Care to explain how it's possible to pay way to much with my buying process? You can't. You can't because you have all the control if you follow what I posted.

This is what I do for a living. This isn't really common knowledge but it also isn't a secret.

I prefer selling to customers that know as much as I do about the buying process. It makes negotiations go much, much faster. If I'm going to take a nothing deal...it better not take up much of my time. I won't spend hours with someone and make nothing.

If you know your ACV versus the trade allowance, you know their profit margin. Period. This isn't a trick. This is how we do it.

If you can buy at invoice less holdback...that's the best deal you will ever get. You may be able to talk a dealer into giving up stair step profit they have not earned yet but that is a fat chance.

Sometimes, on some inventory, we will sell at a loss so we can regain that capital and re-invest it in a unit that has more potential.

Keep in mind that even at a slight loss the dealer may still come out ahead because we all pay floor plan interest on new inventory. A bank floats everything we have, new, on the lot.

It really is a little stupid to walk in demanding they take a loss. They will never do it on fresh inventory.

 

All I know is, I was at the dealership yesterday. They had a 2010 laramie in the showroom with a sign in the windshield, $14,000 off and 0 percent. That would be the starting point of negatiations for me.....

 

Just because they advertise $10,000 or $14,000 off, doesn't mean you get it. Most dealerships advertise with the maximum available rebates. You may not qualify for all of them. Most manufacturer's have a customer rebate that combines with another type of rebate. Like a Owner Loyalty or a Competitive Incentive.

They also make up some of the discount back in back ended gross fees like GAP and their Doc fee.

That is why it's so important to know your ACV and to get the invoice. The more you know, the more you can control the deal.

 

It's also a good idea to know your credit inside and out.

It's a common practice to mark up an interest rate on a customer. If the bank approves them 72 months at 3%, dealerships will mark it up a couple points to 5% and make $1500+ of back ended gross profit.

 

Chrysler makes the first two months much better for buyers of its vehicles, offering a 60-day money-back guarantee and to make the first two months of payments. The automaker is also temporarily offering interest-free 60-month loans on most models, as long as they're financed through GMAC.

 

First, everyone should understand numbers discussed in the USA will be different from Canada. Canada does not have the deals that seem to be given in the USA.

Most of these posts are correct in that it is not hard at all to get a considerable about off sticker. When the 09 first came out I did not even go look, thinking not much wiggle room would exist. But after watching the forum in spring of 10 I went in, ordered a 37K RSCB 4x4 and had NO issues getting 10K off an ORDERED truck.

Unless you are buying a very basic ST model 10K is a good starting point. If dealer A will not do it dealer B will. You can then work further, even negotiating aftermarket dealer installed items. Once you have an acceptable amount you then DIG DIG DIG for extras. For example, I made my deal then pulled another $500 out of the deal when I told them I was financing through my CU and at that time there was a incentive setup with my CU and Dodge. DIG DIG DIG, but do not pull those hard to find numbers out of yoru hat until you have made your best deal.

Of course there are lots of things that go into a sale, trade in really mucks up the water. It is best to negotitate the purchase price and your trade in amount vs a "complete deal" number. I did not trade in so it made my deal easier.

 

Trade ins do not muck up a deal if you know your ACV! That is the point of an ACV! Your ACV would be valid on anything you look at! Where as your trade allowance would change depending on dealer margin.

Honestly, dealerships love trade in units. We take them in at a fair price and usually have between $6,000 and $3,000 margin on most used cars. It's not a greed driven price. It's a market driven price.

The bigger the discount on your shiny new 2010 Ram, the lower the value you get on your trade and the harder it depreciates once you drive it off the lot.

My sales process is international. It doesn't matter what state or country you live in. They all follow the same exact process.

All dealerships do this. Yamaha, John Deere, Prowler RVs....whatever....it's all the same.

Canada doesn't get the same percieved rebates because they have significantly higher costs of living and business with their free health care system.

 

Example A (this is an actual deal):
Typical Deal From A Customer POV:
Desired vehicle: 2010 Ram 1500 Sport 4WD
Invoice: 35623
Cost: 34482 (invoice less hold back)
MSRP: 38930

Trade in: 2008 F150
ACV: 24500
Trade allowance: 25000

I don't even consider rebates yet. I don't consider them because they make no impact on my bottom line.

Knowing these numbers, I can determine that the dealership will make $1141 upfront if they sell me the vehicle at invoice and give me ACV for my trade allowance.

If they give the trade allowance then they are down to $641 upfront profit.

I know that if they give me $25,000 they have to dip into the hold back to get it done.

I'd be happy at this level. Some people will feel the need for the dealership to make nothing and they will continue to beat up the dealership for free extra crap.

That's what we want. We want you to stop beating up the gross margin of the deal. We want you to beat us up on accessories because we have a pretty healthy profit margin on them. If you value the accessories retail at $500 they only cost us $300 or less. They have probably been sitting on a shelf for 6+ months.

Now, if your ACV is $24,500 and the dealership shows you $27,807, then they are dumping their profit into your trade instead of taking it off their MSRP. It's the same thing. Unless you know your ACV, you have no idea how much money they are giving way. The ACV is shopped out the same way your trade allowance is from dealer to dealer.

 

Interest Rate Mark Up:

Lets say you end up financing $20,594.55. You took the max rebate option. So the dealer gets you approved at Tier 1. That's usually a 720+ Fico score. The rate is 3.49%. That means that over 72 months you will pay a little over $2,200 in interest. Your rebates were $2500 so you're automatically in a better payment than you could ever get with 0%. You also have more equity because you took rebate over low APR. Now, if you trade before 72 months...your in much better shape.

If the dealership signs you at 5.49%, you just gave them another $1400. The bank gives them a commission on anything above the 3.49%. Your payment also goes up about $30 a month.

It's almost always better to take the rebate over 0% to 4% range finance incentives. Low APR does nothing for 90% of buyers. They almost always trade before they are through 36-48 months of their loan. So pay a little more in payment if you have to. Get that extra equity.

 

If you're a payment buyer, you need to disclose how much you owe on your trade in before you even get into negotiating the vehicle price. Trust me, you will save yourself and the salesperson a ton of time.

The trade value and your payoff are actually completely unrelated. Just because you owe $11,000 on a vehicle that has a trade value of $5,000, doesn't make your trade worth $11,000.

The average is, for every thousand dollars you're looking at $20 a month. So if you're negative a grand, your payment will go up $20 a month. If you have $1,000 of equity, your payment will drop $20 a month.

So if you're dead set on $400 a month payment, and the vehicle you want is $20,000 and you owe $11,000 on a $5,000 vehicle....you're already out of luck and unless they have some pretty heavy rebates...you may as well go home.

Most banks won't even finance over 120% advance at 60 months. If you are shooting for 72 months they usually won't go over 100%. That means that if you have any negative equity at all...you won't get approved.