Is certification "really" extra?? Used car price negotiations..
October 17, 2014 5:20 AM Subscribe
Found a car I like that is listed, as a certified vehicle, with a certain price on the dealer website. We negotiated a price to my liking, I had a mechanic check it out and right before I was going to sign, the sales manager said they would *add* a certification fee. I walked out. Should I reconsider?
So.. I decided to pass on this car and ended up finding another one to my liking two weeks ago. However, negotiations went south and I walked out. Now reconsidering, as they've lowered the price, but I'm not sure how to proceed.
Here's the deal:
1. The car is a used 2013 vehicle listed as "Certified Pre Owned" with internet price X on the dealer website. The certification is a brand warranty (not a dealer warranty). I am paying in cash, which of course means that the "special internet price" is not the price they *want* to extend to me. I ignored this and used the internet price in negotiations.
2. The internet price was about the same as the NADA clean trade in value. I negotiated that price $200 lower, after taking the car to a mechanic and realizing the tires weren't in great condition (Mechanic pointed out that there were two different brands of tires on the car and the tires "*just* pass a state inspection would need replacing in a few months). I wanted more off the car, but they wouldn't budge. As this was the only identifiable issue with the car, I decided to move forward.
3. During the selling of the car, the certified status of the car was never in question - the salesman described it as already certified, the website described it as already certified. However, once we wrote up the final buyer's contract, I noted that nothing on the contract said the car was certified, as we'd discussed, and that I would not sign until there was a stamp indicating "[Insert Brand] Certified Warranty].
4. At this point, the sales manager comes out and transforms what had been a very pleasant experience into a very unpleasant one. He claimed "I never said the car was certified." I countered: "Your salesman did and it's listed on the internet as certified. The price we negotiated includes this certification." He then said "Well, it *can* be certified", making it clear that this would mean tacking on an additional fee. At this point, I told him that the deal was off and walked. As I did so, he said I was crazy for thinking I could find a better price anywhere else, and I told him he was crazy for losing a customer. Cue violins.
So, two weeks later, I now see that they are advertising the same vehicle on their website for a full $600 less than the price I'd negotiated (which was already $200 lower than the price the sales manager said he absolutely could not go below, as he would be "selling the car under value" [absolute b.s., I know, which is why I walked]. Here are my (interrelated) questions:
1. If the car is advertised as Brand Certified and we negotiate a certain price, doesn't that price *have to* include the certification, given that it is already certified? Can they list a car as certified but then try to sell me that same vehicle without the certification? Can certification be "un-done"? Can a car that was previously certified be sold as a car that is no longer certified but "can be certified for a hefty fee"? What would that even mean?
2. Does the certification come from the Brand and not depend at all on the dealer? The first time around when I walked out, did I actually need them to put a stamp on the buyer's contract affirming that the car was Brand Certified? I suspect I did, but I want to be sure.
3. What kinds of questions do I need to ask (or what demands do I need to make) to make sure I don't get screwed over with the certification side of things?
4. Was the sales manager's tactic (of trying to tack on certification as an additional fee on top of the price we negotiated) normal in the world of used car buying, or in fact a shady business practice that should disqualify that dealership from doing business with me?
5. If I do decide to go back, how should I proceed with negotiations? The price they are now listing is lower than I would have paid before, even if they tack on a certification fee, it would be within my budget, but out of principle, I would simply want to pay the newly advertised low price, with no "extra certification fee", and take this car home.
So.. I decided to pass on this car and ended up finding another one to my liking two weeks ago. However, negotiations went south and I walked out. Now reconsidering, as they've lowered the price, but I'm not sure how to proceed.
Here's the deal:
1. The car is a used 2013 vehicle listed as "Certified Pre Owned" with internet price X on the dealer website. The certification is a brand warranty (not a dealer warranty). I am paying in cash, which of course means that the "special internet price" is not the price they *want* to extend to me. I ignored this and used the internet price in negotiations.
2. The internet price was about the same as the NADA clean trade in value. I negotiated that price $200 lower, after taking the car to a mechanic and realizing the tires weren't in great condition (Mechanic pointed out that there were two different brands of tires on the car and the tires "*just* pass a state inspection would need replacing in a few months). I wanted more off the car, but they wouldn't budge. As this was the only identifiable issue with the car, I decided to move forward.
3. During the selling of the car, the certified status of the car was never in question - the salesman described it as already certified, the website described it as already certified. However, once we wrote up the final buyer's contract, I noted that nothing on the contract said the car was certified, as we'd discussed, and that I would not sign until there was a stamp indicating "[Insert Brand] Certified Warranty].
4. At this point, the sales manager comes out and transforms what had been a very pleasant experience into a very unpleasant one. He claimed "I never said the car was certified." I countered: "Your salesman did and it's listed on the internet as certified. The price we negotiated includes this certification." He then said "Well, it *can* be certified", making it clear that this would mean tacking on an additional fee. At this point, I told him that the deal was off and walked. As I did so, he said I was crazy for thinking I could find a better price anywhere else, and I told him he was crazy for losing a customer. Cue violins.
So, two weeks later, I now see that they are advertising the same vehicle on their website for a full $600 less than the price I'd negotiated (which was already $200 lower than the price the sales manager said he absolutely could not go below, as he would be "selling the car under value" [absolute b.s., I know, which is why I walked]. Here are my (interrelated) questions:
1. If the car is advertised as Brand Certified and we negotiate a certain price, doesn't that price *have to* include the certification, given that it is already certified? Can they list a car as certified but then try to sell me that same vehicle without the certification? Can certification be "un-done"? Can a car that was previously certified be sold as a car that is no longer certified but "can be certified for a hefty fee"? What would that even mean?
2. Does the certification come from the Brand and not depend at all on the dealer? The first time around when I walked out, did I actually need them to put a stamp on the buyer's contract affirming that the car was Brand Certified? I suspect I did, but I want to be sure.
3. What kinds of questions do I need to ask (or what demands do I need to make) to make sure I don't get screwed over with the certification side of things?
4. Was the sales manager's tactic (of trying to tack on certification as an additional fee on top of the price we negotiated) normal in the world of used car buying, or in fact a shady business practice that should disqualify that dealership from doing business with me?
5. If I do decide to go back, how should I proceed with negotiations? The price they are now listing is lower than I would have paid before, even if they tack on a certification fee, it would be within my budget, but out of principle, I would simply want to pay the newly advertised low price, with no "extra certification fee", and take this car home.
These people aren't honest, nor are they bargaining in good faith. I promise, this is NOT the only car in the world. I would ONLY consider purchasing this car if they certify it first and if bring it to YOU, along with all the paperwork to sign at your home. This is not a weird thing to request, I've done it.
The more time and energy you put into trying to buy this car, the more attached you are to it. Make them work for your business. I think it's telling that no one has called you back to tell you of the price drop, or to try to woo you back to the dealer.
In the end a car is an item. It's the people you do business with make or break the transaction. The fact that they're playing games with certification leads me to believe that the car CAN'T be certified.
Did you get the Carfax? Before you think about this car for one minute longer, do that.
posted by Ruthless Bunny at 5:44 AM on October 17, 2014 [5 favorites]
The more time and energy you put into trying to buy this car, the more attached you are to it. Make them work for your business. I think it's telling that no one has called you back to tell you of the price drop, or to try to woo you back to the dealer.
In the end a car is an item. It's the people you do business with make or break the transaction. The fact that they're playing games with certification leads me to believe that the car CAN'T be certified.
Did you get the Carfax? Before you think about this car for one minute longer, do that.
posted by Ruthless Bunny at 5:44 AM on October 17, 2014 [5 favorites]
If this is offered through a Brand dealer, then call the Area Manager and speak to him/her about the shenanigans that you've endured and ask that person to verify that the vehicle is able to be certified and that it actually IS certified. Scan and send copies of the internet listings and advertisements showing that it's being advertised as certified.
And to address #4. YES. Don't do business with these clowns.
posted by Ruthless Bunny at 5:47 AM on October 17, 2014 [6 favorites]
And to address #4. YES. Don't do business with these clowns.
posted by Ruthless Bunny at 5:47 AM on October 17, 2014 [6 favorites]
Ruthless Bunny said what I was going to say. If they aren't being respectful and honest in their communication, I'd keep looking. The world is full of cars, and most car dealers aren't this awful. I'm willing to bet that if you go forward with this deal, you will have another bad experience during the sale and/or you will buy it and later discover more issues beyond the mismatched tires.
posted by Dip Flash at 5:48 AM on October 17, 2014 [1 favorite]
posted by Dip Flash at 5:48 AM on October 17, 2014 [1 favorite]
There are a lot of cars out there, and these guys are sketch. I would walk away. Buy a car from someone else.
posted by J. Wilson at 5:49 AM on October 17, 2014 [1 favorite]
posted by J. Wilson at 5:49 AM on October 17, 2014 [1 favorite]
Do they have your phone number? If they have your phone number, and they are legitimately interested in selling it as a certified car and at the advertised price, then they would have called you. The fact that they haven't says volumes.
In my experience, if a potential buyer walks out over something the dealership is willing to negotiate on, the dealer will go after them or call them. I suspect the advertised price here relies on "popular car fees" and "computer-generated interest rates" and similar shenanigans.
If they don't have your number, it might be worth following up -- maybe -- but as said above, do you really want to buy a used car from these people?
posted by pie ninja at 5:55 AM on October 17, 2014 [2 favorites]
In my experience, if a potential buyer walks out over something the dealership is willing to negotiate on, the dealer will go after them or call them. I suspect the advertised price here relies on "popular car fees" and "computer-generated interest rates" and similar shenanigans.
If they don't have your number, it might be worth following up -- maybe -- but as said above, do you really want to buy a used car from these people?
posted by pie ninja at 5:55 AM on October 17, 2014 [2 favorites]
Show up with cash in hundred dollar bills. But 500 less than the current internet price. Spread it out on the table, start an egg timer at 30 minutes. Walk out when the timer goes off.
posted by sammyo at 6:23 AM on October 17, 2014 [2 favorites]
posted by sammyo at 6:23 AM on October 17, 2014 [2 favorites]
The internet price was about the same as the NADA clean trade in value.
This by itself should tip you off that something is amiss, because selling cars at cost doesn't keep the dealership's doors open. Cars are not sold as loss leaders. The car might be in worse condition than you think, or the NADA prices might be inflated, or they may be advertising low prices with the expectation that they'll find ways to jack those prices up once they've got a customer in the door, but they're definitely not planning to make you a great deal.
More generally, I think you're going about this all wrong when you respond to low advertised prices at dealers. Private sellers might misstep and advertise a genuinely great deal, but a dealership won't. The asking price written on the windshield or posted on a website is almost meaningless, so ignore those numbers. Decide what kind of car you want for what kind of price. Go find a few of them, at different and unrelated dealers. Negotiate for the price you want to pay. If you want to pay so little that the dealer will be hurt by the transaction, buy a bus pass.
posted by jon1270 at 6:31 AM on October 17, 2014 [1 favorite]
This by itself should tip you off that something is amiss, because selling cars at cost doesn't keep the dealership's doors open. Cars are not sold as loss leaders. The car might be in worse condition than you think, or the NADA prices might be inflated, or they may be advertising low prices with the expectation that they'll find ways to jack those prices up once they've got a customer in the door, but they're definitely not planning to make you a great deal.
More generally, I think you're going about this all wrong when you respond to low advertised prices at dealers. Private sellers might misstep and advertise a genuinely great deal, but a dealership won't. The asking price written on the windshield or posted on a website is almost meaningless, so ignore those numbers. Decide what kind of car you want for what kind of price. Go find a few of them, at different and unrelated dealers. Negotiate for the price you want to pay. If you want to pay so little that the dealer will be hurt by the transaction, buy a bus pass.
posted by jon1270 at 6:31 AM on October 17, 2014 [1 favorite]
Response by poster: selling cars at cost doesn't keep the dealership's doors open
But don't dealers actually sell cars under value every day?
More generally, I think you're going about this all wrong when you respond to low advertised prices at dealers. Private sellers might misstep and advertise a genuinely great deal, but a dealership won't. The asking price written on the windshield or posted on a website is almost meaningless, so ignore those numbers. Decide what kind of car you want for what kind of price.
Clarification: I have arranged my own financing but that financing comes with restrictions around the value of the car - specifically the NADA clean trade in value. In order to minimize my out of pocket expenditure, I am trying to negotiate a price on a CPO vehicle around or under the NADA, which I have successfully done before. Is it your view that this is an unreasonable or impossible thing to do? It may be very difficult, which is why I am willing to walk out and have walked out on bad deals, but given my constraints, how would you proceed?
posted by Gray Skies at 6:44 AM on October 17, 2014
But don't dealers actually sell cars under value every day?
More generally, I think you're going about this all wrong when you respond to low advertised prices at dealers. Private sellers might misstep and advertise a genuinely great deal, but a dealership won't. The asking price written on the windshield or posted on a website is almost meaningless, so ignore those numbers. Decide what kind of car you want for what kind of price.
Clarification: I have arranged my own financing but that financing comes with restrictions around the value of the car - specifically the NADA clean trade in value. In order to minimize my out of pocket expenditure, I am trying to negotiate a price on a CPO vehicle around or under the NADA, which I have successfully done before. Is it your view that this is an unreasonable or impossible thing to do? It may be very difficult, which is why I am willing to walk out and have walked out on bad deals, but given my constraints, how would you proceed?
posted by Gray Skies at 6:44 AM on October 17, 2014
5. If I do decide to go back, how should I proceed with negotiations? The price they are now listing is lower than I would have paid before, even if they tack on a certification fee, it would be within my budget, but out of principle, I would simply want to pay the newly advertised low price, with no "extra certification fee", and take this car home.
Look, do you want to be right or do you want to be happy?
Buy the car for the current $600 cheaper price and pay for the certification fee if they still want to tack that on. You'll still be better off than you would have been 2 weeks ago, and you'll have the car you want.
posted by DarlingBri at 6:51 AM on October 17, 2014 [2 favorites]
Look, do you want to be right or do you want to be happy?
Buy the car for the current $600 cheaper price and pay for the certification fee if they still want to tack that on. You'll still be better off than you would have been 2 weeks ago, and you'll have the car you want.
posted by DarlingBri at 6:51 AM on October 17, 2014 [2 favorites]
But don't dealers actually sell cars under value every day?
Dealers make money in a variety of ways:
1. The difference in price between what they bought the car for, and what the market rate is.
2. Acquiring your trade-in for less than what they can sell it for.
3. The finders fees associated with getting you financing.
4. Upcharges on things like undercoating, vehicle service contracts, etch, gap insurance, pin-striping, etc.
5. Goofy surcharges like Dealer Prep, Certification and any other bullshit a dealer thinks might fly.
So, if you're wanting to pay less for the car than it cost them, aren't trading something in they can resell to some sucker for more than they're giving you for it, you're not financing with them, and you refuse to pay for anything over and above the car price....they'd just as soon wait for someone who will, because that's a lot of work to do for no profit.
posted by Ruthless Bunny at 7:01 AM on October 17, 2014 [2 favorites]
Dealers make money in a variety of ways:
1. The difference in price between what they bought the car for, and what the market rate is.
2. Acquiring your trade-in for less than what they can sell it for.
3. The finders fees associated with getting you financing.
4. Upcharges on things like undercoating, vehicle service contracts, etch, gap insurance, pin-striping, etc.
5. Goofy surcharges like Dealer Prep, Certification and any other bullshit a dealer thinks might fly.
So, if you're wanting to pay less for the car than it cost them, aren't trading something in they can resell to some sucker for more than they're giving you for it, you're not financing with them, and you refuse to pay for anything over and above the car price....they'd just as soon wait for someone who will, because that's a lot of work to do for no profit.
posted by Ruthless Bunny at 7:01 AM on October 17, 2014 [2 favorites]
Response by poster: So, if you're wanting to pay less for the car than it cost them, aren't trading something in they can resell to some sucker for more than they're giving you for it, you're not financing with them, and you refuse to pay for anything over and above the car price....they'd just as soon wait for someone who will, because that's a lot of work to do for no profit.
This is helpful and I swear I am not threadsitting but I need to understand this clearly:
What is the minimum "profit" a typical dealer might be willing to make for a cash customer like me? I want to have a reasonable, realistic understanding of how to go back into negotiations, either with this dealer or someone else..
posted by Gray Skies at 7:07 AM on October 17, 2014
This is helpful and I swear I am not threadsitting but I need to understand this clearly:
What is the minimum "profit" a typical dealer might be willing to make for a cash customer like me? I want to have a reasonable, realistic understanding of how to go back into negotiations, either with this dealer or someone else..
posted by Gray Skies at 7:07 AM on October 17, 2014
5. Goofy surcharges like Dealer Prep, Certification and any other bullshit a dealer thinks might fly.
Beware of "documentation fees". These are 100% dealer profit. They are trying to charge you for writing up a receipt. Granted some fees have to go to the RMV, but anything above that is pure BS.
posted by Gungho at 7:58 AM on October 17, 2014
Beware of "documentation fees". These are 100% dealer profit. They are trying to charge you for writing up a receipt. Granted some fees have to go to the RMV, but anything above that is pure BS.
posted by Gungho at 7:58 AM on October 17, 2014
Best answer: Car manufacturers (particularly Toyota) have realized that they can advertise "certified" cars as being the "cream of the crop". This entices people into buying them, thinking they are getting a "good" car. This is great marketing, but really has nothing to do with reality. In reality, car manufacturers don't really have any idea how often a car will break except in aggregate statistics for the entire population of cars. They know that on average, a used car of a particular make/model will experience $x in repairs. So, if the manufacturer trims off the obviously bad-off cars (those in wrecks, those that don't have great appearance, those that are missing important bits and pieces), that they can charge $x (or so) more for a "certified car" and make profit. Certification doesn't mean the exact car you're looking at is blessed with higher reliability - it just means that the car is not lower in reliability than the statistical average. It means that the manufacturer is simply pre-charging for the expected repairs over the warranty period.
Another result out of this is the same point I made in your previous post that you still seem to be ignoring. The listed price of a car is irrelevant. The only price that matters is the number you write on the check that you hand them. They can make the price of the car be $100 + $9,900 certification fee or $10,000 + $0 certification fee, and it doesn't matter to you. It also shouldn't matter to your loan provider, but if you want, you can have your dealer trade price of the car for fees back and forth. This is why you should never negotiate in any way other than "price out the door", because if you don't, they'll try to get the price higher by adding fees.
Everything is negotiable in a car deal, and the only thing that matters to you is the price you pay them. If they aren't willing to charge the price you're looking for, then you need to go to another dealership.
Anecdote - the last car I bought, I negotiated with price out the door. The dealership took the negotiation well after they realized I wasn't going to listen to monthly rates or added fees. They then prepared a quote for the car that included something like 10% of the cost of the car in fees, but still had the same "price out the door". I don't know why it mattered to them, but I accepted it because the price didn't change. I don't pretend to know what bookkeeping they needed to do to make that happen, but that's their business, not mine.
What is the minimum "profit" a typical dealer might be willing to make for a cash customer like me?
You're assuming the dealer bought the car at NADA cost, which is a questionable assumption.
For what it's worth, a dealership might be looking for 3-5% profit on a "competitive" car (low-priced, lots of alternatives), and 5-7% on a "non-competitive" car (higher-priced, fewer alternatives). In general, lower-overhead dealers (for instance, those who sell to businesses/fleet sales) will need to mark a car up less, but they'll still end up with the same profit.
Dealers make money in a variety of ways:
Agreed, but it is also the case that dealers want liquidity, even if it comes at the cost of no profit. Dealerships need to pay their employees somehow, and if that means they sell a few cars at no profit or even negative profit, that is a cost of doing business. From those in the car business that I know, I get the impression this happens more often than they would like to admit. The low/no profit deals are made up by the (surprisingly high) number of people that walk into a dealership and simply pay the listed price for a car.
posted by saeculorum at 8:01 AM on October 17, 2014 [3 favorites]
Another result out of this is the same point I made in your previous post that you still seem to be ignoring. The listed price of a car is irrelevant. The only price that matters is the number you write on the check that you hand them. They can make the price of the car be $100 + $9,900 certification fee or $10,000 + $0 certification fee, and it doesn't matter to you. It also shouldn't matter to your loan provider, but if you want, you can have your dealer trade price of the car for fees back and forth. This is why you should never negotiate in any way other than "price out the door", because if you don't, they'll try to get the price higher by adding fees.
Everything is negotiable in a car deal, and the only thing that matters to you is the price you pay them. If they aren't willing to charge the price you're looking for, then you need to go to another dealership.
Anecdote - the last car I bought, I negotiated with price out the door. The dealership took the negotiation well after they realized I wasn't going to listen to monthly rates or added fees. They then prepared a quote for the car that included something like 10% of the cost of the car in fees, but still had the same "price out the door". I don't know why it mattered to them, but I accepted it because the price didn't change. I don't pretend to know what bookkeeping they needed to do to make that happen, but that's their business, not mine.
What is the minimum "profit" a typical dealer might be willing to make for a cash customer like me?
You're assuming the dealer bought the car at NADA cost, which is a questionable assumption.
For what it's worth, a dealership might be looking for 3-5% profit on a "competitive" car (low-priced, lots of alternatives), and 5-7% on a "non-competitive" car (higher-priced, fewer alternatives). In general, lower-overhead dealers (for instance, those who sell to businesses/fleet sales) will need to mark a car up less, but they'll still end up with the same profit.
Dealers make money in a variety of ways:
Agreed, but it is also the case that dealers want liquidity, even if it comes at the cost of no profit. Dealerships need to pay their employees somehow, and if that means they sell a few cars at no profit or even negative profit, that is a cost of doing business. From those in the car business that I know, I get the impression this happens more often than they would like to admit. The low/no profit deals are made up by the (surprisingly high) number of people that walk into a dealership and simply pay the listed price for a car.
posted by saeculorum at 8:01 AM on October 17, 2014 [3 favorites]
Best answer: 1. If the car is advertised as Brand Certified and we negotiate a certain price, doesn't that price *have to* include the certification, given that it is already certified? Can they list a car as certified but then try to sell me that same vehicle without the certification? Can certification be "un-done"? Can a car that was previously certified be sold as a car that is no longer certified but "can be certified for a hefty fee"? What would that even mean?
They are probably required to sell the car for their advertised price with the certification but they don't have to honor any negotiated price ever for any reason (but neither do you). You can hold them to the advertised price with the advertised extras but if they just haven't had the chance to have their mechanics certify it yet they can certainly try to sell it without it as long as the buyer is aware and they're not trying to sell it for more.
Once you start negotiating down from the ad price, all bets are off until you sign the buyer's contract (handshakes and signatures on a worksheet aren't binding).
2. Does the certification come from the Brand and not depend at all on the dealer? The first time around when I walked out, did I actually need them to put a stamp on the buyer's contract affirming that the car was Brand Certified? I suspect I did, but I want to be sure.
Both sort of. The mechanics at the dealership (who don't typically care all that much about sales) inspect the car following the brand's guidelines and recondition or replace any part that needs it (again, according the brand's guidelines). Then the car get it's manufacturer warranty extended. I looked up Honda's program (since a lot Mefites buy them and my Dad currently sells them) and they extend the original powertrain warranty from 5yr/60,000mi to 7yr/100,000mi and the bumper-to-bumper warranty from 3yr/36,000mi to 4yr/48,000mi.
I asked my dad (who sells Hondas) and he says that the dealership pays a fee to the brand to certify a used car. For Honda it's $1,000-$2,000 depending on the car (the Civic and Fit are going to be closer to $1,000, a loaded Pilot or Odyssey closer to $2,000).
You can figure out an approximation of what the CPO warranty is worth to you by shopping around the internet for an extended warranty that will approximately match the CPO warranty. Since the CPO warranty comes with a thorough inspection (at the least) it might be the less expensive option. And, since it comes from the brand, you know that you can get work done at any of that brand's dealships. A service contract/extended warranty "might" have some restrictions on where you can get warranty work done (but I'm sure some of them have fewer restrictions on where you can work done too).
If I was buying a CPO car, I would ABSOLUTELY get some kind of confirmation that the car was in the CPO program in writing before I signed the buyer's contract.
3. What kinds of questions do I need to ask (or what demands do I need to make) to make sure I don't get screwed over with the certification side of things?
You might be able to call the brand and have them confirm that the car is in their CPO program but there is probably some delay between when the dealer certifies and when that information makes it to the brand so if they say, "Yes" you're good to go but them saying, "No" doesn't necessarily mean that it isn't certified. As long as you have something reasonably official looking from the dealership that says that the car in CPO, you should be fine. They can probably add a line item to the buyer's contract which should cover you.
4. Was the sales manager's tactic (of trying to tack on certification as an additional fee on top of the price we negotiated) normal in the world of used car buying, or in fact a shady business practice that should disqualify that dealership from doing business with me?
It could be either. It might be that he ran the ad thinking that it would be certified by the time they sold it but then they negotiated the price based on a cost that did not include the certification so now they want to basically sell you the certification (and the extended manufacturer warranty that comes with it) at their cost.
I remember selling a minivan where something similar happened. We negotiated the deal assuming that the car had heated seats and realized late in the process that it didn't so we offered to have them installed at cost. We couldn't just eat the cost because we were already close to losing money on the deal.
5. If I do decide to go back, how should I proceed with negotiations? The price they are now listing is lower than I would have paid before, even if they tack on a certification fee, it would be within my budget, but out of principle, I would simply want to pay the newly advertised low price, with no "extra certification fee", and take this car home.
Is the car now advertised with the certification but at a lower price? Did they lower it by whatever amount they were going to charge you for the certification?
If so and if the certification is important to you (and I think those programs are a decent deal in general) I would add the cost of that certification to the ad price and try to negotiate down from there. The magic words are, "If you will sell me that car for $X, with the certification, I will buy it right now."
You don't need to justify anything, the only thing that matters to them is that if they can do what you want, they get to sell a car.
As a salesperson, the few times when a customer phrased an offer like that, I could feel my pupils trying to turn into dollar signs. Not because I was going to make a lot of money on the deal, but because I was pretty sure I was going to sell a car at that point.
On a used car, a $500 profit margin would be about the lowest margin I'd expect a dealer to accept. Even on a normal car, they "might" be willing to go lower but $500 is on the bottom end of fair. If they're having problem selling the car in a timely manner they might consider selling it below their cost (which is different than "below value") just to be rid of it since they are paying interest on the cost (which is why the average days to turn over inventory is a metric that managers pay attention to). Or they might advertise a car with a sales price near or below cost but that one specific Honda Accord (as an example) will be the only one available for that price and all the rest will be slightly more expensive (usually the one with the highest mileage or something). It's not bait-and-switch because they absolutely will sell that specific car for the advertised price.
The problem is that, unless you buy the entire dealership, there really isn't any way for you to find out what they actually paid for the car. The sales manager will be working off of the book value which acts as a proxy for the cost (and likely is the real cost) but if they got an especially good deal at the auction where they bought the car, the book value might actually be higher than what they really paid for it. That said, if they show you the book value, that is about as close as you're ever going to get to seeing what the car actually cost them.
posted by VTX at 8:11 AM on October 17, 2014 [5 favorites]
They are probably required to sell the car for their advertised price with the certification but they don't have to honor any negotiated price ever for any reason (but neither do you). You can hold them to the advertised price with the advertised extras but if they just haven't had the chance to have their mechanics certify it yet they can certainly try to sell it without it as long as the buyer is aware and they're not trying to sell it for more.
Once you start negotiating down from the ad price, all bets are off until you sign the buyer's contract (handshakes and signatures on a worksheet aren't binding).
2. Does the certification come from the Brand and not depend at all on the dealer? The first time around when I walked out, did I actually need them to put a stamp on the buyer's contract affirming that the car was Brand Certified? I suspect I did, but I want to be sure.
Both sort of. The mechanics at the dealership (who don't typically care all that much about sales) inspect the car following the brand's guidelines and recondition or replace any part that needs it (again, according the brand's guidelines). Then the car get it's manufacturer warranty extended. I looked up Honda's program (since a lot Mefites buy them and my Dad currently sells them) and they extend the original powertrain warranty from 5yr/60,000mi to 7yr/100,000mi and the bumper-to-bumper warranty from 3yr/36,000mi to 4yr/48,000mi.
I asked my dad (who sells Hondas) and he says that the dealership pays a fee to the brand to certify a used car. For Honda it's $1,000-$2,000 depending on the car (the Civic and Fit are going to be closer to $1,000, a loaded Pilot or Odyssey closer to $2,000).
You can figure out an approximation of what the CPO warranty is worth to you by shopping around the internet for an extended warranty that will approximately match the CPO warranty. Since the CPO warranty comes with a thorough inspection (at the least) it might be the less expensive option. And, since it comes from the brand, you know that you can get work done at any of that brand's dealships. A service contract/extended warranty "might" have some restrictions on where you can get warranty work done (but I'm sure some of them have fewer restrictions on where you can work done too).
If I was buying a CPO car, I would ABSOLUTELY get some kind of confirmation that the car was in the CPO program in writing before I signed the buyer's contract.
3. What kinds of questions do I need to ask (or what demands do I need to make) to make sure I don't get screwed over with the certification side of things?
You might be able to call the brand and have them confirm that the car is in their CPO program but there is probably some delay between when the dealer certifies and when that information makes it to the brand so if they say, "Yes" you're good to go but them saying, "No" doesn't necessarily mean that it isn't certified. As long as you have something reasonably official looking from the dealership that says that the car in CPO, you should be fine. They can probably add a line item to the buyer's contract which should cover you.
4. Was the sales manager's tactic (of trying to tack on certification as an additional fee on top of the price we negotiated) normal in the world of used car buying, or in fact a shady business practice that should disqualify that dealership from doing business with me?
It could be either. It might be that he ran the ad thinking that it would be certified by the time they sold it but then they negotiated the price based on a cost that did not include the certification so now they want to basically sell you the certification (and the extended manufacturer warranty that comes with it) at their cost.
I remember selling a minivan where something similar happened. We negotiated the deal assuming that the car had heated seats and realized late in the process that it didn't so we offered to have them installed at cost. We couldn't just eat the cost because we were already close to losing money on the deal.
5. If I do decide to go back, how should I proceed with negotiations? The price they are now listing is lower than I would have paid before, even if they tack on a certification fee, it would be within my budget, but out of principle, I would simply want to pay the newly advertised low price, with no "extra certification fee", and take this car home.
Is the car now advertised with the certification but at a lower price? Did they lower it by whatever amount they were going to charge you for the certification?
If so and if the certification is important to you (and I think those programs are a decent deal in general) I would add the cost of that certification to the ad price and try to negotiate down from there. The magic words are, "If you will sell me that car for $X, with the certification, I will buy it right now."
You don't need to justify anything, the only thing that matters to them is that if they can do what you want, they get to sell a car.
As a salesperson, the few times when a customer phrased an offer like that, I could feel my pupils trying to turn into dollar signs. Not because I was going to make a lot of money on the deal, but because I was pretty sure I was going to sell a car at that point.
On a used car, a $500 profit margin would be about the lowest margin I'd expect a dealer to accept. Even on a normal car, they "might" be willing to go lower but $500 is on the bottom end of fair. If they're having problem selling the car in a timely manner they might consider selling it below their cost (which is different than "below value") just to be rid of it since they are paying interest on the cost (which is why the average days to turn over inventory is a metric that managers pay attention to). Or they might advertise a car with a sales price near or below cost but that one specific Honda Accord (as an example) will be the only one available for that price and all the rest will be slightly more expensive (usually the one with the highest mileage or something). It's not bait-and-switch because they absolutely will sell that specific car for the advertised price.
The problem is that, unless you buy the entire dealership, there really isn't any way for you to find out what they actually paid for the car. The sales manager will be working off of the book value which acts as a proxy for the cost (and likely is the real cost) but if they got an especially good deal at the auction where they bought the car, the book value might actually be higher than what they really paid for it. That said, if they show you the book value, that is about as close as you're ever going to get to seeing what the car actually cost them.
posted by VTX at 8:11 AM on October 17, 2014 [5 favorites]
Response by poster: Is the car now advertised with the certification but at a lower price? Did they lower it by whatever amount they were going to charge you for the certification?
Yes, the car is still listed as Certified Pre Owned (the site specifically says that it has already been certified) and they have lowered the "internet price" by about $600 under the price I negotiated two weeks ago. I am not sure how much they were going to try and charge me for certification (on a car that was already certified!), but I estimated they were going to try to tack on a b.s. fee of anywhere between $600-$1000.
A customer service rep from the dealer called a few days after I walked out. He asked if I'd still be willing to buy the car. I said I would, but only at the price I agreed to, not with any "extra certification charge". He said he would call me back after speaking to the sales rep. He never did.
Now that I see they've lowered the price, I could just buy it at the price they are advertising, but I feel like I have been treated poorly as a customer. At the same time, I need to buy a car sometime soon, have limited choices due to the fact that I am trying to minimize out of pocket costs by negotiated a price at or below NADA clean trade in, and .. I'm very tired of this process. Should I just swallow my pride and offer to buy it at the advertised cost, given that it meets my budget and is less than what I would have paid? I'm also worried - given that the car IS certified, is in beautiful condition (except for the tires, which aren't horrible but not great either), my mechanic didn't see anything wrong with it, and the price is now ($1000!) under NADA value, why in the hell hasn't this car been purchased?
posted by Gray Skies at 8:27 AM on October 17, 2014
Yes, the car is still listed as Certified Pre Owned (the site specifically says that it has already been certified) and they have lowered the "internet price" by about $600 under the price I negotiated two weeks ago. I am not sure how much they were going to try and charge me for certification (on a car that was already certified!), but I estimated they were going to try to tack on a b.s. fee of anywhere between $600-$1000.
A customer service rep from the dealer called a few days after I walked out. He asked if I'd still be willing to buy the car. I said I would, but only at the price I agreed to, not with any "extra certification charge". He said he would call me back after speaking to the sales rep. He never did.
Now that I see they've lowered the price, I could just buy it at the price they are advertising, but I feel like I have been treated poorly as a customer. At the same time, I need to buy a car sometime soon, have limited choices due to the fact that I am trying to minimize out of pocket costs by negotiated a price at or below NADA clean trade in, and .. I'm very tired of this process. Should I just swallow my pride and offer to buy it at the advertised cost, given that it meets my budget and is less than what I would have paid? I'm also worried - given that the car IS certified, is in beautiful condition (except for the tires, which aren't horrible but not great either), my mechanic didn't see anything wrong with it, and the price is now ($1000!) under NADA value, why in the hell hasn't this car been purchased?
posted by Gray Skies at 8:27 AM on October 17, 2014
Sometimes weird stuff happens. Sometimes cars have a rare combinations of options that not many people are looking for, maybe there has always been a comparable car for the same price with fewer miles, or maybe it was a trade-in that they paid too much for and had listed at a high price hoping to find someone willing to pay that and now they're just trying to get rid of it.
The dealer has probably already run a carfax report that they can show you (it's too much work to fabricate them so you can assume that it's genuine) so you'll know it hasn't been in an accident, your mechanic didn't find anything wrong, it's certified so their mechanics didn't find anything wrong (and since it creates work for themselves if they find any, they have a good incentive to find something they can fix), and it's too new for it to really have any problems.
Make sure it's certified, try to get a lower price, if they don't go for it, buy it at the ad price (which may very well be a loss leader). It costs nothing to ask and even if it takes you an hour to get them to come down just $100 you're still making $100/hour.
Also, I sent you a me-mail in response to your last question and if you think it would help, the offer still stands.
posted by VTX at 9:00 AM on October 17, 2014
The dealer has probably already run a carfax report that they can show you (it's too much work to fabricate them so you can assume that it's genuine) so you'll know it hasn't been in an accident, your mechanic didn't find anything wrong, it's certified so their mechanics didn't find anything wrong (and since it creates work for themselves if they find any, they have a good incentive to find something they can fix), and it's too new for it to really have any problems.
Make sure it's certified, try to get a lower price, if they don't go for it, buy it at the ad price (which may very well be a loss leader). It costs nothing to ask and even if it takes you an hour to get them to come down just $100 you're still making $100/hour.
Also, I sent you a me-mail in response to your last question and if you think it would help, the offer still stands.
posted by VTX at 9:00 AM on October 17, 2014
Best answer: Should I just swallow my pride and offer to buy it at the advertised cost, given that it meets my budget and is less than what I would have paid?
At some point, it won't be worth it to not buy the otherwise-perfect car just to avoid the sense of being taken advantage of by the dealership. I've been there. I've bought two certified pre-owned cars in my life: a Volvo and a VW. The Volvo was advertised as certified and purchased as such w/o any additional fee. I don't remember if the VW was advertised as "certified" or "pre-certified," but the conversations I had with the salesman were all about the out-the-door price for a certified car. In the financing office, they pulled the same shit with the additional fee for it to be certified. It felt really sleazy, and I still felt like I should have walked to teach them a lesson. But there wasn't another one of these VWs for sale for a comparable price anywhere nearby, and like you, I was exhausted and I needed a car, so paid the $800 certification fee. It was still a good price, and several years later, I'm happy I got that car.
(By the way, if you go this way, look up the brand's requirements for a car to be certified and make sure you're getting everything out of the deal that you can. VW requires cars sold as certified to have all three keys, and I only got two when I bought the car. I contacted VW of America about this and compelled the dealership to produce a new key (which ain't cheap), so that felt like a minor victory.)
posted by ndg at 11:04 AM on October 17, 2014 [3 favorites]
At some point, it won't be worth it to not buy the otherwise-perfect car just to avoid the sense of being taken advantage of by the dealership. I've been there. I've bought two certified pre-owned cars in my life: a Volvo and a VW. The Volvo was advertised as certified and purchased as such w/o any additional fee. I don't remember if the VW was advertised as "certified" or "pre-certified," but the conversations I had with the salesman were all about the out-the-door price for a certified car. In the financing office, they pulled the same shit with the additional fee for it to be certified. It felt really sleazy, and I still felt like I should have walked to teach them a lesson. But there wasn't another one of these VWs for sale for a comparable price anywhere nearby, and like you, I was exhausted and I needed a car, so paid the $800 certification fee. It was still a good price, and several years later, I'm happy I got that car.
(By the way, if you go this way, look up the brand's requirements for a car to be certified and make sure you're getting everything out of the deal that you can. VW requires cars sold as certified to have all three keys, and I only got two when I bought the car. I contacted VW of America about this and compelled the dealership to produce a new key (which ain't cheap), so that felt like a minor victory.)
posted by ndg at 11:04 AM on October 17, 2014 [3 favorites]
Best answer: Should I just swallow my pride and offer to buy it at the advertised cost, given that it meets my budget and is less than what I would have paid?
Who's to say they won't pull the same BS and try to add on the certification? If they advertize it as certified, then try to charge extra I;d let the attorny General's office of consumer affairs know about these sleazy greasy slimy no good for nothing rat bastards.
posted by Gungho at 11:38 AM on October 17, 2014
Who's to say they won't pull the same BS and try to add on the certification? If they advertize it as certified, then try to charge extra I;d let the attorny General's office of consumer affairs know about these sleazy greasy slimy no good for nothing rat bastards.
posted by Gungho at 11:38 AM on October 17, 2014
What is the minimum "profit" a typical dealer might be willing to make for a cash customer like me?
If the car can't be certified and has some hidden problem they might well be willing to sell it to you at a loss!
posted by yohko at 9:34 PM on October 17, 2014
If the car can't be certified and has some hidden problem they might well be willing to sell it to you at a loss!
posted by yohko at 9:34 PM on October 17, 2014
For what it's worth, you can get a 7 year 100k mile Toyota extended warranty for under $1000 as long as the factory warranty is still in effect. I suspect the same is true of other brands.
I say this because last time we bought a car we had a similar experience where it was advertised as CPO but didn't have paperwork to show it. The price was so far below blue book because of previous warranty work and it sitting on their lot for a long while, as this was during the Great Toyota Scare of The Late Naughties that we bought it anyway. I knew we'd be getting the extended warranty anyway and there wasn't anything currently wrong with it, so I wasn't bothered by the change. Some months later, lo and behold, we received some stuff in the mail about the CPO warranty. Turns out it had been certified; they just forgot to give us the paperwork.
What few problems the car has had have all been taken care of at no cost to us by the warranty we bought from another, not sleazy/disorganized/whatever dealer.
posted by wierdo at 11:09 PM on October 18, 2014
I say this because last time we bought a car we had a similar experience where it was advertised as CPO but didn't have paperwork to show it. The price was so far below blue book because of previous warranty work and it sitting on their lot for a long while, as this was during the Great Toyota Scare of The Late Naughties that we bought it anyway. I knew we'd be getting the extended warranty anyway and there wasn't anything currently wrong with it, so I wasn't bothered by the change. Some months later, lo and behold, we received some stuff in the mail about the CPO warranty. Turns out it had been certified; they just forgot to give us the paperwork.
What few problems the car has had have all been taken care of at no cost to us by the warranty we bought from another, not sleazy/disorganized/whatever dealer.
posted by wierdo at 11:09 PM on October 18, 2014
« Older Does a local pharmacy keep stock of all drugs, all... | Where can I find an up-to-date comparison of... Newer »
This thread is closed to new comments.
posted by AzraelBrown at 5:32 AM on October 17, 2014 [4 favorites]