New Car Buying
Buying a new car? There are things you should know about dealers and manufacturers. Know there are factory built- in benefits for the dealer. Online ads and websites can provide useful information. You are not educated enough to buy a new car yet– read on.
The factory provides a MSRP (manufacturers suggested retail price); this number is irrelevant. Knowing the manufacturer allows cars in the show room for a period after which the manufacturer charges interest is more useful. It motivates the dealer and affects the price you ultimately pay; every day the car sits is money lost to the dealer.
Strolling into the showroom you should be warmly greeted; the dealer knows that the first 15-20 seconds are crucial. You should be allowed browsing time unless ready from online ads to see a particular model. The rep will determine if you are a serious prospect or just looking. Once decided- “game on”. Good salespersons will employ trial closing questions. “When do you want delivery?” “How much are you prepared to put down? ” “If I can get it in that color, when can you pick it up?” “Paying cash, leasing or financing?” Having answered, you are on your way. Now comes the first closing as you have decided on availability, color, payment mode and accessories. Most are included with the car; but more will be offered and a” final” price presented. If you can’t agree, the salesperson will go to the boss to “fight” for your price. The rep knows how low he can go and will likely come back with a lower price. If you stand firmly however the T.O.” (Take-Over) process begins.
The boss steps in to “mediate”. You may think you know the dealer’s cost from online information. You don’t. It isn’t the MSRP or sticker price; you are already thousands below that as has been gleefully explained. The boss may show you the invoice-or his cost. There is a lower cost still. Unseen in that invoice is about 3% to the dealer excluding manufacturer’s incentives on that model and/or accessory package! Well, you finally agree upon price. The rep looks beaten but only temporarily. To be sure a commission has been earned. But there is big money to be made in the second closing by the finance rep that sells extended warranties, service packages and various insurance policies. You decide what is advantageous and what is superfluous.
You also may not be given the lowest interest rate for which you qualify. Know your credit quality! The amount charged over the actual percentage entitled to is gravy for the dealer; consider finding financing yourself. If leasing, a lower monthly payment looks attractive but means a higher residual value; at expiration you may owe money to the finance company. But, of course, it can be rolled into a new… Knowing the nuances of new car buying uncomplicates the process.
