dealership needs to make some money and the sales rep needs some commission.

and how is the customer phrasing those words when he is grinding the guy for prices and how are the dealers responding to the nickle and diming scenario. How do the dealers turn them down or does the dealer ask them politely to stop grinding for prices lol :P

[pathwaydon]

Originally posted by max_boost
I have a question, is the finance manager's job as easy as it looks? lol

Take some credit info, fire it off to the banks, wait for approval, sign some documents, sell some undercoat, extended warranty, 6 figure salary.

:bigpimp:

Actually the F&I manager has a full plate most days. Remember that he has an entire sales floor to deal with and every salesperson wants their stuff done right away. I know here, our F&I people handle credit, sell product, put in work orders, get the cars registered and licensed, and chase down paperwork that salespeople miss in order to keep the accountants off their back about unpaid deals.

F&I are typically the busiest people on the sales side of a dealership.

[pathwaydon]

Originally posted by spankingmonkey
i heard if the customer is a grizzled veteran about negotiating prices he can get a great deal.

if I remember correctly, you can get factory rebate and/or even get dealer rebate or something if you play your cards right.

so my question is, if the dealer is gonna bring the price down where are they deducting it from. I know the dealership needs to make some money and the sales rep needs some commission.

and how is the customer phrasing those words when he is grinding the guy for prices and how are the dealers responding to the nickle and diming scenario. How do the dealers turn them down or does the dealer ask them politely to stop grinding for prices lol :P

Dealers will negotiate on price. You don't really have to be a hardass about it though. Typically there are a number of factors that contribute to how much a dealership will discount.

Time of month. Current number of sales. Has the vehicle been in stock for more then 3 months. Is it a model year that is due for re-design or say it's a 2009 and there are already 2010's on the lot.

The dealer makes profit based on the gross profit made on the car. The sales rep gets paid a percentage of the profit amount. For instance, we are paid 25% of the gross profit. So if we make $1000 on the deal I am paid $250.00. However, there is a "minimum deal" for us. Meaning that no matter what the car sells for, I get paid at least $150.00 per unit. That's our particular pay plan but there are as many plans as there are dealers.

[pathwaydon]

Originally posted by Redlyne_mr2

We still get our reserve (kick back) either way.

I'm not sure how it works in Alberta where all you people seem to be from but here's how it works.

If a customer takes a loan and the dealer is paid a reserve "kickback", then the client pays out the loan within 90 days, typically the bank will charge back the dealer the amount of the reserve. So the dealer gets a pissed off call from the bank rep and has to pay back the bank. It's usually less then $1000

[Impreza]

^Is that pretty accurate for how much salesman make per car at Hyundai? I have always wondered how much a salesman makes per sale (ballpark figure). Does it vary a lot depending on brand and price? For example, do you make more money off a Genesis than a Tiburon? and, for example, do Acura salesman make more than Hyundai?

[pathwaydon]

Originally posted by Impreza
^Is that pretty accurate for how much salesman make per car at Hyundai? I have always wondered how much a salesman makes per sale (ballpark figure). Does it vary a lot depending on brand and price? For example, do you make more money off a Genesis than a Tiburon? and, for example, do Acura salesman make more than Hyundai?

I have only worked at 2 different dealers so I have only worked with 2 pay plans.

Most sales reps are paid at least a minimum/car. The pay plan has NOTHING to do with Hyundai, the dealer determines his/her pay plan.

At the end of the day I have never heard of a pay plan that isn't based on paying a sales rep a percentage of the gross profit. So if we sell a Genesis at $500 profit or a Tiburon at $500 profit I still get paid the same ($150 because this amount is more then 25% of a $500 profit.)

Does the Acura guy make more? Maybe, I assume that there is more profit in an Acura, but a busy Hyundai sales rep will likely sell more units/month so it might even out. Depends on your market. Ottawa is a lot of government employees with families etc..so they need practicality in a car rather then flash, thus we are a very busy Hyundai dealer.

[pathwaydon]

bump

[TomcoPDR]

Have you witnessed any customers able to pickup the hot 17-20yo college receptionist?

Who in the dealership world would you say has the highest chance? Or which person(s) in a dealership have had success?

Now I'm just going off my assumptions here, so it's listed in my mind's highest to lowest chance, but I could be wrong, that's why I'm asking:

a) Dealer principle
b) The mid-twenty Dane Cook dude who lives at home so he's able to spend every penny on the "G" or 3 series... enjoys buying "the finer things in life"
c) The mid-life crisis old timer, wardrobe from the 80's, you can see hair appearing from his nostriles, super nice guy and talkative... probably drives a 1994 Oldsmobile Cutlass or 1997 Honda Civic DX sedan, there always seem to be problems he's fixing on his car, as the wife has the soccer Suburban.
d) The 23-29yo mechanic/bodyshop apprentice-journeyman, nicer working man rides like 2002 Mustang, GTi, etc... always has a rumble to them
e) The parts guy, 27- 45yo, tattoos, good guy to chat with, always enjoy a little chronic.
f) The High school inventory logistic cooridnator/ detail kid, always seem to have a sweet project in his garage nobody's seen, usually drives a 1990 Honda Accord, tinted windows, dragon stitched seat covers.

[Redlyne_mr2]

Originally posted by pathwaydon


I'm not sure how it works in Alberta where all you people seem to be from but here's how it works.

If a customer takes a loan and the dealer is paid a reserve "kickback", then the client pays out the loan within 90 days, typically the bank will charge back the dealer the amount of the reserve. So the dealer gets a pissed off call from the bank rep and has to pay back the bank. It's usually less then $1000
Woah which bank is that.. usually it's a federal policy if you're dealing with one of the chartered banks and would still apply in Alberta. The bank I deal is great with not hitting me up with a chargeback.

[pathwaydon]

Originally posted by Redlyne_mr2

Woah which bank is that.. usually it's a federal policy if you're dealing with one of the chartered banks and would still apply in Alberta. The bank I deal is great with not hitting me up with a chargeback.

When I did F&I we would catch shit all the time if a customer paid out a loan within 30days, if it was a loan we got a reserve on. The bank rep would call the controlller and then I would inevitably get a call saying that we lost the reserve and I would have to be charged back from my next commision.

[s2k_boi]

Just out of curiousity (more related to the Finance side) what does one need to become a finance manager ? Are they usually hired from one of the sales staff or can someone external get into this?

[pathwaydon]

Originally posted by s2k_boi
Just out of curiousity (more related to the Finance side) what does one need to become a finance manager ? Are they usually hired from one of the sales staff or can someone external get into this?

Generally they hired from within a dealership. Most of the F&I managers I have know started off as sales reps. Although I have known a couple that were hired from other departments in the dealership.

[Twin_Cam_Turbo]

There are a few main things I have noticed over the past 10 years when my parents have been buying cars.

1. Anything on the lot, or from a previous model year (new but unsold of course) will be easier to negotiate price over than something that has to be ordered or brought in. Also time of year for certain cars matters a lot. For example in January 2008, my dad was out looking for a new car. We were looking for a color, and were taken into the underground at the Crowfoot BMW gallery. We found the color we wanted to see, after searching lots, and finally founded an extremely dusty and forgotten about 2007 Z4M in a corner. My dad had always wanted one, so we went back upstairs and inquired about the price. The price listed on the road was approx $82000. Being the middle of January, we they brought it down to $68000. After we reminded them of it being a 2007 model, they lowered the price to $61000. We told them we would think about it, and came backk later with an offer of $57000 on the road, with the reason being that the car had obviously been forgotten about, as they had searched for the price for a long time the previous weekend, and we didnt want the car to be forgotten about again, and leave it sitting for another while (it was one of my dads dream cars, he really wanted it). We settled half way and picked it up for $59500 on the road. A pretty decent savings if you ask me.

2. Repeat customers show loyalty, and sometimes are able to haggle more money off. Last month my mom started searching for a replacement for here lease that would be ending soon. We went in looking for a 2009 135i, but were unable to find a car agreeable on anywhere in Canada, and production of the 2009s had ended a week previously. We then decided to spec out a 2010 model. The dealer didnt even have prices yet but they estimated there would be little to no price change for the 2010 model year. We specced out a car, and it was overbudget. Went ahead and asked for anything the dealer could do to help, seeing as we were repeat customers. The first thing our salesman told us was there would be absolutely no discounts (obviously being a ordered 2010, one of the first arriving in Canada) but he would talk with his superiors and see if anything was possible. He came back with a 4.5% discount. We agreed, but were skeptical about whether the 2010 pricing would or would not go up. We had set a budget of $50000 on the road. The dealer then furthered the deal and said that if prices did happen to change, and the car came in over budget, they would knock it down under budget no questions asked. We were very impressed and signed the deal right then.

Very good service imo.

[Masked Bandit]

Originally posted by pathwaydon:
"Well there's a lot to reply to there.

Let's deal with the profit margins. As a previous poster has indicated consumer websites like carcostcanada.com will give you this information. I'd be suprised to find more then a few vehicles in any line-up that have $2K-$3K in profit. That vast majority of vehicles, at least at Hyundai and I know Toyota have less then $2K in profit. But even if you're correct, if the dealer makes a $27000 investment of capital to purchase the vehicle from the manufacturer is he not entitled to a 5%-6% return on investment? That is likely the lowest return in retail! And most deals don't take a few hours work, in somecases it takes days or weeks. The dealer needs that profit to:

A. Pay the sales rep
B. Pay support people
C. Keep the lights on
D. Pay himself

It's a business. It's not like the dealer gets every dime of a $1500 or $2000 profit. He gets what's left after everyone gets paid.

High Prices in service:

What is the going door rate for an independant mechanic in your area? Let's say Canadian Tire or something. Around here it's about $85/hour. Our door rate at the dealer is $106/hour. Now, if you're going to have to pay to get repairs and whatnot done on yourt car anyway, is it really worth the $20/hour you save going to an independant mechanic? Has he had the specialized training that techs at the dealership are REQUIRED to take. How well does he know your particular make/model/year. If you just spent say $40k on a new 2010 Genesis Coupe, would you take it to Canadian Tire to have work done. Maybe you would, but I wouldn't.

To Rip off or not Rip off.

It really doesn't matter the sticker price of the item. By that prevalent logic, if a new car was only $150.00 no one would ever haggle for a lower price. I doubt it. I will shop around for a less expensive T.V. when I'm in the market, but once I find the one I want at the least expensive price assuming they are both the same make/model year/trim I'll buy it. But I won't try to haggle the guy over the price.

And what about service? I assume from your use of the word stealerships that you have had a few bad experiences with sales reps or a particular dealer. Did you do any research before hand with the BBB or local consumer affairs advocate? Would that have been worth it to you in the long run?"


I'm just going to post in this thread simply because I'm quite sure the two are going to be merged shortly anyway.

As for the paragraph about the pricing for service work, the biggest difference isn't the cost per hour, it's the honesty of the shop that is the biggest issue. I have never once had a dealership tell me "hey, this doesn't need fixing right now" or "I think we can get by with a used part on this". My regular guy treats my vehicle like it's his own. If it's something that we can cut a bit of a corner on, he offers it up. If it's something safety related (brakes for example) he won't let me get away with anything other than the right way to do it.

[spikerS]

Do dealerships always pass on factory rebates onto the client? For example, if there is a factory rebate of $4500 on a vehicle, is it a common practice for a dealership NOT to pass these on and instead have the client pay full price, and then on top, claim the rebate? same thing for dealer insentives, really any discounts coming from the manufacturer.

I ask this as if each vehicle sold as you posted earlier only has 2k profit, there is not much there, and with selling only a few per day on average, how are they making money selling? We all know it is a giant rip off for the shop rates, but the sales side has to make some money too right?

[pathwaydon]

Originally posted by spikers
Do dealerships always pass on factory rebates onto the client? For example, if there is a factory rebate of $4500 on a vehicle, is it a common practice for a dealership NOT to pass these on and instead have the client pay full price, and then on top, claim the rebate? same thing for dealer insentives, really any discounts coming from the manufacturer.

I ask this as if each vehicle sold as you posted earlier only has 2k profit, there is not much there, and with selling only a few per day on average, how are they making money selling? We all know it is a giant rip off for the shop rates, but the sales side has to make some money too right?

Sometimes those factory rebates are advertised, sometimes they aren't. When they aren't, there ARE dealers that will attempt to get that money. However, most manufacturers now have rebate claim forms that the customer must sign in order for the dealer to get the rebate. Look at what's being signed BEFORE you sign it.

Your point about selling only a few a day is MY point exactly. If the dealer is only making less then 2K/unit at full MSRP it is tough to make a living. I'm not coplaining just stating the facts. The problem is that many people are just conditioned NOT to believe ANYTHING the dealer/sales rep/manufacturer says or advertises and they have convinced themselves that there is thousands upon thousands of dollars in mark up.

What can you do?

[Masked Bandit]

Originally posted by pathwaydon




The problem is that many people are just conditioned NOT to believe ANYTHING the dealer/sales rep/manufacturer says or advertises and they have convinced themselves that there is thousands upon thousands of dollars in mark up.

What can you do?

Well pathwaydon, don't take this as a personal attack, because it isn't. You've been a great help on the board so far and I thank you for that.

However....lol....you started it!

I think the biggest reason why the general public is wary of dealership service departments is because a lot of them are crooked. I've got a client that is a J-man mechanic. He currently works for a larger shop here in town that has an average reputation. Last year he took a job at a dealership here in town for a fairly decent raise in pay. After six months at the dealership he quit because management was pushing him to say there were things wrong with the vehicles that had nothing wrong with them at all. They would make shit up and straight out lie to customers sometimes to the tune of $1000 worth of "repairs" that weren't needed. Now most people are not mechanically inclined enough to really know when they're being phucked over, they just have to trust their mechanic. So my client actually quit over this and wen't back to his old job for about $10,000 a year less because he couldn't believe the amount of BS that was going on at the dealership. I for one tend the think this is the norm, not the exception.

[Wrinkly]

I'm inclined to believe that! EVERY time my van (GM) went in for service at the dealer where it was bought new (after warranty ended), the bill was consistently up in the $700+ range, and it always seemed to 'need' something more doing than it originally went in for.

Once they outright LIED when they were supposed to have rotated the wheels. They were very dirty, yet there wasn't a mark in the dirt at all. When I pulled them on it, they tried to convince me they could get the caps/wheels off without disturbing the dirt!! :bullshit: :nut: :banghead: :rofl:

Makes you wonder what else was paid for that wasn't actually done.

[SOAB]

do you honestly think this doesn't happen even more often at independent shops?

at least the customer has an option of having the work done not like insurance :rofl:

[Xtrema]

Everything you need to know:

http://www.tribute.ca/tribute_objects/images/movies/The_Goods_Live_Hard_Sell_Hard/TheGoodsLiveHardSellHard.jpg


BTW, good thread

[Masked Bandit]

Originally posted by SOAB
do you honestly think this doesn't happen even more often at independent shops?

at least the customer has an option of having the work done not like insurance :rofl:

HEY, WAS THAT A SHOT.....I THINK IT WAS A SHOT......that's okay, we'll get your money whether you like it or not.....lol.


I don't know about "all" shops, I can only speak about my guy that I've used for a little over a decade now. He's probably the most honest mechanic I've ever met. I'll give you an example. A few years back I was driving an older Nissan truck (1993). The E-Brake quit working so I took it into FishCreek Nissan (close to my house) and asked how much to fix. Their estimate was right around $600. They said I needed two new cables (one front and one rear). I called my regular guy and had him look at it. One cable was in fact busted but the other was a little stuck. He replaced the broken one and used WD-40 to get the other one going in a couple minutes. I was out the door for $150.

And no, I won't tell you his name because then he'll be to busy to fix my vehicles when I need it!

[pathwaydon]

Originally posted by Xtrema
Everything you need to know:

http://www.tribute.ca/tribute_objects/images/movies/The_Goods_Live_Hard_Sell_Hard/TheGoodsLiveHardSellHard.jpg


BTW, good thread

Thanks. I tried to have an open discussion.

[pathwaydon]

Well I don't really know too much about the service department as I don't work in the service department but here's what I believe.

Any service that you purchase, anywhere, costs money. The people that are selling you that service, for the most part, will try and part you with as much money as possible. IT IS UNETHICAL TO LIE OR MISLEAD A CLIENT. It only leads to animosity. However, unless you work for the governement or a select few industries, everyone is selling something. You're selling it or your living depends on something being sold. Sales people, regardless of what industry, need to sell for as much as possible. To do that, a real professional knows how to build solid VALUE in the product or service he/she is selling without lying to or misleading a client. I propose that if you ever feel like you paid too much for something, are you upset about the money or because you feel like someone didn't show you the VALUE tied to the amount of money you spent.

All that being said, if you don't like what the service advisor is telling you, get another quote. You'll do it to the sales people all day, shopping their price all over town. Do the same thing on the repair quote, that's your perogative.

[Redlyne_mr2]

Originally posted by s2k_boi
Just out of curiousity (more related to the Finance side) what does one need to become a finance manager ? Are they usually hired from one of the sales staff or can someone external get into this?
I worked on the corporate side before moving over to retail (MB Canada).

[911fever]

Very interesting thread.
I worked as a sales rep for Toyota and now for Kia, and now as an F & I manager in-training for Kia.
Everything at a dealership revolves around gross. Bigger gross is good for everyone at a dealership.
Any questions about factory incentives or negotiating prices, or anything else, you can ask me.

[pathwaydon]

Originally posted by 911fever
Very interesting thread.
I worked as a sales rep for Toyota and now for Kia, and now as an F & I manager in-training for Kia.
Everything at a dealership revolves around gross. Bigger gross is good for everyone at a dealership.
Any questions about factory incentives or negotiating prices, or anything else, you can ask me.

Thanks for following along 911.

I'm glad you liked the idea. Hopefully non-car business folks will take advantage of what we can offer.

Props to Redlyne as well. Thanks for your support.

[pathwaydon]

I seemed to get alot of positive response to this thread and others like it on other boards. So I decided to start a car bizz blog.

More like a diary of my life at a job I love. Check it out if you like.

http://carbizzottawa.blogspot.com/

[canuckcarguy]

In response to earlier comments, lots of times you can definitely get a better deal when paying cash (or cheque or debit) instead of financing a vehicle, for 3 reasons:

First, if you've got the money in the bank, there's no question of financing in the business office, so the sales guy is likely to take you seriously. Like it or not, especially on a busy day, a sales person has to pay more attention to the guy with the definite ability to complete the deal. If you can't negotiate a screaming deal when you've got cash in your pocket, you're not trying hard enough.

Second, when you're paying cash, you're negotiating in actual dollars. If you get a $50,000 car for $45,000, there's no smoke and mirrors - you've saved $5000. But lots of times, credit buyers are more concerned about payment amounts, and a good salesperson will always ask how much of a monthly payment you can afford. At that point, you're only talking a few more or fewer dollars per week, or per month, and it's less likely you'll find the bottom price. Simply by changing the financing structure, or term, or rate, etc, it can appear that you're getting a better deal than you actually are.

And finally, there is the fact that often, when there are low-interest factory financing options offered, there are rebates offered in lieu of a financing discount. So for example if you're being offered 0% financing, but there's a $2500 rebate for a cash deal, it's not really 0%. You're effectively pre-paying the interest or, if you prefer, buying down the rate.

This is the source of many consumer complaints about car dealers - the deals are not transparent. Lots of times you have to push for the available rebates, or ask pointed questions about the actual price in a financing situation.

In Alberta, a dealer has to give you a "cost of credit disclosure" that spells out exactly what you're paying, but unfortunately, you only get that at the very end of the transaction in the business office, when you're already agreed to everything and are unlikely to revisit the deal.

[Speedy]

Originally posted by ZorroAMG
pathwaydon, nah my comment wasn't directed at you...unless you DO that to clients haha :)

Max,

What about being nice to the young guy and taking the time because if HE doesn't buy, he may recommend you to others? THAT is what it's about. NOT being the judgemental dick so that you and your tweed jacket can get back to your cubicle and solitaire LOL

It's all about CS and networking....would you refuse to seat someone because they didn't look hungry? :)

This is so true....there is still places I wont shop at because of bad experiences when I was a "young" shopper.

With all the resources consumers have on the net, I have pretty much made my decision by the time I get in the front door, if you want the sale now you better be polite and keep your mouth shut and just write up the sale.

[pathwaydon]

"First, if you've got the money in the bank, there's no question of financing in the business office, so the sales guy is likely to take you seriously. Like it or not, especially on a busy day, a sales person has to pay more attention to the guy with the definite ability to complete the deal. If you can't negotiate a screaming deal when you've got cash in your pocket, you're not trying hard enough."


It is true that the sales reps LOVE cash buyers. There is no question about whether or not financing is available. He/she KNOWS they're going to be able to deliver the car. However, this has no bearing on the deal itself and how much discount you will get. The profit margin remains the same(assuming no cash back offers), and as the sales rep doesn't make the decision it really is out of his/her control. They might work a little harder, but it's the sales manager's job to decide which deals will be made and which won't and no matter how much cash you have most won't make a deal that isn't making SOME profit. There are exceptions (i.e. demo's or older stock units etc..)

[pathwaydon]

Originally posted by canuckcarguy
Second, when you're paying cash, you're negotiating in actual dollars. If you get a $50,000 car for $45,000, there's no smoke and mirrors - you've saved $5000. But lots of times, credit buyers are more concerned about payment amounts, and a good salesperson will always ask how much of a monthly payment you can afford. At that point, you're only talking a few more or fewer dollars per week, or per month, and it's less likely you'll find the bottom price. Simply by changing the financing structure, or term, or rate, etc, it can appear that you're getting a better deal than you actually are.

This is also true, but a simple calculation with a calculator will tell you the same thing OR just ask to see the breakdown of what you're being charged for before you leave your deposit. At the very least you should know the MSRP, hopefully for the EXACT car you want, before you go in to the dealer. As the MSRP is really the only negotiable number just look at what your paying for the car. Freight/AC Tax and Fuel Tax(Ontario) are the same no mater what. $5000 off of MSRP is $5000 off of MSRP. If the bill of sale in the finance office doesn't show the same number as what you and the rep discussed, don't sign.

[canuckcarguy]

Originally posted by pathwaydon

It is true that the sales reps LOVE cash buyers. There is no question about whether or not financing is available. He/she KNOWS they're going to be able to deliver the car. However, this has no bearing on the deal itself and how much discount you will get. The profit margin remains the same(assuming no cash back offers), and as the sales rep doesn't make the decision it really is out of his/her control. They might work a little harder, but it's the sales manager's job to decide which deals will be made and which won't and no matter how much cash you have most won't make a deal that isn't making SOME profit. There are exceptions (i.e. demo's or older stock units etc..)

I didn't suggest that as a cash buyer I should expect to get a deal that actually loses the dealership money. Not sure where you got that idea.

But as you say, you'll work a bit harder for a cash buyer, knowing that some commission from a cash sale is still a guaranteed profit, vs spending a ton of time on a finance deal that may or may not survive "the box".

As well, a deal that "breaks even" or doesn't make a profit for the dealer, and pays you a $150 flat commission, actually does make money for the dealership, but the dealership does not disclose its actual costs to salespeople, and also typically adds a "lot pack" to its cost pricing to ensure its own profit, even at the expense of the salesperson's. This is why it's not unheard of for dealerships to sell "below dealer invoice".

And speaking of negotiation, if you're really on the ball and a top producer for your store, you should work on getting an increase on that 25%. Dealers like to pretend that's an industry standard, non-negotiable rate, but it isn't.

[pathwaydon]

Originally posted by canuckcarguy
And finally, there is the fact that often, when there are low-interest factory financing options offered, there are rebates offered in lieu of a financing discount. So for example if you're being offered 0% financing, but there's a $2500 rebate for a cash deal, it's not really 0%. You're effectively pre-paying the interest or, if you prefer, buying down the rate.

This is the source of many consumer complaints about car dealers - the deals are not transparent. Lots of times you have to push for the available rebates, or ask pointed questions about the actual price in a financing situation.

In Alberta, a dealer has to give you a "cost of credit disclosure" that spells out exactly what you're paying, but unfortunately, you only get that at the very end of the transaction in the business office, when you're already agreed to everything and are unlikely to revisit the deal.

Regarding 0% vs paying cash and the cash rebates available, you have to keep in mind that when those rebates are offered, almost every manufacturer advertises those things. If not on TV or in the paper, go to the corporate website and link to "Current Promotions" or whatever. Also, the dealer (at least where I work) MUST have a Rebate Claim Form signed by the customer in order to get the money from the manufacturer.

But as I discussed earlier, are you really saving money this way?

Example: You pay cash for a $30000 car get a "Cash Back" rebate of $3000, so it's down to $27000. Then you get another $1500 discount from the dealer now down to $25500.00. Add on freight, taxes, you're out the door at say $29K so you take the money from investments or savings account and pay. Just 1 year later, your car/truck/SUV that you wrote a cheque for $29k is now worth 30% less($20300) because of depreciation. Thats an $8700 loss.

Now, on the flip side you take 0% financing on the same vehicle. Negotiate your $1500 discount and finance say $31K @ 0% for 5 years. You keep your liquid cash in investments or the bank. Hell, take that money and put it in a GIC for 5 years. In the meantime you pay $516/month to a loan that is OPEN anyway! If the payment is a burden, then pay it off, but at least you didn't sink $29K in to lose $8700 on your purchase. In five years, you now have your car(and it's equity) AND your cash.

The bottom line is this. Dealers WANT you to finance. There really isn't ANY advantage to the dealer if you pay cash. Therefore there isn't any motivation for them to give you a better "deal". They get their money either way.

[911fever]

Dealerships make a premium whenever financing occurs. Cash deals don't really act as a huge incentive to sell the car, unless of course they need to clear out a unit.

[pathwaydon]

Originally posted by canuckcarguy


I didn't suggest that as a cash buyer I should expect to get a deal that actually loses the dealership money. Not sure where you got that idea.

But as you say, you'll work a bit harder for a cash buyer, knowing that some commission from a cash sale is still a guaranteed profit, vs spending a ton of time on a finance deal that may or may not survive "the box".

As well, a deal that "breaks even" or doesn't make a profit for the dealer, and pays you a $150 flat commission, actually does make money for the dealership, but the dealership does not disclose its actual costs to salespeople, and also typically adds a "lot pack" to its cost pricing to ensure its own profit, even at the expense of the salesperson's. This is why it's not unheard of for dealerships to sell "below dealer invoice".

And speaking of negotiation, if you're really on the ball and a top producer for your store, you should work on getting an increase on that 25%. Dealers like to pretend that's an industry standard, non-negotiable rate, but it isn't.


At the risk of sounding like I don't appreciate your advice I have to point some things out.

No you didn't suggest that a cash buyer should get a better deal. But you did suggest that you could negotiate from a better position if you paid cash. All I was saying is that gross is gross. It makes no difference how the money gets there. From my perspective, cash or finance doesn't matter, I try to give the same service, because I understand, as most sales reps don't, that even people with questionable credit histories can buy cars, they just have to be willing to pay the interest of a VFC or Wells Fargo.

Obviously you know about the business or currently work in it as you're attempting to educate me about things like the pad and dealer holdback. I know what they are, I know why they are there. As I stated previously, I have worked in management as well. My $150 min deals also come with volume bonuses. For example @ a 90 day average of 16 units per month, I get my commision of 25% or $150 whichever is higher and a bonus of $2000. Now, we work on a draw, so $1500 goes back to the dealer. Plus, I have a dealer demo in lieu of a car allowance. If I drove my own the car allowance would be $300/month.

I don't argue the $200 pad or the holdback. It's pointless. If I sell my units and increase my average/month I make as much or more then some of the managers here with far less stress and headaches. I come in, I WORK my 8 hours, and I go home. Repeats & Referrals are my bread and butter.

Thanks

[max_boost]

Originally posted by pathwaydon


Regarding 0% vs paying cash and the cash rebates available, you have to keep in mind that when those rebates are offered, almost every manufacturer advertises those things. If not on TV or in the paper, go to the corporate website and link to "Current Promotions" or whatever. Also, the dealer (at least where I work) MUST have a Rebate Claim Form signed by the customer in order to get the money from the manufacturer.

But as I discussed earlier, are you really saving money this way?

Example: You pay cash for a $30000 car get a "Cash Back" rebate of $3000, so it's down to $27000. Then you get another $1500 discount from the dealer now down to $25500.00. Add on freight, taxes, you're out the door at say $29K so you take the money from investments or savings account and pay. Just 1 year later, your car/truck/SUV that you wrote a cheque for $29k is now worth 30% less($20300) because of depreciation. Thats an $8700 loss.

Now, on the flip side you take 0% financing on the same vehicle. Negotiate your $1500 discount and finance say $31K @ 0% for 5 years. You keep your liquid cash in investments or the bank. Hell, take that money and put it in a GIC for 5 years. In the meantime you pay $516/month to a loan that is OPEN anyway! If the payment is a burden, then pay it off, but at least you didn't sink $29K in to lose $8700 on your purchase. In five years, you now have your car(and it's equity) AND your cash.

The bottom line is this. Dealers WANT you to finance. There really isn't ANY advantage to the dealer if you pay cash. Therefore there isn't any motivation for them to give you a better "deal". They get their money either way.

Oh totally. The deal maker for me these days it the car with the best lease deal. Low rate, high residual, low payment etc.

Then there are those who like to 'pay cash for it' because they can afford it argument and don't want any monthly payment/debt. Ummm....OK.

But personally I rather make the monthly payment, build the credit, and when I get my statement, see that I have $30K balance instead of ZERO. lol

[Masked Bandit]

Originally posted by max_boost



But personally I rather make the monthly payment, build the credit, and when I get my statement, see that I have $30K balance instead of ZERO. lol

When you calculate your Net Worth, it's the same result.

Whether the vehicle is paid for up front or financed it still depreciate at the same rate. The interest gained from a low risk investment over a five year finance (especially when you take income tax into the equation) is no wheres near enough to offset the cost to finance. It's still cheaper to pay cash in the long run.

[pathwaydon]

Originally posted by Masked Bandit


When you calculate your Net Worth, it's the same result.

Whether the vehicle is paid for up front or financed it still depreciate at the same rate. The interest gained from a low risk investment over a five year finance (especially when you take income tax into the equation) is no wheres near enough to offset the cost to finance. It's still cheaper to pay cash in the long run.

What if the interest rate is 0%?

[max_boost]

Originally posted by Masked Bandit


When you calculate your Net Worth, it's the same result.

Whether the vehicle is paid for up front or financed it still depreciate at the same rate. The interest gained from a low risk investment over a five year finance (especially when you take income tax into the equation) is no wheres near enough to offset the cost to finance. It's still cheaper to pay cash in the long run.

When I say low rate, I'm talking <4%. I lease anyway BUT for argument's sake, you would put it in a higher risk investment. Even Zorro's Strathmore development is offering 11% dividend paid quarterly or 14% yearly.

Or if you want to roll with the stock market, track the TSX60. I'm willing to bet on XIU.TO that right now with a 3%yield automatically covers your interest payments and that 5 years from now the index is going to be higher than 11,000 lol Remember you don't have to hold XIU for 5 years, if it hits 15,000 next year, sell it.

[Masked Bandit]

Originally posted by pathwaydon


What if the interest rate is 0%?

Original purchase price is higher to get the 0% (give up the cash-back offers).

[B4tMan]

Originally posted by ZorroAMG
THAT is what it's about. NOT being the judgemental dick so that you and your tweed jacket can get back to your cubicle and solitaire LOL

It's all about CS and networking....would you refuse to seat someone because they didn't look hungry? :)
people who aren't hungry find that going in a restaurant is counterproductive in most sane scenarios

jokes aside, buying dinner vs. buying a car stretches your argument :)

[Masked Bandit]

Originally posted by max_boost


When I say low rate, I'm talking &lt;4%. I lease anyway BUT for argument's sake, you would put it in a higher risk investment. Even Zorro's Strathmore development is offering 11% dividend paid quarterly or 14% yearly.

Or if you want to roll with the stock market, track the TSX60. I'm willing to bet on XIU.TO that right now with a 3%yield automatically covers your interest payments and that 5 years from now the index is going to be higher than 11,000 lol Remember you don't have to hold XIU for 5 years, if it hits 15,000 next year, sell it.

There's a whole lot of people out there right now that two or three years ago thought their investments were rock sold for at least single digit gains. How's that working out on the average?

When I said "low risk", I'm talking GIC's and such. I think everyone has seen in the last 24 months that just about any kind of investment can fall apart. Nobody knows what the next five years are going to hold when it comes to investments.

However, I do know that when I pay $25,000 cash for a $30,000 financed vehicle (even at 0%), it's pretty tough to make up that missing $5000 in 5 years. People assume you are going to have the original $30,000 invested for the entire five years. Where are the regular monthly payments for the loan coming from?



Edit: When seeing if you can make up that missing $5000 in five years, don't forget to calculate in tax implications of investment income and devaluation of money due to inflation. Instead of $5000 you probably need to earn closer to $10,000.

[B4tMan]

The reason people offer cash : makes buyer, in the sales person's eye, more likely to buy that day.

In some scenarios this "pull the trigger on the spot" attitude is likely to move down the price

[pathwaydon]

Originally posted by B4tMan
The reason people offer cash : makes buyer, in the sales person's eye, more likely to buy that day.

In some scenarios this &quot;pull the trigger on the spot&quot; attitude is likely to move down the price

I can't say this enough. I guess people just don't believe me.

It really doesn't matter. If you're buying, you're buying. You're just as likely to "pull the trigger" if you're financing.

I can assure you that cash buyers don't seem more likely to buy to me. In fact it's usually the opposite. Cash buyers see themselves as having all the time in the world BECAUSE they have the cash.

[B4tMan]

consider the option : cash buyers see the price of the vehicle being the one on paper versus the one price accumulated at 1.9 to 5.9 percent over an average period of 3-5 finance years

That amount goes to the financing body, the dealership and its employees, so that is why cash buyers are harder for you to deal with.

[pathwaydon]

Originally posted by B4tMan
consider the option : cash buyers see the price of the vehicle being the one on paper versus the one price accumulated at 5.9% (nissan 370) over a period of 3-5 finance years

I think I understand what you're saying. But I think the misunderstanding comes from the idea that the sales rep somehow has the ability to OK a deal. They don't.

The sales manager decides what if any discount that there is. And frankly, a person financing doesn't CARE about the cost of the vehicle in cash. They're concern is the monthly payment. How much, and can they swing it in their own budget. The smaller number makes people more inclined to buy...I have had deals go totally sideways once I told a customer the full cost of the car and the amount they would finance. The bigger number scares most people.

[Masked Bandit]

Originally posted by pathwaydon


I think I understand what you're saying. But I think the misunderstanding comes from the idea that the sales rep somehow has the ability to OK a deal. They don't.

The sales manager decides what if any discount that there is. And frankly, a person financing doesn't CARE about the cost of the vehicle in cash. They're concern is the monthly payment. How much, and can they swing it in their own budget. The smaller number makes people more inclined to buy...I have had deals go totally sideways once I told a customer the full cost of the car and the amount they would finance. The bigger number scares most people.


And that is exactly my point. I would tend to think that most people who finance a vehicle don't truly know how much money this car is costing them over the five years. Now, that don't have anything to do with which method a dealership prefers, but I'm surprised that a Beyond thread has stayed on track as long as it has.

From a personal finance standpoint, financing a car is a much less effecient method of spending your money. People will buy more car than they really intend simply because they can afford the monthly payment. If they ever saw the entire big five year number, most of them wouldn't agree to it (I suspect). I think the best example of that are those VFC deals. pathwaydon, I'm sure you've looked over those deals after the fact and once you end up adding in the interest & fees, most people pay DOUBLE the cash price of the car. I've seen it in my office far too many times. And these are usually the people who can least afford to be pissing away thousand of extra dollars.

[max_boost]

Originally posted by Masked Bandit


There's a whole lot of people out there right now that two or three years ago thought their investments were rock sold for at least single digit gains. How's that working out on the average?

When I said &quot;low risk&quot;, I'm talking GIC's and such. I think everyone has seen in the last 24 months that just about any kind of investment can fall apart. Nobody knows what the next five years are going to hold when it comes to investments.

However, I do know that when I pay $25,000 cash for a $30,000 financed vehicle (even at 0%), it's pretty tough to make up that missing $5000 in 5 years. People assume you are going to have the original $30,000 invested for the entire five years. Where are the regular monthly payments for the loan coming from?



Edit: When seeing if you can make up that missing $5000 in five years, don't forget to calculate in tax implications of investment income and devaluation of money due to inflation. Instead of $5000 you probably need to earn closer to $10,000.

It's all in the #'s.

Paying cash CAN work if the deal is right but this isn't necessarily always the case is what I'm saying.

[Masked Bandit]

Originally posted by max_boost


It's all in the #'s.

Paying cash CAN work if the deal is right but this isn't necessarily always the case is what I'm saying.


I would agree to that. I guess my position hinges on getting a big enough discount for paying cash, which seems to be the case with new cars these days (from the domestic guys anyway).

[pathwaydon]

Originally posted by Masked Bandit



And that is exactly my point. I would tend to think that most people who finance a vehicle don't truly know how much money this car is costing them over the five years. Now, that don't have anything to do with which method a dealership prefers, but I'm surprised that a Beyond thread has stayed on track as long as it has.

From a personal finance standpoint, financing a car is a much less effecient method of spending your money. People will buy more car than they really intend simply because they can afford the monthly payment. If they ever saw the entire big five year number, most of them wouldn't agree to it (I suspect). I think the best example of that are those VFC deals. pathwaydon, I'm sure you've looked over those deals after the fact and once you end up adding in the interest &amp; fees, most people pay DOUBLE the cash price of the car. I've seen it in my office far too many times. And these are usually the people who can least afford to be pissing away thousand of extra dollars.

I 100% agree. But that situation is rare. Also, most manufacturers offer SOME type of 0% financing these days. So for the non-credit challenged it's a simple calculation. Your payment x the number of months = the $$$ of the car. How can borrowing the money at no cost to you be a bad idea? I don't get it.

For the VFC people I'll say this. For many people, a vehicle is a need. If you have kids or a job that requires it etc.. good credit or not you might have to buy one. If your credit is in question, well then you have to pay the interest, at least for a while until you've gone through the steps to re-build it so that you CAN get the 0% loans later on. Is it financially smart? Maybe not. But even billionaires go bankrupt and without High Interest Lenders these people would be VERY hard pressed to rebuild after a financial mis-step. Do the crime, you have to do the time.