Making an offer to buy a car

[Clitheroekid]

I'm currently considering the purchase of an expensive used car from a dealer, and I'm pondering how much to offer them. I've often heard it said that they may offer a better price if I tell them that I need finance to complete the deal because they will earn commission on the finance.

I don't want to borrow any money, and if I did I would only be doing so to secure a better deal, with a view to paying the loan off as soon as possible.

However, I would be grateful if anyone with actual knowledge of the car trade could confirm or deny the truth of the basic proposition. If it is true it would also be helpful to know how the commission is calculated so I could work out how much the dealer would be receiving.

TIA for any replies.

[Howard]

This isn't exactly answering your question and I'm guessing at the type of car you may be considering from your previous motoring posts. I have experience of buying expensive new cars in the past, and have previously been surprised at how big a discount dealers offered me. For example, with an offer of more than 10% off the price and free servicing for three years it made little sense to buy a second hand car with a less good warranty. The only drawback is that I had to choose from one of the models which were in the dealer's pipeline, although in each case they had something that met my requirements and I didn't have to pay for unnecessary extras. There did not seem to be much benefit in finance offers when I worked out the final cost.

However, recently arranging a contract hire for a more modest new BMW through a broker, I was pleasantly surprised at the annual cost, especially as it means I don't have to sell the car at the end of the agreement. The broker's cost was substantially below the quote I received from a main dealer and the rental agreement is with BMW's UK leasing subsidiary. In this case the cost of ownership was dramatically lower than purchasing a used car with the same specification and servicing and tyre costs etc are included in the rental cost.

I think timing was important in the purchases. For the two most recent cars, I was not in a hurry and approached dealers when they were very keen to achieve sales targets. This seemed to be more important than the method of purchase.

Not sure how helpful this is - but good luck with the decision! And let us know how you like the new machine.

regards

Howard

[DrFfybes]

It does depend on the car and type of dealer.

Main dealer, specialist, main dealer of a different marque so they want rid of it, small dealer with lower overheads, is the car the most expensive one on their forecourt as if so they have a lot of money tied up (assuming it is their car and not on SoR) so might be more amenable to an offer.

You may find there is an early redemption penalty to pay off any finance they provide, which negates any discount you might get.

Is it a direct purchase with no p/x (so they know their margins) or are you swapping one? In this case the only thing that matters is the price to change, not the actual figures for each vehicle.

I would look around, decide a fair price for the car, and offer that. Also if the car is from a non mainstream manufacturer, or perhaps an unusual model or has a bit of a cult following, then look on the forums as they might have some history of the vehicle - I've found previous owners that way in the past, and ask about getting it inspected - the dealer warranty will be an aftermarket one that covers very little on some vehicles.

Paul.

[killergorilla]

Hi CK
A trick that's worked for me in the past was to walk in with cash ready for what you want to pay.
The car was 7k. I wanted to pay 5.5. I took 5.5 out of the bank went in with cash, made my offer. They rejected the offer. I showed him the cash nd let him count it then said I was sorry we couldn't figure out a price and walked for the door. I got about 10 yards from the door before the owner chased me and did a deal.
Guessing you're spending a lot more. Another way to do this is to write a cheque for the amount you want to spend then go in, say you want the car and you'll pay x. You're so serious you've even written the cheque!
Hand them the cheque to hold, then if they say no, have them give it back.
It's very difficult to let money walk out of the door. The psychology of it is torture for sales people Margins on second hand cars are usually much higher than new cars (as anyone who's ever traded a car in will attest!). Exotic cars are very difficult to sell as you're waiting for the one person for whom it's special. I'd start 10% lower and creep up from there. You can always offer more.
Good luck
KG