Just left dealer,good deal?

[xola3que]

all this financing shit hurts my brain...:bonk:

 

[CW08DSG]

There's so much mis-information here it's not funny.

I didn't used to be a car salesman for a little bit, years ago. Those tales typically go like the one told here - full of misconception and generally bad information based on little experience years ago, when the business was very different.

I have been in the business for 13+ years, over 9 of that with one brand. I'm still in the business. I work for a family owned dealership that has been in business 52 years. We have two brands. I make a very good living and I do it 100% ethically and above board and I sleep very well at night.

Most manufacturers do pay their dealers "holdback" on every vehicle. It's a percentage (typically 2-4%) of the base invoice price of the vehicle, and it's typically paid out to them over a 90 day period. It's assistance from the manufacturer to help offset floorplan (interest) the dealers pay for their inventory.

VW's holdback is 2% - so using a base invoice price (before options etc) of 23K, they're getting an additional $460.00 in holdback. There are often other monthly volume incentives too, some are national, some are on a regional basis. But they are typically nothing earth-shattering - maybe an extra $100-200/unit, based on meeting or exceeding the objective set for them by the manufacturer for the month. There's no "home runs" in new cars sales anymore.

Audi ties their holdback to a dealer to that dealer's CSI (customer service index) scores - don't meet a certain standard, that dealer doesn't get paid holdback. It's a hell of a financial incentive to that dealer to be stand up and operate to a high standard.

New car dealers aren't getting rich off of new car sales - the money is being made in the used car dept and in the service dept.

In regards to financing - almost every single state in the US has caps/limits/restrictions on the amount of rate markup allowed. Most all major lenders also have their own restrictions.

For example, on our (Subaru) advertised rates of say 0.9% or 1.9%, there is ZERO markup allowed. The dealer gets paid a "flat" fee by the lender (Chase is Subaru's finance arm) for handling the paperwork. The other rates we do have are typically limited to a 1% markup, but more and more lenders are offering larger "flats" which are often larger than what our cut would be with a 1% markup.

I belong to a credit union. My current car is financed with a credit union. I don't have my head in my ass and think that the credit union isn't making money off of the loan. To think they don't (and only dealers do) is misguided.

As for products offered in the finance department, there's some with benefits, some without. Be a smart consumer, do your homework and know that you have options and that every single thing which may be presented to you is an option - there's nothing mandatory or required. And if you don't like the presentation or feel pressured - walk. There's plenty of good dealers who are willing to work with you. If you sign up for every single thing then bitch about it later, you have no one to blame but yourself.

There are dealers who don't pay on commission. Some pay a salary, plus bonuses for volume, CSI etc. My payplan is extremely fair and is structured as such that there's not the pressure to get that last $100 out of a customer on a purchase.

Dealers are businesses. There's going to be good and not so good ones out there. No different than any other service provider we may come across. As a business, they are entitled to earn a fair return on their investment, and they are in business to A. make a profit. B. provide a service/goods. Those that bitch about them making money must all work for non-profits and don't depend on their employer making a profit to pay them their wage.

 

[U.G.MKV]

So where is the misinformation? There is nothing wrong with being a smart consumer. No one is bitching. If a dealer doesn't want to drop the price of a car there is nothing wrong with calling them out on it. And the phony invoice game is real too. The dealer plays a game with numbers like mark up on margin and so on. I've got no shame I brought the finance manager from the dealership I work at with me when I bought my car. They tried to play with the numbers and my finance manager yanked the calculator right out of the guys hand figured my entire loan for him and she was within fifty cents on my payment. The guys from the vw dealer had me paying fifty bucks a month too much and told me to come back in a year and refinance to lower they payment. Why? Because he would make money on me twice.

The finance people always hold out on the interest rate too. They make more money if you pay a higher rate when you don't need to. They always have a lower rate as a negotiating tool. Yes they are there to make money but they shouldn't have to stick it to you to do so.

How about the op's trade? it's free and clear and worth eight grand yet if he is telling it right they aren't giving him anything and they're getting a car they will sell for ten grand and make money there too. Hell, I would try to sell my paid off car outright and put all of the money down on the new car.

 

[BlaineWasHere]

There are plenty of VW dealers, shop around.

 

[tomshouse516]

Sell the 05 and put it all down plus what you can afford for a down payment on the new car.

 

[CW08DSG]

So where is the misinformation? There is nothing wrong with being a smart consumer. No one is bitching. If a dealer doesn't want to drop the price of a car there is nothing wrong with calling them out on it. And the phony invoice game is real too. The dealer plays a game with numbers like mark up on margin and so on. I've got no shame I brought the finance manager from the dealership I work at with me when I bought my car. They tried to play with the numbers and my finance manager yanked the calculator right out of the guys hand figured my entire loan for him and she was within fifty cents on my payment. The guys from the vw dealer had me paying fifty bucks a month too much and told me to come back in a year and refinance to lower they payment. Why? Because he would make money on me twice.

The finance people always hold out on the interest rate too. They make more money if you pay a higher rate when you don't need to. They always have a lower rate as a negotiating tool. Yes they are there to make money but they shouldn't have to stick it to you to do so.

How about the op's trade? it's free and clear and worth eight grand yet if he is telling it right they aren't giving him anything and they're getting a car they will sell for ten grand and make money there too. Hell, I would try to sell my paid off car outright and put all of the money down on the new car.

I never once said you shouldn't be a smart consumer - that's simple common sense on any purchase - tv, car, home, education. Everyone has to do their due dilligence when making a major purchase. If you don't, shame on you.

You obviously didn't read a thing I said regarding rate mark-up etc. and most state's and lender's caps and limits on that.

Here's a little real math using real numbers, not speculation. After doing the math, you'll see there's not the potential for a finance department to make "thousands" in a rate bump - your $50 a month difference simply doesn't equate. Maybe they had products in there and were packing a payment, and if so, then they are sleezy, but that kind of money isn't/wasn't coming from a rate bump. Period.

If you borrow 25K for 60 months @ 1.9% and you do not pay it off early or make any additional principle payments over the life of the loan, the total finance charges are approximately $1472.00.

If the dealer was allowed to bump the rate 1% to 2.9%, the total finance charges under the same scenario jump to approximately $2270.00, a difference of $798.00.

Lenders who do allow rate bump do not give 100% of the increase to the dealer. Typically it's a cut between 50-70%. So even on the high side, the dealer is picking up an additional $559.00 in income. That same lender probably pays the dealer a "flat" for financing that same amount of $400, or a % of the amount financed which would come close to the $400 range.

With money being as cheap as it is now, there's very little rate mark up going on in the real world. We'd rather take the flat of $400 and move along, rather than come in .5% higher than the local credit union and lose the financing completely.

We have lenders right now with buy rates in the 1.9% to 2.15% for people with solid credit, and that's what our dealer rolls them out in.

And FYI, the invoice is a "real" document. And 99% of them show MSRP, invoice and in our case, they also shows Holdback and fuel allowances allowed for prep. Other than the occasional monthly volume bonus or stair step programs, if you back the HB out, that is the dealers true net cost on a new vehicle.

 

[U.G.MKV]

I never once said you shouldn't be a smart consumer - that's simple common sense on any purchase - tv, car, home, education. Everyone has to do their due dilligence when making a major purchase. If you don't, shame on you.

You obviously didn't read a thing I said regarding rate mark-up etc. and most state's and lender's caps and limits on that.

Here's a little real math using real numbers, not speculation. After doing the math, you'll see there's not the potential for a finance department to make "thousands" in a rate bump - your $50 a month difference simply doesn't equate. Maybe they had products in there and were packing a payment, and if so, then they are sleezy, but that kind of money isn't/wasn't coming from a rate bump. Period.

If you borrow 25K for 60 months @ 1.9% and you do not pay it off early or make any additional principle payments over the life of the loan, the total finance charges are approximately $1472.00.

If the dealer was allowed to bump the rate 1% to 2.9%, the total finance charges under the same scenario jump to approximately $2270.00, a difference of $798.00.

Lenders who do allow rate bump do not give 100% of the increase to the dealer. Typically it's a cut between 50-70%. So even on the high side, the dealer is picking up an additional $559.00 in income. That same lender probably pays the dealer a "flat" for financing that same amount of $400, or a % of the amount financed which would come close to the $400 range.

With money being as cheap as it is now, there's very little rate mark up going on in the real world. We'd rather take the flat of $400 and move along, rather than come in .5% higher than the local credit union and lose the financing completely.

We have lenders right now with buy rates in the 1.9% to 2.15% for people with solid credit, and that's what our dealer rolls them out in.

And FYI, the invoice is a "real" document. And 99% of them show MSRP, invoice and in our case, they also shows Holdback and fuel allowances allowed for prep. Other than the occasional monthly volume bonus or stair step programs, if you back the HB out, that is the dealers true net cost on a new vehicle.

Blah blah blah! No matter what you say the op was getting hosed out of his free and clear car. Denial is nothing more than a lie! And my finance had nothing more than road hazard. Since you're so smart tell me how I magically went from 7 to 2%. with a 750 score. Just because your dealership works one way does not mean the others do. And there is no way on Gods green earth a salesperson would be allowed to show true cost of a vehicle and you know it.

 

[blackmagic08]

I worked for the local VW dealer when I bought my GTI and got supposed "invoice." I could not get the straight info from the VW sales manager so I asked the Audi sales manager and he told me that invoice is not truly that there is holdback involved. The dealer would NEVER show you what they really pay for a car, that would be tipping their hand too far in the wrong direction.

 

[Bodhi]

I worked for the local VW dealer when I bought my GTI and got supposed "invoice." I could not get the straight info from the VW sales manager so I asked the Audi sales manager and he told me that invoice is not truly that there is holdback involved. The dealer would NEVER show you what they really pay for a car, that would be tipping their hand too far in the wrong direction.

Indeed.

When my dad worked at a Toyota dealership, he got the new cars for, from what I understand "$100 over cost."

 

[enjoyincubus365]

Run that 05 into the ground man. No sense in letting on 05' with only 60k go so you can have a car payment.

 

[paulnur]

Make a small amount off the new car + being financed & make money selling your car for over 8k.

 

[gti4vic]

good buy IMO the sales man wont make money but the dealer whants to move the unit because everymounth you pay a lot fee for that car siting thier so i would go bold and tell the dealer if they can do 24500 out the door with GAP you will but today. GAP is the best shit ever.

 

[adamh49]

Run that 05 into the ground man. No sense in letting on 05' with only 60k go so you can have a car payment.

Sounds like your just bored with your perfectly good mk4. but if your dead set on buying a 2012 model, then this isnt about finances its just that you want a new car. thats perfectly fine, its your money, in the end if you pull the trigger take this bit of advice, dont scour the internet to see if you got the best deal or not. because chances are the dealership is on the winning side 99% of the time. and you will always get a forum member make you think you got hoodwinked.. Trust your gut at the dealership and know you have the liberty to walk out that door until you get the deal you feel comfortable with. Best of luck shopping, most of all enjoy your new DUB.. post pics if you buy!