Buying and Maintaining a Car
Re: Dealer Quote Mystery

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By rael4mozo
November 3, 2004

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Dealer holdback is not always a direct profit to the dealer (i.e., the price you paid minus the invoice of vehicle (plus holdback) does not equal the true dealer profit. It's money that is truly held back from the dealer by the manufacturer until a later date (and after the vehicle is reported sold, or "NVDR'd"). The holdback amount is often credited back in some way to the dealer in the form of reduced money owed to the manufacturer for future purchases, or from my years spent it the Auto Industry, it was credited to the Part's Dept's account. It's not called holdback for nothing, folks. It's not immediate money/profit to the dealer, which is why some dealers aren't apt to give it up.

As someone who spent 15 years in the field, allow me to rant/advise a bit here: One of my pet peeves is that everyone wants to know what the "cost" is for everything and to make sure they squeeze every penny from a dealer so as not to feel ripped off. Getting a good deal is fine, but remember this: when you whine, nag, and try to play games with a salesperson or finance manager-- they remember you. So be nice. Play fair. Remember the Foolish Car Buying Tips...Do your homework before you go into the dealer so as not to waste your time looking at cars you can't afford. Check your credit report so as not to be shocked when the subject of rates comes up. Make sure you have an idea of how much you owe on your car and some sort of idea as to what it's worth (and it will almost always be worth less to the dealer than to you). Run some numbers on the Fool's calculators to make sure you can afford the payments (and don't forget about Taxes!!). Call your insurance agent to make sure your insurance rate on the new vehicle will be affordable (don't expect to go from a 1995 Cavalier to a 2004 Cadillac and pay the same). If you plan on having the car for longer then the factory warranty lasts, then take a look at the manufacturer's extended warranties (shop them if necessary, too).

Granted, there are sharks out there looking to take your money and run, but if you are direct, speak the truth, and respect the person you're dealing with, you're more likely to be happy a whole lot sooner than if you resort to playing games. These people have families to feed and support, mortgages, rent, and bills to pay as do you. Many rely on commission, receive almost no salary, work for greedy owner's, and if you/they know your sale will result in a small commission because you are a savvy consumer, then get in, get your deal, and get on the road so they can help the next client. If you run into a salesperson that is not treating you the proper way, don't be afraid to ask the manager for a different salesperson. Doing so will bring the other person's poor habits to their attention, and hopefully get them straightened out.

One final note from my soapbox--Most new cars are shipped by railcar, boat, truck, and sometimes by person before they wind up on a dealer's lot. Don't be surprised if your car has a ping, ding, or chip in the paint. Be thankful that after hundreds (or even thousands) of miles in transit in the open air that it doesn't look like it was driven all that way. Point here is to look it over before you leave the lot -- after you go home and find a problem, don't get mad if the dealer doubts your story, even if you live around the corner. Walk around the car with your salesperson, and note any blemishes. If it's dark when they bring it to you, have it brought inside under the lights (sometimes right in the service area is good) to get a better look at the finish, interior, etc....

Most importantly, if you liked the salesperson and/or dealer, tell a friend! Salespeople love referrals, and should you ever need a friendly service favor, will they remember you as the know-it-all client, or the good person who wanted (and got) a good deal?



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