What's the deal with "dealers fees"?

[Jim 5]

Originally Posted By: benjamming
Originally Posted By: saaber1
Buying a new car is simple:

1) Obtain the actual dealer invoice amount from an objective 3rd-party source and then subtract any factory rebates etc.

2) Show that invoice printout to the dealer and ask what is the minimum profit they will accept above that amount. Tell them you are going to multiple dealers and will go for the lowest price.

3) Any hassle, "multiple salesman attacks", or waiting games then immediately walk out as stated above.


What do folks typically use as profit you deem acceptable? I tend to start at 2%. I won't pay more than 4%.


My thought is that I'd let them have around $1000 at most depending upon the price of the car. Profit isn't a bad word, and they have overhead to cover.

 

[Audi Junkie]

We just did a deal on monday.

$19k msrp
-$5k discount

Glass etching $240

Armrest $199

We wanted the armrest, and all dealers do that etching stuff for "their" insurance.

At -$5k off, we are still getting a better price than other dealers before they added their own stuff.

We got pitched on the fabric/paint protect for like $200, bzzt.

Same on extended warranty...I politely let him do his spiel and even negoiated a $100 off ($900 to go out to 6 years/60k bumper to bumper w/$100 ded) not too bad, but we skipped.

Skipped on wheel protection too.


So, yeah, the dealer made a few bucks off us, but they had to work for it, a complex deal with 2 owners and a clunker.

It was worth it for an $11k new German car.

 

[Drew99GT]

Originally Posted By: Bill in Utah
My rule of thumb (and in over 30+ years of buying new/used for family/friends and myself) is if the vehicle stickers for $20k, pay NO MORE OUT THE DOOR than $20k incl ALL "fees".

NEVER pay more than the sticker out the door.

That's what my Dad, a former car salesman, has basically taught me. Sure, you can haggle down to the nitty gritty about dealer holdback and whatnot (ie, the "invoice price" on a sticker is more then a dealer actually bays for a car because the manufacturers give them holdback money to help finance operations), and try and shoot for the magic deal of getting a car at the sticker invoice price.

The easiest thing is to offer MSRP OUT THE DOOR (not including tax/title/license fees of course). If they want to do the bull [censored] fee game, they can have their accountants sort that out in the end cause I'm not going to pay some handling fee of $500 bucks more then their asking price for the car.

This is yet another reason why buying low low mileage used/lease returns is so much easier because dealers make so much more profit off them and there's a ton of wiggle room in there.

When we bought our Impala, their sticker price was in the NADA ballpark for dealer retail, it was an off lease return they got at an auction (carfax and autocheck verified), so we knew they had several thousand in profit all ready. My Dad offered them a thousand under NADA dealer retail out the door (ie they can "account" for their bull [censored] handling fee how they desire - out the door is out the door) and the guy laughed. My Dad didn't bat an eye, turned around and walked said out loud "lets go look at the other Impalas on the list".

The sales manager ran up stopped us and said we had a deal!

 

[javacontour]

I always negotiate the bottom line out the door price. I don't care if they put the fees on it or not, as long as the bottom line, with tax tag and title is the number I give them.

Tax is a known amount, so are title and tags, so there is no reason to sharpen your pencil and figure out that if you are looking at paying $10K car, with 5% tax and $143 in tags and title from the state, that the bottom line is $10,643.

So I'll say something like $10,600 or $10,650 out the door, which means that's the check I'll write. You figure how to arrange the numbers above the line to get there.

It takes a lot of the games out of the deal when you negotiate for the bottom line number.

 

[javacontour]

Those add on stickers are called "sucker stickers" for a reason.

 

[Thermo1223]

Someone explain this to me.

Every used car I have bought has always been almost $2k below retail value. Do I just get that lucky?

I mean I check values and everything it just always has been.

Although I never bought new so maybe thats why.

 

[Drew99GT]

Originally Posted By: Thermo1223
Someone explain this to me.

Every used car I have bought has always been almost $2k below retail value. Do I just get that lucky?

I mean I check values and everything it just always has been.

Although I never bought new so maybe thats why.


Wholesale used car prices are LOW! If anyone ever has the chance to go to a dealer auto auction, go. Your jaw will hit the floor at the prices dealers pay for cars. That's why there's so much more profit in used cars.

 

[saberz]

I heard about the auctions, the one guy whome I became buds with at Toyota(the sales guy, not the finance guy) told me he went under the dealer license and got his 04 BMW for like 12k and it retails for 20+k.

Some people say you can goto an auction with the dealer if you know them well enough but the chances of them allowing you to come have to be small since "you" will "know" how they operate etc.

 

[Familyguy]

Originally Posted By: Audi Junkie

It was worth it for an $11k new German car.


So how do you like the Astra? I was considering one, but I'm uncomfortable with getting stuck with an orphan now that Saturn is circling the drain and I'd be back to paying Audi rates for parts since they're all coming from Europe.

Best,

 

[bullwinkle]

Originally Posted By: javacontour
I always negotiate the bottom line out the door price. I don't care if they put the fees on it or not, as long as the bottom line, with tax tag and title is the number I give them.

Tax is a known amount, so are title and tags, so there is no reason to sharpen your pencil and figure out that if you are looking at paying $10K car, with 5% tax and $143 in tags and title from the state, that the bottom line is $10,643.

So I'll say something like $10,600 or $10,650 out the door, which means that's the check I'll write. You figure how to arrange the numbers above the line to get there.

It takes a lot of the games out of the deal when you negotiate for the bottom line number.
+1-all new car deals should be done this way!

 

[rationull]

Originally Posted By: javacontour
I always negotiate the bottom line out the door price. I don't care if they put the fees on it or not, as long as the bottom line, with tax tag and title is the number I give them.

...

So I'll say something like $10,600 or $10,650 out the door, which means that's the check I'll write. You figure how to arrange the numbers above the line to get there.


+1 again. This is how we did it when we bought my wife's Mazda3. It helped a lot that it was a leftover 2008 model when we were buying in Feb or Mar 2009 but we ended up paying, out the door, 2k or so less than MSRP.

It was very, very nice being able to write a check for a round number negotiated ahead of time, and know nobody's playing games with you.

Like you said, if you agree on an OTD price, they can arrange add-on fees, trade-in etc however it suits them.

This is NOT how I bought my Civic in Jan 2007 and while I don't think I got ripped off by any means (early 2007 was a different auto buying market than early 2009) my second experience definitely opened my eyes as to how easy it can be if you make your limits known, make sure they know you'll actually buy if they accommodate you, and don't get too attached to the deal before it's made.

 

[benjamming]

java,

I certainly agree with that approach & is what I used the only time I purchased a new car. I don't care if they put janitorial fees on there, they can sort out how to pay their bills as I'm not interested in that. But, how do you determine $10,600 or $10,650 that was used in your example?

 

[RWEST]

It's very simple - they are trying to gouge you as mercilessly as they can. Every penny they can get out of your pocket is a point of shame for you/pride for them. In the current economy, YOU are definitely in charge, use it to your advantage. They are NOT your 'friend' - a true friend doesn't try to rob you blind.

Import dealers, specifically Toyota (we know our cars are great) & the German guys (ve are Teutonic - you vil pay) seem to be the worst.

Some of their tactics are incredible - a few years ago, the lease on my '04 Expedition was coming to an end, so I stopped to look at a Toyota 'Sequoia'. I told the guy I intended to lease, and didn't want to spend more than $xxx.00/month, which was roughly 10% more than I was paying for the current vehicle lease. After 2 hours (my fault, I should have walked - never let them keep you waiting more than 15 minutes, MAX, ever!! - guaranteed, someone is watching you and will not let you get out the door), the guy comes back with a figure 2X higher than I wanted, then said "okay, are you ready to sign?". Yeah, here's a sign, right here!!

Quote:
So I'll say something like $10,600 or $10,650 out the door, which means that's the check I'll write. You figure how to arrange the numbers above the line to get there.

Yep, that's how to do it. If they want to do the deal, they'll do it, if not, tough beans!!

 

[javacontour]

Originally Posted By: benjamming
java,

I certainly agree with that approach & is what I used the only time I purchased a new car. I don't care if they put janitorial fees on there, they can sort out how to pay their bills as I'm not interested in that. But, how do you determine $10,600 or $10,650 that was used in your example?


I was willing to pay $10K for the car.

My hypothetical tax is 5% (to make the numbers easy) so that $500

The state of IL charges $78 for tags and $65 for title, so that's $143

10,000 + 500 +143 = 10643.

So I would make a nice round OTD offer of $10,600 or $10,650. They can play with the numbers above the line all they want.

 

[Win]

Originally Posted By: javacontour

So I'll say something like $10,600 or $10,650 out the door, which means that's the check I'll write. You figure how to arrange the numbers above the line to get there.



Can't do a one check deal around here.

Dealer gets one check for the car, then you have to wait a week for them to prepare the MSO, and then take the MSO, the sale contract, odometer statement, and some other misc papers to a state office where you get to write another blood boiler for the sales tax and tag.

I always expect the dealer to make a fair profit - buildings, pavement, equipment, etc., are extremely expensive, and employees always expect to be paid on time, so I just decide the price range of what the car is worth to me, and when the deal is in that range, I'm done.

I would never waste time with a car salesman - just deal directly with the sales manager, they are the only person that can make a deal, and they can decide which one of their (likely) relatives can get the commission. It shouldn't take more than ten minutes to negotiate a deal on a car.

 

[javacontour]

Some dealers actually issue plates. So you can do it all in one stop.

Now if I buy in MO and I live in IL, still some dealers can do it one stop as they have "stores" on both sides of the river.

Others do everything but the tax, tag and title, and either employ a shop that does that on the IL side of the river, or they give you the paperwork and you visit the Sec of State's office.

If the latter is the case, then you are writing two checks, one to the DOR for the taxes and one to the SOS for the title and tags.

If your vehicles is financed, the dealer is going to have someone do that so the lien is recorded.

 

[benjamming]

java,

Go back one step. I'm trying to determine how you arrive at $10k.

Win,

What do you use for % profit or is it not anywhere near that concrete?

 

[Cogito]

I have bought about a half dozen new cars and every time they tried to milk me for "documentation fees, local dealer prep or handling," or whatever bogus name they were using at that time to scam the customers. I always told them that overhead is part of the vehicle price, not an added cost, and I would not pay it. They always cried about how they had to charge it, everybody paid it, etc., etc. But in the end, they always dropped it when I started to walk out. Never fall in love with a car, there's usually another one just like it at another dealer. If the car is worth more to you than it is to them, you will pay too much.

 

[Audi Junkie]

Originally Posted By: Familyguy
Originally Posted By: Audi Junkie

It was worth it for an $11k new German car.


So how do you like the Astra? I was considering one, but I'm uncomfortable with getting stuck with an orphan now that Saturn is circling the drain and I'd be back to paying Audi rates for parts since they're all coming from Europe.

Best,



We're super-happy with the Astra. Let's say it compares better to an A3 than a Golf. The car is built super-well and handles like nothing else in it's class, not even close. Not worried about parts, I rarely hear any complaints from owners, here or overseas. Opel has a super-high quality product, a lot of TUV awards as well as AutoBild's awards of "Best German Marque".

When I configure the same car in Germany, with the same 1.8 Ecotec it comes to $23,000 Euros.

The car reviews pretty well, although TopGear makes sport of it to a degree. It beat the R32 and CL55 AMG on their track test.

http://www.youtube.com/watch?v=7QhS6FKeP1s

http://www.youtube.com/watch?v=PAwX-brllj0

http://www.youtube.com/watch?v=4AYl6VsCBLE&feature=related

http://www.thetruthaboutcars.com/saturn-astra-review/

https://www.opc-racecamp.de/

http://www.opel.de/


Here's ours...

 

[mrsilv04]

Last vehicle I bought, here was my strategy. I worked the numbers at home, the night before, and came up with a number I was very comfortable with.

The next day, this is what I presented the salesman with:

"I will pay you $XX,XXX, for that vehicle, out the door. You work the numbers up however you want to on the sales contract, but I will write you a check... right now... for $XX,XXX, for that vehicle.

That's my one and only offer. My offer includes tax, title, plates...everything. Not a single dollar more."

I went home with the vehicle at that price, and have never regretted it.