4 ms·

I tried to buy a new car yesterday. The price was exactly MSRP, but there were plenty of ad-ons. That I couldn't remove "if I wanted to buy that car". In the e

I tried to buy a new car yesterday. The price was exactly MSRP, but there were plenty of ad-ons. That I couldn't remove "if I wanted to buy that car". In the end, there were about $11k in "extras" and they low balled me on my trade-in vehicle. I ended up walking away.

mrfusion 4y ago
I found this in the US too. They were close to MSRP but each dealer had a different mandatory package of junk adding at least 6k. I looked at my itemized bill and I had actually paid $200 for a phone cable. Oh and one dealer had mandatory financing.
jcampbell1 4y ago
Know the 4 boxes where they make profit. Price, trade in, add ons, and financing. You just found out that a law that forces MSRP doesn’t do much except help politicians break their arm patting themselves on the back.
- syrrim 4y ago
  You could sell the car yourself, and get financing from a bank. Then its only price (fixed), and addons.
  - kube-system 4y ago
    I've found (in the US at least) that automaker financing on new vehicles is usually better than any other banks. I'm now wishing I put zero down on my last car, because it's looking like my loan is way cheaper than inflation is going to be over the life of the loan.
    - hansvm 4y ago
      Last time I thought financing might be a good idea, the dealership asked who I banked with, applied for a loan in my name without my permission, and presented it to me +0.5% extra profit for them. They were just going to insert themselves as an intermediary.
      - kube-system 4y ago
        Hard to do that with automaker financing when the rates are listed directly on their website.
      - pnutjam 4y ago
        I had financing lined up and the dealer still blasted an app out to a dozen different companies and dinged my credit.
    - Dylan16807 4y ago
      > I'm now wishing I put zero down on my last car, because it's looking like my loan is way cheaper than inflation is going to be over the life of the loan. Would you have invested that money in something that is currently growing at least as fast as inflation?
      - kube-system 4y ago
        Yeah, I have about the same invested in I-bonds at the moment as I have outstanding on my car note. But either way, the rate on the car note is lower than inflation, so I'd be ahead just by spending the cash on something else.
    - bluGill 4y ago
      The automaker financing is often subsidies. In the past you could choose a rebate or their low interest financing, if you ran the math the rebate was basically the difference between the interest rate they offer and what a little more than what a fair market value interest rate would be. I seems the rebate option as disappeared though, so financing is probably your only option to get these rates. Of course in the end if you have options you need to run your own numbers. Things change far too often to give general advice.
      - kube-system 4y ago
        Right, the automakers' finance divisions make money by selling cars, not loans. If you can get a loan under the prime rate, it's definitely subsidized.
  - taneq 4y ago
    If you're going that far you might as well buy privately and avoid their shenanigans altogether.
- oneoff786 4y ago
  I’ve never done any research into this but by the way they talk to me it always seemed like the real big one after financing was warranties
  - bombcar 4y ago
    Warranties are pure profit for the dealer - and for the dealer specifically as they run the extension themselves. Financing is usually profit shuffled off to the bank.
- ssharp 4y ago
  And you should go into the dealership with clear alternatives to each. There are lots of dealers to buy vehicles from, lots of people to sell your vehicle to, plenty of alternatives to "add on", most of which are unnecessary, and lots of banks and credit unions to loan you money. When you have alternatives and can use them at the dealer, you'll get dealership down on prices. Understand the incentives the dealers have (how they make money, especially extra money), understand their cost structure, etc. and you'll have even more bargaining power. For example, you can often leverage financing to get the price down. The dealers get extra cash by bringing financing deals to their partners, so they might take a few hundred off the vehicle if you finance. Even if you want to pay cash, take the financing (make sure no origination fees or early payment fees) and pay it off before it accrues any interest. I've also walked into dealers before with print outs of the same vehicle priced lower at other dealers and magically they become more flexible. I've ever tried this before where I didn't present this info and they let me walk out of the store, refusing to budge. Then when I came back with the info, they became more flexible. The service departments pull this nonsense as well. I've negotiated service prices down 40% in the past and know that you can use things like recall repairs to get a better deal on repairs you actually need done (if you do x repair for $y, you can do this recall repair as well). I think dealers are an extremely bad component of the vehicle market, but eliminating them will lead to people who can exploit the system to pay more. It will be an overall net benefit for the market though.
monkeybutton 4y ago
Like this? https://globalnews.ca/news/8414322/consumer-sos-buy-extras-no-sale-toyota-customer/ https://globalnews.ca/news/8414322/consumer-sos-buy-extras-n...

mrfusion 4y ago

I found this in the US too. They were close to MSRP but each dealer had a different mandatory package of junk adding at least 6k. I looked at my itemized bill and I had actually paid $200 for a phone cable. Oh and one dealer had mandatory financing.

jcampbell1 4y ago

Know the 4 boxes where they make profit. Price, trade in, add ons, and financing. You just found out that a law that forces MSRP doesn’t do much except help politicians break their arm patting themselves on the back.

syrrim 4y ago
You could sell the car yourself, and get financing from a bank. Then its only price (fixed), and addons.
- kube-system 4y ago
  I've found (in the US at least) that automaker financing on new vehicles is usually better than any other banks. I'm now wishing I put zero down on my last car, because it's looking like my loan is way cheaper than inflation is going to be over the life of the loan.
  - hansvm 4y ago
    Last time I thought financing might be a good idea, the dealership asked who I banked with, applied for a loan in my name without my permission, and presented it to me +0.5% extra profit for them. They were just going to insert themselves as an intermediary.
    - kube-system 4y ago
      Hard to do that with automaker financing when the rates are listed directly on their website.
    - pnutjam 4y ago
      I had financing lined up and the dealer still blasted an app out to a dozen different companies and dinged my credit.
  - Dylan16807 4y ago
    > I'm now wishing I put zero down on my last car, because it's looking like my loan is way cheaper than inflation is going to be over the life of the loan. Would you have invested that money in something that is currently growing at least as fast as inflation?
    - kube-system 4y ago
      Yeah, I have about the same invested in I-bonds at the moment as I have outstanding on my car note. But either way, the rate on the car note is lower than inflation, so I'd be ahead just by spending the cash on something else.
  - bluGill 4y ago
    The automaker financing is often subsidies. In the past you could choose a rebate or their low interest financing, if you ran the math the rebate was basically the difference between the interest rate they offer and what a little more than what a fair market value interest rate would be. I seems the rebate option as disappeared though, so financing is probably your only option to get these rates. Of course in the end if you have options you need to run your own numbers. Things change far too often to give general advice.
    - kube-system 4y ago
      Right, the automakers' finance divisions make money by selling cars, not loans. If you can get a loan under the prime rate, it's definitely subsidized.
- taneq 4y ago
  If you're going that far you might as well buy privately and avoid their shenanigans altogether.
oneoff786 4y ago
I’ve never done any research into this but by the way they talk to me it always seemed like the real big one after financing was warranties
- bombcar 4y ago
  Warranties are pure profit for the dealer - and for the dealer specifically as they run the extension themselves. Financing is usually profit shuffled off to the bank.
ssharp 4y ago
And you should go into the dealership with clear alternatives to each. There are lots of dealers to buy vehicles from, lots of people to sell your vehicle to, plenty of alternatives to "add on", most of which are unnecessary, and lots of banks and credit unions to loan you money. When you have alternatives and can use them at the dealer, you'll get dealership down on prices. Understand the incentives the dealers have (how they make money, especially extra money), understand their cost structure, etc. and you'll have even more bargaining power. For example, you can often leverage financing to get the price down. The dealers get extra cash by bringing financing deals to their partners, so they might take a few hundred off the vehicle if you finance. Even if you want to pay cash, take the financing (make sure no origination fees or early payment fees) and pay it off before it accrues any interest. I've also walked into dealers before with print outs of the same vehicle priced lower at other dealers and magically they become more flexible. I've ever tried this before where I didn't present this info and they let me walk out of the store, refusing to budge. Then when I came back with the info, they became more flexible. The service departments pull this nonsense as well. I've negotiated service prices down 40% in the past and know that you can use things like recall repairs to get a better deal on repairs you actually need done (if you do x repair for $y, you can do this recall repair as well). I think dealers are an extremely bad component of the vehicle market, but eliminating them will lead to people who can exploit the system to pay more. It will be an overall net benefit for the market though.

monkeybutton 4y ago

Like this? https://globalnews.ca/news/8414322/consumer-sos-buy-extras-no-sale-toyota-customer/ https://globalnews.ca/news/8414322/consumer-sos-buy-extras-n...