Is it ethical to break a deal with a car dealer?

August 17, 2004 1:36 PM

Car buying ethics question: I'm buying a new car that's relatively rare and had set my expectations such that if I were able to get it for < $1,500 over invoice that I'd be ok with the deal. I negotiated one dealer down to $1,300 over invoice and put a $500 deposit down on the car yesterday (it's arriving late this month). [MI]

I had been in negotiations with a few other dealers, but hadn't heard back from them in a couple of days, so I assumed they couldn't beat the price that I had given them a couple of days previous.

Today I get an e-mail from one of the other dealers saying that I should break my deal with the other dealer and that she can now give me the vehicle for $250 over invoice, a savings of a little over a thousand dollars.

The deposit is refundable, but it feels like there's sort of a contract that has been entered into and if I break it I'm not sure if I'd feel right about that. But, hey, it's a thousand bucks! :)

Is all fair in love, war, and car dealing, or should I stick with the deal I originally made?

One other caveat: The dealer I put the money down with is local (Twin Cities) and the one giving me the great deal is about a 6 hour drive away (Chicago). I don't mind making the drive, but wonder if I need to worry about anything related to that.

posted by freshgroundpepper to religion & philosophy (16 comments total)

What was the point of the deposit if it's refundable? I would double check that if I were you. My guess is, it's refundable if the dealer doesn't come through on his end. It may not be refundable if you break the deal. Otherwise, why would the dealer even want the deposit?

That said, I would talk to the dealer and explain your dilemma. There's an excellent chance he'll match the Chicago offer, if you can document it somehow. Save you that 6-hour drive, and the ethical anguish. ;)
posted by stupidsexyFlanders at 1:51 PM on August 17, 2004

Two things, I think:

1) It's not only the drive, but what kind of dealer is the second one, if she's encouraging you to break an agreement with someone else? Especially if she knew you had made the first deal, and then offered you a better one, she sounds dubious. What if you break the first deal, give her a downpayment, and then she gets a better offer from another buyer--you think she'd bat an eye before she called you and bailed? You want to have to go back to the first guy and re-negotiate a deal after all that?

2) On the other hand, I'd definitely try and use this as leverage with the first guy. He may or may not be able to move his price much--if he can, then great, but you might also be able to get either a better service contract, or some extra options/accessories thrown in, etc.
posted by LairBob at 2:09 PM on August 17, 2004

Something else to consider: as my boss observes, you're not just buying a car, you're entering into a relationship with a dealership.

Buy your car at your local dealership and they'll be more likely to bend over backwards to help you when you need it -- either because they're smart businesspeople, or because you'd communicate your dissatisfaction in surveys, and that would show up in their customer satisfaction reports at the automaker.

Maybe your local dealership can meet you halfway on the price difference, or throw in a stereo upgrade or some accessories or free oil changes, etc.
posted by pmurray63 at 2:10 PM on August 17, 2004

There is no honor among thieves. Things to think about:

1. Your deposit probably isn't refundable.
2. I bet (just a hunch) that the factory just announced a new rebate (either factory to consumer or factory to dealer).
3. If you tell the local dealer that the other dealer is going to do $250 over invoice, the existing dealer (if he's smart) will let you have the car for $750 over invoice. Remember that a dealer's profit per unit (because of spiffs and other factory-to-dealer incentives) jumps exponentially at certain levels of units sold. For example, a dealer might only earn sales price minus invoice for the first ten cars he sells. After that, he gets a $500 bonus per car up to twenty. Then he gets a $1000 bonus per car, et cetera.

If you tell me the type of car, I'll call a friend who is in the business, and see if he knows of any factory promotions.
posted by trharlan at 2:14 PM on August 17, 2004

Of course, you must get the Chicago offer in writing, and if you are financing the car through the dealer you must make sure that both entities are financing you under the same terms.
posted by trharlan at 2:16 PM on August 17, 2004

I, too, will be surprised if the deposit is refundable with no stings attached.
However, If the deposit is refundable then you're off the hook ethically. I'm sure that they would prefer that you stick to the original agreement but, if they offered such an arrangement, then they have explicitly accepted the risk that you would back out. In practice, I expect that asking for your deposit back will be an opportunity for them to renegotiate.
As for why a dealer would ask for a refundable deposit, people like to feel that they are not locked in but a sense of obligation would prevent most people from backing out.
posted by Zetetics at 2:17 PM on August 17, 2004

A grand don't come for free. This second dealer sounds shady-- why does she want to let the car go for so cheap? You'll probably end up paying for the $1k in savings in other ways. A local honest guy sounds more like someone I'd like to buy a car from, especially if it's rare. But see how low you can get him with this second offer.
posted by samh23 at 2:30 PM on August 17, 2004

trharlan: It's a 2004 Infiniti G35 coupe manual transmission.

I don't know if it counts as "in writing" but I've got it in an e-mail from the chicago dealer quoting only $250 above invoice.

She's also the one that told me that "by law they have to refund your money", which I'm not 100% sure if I believe. Really, all I've got from my local dealer is a receipt for the credit card that I put it on.

Now that I think about it, I'm guessing that the posters above are correct, and that it's not actually refundable. Which would mean I'd only be saving $500 for a 12 hour round trip and to work with a dealer that I'm less comfortable with.

Thanks for everyone's input, I'm leaning towards sticking with the original dealer and deal. I think I'd rather enter into an arrangement with a clear conscience. Plus, the local one is the dealer that I felt the most comfortable with in the negotiations.

Also, as of yesterday I was happy with the deal that I had, so this really shouldn't change it.
posted by freshgroundpepper at 2:54 PM on August 17, 2004

Don't hesitate to use it as a bargaining chip though, that's totally fair game.
posted by RustyBrooks at 3:04 PM on August 17, 2004

Absolutely--get what you can from the first guy.
posted by LairBob at 3:06 PM on August 17, 2004

Man, you owe it to yourself to use the new offer as a bargaining tool.

If you're faithful to the dealer, they should be willing to sell you the car at no profit at all, because they're sure as heck going to clean up on the manufacturer-paid warranty work and owner-paid post-warranty work.

Keep this in mind: the job of the salesman is to make as much money as possible for the automobile dealer. He is not working for you.
posted by five fresh fish at 3:31 PM on August 17, 2004

Heh, after e-mailing the Chicago dealer and telling her that I was going to stick with the original deal, she says that she'll give me invoice on it. I'm still going to stick with the original dealer.

This thread could be a how-to for someone who wants to negotiate a car deal and get the best price, if their willing to twist things a little bit. :)

Thanks again for everyone's advice.
posted by freshgroundpepper at 3:32 PM on August 17, 2004

What is she, trying to dump the car???
Red flag, red flag, red flag!
posted by dness2 at 4:58 PM on August 17, 2004

I'll say the "dump the car" scenario is unlikely.

A quick glance on the forums at edmunds.com reveals that people in the Midwest and Northeast are buying their cars near the invoice price, and sometimes a bit below.

Reasons: 2005 G35 is coming soon, and MT coupes don't sell well at summer's end in the snowbelt.

So, pepper, I hate to pile on, but I'd tell this dealer that s/he'd better drop the price some. Whether or not you negotiated the deal in good faith, $1,000 is a lot of money. Don't think the dealer wouldn't do the same to you if the roles were somehow reversed.
posted by trharlan at 5:27 PM on August 17, 2004

How about leaving the deposit and buy the car in Chicago?

The $1300 you'd normally have saved is now split between you ($800) and the local dealer ($500). If you can get your deposit back, then go for it, but if there's legal or ethical issues with that, this is another solution that should make all three parties happy.
posted by bachelor#3 at 5:51 AM on August 18, 2004

I own one myself. Great car. I bought it from Infiniti of Lisle and use Fields Infiniti of Lake County for service. They both seem to be excellent, upstanding dealerships (for example, when Fields left grease on the headliner after a repair, they kept the car and the service manager dropped it off at my house, 75 miles away, that night after work)

Anyway you should check over at Fresh Alloy's forums to see what the going rate for the car is and check out the general feelings about the two dealerships.
posted by rtimmel at 7:32 AM on August 18, 2004