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re: Updated v.3.16 - Will Cover's 2018 buying guide to purchasing a new vehicle
Posted on 4/22/18 at 5:38 pm to Will Cover
Posted on 4/22/18 at 5:38 pm to Will Cover
11. Dealers often make as much money in the “business office, i.e. F&I room” as they do on the showroom floor. Insurance, dealer add-ons, extra fees and interest rate changes are among the common ploys you could get clobbered with on your way out the door (administrative fees, handling charges, advertising fees, paint protection, VIN etching – simply do not pay these as these are deal breakers). And believe it or not, even “delivery” charges are negotiable.
12. GAP insurance is the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease, etc.) in the event of an accident. Do you need it? Only you can decide. However, it is optional insurance coverage and you are NOT required to purchase it (unless specified by your auto loan terms). Car dealers sell GAP insurance coverage at a ridiculously inflated price. Figures can reach as much as 4 x the actual cost versus purchasing GAP insurance at your local credit union or insurance company.
13. Get the deal in writing. Full disclosure, in writing, of all fees pertaining to your vehicle purchase, such as destination, title, documentation, licensing and registration. If the dealer will not put it writing, “walk away.”
14. If asked, do not share pricing with another dealership. The less they know, the more aggressive they need to be to compete for your business.
15. Put deposits on a “credit card” only. Do NOT pay with a check.
16. The “If I” sales tactic. This is the last step in the sales negotiation process. Ex. If I decide to purchase the vehicle today, you have to include free window tinting. If I decide to take the red vehicle instead of the white vehicle, you have to include 5 free oil and tire rotation services. If I decide to purchase the vehicle today, you have to include floor mats at no additional cost. If done correctly, this will allow you to get another “service and/or product” that you normally would not have received and by this time, there is no way will the dealership allow you to “walk” because there is too much time invested between both parties. The dealership knows you are in a buying mode and doesn’t want to run the risk of you becoming a “be back” customer for another dealership since most people buy within 48 hours of stepping onto a dealership’s lot.
17. If you got a great deal, show your appreciation. Thank the dealer and be sure to send your friends to them when they go car shopping.
Final thoughts. Do NOT become emotionally involved or attached to a vehicle. Remember, if you aren't able to come to an agreement to your liking, you must have the discipline and self-control to walk away. After all, it’s your money and you get to decide what you want to do with it. In short, don’t let your heart rule your head – it can lead to aching in both body parts.
And while a vehicle for many is considered a “need” today, the type of vehicle you are looking to bring home is most likely a “want.”
Best of luck to you in your decision-making process!
12. GAP insurance is the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease, etc.) in the event of an accident. Do you need it? Only you can decide. However, it is optional insurance coverage and you are NOT required to purchase it (unless specified by your auto loan terms). Car dealers sell GAP insurance coverage at a ridiculously inflated price. Figures can reach as much as 4 x the actual cost versus purchasing GAP insurance at your local credit union or insurance company.
13. Get the deal in writing. Full disclosure, in writing, of all fees pertaining to your vehicle purchase, such as destination, title, documentation, licensing and registration. If the dealer will not put it writing, “walk away.”
14. If asked, do not share pricing with another dealership. The less they know, the more aggressive they need to be to compete for your business.
15. Put deposits on a “credit card” only. Do NOT pay with a check.
16. The “If I” sales tactic. This is the last step in the sales negotiation process. Ex. If I decide to purchase the vehicle today, you have to include free window tinting. If I decide to take the red vehicle instead of the white vehicle, you have to include 5 free oil and tire rotation services. If I decide to purchase the vehicle today, you have to include floor mats at no additional cost. If done correctly, this will allow you to get another “service and/or product” that you normally would not have received and by this time, there is no way will the dealership allow you to “walk” because there is too much time invested between both parties. The dealership knows you are in a buying mode and doesn’t want to run the risk of you becoming a “be back” customer for another dealership since most people buy within 48 hours of stepping onto a dealership’s lot.
17. If you got a great deal, show your appreciation. Thank the dealer and be sure to send your friends to them when they go car shopping.
Final thoughts. Do NOT become emotionally involved or attached to a vehicle. Remember, if you aren't able to come to an agreement to your liking, you must have the discipline and self-control to walk away. After all, it’s your money and you get to decide what you want to do with it. In short, don’t let your heart rule your head – it can lead to aching in both body parts.
And while a vehicle for many is considered a “need” today, the type of vehicle you are looking to bring home is most likely a “want.”
Best of luck to you in your decision-making process!
This post was edited on 4/22/18 at 5:47 pm
11
Posted on 4/22/18 at 5:39 pm to Will Cover
1. Do research
2. Be willing to walk
TLDR
ETA: Ah this is a guide for poors. Good luck gentlemen
2. Be willing to walk
TLDR
ETA: Ah this is a guide for poors. Good luck gentlemen
This post was edited on 4/22/18 at 7:52 pm
Posted on 4/22/18 at 5:40 pm to Will Cover
Why Car Leasing is Generally a Bad Idea
Leasing provides a good deal for four parties - the sales person, the F & I guy, the dealership’s owner and the finance company (leasing company). It is a lousy deal for the customer. You owe something, but you own nothing. Leasing adds a layer of complexity to the deal that allows the salesman to hide or misrepresent the true purchase price.
The less you understand about the following terminology, the more susceptible you are to accepting a bad deal:
• Capitalized Cost – This is the vehicle’s selling price and can be negotiated. This is the total amount you’re financing, including the negotiated price of the vehicle, all options, fees and taxes. It should be under the Manufacturer’s Suggested Retail Price (MSRP).
• Capitalized Cost Reduction – Your down payment. This can be negotiated.
• Acquisition Fee (Bank Fee) – An administrative fee. This is usually lumped into the Capitalized Cost a.k.a. “due at signing” figure. In this respect, it is a “hidden fee.” Acquisition fees vary among leasing companies. Typically, dealers do not make a profit on this fee, although some leasing companies may “kick back” part of the fee to the dealer as a reward for sending them business. Acquisition fees range from $395.00 to $1095.00, with an average of about $595.00. And contrary to what the finance company (a.k.a. leasing company) wants you to believe, this is a fee that can be negotiated.
• Disposition Fee – This is a fee that can be imposed (Did you read the contract?) should you decide not to buy the leased vehicle at the end of the lease term. This is a fee that can be negotiated.
• Money Factor – This is your interest rate. In order to get the Money Factor, you have to multiply it by 2,400. The Money Factor is set by the finance company (a.k.a. leasing company) and can be different depending on which finance company (a.k.a. leasing company) you decide to use. The Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet.
• Residual Value – This is the value of the vehicle at the end of the lease. Residual values can be different depending on which finance company (leasing company) you decide to use, but Automotive Lease Guide Residual Percentage Guide is the industry’s bible.
Most people are quick to answer a sales person when he/she asks if they’re planning to buy or lease a vehicle. As soon as you give away that you’re planning to lease, the price of the vehicle (capitalized cost) will freeze up. You’ve essentially lost any leverage you had at this dealership. You should negotiate the price of the new vehicle as if you’re going to pay for it with cash out of your own pocket and then bring that over to the lease.
Leasing has become an incredibly effective tool for dealers to sell their product at a significantly higher price and profit margin and is often “pushed” or “encouraged” through the sales process.
• Leasing makes the car more affordable and therefore easier to sell. The buyer gets focused on being able to drive a nicer vehicle for a lower monthly note than what they most likely could not afford to buy.
• It allows the customer to afford a more expensive car, and the more expensive the car, the larger the profit.
• Leasing allows the dealer to legally hide the true cost/price of the vehicle and charge you a higher price than you would normally agree to.
• A leasing customer is more likely to return to the same dealership to get their next vehicle and next vehicle and next vehicle. Even though your original sales person will be long gone, the dealership is able to maintain customer retention and that’s where it pays off in the long run.
An inflated residual value lowers your monthly payments, but it can also handcuff you. A more realistic residual value will make it easier to sell the lease, trade your vehicle in the middle of the lease or buy the vehicle at the end of the lease. Many people get lured in by the low initial payment, but should beware that all the financial factors that go into leasing, including trading in your current vehicle to obtain a new leased vehicle will effectively ensure your monthly payment will be much higher in subsequent leases. This makes it hard to break the cycle and purchase future vehicles with a sizable down payment.
Be careful of charges for excessive wear and tear. A leasing contract requires you to return the vehicle in good shape. But your definition of good shape may not match your leasing company’s definition. Prior to turning your vehicle back in, ask the leasing company to inspect it for wear and tear. If there are any dings, dents or chips, get them fixed ahead of time rather than have the dealer charge you for them later. It’s usually cheaper to get the repairs done on your own watch; otherwise, the dealer could charge you for full body shop work.
A person that decides to lease a vehicle needs to know how many miles they are going to drive in a year. Leases typically allow for 10,000, 12,000 or 15,000 miles per year. With a common lease period being 36 months, that mean you have to stay under 30,000, 36,000 or 45,000 miles for the life of the lease. The lower the mileage limits, the lower the depreciation of the lease and lower the monthly payment.
If you surpass the mileage limit, you’ll have to pay at least 25 cents per additional mile. But if you know you are going to surpass the mileage limit, you can negotiate buying extra miles for a lower rate than 25 cents per additional mile. While you’ll end up with a larger monthly lease payment, it will be comparatively cheaper than paying for hundreds of additional miles at the end.
Simply put, leasing is the equivalent of throwing a $100.00 bill out of your vehicle’s window every week for 3 years in terms of depreciation. The bottom line is this … any way you look at it, leasing is a convenience that you’ll pay for in the end. Put another way, if you can’t afford to buy your next vehicle with a four-year loan or less, then you really can’t afford it. The better deal long-term is to buy a reliable vehicle (good, late model used vehicle or lower priced new vehicle) and hold onto it as re-leasing every three to five years is no way to build wealth.
Leasing provides a good deal for four parties - the sales person, the F & I guy, the dealership’s owner and the finance company (leasing company). It is a lousy deal for the customer. You owe something, but you own nothing. Leasing adds a layer of complexity to the deal that allows the salesman to hide or misrepresent the true purchase price.
The less you understand about the following terminology, the more susceptible you are to accepting a bad deal:
• Capitalized Cost – This is the vehicle’s selling price and can be negotiated. This is the total amount you’re financing, including the negotiated price of the vehicle, all options, fees and taxes. It should be under the Manufacturer’s Suggested Retail Price (MSRP).
• Capitalized Cost Reduction – Your down payment. This can be negotiated.
• Acquisition Fee (Bank Fee) – An administrative fee. This is usually lumped into the Capitalized Cost a.k.a. “due at signing” figure. In this respect, it is a “hidden fee.” Acquisition fees vary among leasing companies. Typically, dealers do not make a profit on this fee, although some leasing companies may “kick back” part of the fee to the dealer as a reward for sending them business. Acquisition fees range from $395.00 to $1095.00, with an average of about $595.00. And contrary to what the finance company (a.k.a. leasing company) wants you to believe, this is a fee that can be negotiated.
• Disposition Fee – This is a fee that can be imposed (Did you read the contract?) should you decide not to buy the leased vehicle at the end of the lease term. This is a fee that can be negotiated.
• Money Factor – This is your interest rate. In order to get the Money Factor, you have to multiply it by 2,400. The Money Factor is set by the finance company (a.k.a. leasing company) and can be different depending on which finance company (a.k.a. leasing company) you decide to use. The Federal Trade Commission has determined that this is not a debt, so there is no federal disclosure involved. Therefore, you have no truth in lending disclosure sheet.
• Residual Value – This is the value of the vehicle at the end of the lease. Residual values can be different depending on which finance company (leasing company) you decide to use, but Automotive Lease Guide Residual Percentage Guide is the industry’s bible.
Most people are quick to answer a sales person when he/she asks if they’re planning to buy or lease a vehicle. As soon as you give away that you’re planning to lease, the price of the vehicle (capitalized cost) will freeze up. You’ve essentially lost any leverage you had at this dealership. You should negotiate the price of the new vehicle as if you’re going to pay for it with cash out of your own pocket and then bring that over to the lease.
Leasing has become an incredibly effective tool for dealers to sell their product at a significantly higher price and profit margin and is often “pushed” or “encouraged” through the sales process.
• Leasing makes the car more affordable and therefore easier to sell. The buyer gets focused on being able to drive a nicer vehicle for a lower monthly note than what they most likely could not afford to buy.
• It allows the customer to afford a more expensive car, and the more expensive the car, the larger the profit.
• Leasing allows the dealer to legally hide the true cost/price of the vehicle and charge you a higher price than you would normally agree to.
• A leasing customer is more likely to return to the same dealership to get their next vehicle and next vehicle and next vehicle. Even though your original sales person will be long gone, the dealership is able to maintain customer retention and that’s where it pays off in the long run.
An inflated residual value lowers your monthly payments, but it can also handcuff you. A more realistic residual value will make it easier to sell the lease, trade your vehicle in the middle of the lease or buy the vehicle at the end of the lease. Many people get lured in by the low initial payment, but should beware that all the financial factors that go into leasing, including trading in your current vehicle to obtain a new leased vehicle will effectively ensure your monthly payment will be much higher in subsequent leases. This makes it hard to break the cycle and purchase future vehicles with a sizable down payment.
Be careful of charges for excessive wear and tear. A leasing contract requires you to return the vehicle in good shape. But your definition of good shape may not match your leasing company’s definition. Prior to turning your vehicle back in, ask the leasing company to inspect it for wear and tear. If there are any dings, dents or chips, get them fixed ahead of time rather than have the dealer charge you for them later. It’s usually cheaper to get the repairs done on your own watch; otherwise, the dealer could charge you for full body shop work.
A person that decides to lease a vehicle needs to know how many miles they are going to drive in a year. Leases typically allow for 10,000, 12,000 or 15,000 miles per year. With a common lease period being 36 months, that mean you have to stay under 30,000, 36,000 or 45,000 miles for the life of the lease. The lower the mileage limits, the lower the depreciation of the lease and lower the monthly payment.
If you surpass the mileage limit, you’ll have to pay at least 25 cents per additional mile. But if you know you are going to surpass the mileage limit, you can negotiate buying extra miles for a lower rate than 25 cents per additional mile. While you’ll end up with a larger monthly lease payment, it will be comparatively cheaper than paying for hundreds of additional miles at the end.
Simply put, leasing is the equivalent of throwing a $100.00 bill out of your vehicle’s window every week for 3 years in terms of depreciation. The bottom line is this … any way you look at it, leasing is a convenience that you’ll pay for in the end. Put another way, if you can’t afford to buy your next vehicle with a four-year loan or less, then you really can’t afford it. The better deal long-term is to buy a reliable vehicle (good, late model used vehicle or lower priced new vehicle) and hold onto it as re-leasing every three to five years is no way to build wealth.
This post was edited on 4/22/18 at 5:41 pm
Posted on 4/22/18 at 5:43 pm to Will Cover
Bookmarked. Again.
Posted on 4/22/18 at 5:44 pm to Will Cover
Why do you hate car salesman’s families who you are stealing their livelihood from?
Posted on 4/22/18 at 6:01 pm to Will Cover
As soon as I saw the thread title I bookmarked this 
. I'll likely be getting a new or used truck this year after driving the same car since 2009 so I'll be using your advice for sure
. I'll likely be getting a new or used truck this year after driving the same car since 2009 so I'll be using your advice for sure
Posted on 4/22/18 at 9:11 pm to Will Cover
I would only add...
If you're trading in a vehicle and want top dollar, have all maintenance records in hand.
Vehicles that are serviced on the reg by a dealership receive better trade in values than vehicles serviced at a chain store or mom&pop garage.
The reason being is that the dealer will anticipate a lesser inspection charge from their own service dept if vehicle was maintained at a dealership vs chain store = more value added to your trade-in.
If you're trading in a vehicle and want top dollar, have all maintenance records in hand.
Vehicles that are serviced on the reg by a dealership receive better trade in values than vehicles serviced at a chain store or mom&pop garage.
The reason being is that the dealer will anticipate a lesser inspection charge from their own service dept if vehicle was maintained at a dealership vs chain store = more value added to your trade-in.
Posted on 5/1/18 at 10:01 am to Will Cover
Thanks will cover. I used your guide last month buying a new 2018 GMC Sierra slt 4x4. The sticker was over 53k. I paid 40k, got them to put in a bed liner and weather mats. They offered me 7k for my trade and they came up to 7500.
I had to use gm financing to get that price which is a joke bc the rate for 72months was 4.99 compared to 1.99 that my credit union gave me prior to walking in the dealership. Anyway, I took the deal, financed with gm, and before 30 days and my first payment was due, refinanced with my credit union.
I know they made money on me and I’m ok with that. I feel like I got a fair deal mostly bc I watched the price of the truck sitting on the lot for 6 months before I stepped foot in the dealership.
I had to use gm financing to get that price which is a joke bc the rate for 72months was 4.99 compared to 1.99 that my credit union gave me prior to walking in the dealership. Anyway, I took the deal, financed with gm, and before 30 days and my first payment was due, refinanced with my credit union.
I know they made money on me and I’m ok with that. I feel like I got a fair deal mostly bc I watched the price of the truck sitting on the lot for 6 months before I stepped foot in the dealership.
Posted on 11/20/18 at 7:38 am to Will Cover
Bumping this post with some questions. I've been shopping around online, comparing prices, and have started pitting dealerships against each other. Essentially calling one, saying "well they offered me x on the exact same truck, y'all have to beat that," repeat back and forth. Currently have an offer about 2.5% below invoice. How long is this going to work, and what do I need to do after it stops working to maximize my savings?
I have enough to put down about half and I'm financing through a credit union, but the dealer doesn't know that yet thanks to Will Cover.
I have enough to put down about half and I'm financing through a credit union, but the dealer doesn't know that yet thanks to Will Cover.
Posted on 11/20/18 at 8:34 am to Will Cover
I love buying vehicles.
Buyer has the power.
Know what you want and what you’ll give.
The won’t do it? Walk.
I’ve done it countless times.
I love seeing the sales guy come running out store after me ... happened this summer when I bought another truck.
I said nope... not what I offered.
You make them feel really stupid.. I’ll give you this or I’m going here to get it.
Let them decide.
Buyer has the power.
Know what you want and what you’ll give.
The won’t do it? Walk.
I’ve done it countless times.
I love seeing the sales guy come running out store after me ... happened this summer when I bought another truck.
I said nope... not what I offered.
You make them feel really stupid.. I’ll give you this or I’m going here to get it.
Let them decide.
This post was edited on 11/20/18 at 8:35 am
Posted on 4/23/19 at 9:42 pm to Will Cover
Always, always, always buy a vehicle on the last day of the month or the qtr. if a dealer is close to making their quota they will actually lose money on a deal, in order to make the incentive.
Posted on 4/25/19 at 12:24 pm to Will Cover
How do I get a F-250?
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