Sunday, December 13, 2009

Topic Four: Used Car or Truck Purchase Process Variables and Tips

Keep Your Wits

So now you are with the salesperson or finance person at the dealership and have landed on the vehicle of your dreams.  Be careful not to get caught up in the moment - save the euphoria for when you take delivery as it is a great feeling.  For now, put on your bankers hat. 

Don't Get "Hot Boxed"

Some dealerships are very aggressive in closing the deal, expect a certain amount of discussion designed to get you to move forward but if at any time you feel extremely uncomfortable,  say so and/or get out.  There are many variables in how much you ultimately pay for a vehicle, including repairs based on it's condition. 

Trade In Effect

Make sure you confirm the actual sales price for the vehicle, tease out any trade in valuations - used vehicle trade ins are only worth what the market bears - dealers can give you more for the trade than book value ( is a great source as is Kelly Blue Book or but they are just charging you more for the vehicle you are buying. 

What Dealers Try to Make

There is a certain amount of gross profit it takes for a dealer to net any amount of profit on the deal.  Seems odd that they may shoot for a $2000 margin on you and end up taking $150 to the bank but that's why volume is king.  Thus they will find a way to make something somewhere.  It's like squeezing a ballon in different sections, one section may get squeezed but another section expands and the same amount of air (profit) is still in the balloon.    Profit allows the dealer to eat so do not begrudge them something. 

When To Buy A Car Or Truck

One note - cash buying is quite beneficial for you as well as purchasing at the end of the month.  We want to hit our numbers - it's how we live but also part of our psyche.  "One more on the board" feels good and feeds the kids so help us hit our goals and maybe shave a few hundred off the deal.

Interest Rates

If you are getting bank financing they are all fairly comparable.  If you are getting dealer financing sometimes called "Buy Here, Pay Here" or signs say "We Finance" that means the dealer is the bank as well as the dealer.  States set top interest rates just like for credit cards and they are just as high i.e. can get up to 26%.  If you need a vehicle for work you need a vehicle for work but see if you can demonstrate some credit worthiness.  Years on job, years in house, owning a home, good paycheck, multiple references all point to stability.

Monthly Payments

One way for not so good dealers to make lots of money from you is to have you pay for years.  I realize you need a certain payment to live but try to pay the car off as fast as possible!

Down Payments

Put as much down as you can.  Use the "Friends and Family" approach - I do not care where your money comes from - collect what you can and pay those folks off with your next paycheck.  The more you put down the more likely a dealer is to sell you a car and finance you himself.  Look to put down about 1/2 of what the list price is.  You can get $500 down but that barely covers registration and title and sales tax.  The dealer will get good profit on these kinds of deals but try to collect more than that.


Fees are fees, most are legitimate - the only one you might fight is a documentation fee - I use it to pay my brother to go to the DMV.  You don't have to pay it but if you want the car, I'd let the dealer have his $50.

So those are the variables and notes on bringing each one down as best as possible.

More next week on the actual documents leading up to the "Golden Moment"!

Sunday, November 29, 2009

Topic Three: Used Vehicle or New Car or Truck Purchase Preparation

So you've landed on your three most favored car or trucks. 

You've collected all the cash you have from friends, family and savings.  You've decided how much you have versus how much the vehicle costs which means you will either pay cash or finance the purchase.

Cash deals can be very fast.  At 9995 Motors I have been able to deliver a vehicle in under an hour for cash deals.  Finance deals take longer but we are able to do that in under two hours if you come with all the proper documentation for a credit application.  Short version of that is drivers license, current address and information about rent versus own, years at that location, references with phone numbers, employment data, including name of company, address, years there, occupation, monthly income from all sources, a utility bill for proof of residency, phone numbers, etc.

You've also test driven each one, you've seen what you should pay for them by checking comparable cars and trucks on or or Craigslist or new car information site.  If a used car or truck you're either willing to buy AS IS, have done your own mechanical assessment, have taken it for a diagnosis at a Firestone or NTB or other mechanic, and know what you'll need to do to it for repairs.

So now just tell the dealer which vehicle you want, whether you will pay cash or want to finance, and how much down if a finance deal.  You also want to consider the monthly payment you can really afford.  At 9995 Motors, I ask consumers how much money they have allocated for transporation montly.  Deduct insurance and gas costs, set aside $50 a month for maintenance and repair (maintenance meaning oil changes, air filters, system flushes, repairs meaning things like new radiators, tires) and what you have left from the fund is what you can afford montly.  As a guide, used car dealers who finance you themselves look for 1/2 of the purchase price down and $300 a month as a guideline.

If you cannot hit those parameters you may want to consider not buying until you get your situation in order.

Look for the actual transaction step in my next blog!

Thursday, November 26, 2009

Topic Two: Buying a Car or Truck? Need based approach.

Buying your first car for school, for your son or daughter, or going to work?  It is the second biggest purchase of your life but actually pretty simple process when you break it down and can be fun. 

The best thing to do is to think first about what you need not what you want.  Think about how much cash you have as cash is king in the automotive world.  If you have enough cash, you may be able to buy your car outright.  Dealers love cash as it helps them pay their bills, buy more cars, etc.  Cash deals are actually not very profitable versus vehicle financing but cash flow is cash flow nontheless.  Some dealers make millions but it's based on volume.  They may gross $1500 on your purchase but after they pay their bills most end up actually profiting $150.  So don't lowball them too much as it just sets a bad tone.  Plus dealers have a tendency to do alot more for a customer they made a profit on.  Small things like putting on your new license plates or washing it don't seem like a big deal but can save you time, money, and hassle.

My recommendation once you know what your needs are and how much cash you have, the monthly payment you can afford (after gas, insurance and a little repair/maintenance fund), get on the web and hunt for vehicles in your price range.  My favorite sites as a consumer as well as a dealer are Craigslist and  Craigslist postings have a tendency to be cheaper but buyer beware.  You can also buy from other consumers but be prepared for an extensive hunt, title issues, and some creepy experiences.

Getting a feel for what you can get for your money, send the dealer an e-mail to ensure the vehicle is still there, and then go visit on a Sunday if you want some time to think.  If you are ready to buy, need a car or truck really fast or have some questions then by all means go on a Saturday.  At 9995 Motors Saturday is my biggest day of the week.  You can also get very lucky at end of month as we need to pay our rent on the first.

Come with your cash in hand and use it as a bargaining chip.  Learn about the car, drive the car, and once you find the best of the three for the money you have, offer them a reasonable price based on your websearch. 

You may want to take the vehicle to a repair shop to have them check it out - well worth the $100 or so at an NTB or other garage.  We have one across the street from us.  Many consumers hope by finding things wrong the price will go down but as dealers we price the vehicle based on the condition it is in but you would want to know yourself so you can plan your repairs and maintenance.

Many folks spend alot of time driving around hoping to find "the magic bean" but most of the time you'll find vehicles are priced right for the market these days.  There are some basic values out there like Ford Taurus, Ford Focus or Windstar Minivans, some folks like to stick with the Japanese hoping for some reliability - just depends what your needs are.  Chevy trucks, Ford trucks, Camrys and Accords seem to top most used vehicles lists but you will pay a pretty penny for the Toyotas and Hondas.

Once you have landed on the vehicle, then it's transaction time.  More on that in later postings.

If you have found this helpful or interesting, then send me a note!

Your Car Insider

Wednesday, November 25, 2009

Topic One - Where I get my info

I worked for one of the big three for seven years in sales, coming in contact with 150 or so dealers learning from each one of them as well as from the factory itself.

I most recently became a used car dealer and have done every aspect of that business from beginning to end, license through launch, auction through titleing at the DMV.

I am currently also employed full time in the parts and service business so whatever aspect interests you then let the questions or observations fly!

Your Car Business Insider Launch

Buying a car or truck?
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Industry veteran from factory and dealer side has created this blog for you!
Ask away!