How to "deal" with car salesman?
July 21, 2006 11:14 AM   Subscribe

CarFilter: What are the typical hidden fees and pricing scams I should look out for when I buy or lease my next car?

I'm considering going to a BMW dealer to buy a new or slightly used 300 series. I'm also considering leasing.

What types of hidden fees and pricing scams do I need to be on the lookout for? What types of things should I try to negotiate as included-at-no-extra-charge?
posted by GIRLesq to Shopping (15 answers total) 3 users marked this as a favorite
Figure out exactly what it should cost and then examine exactly what it will cost on whatever you sign. They will lie straight to your face about all sorts of things, and the only thing that matters is what's on paper.
posted by trevyn at 11:17 AM on July 21, 2006

The most important thing is "will the mileage limit be compatible with how much you might ever need to drive during the lease term, and if things change, will it be renegotiable".

Make sure to look into gap insurance, too.
posted by baylink at 11:25 AM on July 21, 2006

Response by poster: Trevyn writes: "figure out exactly what it should cost."

I don't mean to be flip, but that's sort of what I'm doing here.

It's difficult to determine what 'secret' dealer incentives and hidden fees exist. There are sites that come up from google -- but they usually require you to pay a fee to get their package of information. For free, all they really tell you is to get your financing first from e-loan and price shop on Edmunds.
posted by GIRLesq at 11:31 AM on July 21, 2006

Do your homework. Compare pricing. Go to multiple dealerships that sell the same brand of car and get quotes from each. Get a male friend to do the same (if you are female). Get a more or less attractive female friend to do the same. Don't believe the "this offer is for today only" bs.

I'd also suggest reading some of these posts, particularly the first five, on The Consumerist.
posted by ChazB at 11:37 AM on July 21, 2006

Unless you are anal about your car (trust me the BMW dealership will be) and unless you have a pretty good feel for how much you drive then don't go for the lease. Lease can be good but people I have talked to have had nothing but complaints about how any savings will just go down the drain after the dealer picks over everything with a fine tooth comb.
posted by geoff. at 11:48 AM on July 21, 2006

I don't mean to be flip, but that's sort of what I'm doing here.

Sure, but in that case you'll need to be more specific than "a new or slightly used 300 series". If you have an exact car in mind, you might get a more exact answer.

What I'm trying to say is that it doesn't matter what "secret" incentives there are and what bogus fees the dealer will try to push on you. What matters is how little a dealer will sell for, and how close your deal comes to that.

If you're going new, I recommend Bimmerfest's purchasing forum. Used will be a little less precise because it depends more on the particular car and availability of what you want, but you still might be able to get good advice there.
posted by trevyn at 12:04 PM on July 21, 2006

You might want to consider paying for some information for instance take a look at Fighting Chance. What they try and give you is a market summary for the car you are interested in. It is $35.

I haven't used them myself but here is an account from someone who did. BTW Getrichslowly is our own jdroths great personal finance blog.
posted by bove at 12:12 PM on July 21, 2006

You'll be much happier in this purchase (and any others) if you define your goal as "a price I am comfortable paying for what I'll get." Trying to figure out exactly the dealer's price plus $1 leads to madness, aside from which you then have to figure out their capacity for pain, if it's been a slow week, whether this is a vehicle someone else would pay more for and therefor is something they won't negotiate on*, etc.

Once you've accepted this concept there's other techniques but as others pointed out, you need to be a little more specific. On a lease you should look at the total amount you'll pay for the vehicle vs what the buyout price will be when it's over. If you're going to make $22,000 in payments over the term of a lease and then it's $12,000 to buy and the sticker on the car for cash-on-the-barrelhead is $26,000 then that's a bad deal.

In a perfect world (for you) on a lease you'll pay an amount of money (plus allowing for interest) that will result in a buyout price equal to what the car will be worth then. The dealer, on the other hand, wants to take that car back with it largely paid for so that when they sell it they make a goodly profit. Hopefully you can find a happy medium.

*this is the legit reason behind the sales manage dance (as opposed to the aspect that is pure negotiating technique) - the sales manager is interested in the maximum profit for the dealership and therfor would rather hold onto that car for 2 more days and sell it for 2% more, vs the car salesman who wants to MAKE THE SALE.
posted by phearlez at 12:18 PM on July 21, 2006 provides what they call "True Market Value" that includes holdbacks and promos. You can use this info to negotiate with the dealers over the phone or email before entering the dealership. With leasing and used cars, everything goes out the window. With leasing, there are so many terms of the lease (e.g., time, miles, terminal value, etc.), that an unscrupulous dealer can find a way to screw you without you knowing.

Tip #1: Learn how to use a financial calculator. This saved me from paying $800 for an unnecessary extended warranty.

Tip #2: Do not play the "What type of payment are you looking for?" game. If you don't follow tip #1, you can't follow tip #2, and you will get screwed--ask my friends who entered into a 5 year lease on a used car or my friend who "refinanced" his Honda.
posted by GarageWine at 12:23 PM on July 21, 2006

I've found a wealth of information regarding auto buying at Bimmerfest is probably even better, as it caters to BMWs, but Edmunds is a great general automotive resource.
posted by Doohickie at 12:44 PM on July 21, 2006

While at edmunds, be sure to check out the relevant forums at insideline. And as others have noted, enthusiast forums such will probably yield good results.
posted by notyou at 1:14 PM on July 21, 2006 < - all you>
Well, I lied. You need the Fighting Chance information packet too so you can learn the "fax attack."
posted by Ekim Neems at 1:47 PM on July 21, 2006

Response by poster: In response to those who said "be more specific," I'm looking at the BMW 325 hard top. If used, then either 2005 or 2006 models with less than 10,000 miles.

I'm not just looking for a fair price, and I'm not looking to squeeze the sales guy into a $1 commission either, but I am looking for a great deal.

I want to know how I can find out the dealer incentives so I can capitalize on them and what kind of fees can be waived or absorbed by the dealer (like destination charges and window etching). I'm willing to wait until year end, but I've heard there are lots of incentives this time of year due to the dealer's need to clear floor space for new models.

Sorry I wasn't more specific and thanks for your feedback so far.
posted by GIRLesq at 2:22 PM on July 21, 2006

You will get the best deal if you can find the car you want, on a lot that doesn't want it. By that I mean a model that's been in inventory for a while, or a misfit (eg a used BMW at a Kia dealership), or around model year changeover. In these cases, they're more motivated to get it off the lot.

You also will save by not buying the extra's they try to throw in - undercoating, extended warranty, etc. These things can be purchased elsewhere for less.

To me there's no economic benefit to leasing unless the car's used mainly for business so that the lease is a write-off.
posted by Artful Codger at 8:10 PM on July 21, 2006

Best answer: Yes, the "fax attack" is good. Basically, write up a detailed proposal, and fax to the fleet managers at all dealerships you'd be willing to travel to.

My bet is that your best deal will be $1000-$1500 over invoice for a European Delivery order. Planning a trip to Germany anytime soon?

Check this PDF.

For a 2006 325i sedan, your faxes would end up looking like:

$26,150 325i Base Euro Delivery
$1,210 Automatic Transmission
$730 Xenon Headlights
$430 Metallic Paint
$695 Destination
$1,000 Dealer Profit
$xxxx State Sales Tax

FINAL PRICE: $30,215

If you can't do Euro Delivery, you have to add $2,150 to the base price. ED lets them import it into the US differently to save on import taxes; that's why it saves money. Also, you may have to give them closer to $1,500 on the dealer profit line if you live in a major metro area that has a habit of overpaying for cars. Your call. I'd suggest making a post on Bimmerfest mentioning your location once you've decided on the exact car that you want, and they should be able to give you pretty good feedback on what to ask for.

BMW's form of holdbacks and incentives is really more of a "sell 100 of X car and get 5s on the surveys to get a bonus" kind of thing; it varies from dealer to dealer how much profit they're willing to give up on your car to get the bonus. That's why you want to see what kind of deals other people are getting via the forums, and then fax spam to find the dealer who's willing to give you the deal that you know is possible to get.

I would be leery of a used car with less than 10k miles. Chances are very high you'd be getting a demo, loaner, or a bought-back problem car. In other words, it would likely have been thrashed at some point.
posted by trevyn at 12:18 AM on July 22, 2006

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