Unit 3- CAR BUYING

Confessions of a Car Salesman

- Salesman evaluate (if a couple comes in) who wears the pants in the family, and makes sure to appeal to them - Pump up the car to the potential buyer. This includes exaggerating about the car, letting them go for a test drive, talking up the features, and comparing it to other models - In the manager's office, the manager comes up with a price to give to the salesmen, in hopes of getting that price out of the buyer - Often send in "Turn Over" sales people. These are high experienced salesman and negotiators. - The F&I guy will attempt to squeeze in many extra costs and fees, by telling you they are a necessity, or not even telling you at all and simply adding them to the numbers.

20/4/10

20- Should put down AT LEAST a 20% downpayment to the car 4- The loan term should not exceed more than 4 years 10- The price of the car should not exceed more than 10% of your annual income

Dealer Holdback

Amount that manufactures give to auto dealers for each vehicle sold

Advantages of LEASING:

Can drive luxury cars Lower monthly payments Low maintenance GAP coverage (insurance to help pay off auto loan if car is totaled or stolen

examples of manufacture Cash back rebates

Cash back rebates Lease deals Bonus cash APR deals Loyalty programs "Dealer Cash" (incentive paid to dealer from manufacturer for selling a certain model, to help encourage more sales, thus stimulating sales

Disadvantages of LEASING

Have to give back the car after the 3(ish) year period Fees- include mileage, wear and tear contract Payments never end (unlike a loan)

Significance of car types and models

Help determine what we need. If we are looking for an SUV because we have a lot of kids, we will consider looking at larger vehicles, and then determine how much we can spend on that certain car. Our daily lives play a large role, because if we want something that is small only to go to and from work, we will consider investing in maybe an older used car. They help determine what exactly we need, and then how much we should spend.

Disadvantages of BUYING NEW

Higher cost Higher sales tax High insurance rates

Disadvantages of BUYING USED

Higher interest rates Less choice/customization Possibility of lower reliability

disadvantage to longer financing terms (5 or 6 years)

Higher interest rates Lots of fees Potential fixed term rates

Why cars are considered an expense not an investment

Investment: value will never increase from the time you bought it, to the time you want to sell it.Expense: the second you drive the car off the lot it depreciates, (goes down in value). Cars also often require payments, for long periods of time.

Advantages of BUYING NEW

Newer features/benefits Ability to pay off car and fully own it Low interest rates

Private Party

Personally selling a car, not through a dealership, but on your own. Most likely this will make you more money.

strategies for getting the best deal on a car

Research (reports, invoice, know incentives) Pay in cash if you can Bring in calculator or checkbook Come at the end of the month (oct.)- eager to sell cars because new ones are coming to the lot Know the names of other dealers Hold ground price (DON'T BUDGE) Get up, walk out trick Give car salesman name and phone number Talk (price, trade in, financing) Go to the lot on a sunday to see if they have the car you want

Advantages of BUYING USED

Saves lots of potential money Most of the depreciation has already occured Smaller loan amount (faster to pay off)

Opportunity Cost

The act of disregarding something, in return for something else. (EX: If you spend more money on a fancy car, you are more likely to have less money to spend on a house). What you give up in order to have something else.

Invoice Price

The initial/original charge the automobile manufacturer chargers the dealer

Trade In

Trading in your old car to the dealership, and taking the money they give you for what your car is worth, and using it as a downpayment to the new car.

How CarFax helps us

offers full vehicle reports. These can range from the condition of the interior, to how many accidents it has been into, or where it has damage. It also provides insight to how many previous owners the car had, and for how long. There reports are very thorough.

Dealer Retail

A car dealer would like to sell his used vehicle at dealer retail price. This is the highest price and is often the most visible one, it's pasted on the car's windshield in big, bright letters.

Destination Charge

Fee the manufacturer charges to deliver the car from the manufacturer to the dealership

How Edmunds helps us

helps by searching for a new car whether new or used. When searching, they often provide with reviews from employees and customers, based off of every aspect of the car. Also offers car appraisal. If you want to see how much your car is worth in general, or before you sell it, its great for determining what your car is worth. Not only do they do all this, they also give you an idea of what you SHOULD be paying for the car you want to purchase.

How Autotrader helps us

helps you find the right car. They offer many options of different makes, models, and new or used cars. Also helps give you the best price, so you know exactly how much to spend on the car. They also offer descriptions about the car which include features and details.