Just a little update...
For those of you who're familar with my previous post, the woman who was supposed to buy the Buick? She called me today and said her son got called away to some emergency meeting at work and couldn't be reached, and then him and his wife are going away for the weekend, but she'll be in touch with him sometime late Saturday or anytime on Sunday, and she'll have an answer for me Monday morning at the latest.
That's just the nature of the beast I guess. She did tell me she was interested on information on a "one-pay lease." I'm not allowed to tell her this, but I think if she goes for that, she's screwing herself. The way the deal was originally written as a purchase, with her trade-in and rebates, she could drive off with a brand-new LaCross CXL for $19,000. She's got the money in cash, because her husband just died over the winter and she's the recipient of his fat life insurance policy.
With the one-pay lease option, she can drive off with the same car for under $10,000; but, that's assuming she gives us her trade-in which is a fully-loaded '01 Oldmobile Silhouette in pristine condition - which also has a clear title. This one-pay lease is 3 years, 15,000 miles per year, which means she can put 45,000 miles on it. Aside from the fact this lease is less than half the purchase, if she were to die before the lease expires, she can designate a beneficiary who could drive it until the lease is up - and that beneficiary would just turn the car in, thus avoiding probate court altogether. (If she out-right owns the car, the car would be tied up in probate court upon her death, even if she does have a designated beneficiary; this was an important fact to her, as she's 75 years old, with Krohn's disease.)
After reading all of that, you might be thinking, "Down-side? What down-side?" The downside is this: She can outright own the car for $19,000 + trade for as long as she lives. We're giving her $6,500 for her trade, so if she puts in an additional $9,900 in cash, she's giving us over $16,000 and has to turn it back in after only 3 years. If she's still alive after 3 years, she's without wheels.
At the end of the lease, she can buy the car for the difference between the $19,000 cash payment that would've allowed her to out-right own it, minus the cost of the lease ($9,900). In other words, after already giving us $9,900 cash, (not to mention her trade) she'd have to cough up an additional $10,000! If she leases, then buys the car at the end of the lease, she's paying $29,000 for a $27,000 car and outright giving us her '01 Silhouette, which is in mint condition - and has a clear title (her husband paid cash for it, brand-new).
If she outright buys the new Buick, she's paying $27,000 for a $27,000 car, and her trade-in is factored into the deal in her favor; with the lease, she's just giving us her trade, plus an extra $2,000. The only advantage is, if she dies before the lease expires, the beneficiary won't have to worry about the car being tied up in probate court - and she pays half the cash to drive away with it. Those are the only 2 advantages.
Also, how does she know she'll even have $10,000 in 3 years? She's getting screwed!
If she dies in less than 3 years, it works for everybody: she's driving a $27,000 car for only $9,000 cash + trade. Rather than spending $19,000 (+trade) to out-right own it, she can drive off with it for a measly $9,900 (+trade). That frees up $10,000 cash for her, plus her beneficiary doesn't have to worry about the car being tied up in probate court.
If she lives longer than 3 years, there's no guarantee she'll even have the $10,000 to buy it, which puts her really far behind the 8-ball, because she doesn't have a trade-in either.
The way I see it, she's farther ahead just out-right owning it. Even if she becomes incapacitated and can't drive in less than 3 years, she at least has something she can sell to raise money for a home-health aide. If she stays healthy for the next 10 years, a ten year-old Buick is still a good car - and she only has to put gas, oil and the occassional set of tires on it. To me, it's a no-brainer. But, I know my manager would freak if I pointed out the obvious, if she was leaning toward a sucker deal.
She's not stupid. Not only that, she drives like a man. She test drove that car down a narrow country road: about the width of an alley. There was a dump-truck approaching from the on-coming lane, and she just casually nudged the steering wheel to the right a little, putting the passenger tires in the grass, while talking to me, without slowing down, or pausing her conversation. In fact, I think she even punched the gas to give the car a little more momentum while the passenger tires were in the grass! That's what a man would do, not some typical 75 year-old granny!
Given the fact she isn't stupid, I just hope she doesn't take this one-pay lease as an insult and take it out on me by not buying the car. My manager is the one who originally brought it up.
I guess we'll find out on Monday!
That's just the nature of the beast I guess. She did tell me she was interested on information on a "one-pay lease." I'm not allowed to tell her this, but I think if she goes for that, she's screwing herself. The way the deal was originally written as a purchase, with her trade-in and rebates, she could drive off with a brand-new LaCross CXL for $19,000. She's got the money in cash, because her husband just died over the winter and she's the recipient of his fat life insurance policy.
With the one-pay lease option, she can drive off with the same car for under $10,000; but, that's assuming she gives us her trade-in which is a fully-loaded '01 Oldmobile Silhouette in pristine condition - which also has a clear title. This one-pay lease is 3 years, 15,000 miles per year, which means she can put 45,000 miles on it. Aside from the fact this lease is less than half the purchase, if she were to die before the lease expires, she can designate a beneficiary who could drive it until the lease is up - and that beneficiary would just turn the car in, thus avoiding probate court altogether. (If she out-right owns the car, the car would be tied up in probate court upon her death, even if she does have a designated beneficiary; this was an important fact to her, as she's 75 years old, with Krohn's disease.)
After reading all of that, you might be thinking, "Down-side? What down-side?" The downside is this: She can outright own the car for $19,000 + trade for as long as she lives. We're giving her $6,500 for her trade, so if she puts in an additional $9,900 in cash, she's giving us over $16,000 and has to turn it back in after only 3 years. If she's still alive after 3 years, she's without wheels.
At the end of the lease, she can buy the car for the difference between the $19,000 cash payment that would've allowed her to out-right own it, minus the cost of the lease ($9,900). In other words, after already giving us $9,900 cash, (not to mention her trade) she'd have to cough up an additional $10,000! If she leases, then buys the car at the end of the lease, she's paying $29,000 for a $27,000 car and outright giving us her '01 Silhouette, which is in mint condition - and has a clear title (her husband paid cash for it, brand-new).
If she outright buys the new Buick, she's paying $27,000 for a $27,000 car, and her trade-in is factored into the deal in her favor; with the lease, she's just giving us her trade, plus an extra $2,000. The only advantage is, if she dies before the lease expires, the beneficiary won't have to worry about the car being tied up in probate court - and she pays half the cash to drive away with it. Those are the only 2 advantages.
Also, how does she know she'll even have $10,000 in 3 years? She's getting screwed!
If she dies in less than 3 years, it works for everybody: she's driving a $27,000 car for only $9,000 cash + trade. Rather than spending $19,000 (+trade) to out-right own it, she can drive off with it for a measly $9,900 (+trade). That frees up $10,000 cash for her, plus her beneficiary doesn't have to worry about the car being tied up in probate court.
If she lives longer than 3 years, there's no guarantee she'll even have the $10,000 to buy it, which puts her really far behind the 8-ball, because she doesn't have a trade-in either.
The way I see it, she's farther ahead just out-right owning it. Even if she becomes incapacitated and can't drive in less than 3 years, she at least has something she can sell to raise money for a home-health aide. If she stays healthy for the next 10 years, a ten year-old Buick is still a good car - and she only has to put gas, oil and the occassional set of tires on it. To me, it's a no-brainer. But, I know my manager would freak if I pointed out the obvious, if she was leaning toward a sucker deal.
She's not stupid. Not only that, she drives like a man. She test drove that car down a narrow country road: about the width of an alley. There was a dump-truck approaching from the on-coming lane, and she just casually nudged the steering wheel to the right a little, putting the passenger tires in the grass, while talking to me, without slowing down, or pausing her conversation. In fact, I think she even punched the gas to give the car a little more momentum while the passenger tires were in the grass! That's what a man would do, not some typical 75 year-old granny!
Given the fact she isn't stupid, I just hope she doesn't take this one-pay lease as an insult and take it out on me by not buying the car. My manager is the one who originally brought it up.
I guess we'll find out on Monday!
posted by Boris Yeltsin @ 9:58 PM
5 Comments:
At 11:44 AM, April 25, 2006,
Intellectual Insurgent said…
Do you feel bad at all that you can't be completely forthright about her options?
At 12:08 AM, April 26, 2006,
Boris Yeltsin said…
No doubt in my mind. But, the dealership is real weird about salesmen pushing the option with the least amount of gross in the deal.
The way it was presented to me is, "These people accumulated enough wealth to buy a car; if they're smart enough to do that, they're smart enough to figure out the best way to purchase that car - especially when it includes a decision that'll generate a higher grossing deal."
We get paid based on the gross. The gross is the difference between the "break-even number" (the amount the dealership itself has to get out of it) and the amount the car actually sells for. We get 25% of the difference, unless we sell 6 or more cars in any given month, then that figure jumps to 35%. As you can see, it doesn't take a rocket scientist to figure that gross is important to everyone involved.
One side note to this: I went into this thinking I'd be different. I saw most car salesmen as nothing more than snake oil salesmen, and I thought I'd be different and provide a low-key, low-pressure approach.
Damn good thing I'm also collecting unemployment because if it wasn't for that, I'd be starving right now!
You know the old saying? "How do you know when a car salesman is lying? When his lips are moving!"
Car salesmen have the same joke about "ups." (Those are the people who walk or drive the lot, browsing for cars.)
It's true I suppose about both car salesmen and ups. They both lie quite a bit to eachother. It's true.
"I'm just shopping." You're buying. When was the last time you walked the aisles of a supermarket with no intention of buying, whatsoever?
"I don't want to waste your time." Wow. Since when did people get concerned about a salesman's time?
People don't understand that when you remove the negotiation process from the equasion, the salesman does probably know more about what you want than you do. Seriously. I know it sounds arrogant, but it's true.
People don't know too much about cars, or how they're priced, or what options they have, or how they're financed. I'm continually amazed at how much I'm learning myself. People just think they know what they want.
Also: people with marginal credit who think they can't get a car financed are just as wrong as the people who just declared bankruptcy or the people who just got a car re-poed.
The people with marginal credit are easily financed, the people who just declared bankruptcy or who just had a repossession, better be coming to the dealership with thousands and thousands of dollars.
"Bad credit, no credit, we can help!" Yeah, if you just robbed a bank! Put enough down on a car, and it doesn't matter. Walk in with seriously messed-up credit and think you're driving away on a "sign-and-drive" deal, and you're living in la-la-land!
Also, the myth that cars are an investment. They're not; they're an expense. If you want a car as an investment, buy a Corvette or a Rolls Royce. Everything else goes down the second you drive it off the lot.
Two years is when a car is at the apex of it's trade-in value.
Leasing: "I got screwed on a lease, so I'll never lease again."
You didn't get screwed on high mileage penalties: you were just told the truth in advance.
"Yeah, but if I own a car, there are no high mileage penalties."
Bullshit! The only difference between trading in a car you own and a lease is, no one tells you on the car you own that the more miles you put on it, the less it's worth; in a lease, that is spelled out in black-and-white. Just because you weren't told your car is worth less with higher miles, doesn't negate the truth that you'll be getting less for it.
"Yeah, but at least I didn't pay a high mileage penalty."
Yeah you did. Your trade-in value was less because your car had high miles on it. Think about it. The difference between what your car would be worth with only 36,000 miles on it, as opposed to what your car's worth with 100,000 miles on it, is the penalty - it's just not spelled out to you when you trade it in, so you think you're beating the system, but you're paying the same penalty a leasee would pay by not getting as much for your trade.
It all works out the same.
The only time people actually get screwed is the negotiation process. That's where they do get screwed. It's a game, and those who don't play by just buying, and those who get all pissed off and don't buy at all, are the ones who get screwed the worst.
You've got to hold your ground by just telling the salesman, "I've got to think about this a little more."
No one likes that, but trust me, nothing gets the sales manager's attention more than someone who is still sitting there, but won't sign. As long as you're sitting there, you're a potential customer. They want you to sign, so the longer you sit there, the more they'll drop the price on that car until it's either no deal, or you get what you want.
It's a game, and luckily most people don't do it more than once every two years or so.
Hope that helps you out, because this is stuff I never would have known if I would have never worked in a dealership.
I'm almost embarassed at how badly I've been taken now that I know how it's done.
Oh well, it happens to everybody!
At 10:21 AM, April 26, 2006,
Chris the Hippie said…
Wow... I've never bought a new car in my life (we're not exactly wealthy folk - both our cars cost less than a thousand bucks and have over 150,000 on 'em) and now I'm kinda glad I've never gone through that experience!
Usually when I buy a car it goes something like this:
Me: "I have $798, a hubcap and three pieces of gum. What can I buy with that?"
Salesman: "Here's a shiny new bicycle we can sell you...?"
Me: "I was kinda hoping to get a used car."
Salesman: "Oh." The salesman usually chooses that time to start laughing at me. I get sad.
For some reason, though, I was able to find a way to get a new motorcycle a few years ago... Priorities, I guess.
At 12:46 PM, April 26, 2006,
Intellectual Insurgent said…
The assumption that because someone has enough money to buy a bar, she is smart enough to negotiate her way through all the options is wrong. But I am sure your salesmen know that and just tell themselves that b.s. so they can sleep better at night. So they can see the customers at church and not feel ashamed of themselves.
A car is most definitely not an investment, which is why buying a new car is a waste. I recently bought a beautiful used car from a dealer, but only because a good friend of mine handles all their advertising and had them tell me the invoice price on the car. We worked out an acceptable profit for them to earn and we were done within an hour.
At 10:09 PM, April 26, 2006,
Boris Yeltsin said…
II: the way you did it is the best way. As far as the the other thing, yes, it does seem somewhat seedy, but...they gotta make money too.
Is it taking advantage? Not if that woman has a reasonable suspicion that she's going to die soon, but doesn't feel like spilling her guts about it to the local dealership. The one pay lease does have advantages in terms of the heir's ability to avoid probate court (upon her death) that out-right owning the car doesn't have.
Maybe she knows something that we don't, that she feels uncomfortable sharing with us.
Of course, you could counter with, "Yeah, but do you care?" and my response to that is, "yes, I do, but I know my sales manager doesn't; he just cares about the gross, and that's pretty much it."
Does that make him inhumane? In my opinion, he's doing a job that he was assigned to do, and if he didn't take it seriously, the owner would replace him with someone who does.
What I like to focus on, are the stories where people get way more car than they ever thought possible, because they came into the dealership with incorrect preconceived notions about a variety of things.
Are car salesmen snakes in the grass? I guess it depends on the dealership. It really does. The dealerships that promote the snake in the grass behavior, usually cater to a clientel that could possibly warrant it.
You know, the people who think the world owes them the car of their heart's desire, even though they don't show up for work every day long enough to accrue seniority, who also never pay their bills on time, yet get pissed off because all their credit rating gets them is a "buy here, pay here" type of situation.
I did used to think that car salesmen were snakes in the grass, but after I did some computer work for a dealership one time, I saw the other side of the equasion that the A&E show, "King of Cars" does a good job of portraying.
Is the owner of our dealership throwing money at sales meetings and acting like he just smoked about 50 pellets of crack? No. But, it is a fun industry to work in - that part of the show is real.
Customers lie, lie lie. That's the truth too. Salesmen lie as well. They know damn good and well what the price of a car is. They have no control over whether or not the manager will approve the deal, but they know.
Unless a salesman has been there for a long time, and unless that salesman is one of the superstars, the salesmen can't influence deals in terms of price. Their name isn't on the building.
Salesmen also don't know the rock-bottom, "whisper number" for a car; you know, the lowest possible price a dealership can sell it for, and still make a profit. Only the managers know that, and they come in as high as they possibly can.
Why can't cars be like items of clothing, where the price of the car is right on the windshield, and there's no dickering - either take it, or leave it?
It's because there are so many variables that go into the pricing of a car. You have the mechanical condition, the number of miles, how well the interior has been maintained, how good the customer's credit is - those are all things that determine whether or not you'll get as good of a deal as the person who may have bid on that yesterday, and lost. Maybe you'll get it for a lower number because your credit rating's good.
What does that have to do with the price of a car? The worse your credit is, the more expensive it is for the dealership to get you approved.
That's why as a salesman, when you sell a special (bad credit/no credit) it doesn't even count on the board. (When you get 6 cars on the board in any given month, your commission goes from 25% to 35%)Only cash deals and conventional financing count.
Not only that, but specials only pay a flat commission of $100, no matter how much gross is in the deal. They don't want you concentrating on people with bad credit, because they're a hassle. They want more service and more car, and they're a ton of headaches.
Do salesmen try to put people in cars that they don't want because there's a higher gross? Of course they do. But, that's considered a gift to be able to do that.
We've got a guy who can do that consistently; he's called the King of Gross. Even the owner of the dealership is amazed at him. If you can't close a deal yourself, you're supposed to TO to the King of Gross immediately. (TO stands for turn-over.)
Our King of Gross is an unassuming, short, fat Mexican guy who has a humble personality and he cares for people. He really does. Even though he's got a wife and kids, he can put on a pole dance (sans pole of course) that would make Carmen Electra jealous. He's funnier than hell - really. When we get a Gregg Kinn song on XM, he goes out into the lot and puts on a show where he's slapping his ass to the beat and everything - assuming no male customers are around - the women just eat it up! They really do.
Does he take advantage of the fact that people see him as a caring person, and they trust him? Here's what he says: "Hey - I'm a car salesman - I sell cars. That's what I do. Don't expect me to be apologetic about it - are you apologetic about what you do for a living?"
I heard him say that on a test drive one time. My jaw about hit the floor. The customer was like, "Now that you've put it that way, I guess you're right."
Our King of Gross can say those types of things because he's not threatening.
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