Friday, March 14, 2008


Tonight rather than talk about procedure in purchasing a car, I am going to talk about things you should never do while purchasing a car.

  1. Never buy A&H or life. A&H and life are basically insurance. When you go into the finance office, the finance manager (a.k.a best salesman) will generally offer you 4 products. Life, A&H, gap, and warranty. I suggest always buying gap and warranty. Now A&H protects your credit. If you were to fall ill or injure yourself. A&H would pay your monthly note for 3 to 6 months. While this prevents repossession it just cost to much, thousands of dollars. They will show you a small increase in payment and say something like this. What if you get cancer? The finance managers are the toughest to deal with in the car business. After asking you a what if with a possibly deadly end. They will mention Life. Now this is also an insurance, which protects your family. If you were to die the day after you bought the car, the insurance would pay the car off completely. While this sounds good it also can be very expensive. So what does the cost matter for peace of mind. How about this. Lets say a couple walk in the finance managers office. They are relieved they know its about over. However this is where most people get screwed in the car business. The finance manager will be very pleasant. The couple has picked out a Minivan(so all there cute kids could fit). At this point the couple think they are going to pay $425 a month for 60 months (a base model or maybe a used one for that price). They are presented numbers at this point, and they both notice the note is $505 for 72 months for a $20000 van(too high unless you have credit problems). So they say no. But the finance manager wont let them leave till they hear his proposal. So 30 minutes later. The couple leave exhausted, but relieved and excited about their new van. What happened in the finance office? They were sold. Sold Life, A&H, gap and warranty. Now they are paying 80 dollars more a month and for a year longer than they expected. What does this mean for their future. They will not be able to trade this vehicle in until its payed off at which point the van will be worth maybe $1000. Why? The stuff they were sold in the finance office costs around $6000. Which means they are $8000 up side down when they pull off the lot. So take my advice and don't buy Life and A&H. There is only one exception, you are already extremely sick and could possibly die.
  2. Super Sale! Have you ever gotten one of those fliers in the mail that says You Won! come to blank blank dealership to collect the prize. Throw it away. Or go with this knowledge in mind. These fliers will offer a check for $4000 off or at least $3600 for your trade. They will have cars for 500 dollars and cars with low monthly notes of $199 a month. Last but not least they will guarantee you financing bad credit, no credit etc. The first thing you need to know about these sales is that the salesman working are not from the area well not all of them, the regular staff will be there but the Super Sale team will be running the show. These salesmen are the best in the business. They get a week to make enough to cover hotel, food, plane, and regular monthly expenses. They are good. 2nd They don't care what they have to promise because they will be not be there next week. 3rd These sales are for used cars, claiming to be a liquidation event. Not true. 4th While you think the cars are marked down they are actually marked up at minimum $6000 over cost. My first sell in a super sale I made 2300 dollars on one car. 5th The big prize you think you won is a 5 dollar Wal-Mart gift card and to get it you will have to register at which point they will run your credit. Now there is a big prize and you can win it but no one ever does. Why? Because the team sends out around 60,000 fliers, the odds of that winner walking in the door are extremely low. 6th When you they show you the numbers and take the $4000 off they will first mark the price up again $4000 dollars so they don't lose money. Basically if you buy a car without negotiating at one of these events you will pay at minimum 6k over cost and don't feel safe looking at a new car. These salesmen can even get you on them. So I will leave you with this: If you have all day, enjoy playing the car game, don't have a problem saying no, feel you understand the car business and the salesmen, and know you can walk out at any time. Go to all the super sales you want, and collect the gift cards. Maybe you will get lucky and win the prize.
  3. Never mention down payment until you are in the finance office. Pretend you forgot you had it. If you mention it before you agree on numbers they can make it disappear in the numbers by bumping the cost, making up charges, and bumping interest rate.
  4. Never mention a trade/how much you want for it till you see a price on the car you want. Why? They can show you as much as you want for your trade by simply subtracting price from the car you want. For example lets say you want $2000 for your paid for Neon. You want to buy a Stratus for $10000. Now the Neon is only worth $1000 and the Stratus is only worth $6000. So they say they will give you 2000, for the Neon. They just lost $1000. To supplement this loss they will say with a discount $567 on the Stratus, and 2000, for your trade, you are out the door at $7433. Looks good. doesn't it. What you don't realize is that they actually gave you $1000 fro your car and a $1567 discount. Still sound good? Well if it does, your wrong. Your 1st goal is to get the discount. As much as you can. From part 1 of this series you should know that used cars are on average marked up $4000. Which means with the $1500 you got off they still made close to $2500. So first get a discount of at least $2000 dollars. 2nd mention your trade. You will always want more than what they offer. So if you get the 2k off and they show you another thousand in your trade you end up getting 3000 off rather than 1500. Its kinda complicated, I hope I explained it well enough

Things to remeber.

  1. Don't buy A&H or life unless you are sick.
  2. The finance manager is where the struggle begins.
  3. Super sales are bad news.
  4. Never mention a trade until you get the price you want.
  5. Never mention what you want for your car till you get the price you want
  6. Never mention down payment until you get ready to sign the papers.
  7. Super Salesmen are really that, Super slalesmen, without the knowledge you will be taken advantage of.

Anyway that concludes part 2. Feel free to ask Questions. Remember there are no dumb questions in the car business.


 Just Do It!