How much negotiation is there on a new car. Buyers can find out invoice online, but what other deals do dealers get for purchasing say 5 cars at a time that helps boost their profit?

 

The residual value is not open for negotiation. Any wiggle room there would have to be done directly with the leasing company when you were trying to buy out the lease.

The money factor, just like a financing rate, has a buy rate and a sell rate. There is markup between the two. How much markup depends on how nice the dealer feels like being, how good your credit is, and how much you negotiate.

Very few people get the buy rate on financing or leases, because then the dealer doesn't make any money. As they say, "profit isn't a dirty word" and the dealership has to make money somewhere in the deal or it doesn't make sense. So, if you bought the car for under invoice, don't expect to steal the financing, and vice versa.

Also, I work in the internet department. We really don't make much on each car, we trade profit for volume. The floor salesmen go for the big profits. So I am probably not as sleazy as the salesmen you all are used to working with

 

I'm interested in purchasing a new car. I have a myFICO.com score over 710, but I would much rather prefer to purchase a vehicle cash rather than paying interest.

Can you enlighten me about "auto enhanced FICO" scores?

What is the best strategy (as a consumer) when negotiating a deal?

Would it be wise to walk into the dealership and negotiate down the price, with the assumption that I am going to finance with them. Then turn around a few days after I drive-off with the vehicle and pay the remaining balance off?

How much can you realistically go under the sticker price -- for new, used, and "certified" pre-owned.

THANKS

 

True, but I like going in knowing the dealer's game plan. It provides the opportunity to negotiate even better terms.

 

Despite what some dealers would like you to think, there is no "volume discount" on cars. Think of it this way: manufacturers don't give a shit how many cars you BUY from them. They care how many you sell. So you'll get bonuses for selling more units than planned, but you are going to be buying the same regardless.

The price of a car works like this:

Invoice = "Actual cost" + Holdback (2-3% of the MSRP of the car)

MSRP = Invoice + "Markup"

Total price = MSRP + Freight + Advertising fees (if applicable) + Documentation fees (if applicable)

Out the door/on-the-road, etc price = Total price + tax + tags/title

You might be able to buy a car for Invoice, but a dealer will never give up the holdback. That's basically the minimum profit that is guaranteed to the dealer for selling the car. It's not written down on anything, the invoice, the monroney label, etc. It is paid to the dealer at the end of the month after the car's been sold.

 

I hate how salesmen approach me on the lot. How can I get rid of them without being overly rude.

How much do they REALLY make? Does the income justify their need to wear a suit and tie and stand in the middle of a car lot for hours and hours looking for helpless prey?

 

With enough digging, it's often possible to find out the "buy" rates online. I've been successful finding them for BMW before. If you know the buy rates and all the fees, plug them into a lease calculator and you'll know what you should be paying at the buy rate. Negotiate from there.

 

I like this guy.

 

Actually the shirt and tie are to portray a professional image. It isn't cheap to dress well every day, and to go to the dry cleaners so we'd probably rather not have to dress that nicely.

You might be surprised at the pay plan. It is very complicated but let me sum it up:

I get paid on 20% to 30% gross profit (front-end) and unit count. Front end gross is sale price - invoice + holdback + incentives. In the internet department it averages around $1000, so basically you can dumb it down to about $200 a car. That is if we sell the car at a profit. If we make 0 front end gross or even negative, I make $50.

Often in the internet department we are moving old stock or we are taking a loss to hit unit count. More than half of my deals in a month are usually "mini deals", or $50 deals for me.

This varies from dealership to dealership but that's the basic way it works at many of them.

 

How do you feel about 3rd party companies like autoland?
they got me an 08 accord V6 for 24K out the door!