Buying Advice / Pricing Benchmarks

[cbondhonda]

I normally post on TOV, but am beginnig to enjoy this site pretty well. I would just like to offer a little advice on car buying and answer any quesions some may have when it comes to pricing or anything that has to do with doing buisness as a dealership. For starters...I have had a few people ask me "How do I get the best deal???" Well here are my 2 cents..

1st of all....see what numbers you can get by phone or email....the more info/numbers you get this way the more you can shop without leaving your chair....plus it gives you time to see honestly how "cool" that dealer will be to work with.

2nd....dont be in a rush, even if you are. Act as if you have all the time in the world and your shopping everything from kia's to Benz's.

3rd....dont discuss what numbers you want. I repeat....DONT DISCUSS WHAT NUMBERS YOU WANT. Once you give up your hand, its hard to keep a poker face.

4th.....work the deal as if you are paying cash before talking finance or trades.

5th....Car Math is just like 1st grade math:

a) For every 5k you finance, you are going to pay around 100 bucks a month for it over a 5 year term.

b) For every year under or over 5 years on financing...either add or take away about 35 bucks a month.

c) For every 1000 you either put down in cash or trade equity....or add to the loan because of negative equity...take away or add 20 bucks to your 5 year loan per month.

d) Your rate (or APR) Doesnt matter THAT MUCH on your payment like a lot of people think!! 1% in RATE = 11 to 6 dollars a month extra on a 24-60 month term respectively.

6th.....To get financed from tier 4 (worst) to tier 1 (best)...you HAVE to have a 580 to 720 beacon score. Anything lower and be happy you got a loan...but be prepared to pay some crazy rate.

7th.... if one dealer couldnt finance you...chances are NONE OF THEM CAN no matter what they might say......you hopping from place to place will only make your score worse. Pull your own credit and go shopping that way.

8th....and possibly the most important........SHUT UP!!!!!
The more you talk, the easier you are to read. Negotiators do it for a living....regardless of how smart and savvy you think you are. They (we) (Me) are professionals at what they- we - I do...we feed our kids with this job...and we hear every kind of story thats possible to come up with.....and the more you talk or act like you have read every book on car sales...the more you are giving yourself away. By knowing everything you can before you walk in the door and making sure they (we) (me) doesnt know that....the better.

And lying that you got some 4.9 rate at so-and so credit union is the first way to tell a salesperson thats worth his salt that you have no clue about what you are doing.

We see rates all day. We see the best credit to the worst credit and we know what it takes to get whatever rate. Also, a dealership like mine uses over 30 lenders to get people bought. So that means I know what the best deal in town on rate-payment-term is by 730am every morning. The reason I want to know that is becasue this tells me what people need to get bought....and that helps me make money because that helps me get more people in a car that otherwise might not get done....or know that they could go for a new car when they thought they couldnt.

So the moral of the story is very simple....find the car(s) you want...compare them thru info sites, drive each one...and do your own math. Walk in the dealer, give them your math, tell them the rate tier you qualify for and tell them to clean and gas her so you can get your new car on the road.....just bring a pen to sign with and you are in and out within an hour or so and I (we) can go help someone else get into their new baby as well.

At least thats how I like to do it!

Of course not all dealers are that easy to deal with...so search till you find one that is!!



Chris

[darna]

people should learn from this write-up...

way to go!

[cbondhonda]

Just wanted to say also if you guys have any questions at all about working a deal, Financing, Add-On Prices, or just anything at all having to do with purchasing a car....drop me a line here or PM/Email me.

Chris

[cbizz]

Great read, thanks!

[Xtreme Thunder]

Thank you for the read!

Buying the Civic was my second car purchase, I would say I used about 80% of what you mentioned when purchasing it! Most of it is common sense to me, but not everyone is me!

[blck06si]

thank you. i'm a sales rep too for honda and i agree 110%

[KingMarineM16a4]

Nice write up... The shut up part is where i fail, but i've learned to BS to get my test drive...

[cbondhonda]

I agree that although it may be the most important part, it is the hardest to do!!!

LOL

[Avenger]

I've bought 2 new cars now........and really buying the Honda was a bit tougher to get a smokin deal like I got on my Chrysler. I eventually ended up getting a great deal though.

With my Chrysler:
Called all the dealerships in the area asking for their best price on the exact model I wanted with the exact options I wanted. Told them if they were the lowest price, I'd buy it from them and that they could call me back within a few days.
They ALL will probably call you back, because they all want to make a sale.
A couple dealerships gave me quotes of MSRP ($34500 + taxes), but a couple gave me dealer cost price at ($28800).........ended up settling on a final price at one of the two dealerships that gave me a price of $300 below dealer cost ($28500 they still make money on the deal).
In all, the price range was nearly $6,000 difference from the high range to the low range.


With the Civic, I ended up emailing a bunch of dealerships with what I wanted and still asked them for their best price stating that the lowest price I get was going to get my business. A lot of the dealerships I emailed didn't want to give me numbers over the internet and INSISTED I came in (to try to hook me in at a higher price). There were a few bad prices emailed back ($500 under MSRP), but then I got a price of $1200 below MSRP in the return email from a local dealer. Went in, signed a deal on an '07 RR DX coupe.........but then found out that there was an '06 GG DX coupe sitting on the lot that he was willing to let go for $800 less. Had him rip up the contract, and ended up getting the '06 for $2k below MSRP (remembering that this is a base model I thought that this was a pretty great deal).


Honestly, for a higher model Civic, I'd expect to get at LEAST $2k off the MSRP for a current model year.


So, my advice:
Phone and Email

I don't recommend actually going in, where they think they can break you and talk you into the car for more money than you're willing to pay. I find the dealerships aren't even serious about price dealing if I'm there.........they seem to think it's a done deal at MSRP.

The other thing that can be done is once you have your best price, you can call up the dealership you really want to buy the car from and ask them to beat that price........if they can't do it, go get the car from the other place.

[cbondhonda]

That sounds like a pretty fair deal on the Civic. Keep in mind on domestics...mark ups are HUGE!!!!

How else could the Chevy dealership just down the road Have the highest grossing year ever and had sold most of their vehicles for "5000.00 Under MSRP" all year!

Thats also the good thing about the way our dealership does buisness....its actually called One-Pricing which means we have to give our customers the BEST price we can offer UPFRONT with no B.S. or haggling/negotiating.

Thats why I am able to help others negotiate deals across the country, because all dealers pay the same for their cars, regardless of location. And since most of the New Vehicles we sell are at prices that are some of the LOWEST nationwide, I can judge whether someone is getting a good deal now matter where someone is located.

So it is good that you have had success in the past, but also keep in mind for future refference, That even cars at invoice at not nearly as low as they can really go!

Chris

[cbondhonda]

Some food for thought to those interested in "Purchasing" compared to "Leaseing" a Honda.....


Say you buy a car for 23,000.00 OTD and you finance for 60 months(5 Years)
460 a month x 60 months = 27,600 total paid buy term end.
and you dont get gap, your car isnt Positive Equity tradeable for 3 1/2 to 4 years. So you are basically "Stuck" in this car for at least 3 1/2 to 4 years depending.

For the same 23,000.00 car ....you could lease it for 3 years at 12k miles a year and pay around 375 or so a month.
375 x 36 = 13,500.00 total paid over 3 years.

At this point you have the following options:
1) Trade in the car for a new one and pick up payments where you left off with NOTHING down

2) Give the car back to the dealer with no money owed and go buy something else...maybe even have some positive equity to use for a new car!!!

3) Finance the remaining amount of you car and finish buying it
(Gauranteed value of car is = 14,500 and you have 14,100 left over.)

So you pay 400 a month for 3 more years and its yours
Which means you paid 13,500 + 14,400 over 6 years for your car
Which = 27,900 over the course of the term.

Gap is included! also... You have a 1500.00 "Mulligan" for minor incidents up to 499.00 per incident for the 1500.00 total-(which means it is fixed with nothing out of pocket) and you have the option of changing out cars within 3 years without ANYTHING out of your pocket owed.

So you drive a lot of milage....ok no problem.

If you go to KBB and do a trade value on your car thats say an 06 si with 15k miles at good value.....then you do the same at 20k miles.
15k - Good - Trade Value = 16,855.00
20k - Good - Trade Value = 15,980.00
5k miles = 875.00 less trade value which is .17 cents per mile

Honda only charges .10 to .15 cents per mile if you go over the amount agreed to in a contract Lease...5k miles x .15 = 750.00 (125.00 less than Trade Depriciation)

So if you are buying, you will pay more in depreciation on milage than if you leased it and paid a fee per mile you went over.

With this info, especially for those of us who like to have a new car every 3 or 4 years...and dont like putting a lot of money down...and like having a low monthly payment....why would you want to "buy" and be liable for everything when you can lease and pay less-trade early-and have options??

Keep in mind too....only 19% of all people who purchase a car actually make it thru the full term of the loan before trading the vehicle in. So that means 81% of people who "buy" cars never really bought...they just leased it with none of the benefits and paid more per month!!!

Chris

[4DoorSi]

Is it easier to get a lower selling price if you pay cash. I plan on buying an 07 Si sedan towards April. One dealer is selling for 21,885. Im thinking I should get about 800-1000 over what I owe for trade. Id plan on going in, test driving a couple of different models and than say maybe offer 20000 cash plus trade OTD or should I go a different route when paying with cash??

Thanks cbondhonda.

[cbondhonda]

When it comes to paying cash....dealers dont like to see it because they would rather you finance so they can make money on that.

Having said that though, Why would you want to pay cash?????

Example:

Your Buying a 20,000.00 Car and you can finance at...say 6% APR.

Would you rather:

A) Pay 20k up front to avoid the 6% apr that you would pay over time.

B) Finance the vehicle with nothing down but your trade for a 5 yr term and pay 400 or so a month for a total of around 24,000 total over 5 years.

C) Neither...You just put that 20k in your bank to EARN YOU say 7.5% in a CD or Money Market account....Lease the vehicle for 3 years, pay 325 a month and be able to upgrade in 3 years or pay it off with the money YOU EARNED in that 3 years on intrest so you NEVER eat any depriciation or even TOUCH the 20k you have in the bank??? (basically let your money pay for most of the car without even touching the original 20k)

You let me know which option you would rather do and why and Ill tell you the best way to do what you want and save you as much money as possible.

I know what I would do, but you might have a different situation than I so whichever you chose Ill give you the best advice i can...Just let me know!

Chris

[CZ-75]

Congratulations - no one has jumped your ass for posting here what you did at TOV.

[cbondhonda]

Yep...the folks on 8thcivic are made up of mostly people who are wanting info on buying or overall consumer advice...not Sales People who are mad Im giving away their secrets...
But I still post on TOV, just not as much as I used to.

LOL

Chris

[4DoorSi]

Hey, Chris. I understand where your coming from and see what your getting at with saving the money. Our main goal, is since Im unhappy with the car I have now, is not to have a car payment. My wifes car has been paid off for 3years now. We are getting the money from the sell of our house and had planned on either paying off the car or trading it in and paying cash.

[RockALittle250]

Originally Posted by CZ-75

Congratulations - no one has jumped your ass for posting here what you did at TOV.

Yea, that surprised me too. Whatever he is trying to accomplish on this site is completly self-serving.

[CZ-75]

Originally Posted by RockALittle250

Yea, that surprised me too. Whatever he is trying to accomplish on this site is completly self-serving.

Actually, I wasn't trying to be cynical and I disagree that it is COMPLETELY self-serving, as the tips are generally what you find anywhere in a car buying guide. Check some other threads here, as cbondhonda is offering useful info to folks who couldn't possibly buy from him without major expense, effort, and inconvenience. However, by being helpful (a form of self-promotion), I do feel he will gain some sales from folks who post here and live in TX, which is alright by me, being a supporter of capitalism.

[cbondhonda]

Originally Posted by 4DoorSi

Hey, Chris. I understand where your coming from and see what your getting at with saving the money. Our main goal, is since Im unhappy with the car I have now, is not to have a car payment. My wifes car has been paid off for 3years now. We are getting the money from the sell of our house and had planned on either paying off the car or trading it in and paying cash.

Then by all means pay it in full so you can be in the position you want to be in. Once you decide what kind of car you want and the price you are being offered, let me know and we will work something up for your area (state / county and so forth) and see what happens!

Chris

[RockALittle250]

Originally Posted by CZ-75

Actually, I wasn't trying to be cynical and I disagree that it is COMPLETELY self-serving, as the tips are generally what you find anywhere in a car buying guide. Check some other threads here, as cbondhonda is offering useful info to folks who couldn't possibly buy from him without major expense, effort, and inconvenience. However, by being helpful (a form of self-promotion), I do feel he will gain some sales from folks who post here and live in TX, which is alright by me, being a supporter of capitalism.

Good point...it is pretty self-serving but not completly. I'm not trying to be cynical either, just calling it how i see it.