Down Payments and Trade Ins
The first two things a good salesman wants to find out before he prices a car to you is if you're putting any money down, and if you're trading anything in. While these seem to be harmless questions at first, they can significantly alter the deal you get offered...in a bad way! I bet you're wondering why knowing these two things before a car is priced could hurt. A bank is only going to loan a certain amount of money on a car based on the book value. If you don't have a down payment and the book value of the car your looking at is $15,000, then the dealership can only sell it to you for $15,000 (or less, of course). But, if you tell the saleman you have $2000 down, he is trained to sale you the car for $17,000 instead of $15,000. This is sad but true because if he sells it for $17,000 and subtracts your $2,000 then he is back to $15,000 financed at the bank and he steals your down payment as his profit. However, if you tell him you have no money down and he prices the car at $15,000, the trick is once you get inside, you tell him you think you actully could come up with $2000 down. He is in an awkward position because he can't change the price he offered you, and he so has to sell you the car at only $13,000, instead of the $15,000 he wanted to price you at, if he had known about your $2,000 down payment. Even if you don't understand any of the math, just trust me and remember, don't tell them about a down payment until after they price the car.
The same goes with trade-ins. If you tell them you have a trade-in before they price a car, then they will price the car higher. They can then give you more for your trade on paper then the dealership down the road. Let me tell you something, your car or truck is worth the same thing every where you go, we all have the same book, the black book, to figure our values. So the truth is when one dealership tells you $18,000 for your trade, and another dealership is only giving you $16,000 for the same trade. The first dealership is just playing with more profit. That's why it's called trade allowance, it's not the actual car value but the allowance against the price of the car.
Let me give you an example. Let's say Joe's Honda has an Accord that they have $15,000 in dead cost. Joe Customer comes on the lot and before any pricing he tells the salesman that he's trading a 2000 Taurus and he's not taking no less than $5000 for it. The salesman shows him the accord and prices it at $19,995. Remember, the cost is $15,000. That's $5,000 in profit. The Taurus is appraised at $2500(A.C.V.) The salesman tells Mr. customer that he was right on the money and will happily give him $5,000 for his trade. The dealership makes a $2500 profit. But, if he didn't know until after he priced the Accord, lets say at $17,995, then he would probably have to meet Joe Customer somewhere around $4,000. If you agree on it, they would only have a $1,500 deal.
Again it can get confusing, but if you'll just listen to me and stay away from talking about trading until after the vehicle is priced, I promise you'll have the upper hand, not them.