Confession Of A Car Salesman

[Tony Cano]

http://edmunds.com/advice/buying/articles/42962/article.html

[gabriel]

JMJ please comment. ;)

[Dolemite73]

This is an outstanding article. Hopefully JMJ can chime in. Im going to buy me a car next month and I need some advice!!

[JMJ]

Originally posted by Dolemite73:
This is an outstanding article. Hopefully JMJ can chime in. Im going to buy me a car next month and I need some advice!! It's an outstanding article if you believe everything the author wants you to believe. Here's a guy that admittedly had no real aptitude for sales, spent a whole THREE months in the business, sold a total of six cars (which is horrible), and he's going to tell you what the business is all about. I'm not saying that none of what he's talking about actually happens, because it does in SOME dealerships. My problem with the article is that he chose to go to extremes when it came to the TYPE of dealers he chose to work for. He goes to a high volume-high pressure store (whom he had no business working for, but they'll hire anybody)and "exposed" the methods that high pressure stores use. OK, what did he expect?? The customer that goes to a store like that believes the ads and the hype they see on TV, on radio, and in the newspaper, doesn't do their homework ahead of time, and then wonders why they had an unsatisfactory experience. In alot of cases, it's because they never met a salesman. They met a glorified greeter, and there's alot of them in the car business. The author was a greeter, nothing more. Three months into the car business, most salespeople have no real clue as to how to SELL a car, much less write articles about it. When I sold, I sold myself first, the dealership second, and the car third. Customers generally don't buy from people they don't like, regardless of the car or deal. I'm going to stop here, but I'll pick it back up later. Edmunds.com is pro customer-anti dealer, and believes that profit is a dirty word because they truly don't understand the business. I will explain further in a little while. Feel free to ask me any questions you may have......JMJ

[ December 21, 2003, 06:49 PM: Message edited by: JMJ ]

[gabriel]

word. we want the jmj science to be DROPPED on us.

[Tony Cano]

not a question, but just a statement.

i've always felt to be at a disadvantage when buying a car when you have to disclose your income to the car salesman. they seem to taylor your payment to what they think you can afford.

[JMJ]

Originally posted by Tony Cano:
not a question, but just a statement.

i've always felt to be at a disadvantage when buying a car when you have to disclose your income to the car salesman. they seem to taylor your payment to what they think you can afford. If you're paying cash. there's no need to disclose anything, but I'm guessing you finance, so it really does make a difference, and don't feel like your at a disadvantage. The reason he or she needs to know is because the banks or finance companies use two different formulas when deciding making a credit decision. Typically, the bank isn't going to allow your car payment to be any higher than 20% of your monthly income. They also look at your current debt to income ratio, meaning they add all of you're currnet outgoing credit obligations (monthly bills) vs. your income. They are looking for your "ability to pay". They then have to figure a car payment into that without exceeding 40-45% toal income to debt. There are exceptions, but that's pretty much the rule. Cash down always helps (10-20% is ideal). Alot of customers think that because everybody advertises "NO MONEY DOWN", that they really don't need money down, which is true for some customers, but foolish unless you plan on keeping the car well beyond the finance term. Everybody claims that they'll keep it 8-10 years, only to try to trade in two or three (just before the factory warranty expires), finding themselves $3000-5000 or more "upside down", or with negative equity in their vehicles. Cars unfortunately are depreciating asset, and while everybody wants to own one, few really do. Getting back to that $3000-5000 gap between your bank payoff and what your car is really worth, remember the no money down offer that you thought was so great??? This is where it comes back to haunt you. So don't feel like you're at a disadvantage when it comes to disclosing income. it's necessary info, and no different than applying for a mortgage.......JMJ

[ December 22, 2003, 10:23 AM: Message edited by: JMJ ]

[Tony Cano]

cool - graemlins/thumbsup.gif

[Dolemite73]

JMJ
Is there anywhere on the web where you can get objective and unbiased info to get invoice prices and true values of used cars?

[JMJ]

I personally don't like Edmunds, but you might try Kelley Blue Book. They have MSRP and invoice prices for new cars. You might use Edmunds TMV as a guideline, but not as gospel. Forget about what these sites say about dealer holdback too. Dealers finance their vehicles usually through the manufacturer, meaning the manufacturer not only makes money on the vehicle (by selling it to the dealer), but also on the financing, and this has nothing to do with the consumer. Once the manufacturer delivers the car to the dealer, it's considered "sold". The holdback is additional money given back to the dealer once it's sold at retail, but not necessarily profit, depending how long the vehicle has been in dealer inventory. This is paid to the dealer once a year, not after every vehicle sold. Edmunds believes you should negotiate into the holdback, and they're wrong. Ever wonder how some cars have $5000 rebates?? The manufacturer is giving up profit (made on the dealer) to drive sales, usually on slow moving models. Dealers are fighting to hold on to a very small profit margin once they have the vehicle in inventory, and most consumers don't understand this. MSRP on a Dodge Neon SXT is $16,240. Invoice on that vehicle is around $15,500. That's a margin of only $740 to start with, and the $2500 rebate doesn't count because that's from the manufacturer, not the dealer. So in the case the dealer is only working on a 4 1/2% profit margin to start. Doesn't seem like much, does it?? Every manufactuer is different, and some allow higher margins than others, not usually anymore than 10-12% on domestic models, and 15% on some imports and high lines. The margin on clothing is about 300% Does anybody really walk into Bloomingdales, hold up a pair of pants, and yell, "What's your best price???" Of course not. Nobody even thinks about it. Dealers are usually not the bad guy, although there are bad dealers. They're just trying to make a fair profit on their merchandise in most cases, and profit isn't a dirty word, yet most consumers don't believe the dealer should make ANYTHING, and some of these know-it-all websites aren't helping things in that respect. Most dealers are independent businesses, not manufacturer owned, so keep that in mind also. I'm not defending anything that goes on in some of the bad places, just giving you some inside info that you won't hear from Edmunds or some of the other websites. If they told you these things, they'd see alot fewer hits, wouldn't they??.......JMJ

[JMJ]

Keep in mind too, that destination and delivery is non-negotiable (regardless of what Edmunds tries to tell you), and that the advertising fee that the manufacturers charge the dealers is usually not on the invoice prices on their websites because it's different in every area, yet it's listed on REAL invoices. Also non-negotiable because it's already paid for by the dealer......JMJ

[ December 22, 2003, 11:16 AM: Message edited by: JMJ ]