If he stops making floor plan payments, the factory's finance arm will repossess it. This isn't something the dealer wants to happen, because it affects his credit rating with the manufacturer, and he's out all the floor plan payments he's already made. So usually if a dealer has a car that isn't moving, he'll wholesale it off to another dealer. He may take a loss on that transaction, or not, depending on a number of factors.
Gary
I've never worked in the car business, but my uncle did, for 42 years. He talked, I listened.
But if you're smart, you won't trade. You will almost always be able to get a better price for a used vehicle if you sell it yourself. Even if you wind up wholesaling it (CarMax will buy it outright for a fair, but not excellent, price, or you can take it to an auction), you may still come out ahead of trying to work a trade at a dealership. As the story above shows, the dealership guys are out to get in your pocket any way they can. Having to work a trade just gives them another opportunity.
But it may be worth your while to let the salesman think you're going to trade. They figure the profit they're going to make on selling your trade in, and can give you a bit better price on the new one to close the deal. Make them come down on the price of the new car rather than jacking up the price of the trade in. Once they put down in writing what they'll do, you can pull the trade off the table and talk straight sale. If they then try to jack the price of the new car back up, walk.
Another tip, *never* tell a salesman that you're going to pay cash for a car. Let him think you'll be financing it through the dealer. Let him natter on about monthly payments, but keep your eye on the bottom line. The dealer makes money on financing, so he's apt to cut you a bit better deal on the front end if he thinks he'll make it up on the back end financing. Let him think that.
Then when the sales papers are signed and it is time to talk to the finance man, write him a check. Ooooh, they hate that. But they've signed the sales agreement, they're bound by it.
An old idea that's basically true is to go shopping for a car near the end of the month, and on a rainy day if possible. The dealer is itchy to move cars before he has to make another floor plan installment, and things are usually slow on rainy days so any customer is welcome.
They'll be willing to take more time to dicker with you. Take the time. A couple of extra hours can save you considerable money if you're any good at working the deal. (But if you're really good, it doesn't take long at all to buy a car. I bought the Z in under
20 minutes, and got a *terrific* deal on it if I do say so myself.)Don't marry a car. If the deal isn't right, walk away. There'll be another car and another deal. But don't walk away too quick, just act like you might, and see what they'll do.
Most new car dealerships sell using a "system". They're programmed to do it a certain way. Be aware of this, and work their system against them. This can be a bit tricky, but it can pay big. The salesman pretends he's your agent, working for you, the sales manager plays the bad guy who has to be convinced to sell you a car. It is the old good cop bad cop routine.
What you want to do is feed your salesman only the information you want the sales manager to believe. The salesman really isn't your friend. If you work it right, though, he can be your unwitting ally in hustling the sales manager to give you the deal you really want.
Buying a car is the second largest purchase most people will ever make. Take your time, become informed not just on the car you want, but on the car market, and how it works. Knowing how things really work can save you big money.
Of course if you really don't want to play the game, you can go to CarMax, or a Saturn dealer, and just pay what's on the window sticker. If you aren't good at the game, this may be your best deal. But if you're good at the game, you can almost always beat the CarMax price somewhere else. I *enjoy* working the deal. I'd miss the chicanery and carnival atmosphere if all dealers were like CarMax.
New car dealers are too easy, I really like the challenge of dealing with used car lots. Those old boys will skin you if they can, but that's just part of the game, and you can usually get out of a used car without losing your shirt if you later decide it isn't what you really want. You're *always* going to lose money on a new car, the game there is just to lose as little as possible.
Gary
I'm too lazy to be successful at that game. Instead I print up my bid instructions and take it to three dealers. I list the vehicle and accessories I want, stuff I don't want, the rest I don't care. I tell each dealer that I'm going to two other dealers, low net drive-out wins.
Usually, the transaction consists of me handing the paper to the salesman, he looks it over, asks for the keys to the trade-in, then says he'll be back in ten minutes. He'll come back with the price.
Every time I've tried this, they're within about $100 of each other. Only once did I get any guff. The salesman appeared to understand what I wanted, but came back with a number he didn't want to show me, but finally did. I got up to head to the next dealer, and he requested a 1 minute delay while he got the manager over. What an idiot. He started off asking me didn't I value a good service dept, and other silly questions. I asked him if he could read, and got up to leave. He finally said hold on, and wrote another number. He dropped the price $3500, and ended up being the low guy by about $75.
Pete Keillor
As of last Thursday, the new workshop is officially the second largest purchase I have made (with my money anyway).
Mark Rand RTFM
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