JM1FE

...if you buy at invoice?

Holdback == how much per vehicle?
Bonus from Mazda for financing through MAC?
Other non-disclosed spiffs to the dealer?

I want to be able to say "I'll pay invoice and I know you're making $xxx on the deal so STFU" (paraphrased... :D)

DateAn8

I know I took the Kelly Blue Book break down when I went to the dealer and could tell him how much they were charging and how much it cost them for all the extras. But they got me back on my trade-in value

cgrx

stealerships






enough said

jsh1120

Frankly, I wouldn't bother getting into this discussion. The amount a dealer makes on any specific vehicle is difficult to calculate and not the way a dealer does business, anyway. Their profit is based in part on volume and may vary significantly from one car to another depending on programs in force at various points in time. Suffice to say that, on average, a dealer selling cars "at invoice" isn't losing money.

From your perspective this may look like a game that focuses on your specific car. From the dealer's perspective any one deal is only part of a larger picture that involves overall profitability from sales, service, and parts. Dealers pay interest on money borrowed to have cars on their lots, for example. By selling cars, they reduce that cost. Is that "making $xxx on the deal?" Well, in a technical sense it is, but I doubt even your dealer can calculate precisely how much since it's going to vary according to how long the car has been on the lot, the interest rates in force over a particular period, etc.

Recognize that a dealer is providing a service (providing a car for you) for which he/she "deserves" whatever profit the market will support. Without that profit he/she would be in another business. I suspect you make the same calculation in your own life.

Just make the best deal you can. Ignore the dealer's efforts to convince you he/she is losing money by giving you what you want at the price you want to pay. By the same token, resist the temptation to play "gotcha" with the dealer; it's a silly game.

MrMethane

Go here: http://www.carbuyingtips.com/

Read everything. Some of it is outdated but its a very interesting read and should help you figure out about what the dealer is making off the car. Of course you'll never know for sure there are all sorts of hidden incentives that are very hard to find out if your not in the business. But still the advice on this site should save you at least $1000 more than you probably would if you went in to a dealership today.

dwynne

Mazda hold back is 2% of the base MSRP - so a little over $500 on an 8. Of course, hold back is not paid until the start of the next quarter - so it is not something that the dealer will normally want to count on as their only profit on the deal.

Saying you will pay invoice is not a good idea either, since there can be rebates, promos, and factory to dealer money. So if I were the car dealer and you said that to me, I would write up the deal for invoice (and show you the actual invoice) then I would keep the $3,250 in rebates you are due - which would be a nice profit.

The dealer has to make money, bottom line. Nothing wrong with letting them make a fair profit on the deal - even over his cost plus the hold back. I count on other folks paying too much so they can afford to sell me a car for just a little.

Someone saying "I bought the car for invoice, but got hosed on the trade" just plain got a bad deal. If you can get a FAIR price for your trade and get the car for just a few hundred over actual dealer cost (after all rebates, promos, and dealer money) - then you got a good deal.

Dennis

Chasvhill

The preceding comments are all pretty much on target. Especially the post by jsh1120. I speak from experience having spent five years selling vehicles (in my case, Class 8 trucks). A dealer works each car differently to make a bottom line overall. The longer a car sits on the lot, the more cost accrues to that car - remember, it's all borrowed money anyway. Special incentives come down from the manufacturer. Finance deals get cut. Just do your research and figure out what you want to pay. And don't be afraid to walk away from a dealership. There's always another one right down the road.

DO NOT TRADE. Remember, every new car is the same as the one sitting beside it. Everyone knows about what it costs. Your used car is the only one like it in the world and the price is totally negotiable. Furthermore, no matter what the deal sheet says, you will never know how much the dealership has actually put into your car.

And once you make the deal, never look back. Never give it a second thought, because it's all water under the bridge. Just go out and enjoy your new RX8 :p

dwynne

They usually get 90 days or more "free" of interest or other payments on the inventory. Will not matter on these left-over '04 cars, but in the past I checked the build date on all the similar cars on the lot and "chose" the oldest one they had with the color and options I wanted. The dealer was the most motived to move that one, VS the same car that they just unload off the truck :D

Dennis

jsh1120

I'll return the compliment. Right on, especially the reference to trading a vehicle. Unless you believe your time is so valuable that selling your car is prohibitively expensive (and it may be), you'll only make yourself financially vulnerable by trading in your car. (Note: Consider, however, that a trade-in in many states reduces the before tax value of the new car so you're saving some additional money by trading beyond what the dealer offers. This benefit, however, is seldom sufficient to make a trade a good deal for you.)

Finally, though you didn't ask, remember that leasing a car is a "good deal" only for a minority of consumers. If you consider leasing to enable you to drive a car you could not afford to buy, you're not of those consumers.

dwynne

You know that old phrase "you should not make sweeping generalizations" :D ?

If you know what you are doing, leasing is a super way to get a great deal on a car. Folks here are wondering about the resale value of their 8s due to all the incentive money to move out the old stock. With a lease the final value is predetermined. At the end of the lease, if you car is not worth the buy out price then you can negotiate a lower price or just walk away. If the car is worth more than the buyout price, then you can buy and sell it and make money - or just buy it and keep driving it.

If you paid $34k for an 04 on a 5 or 6 year note you are now WAY upside down, and in a year or two you want something new you will STILL be way upside down. If you check autotrader or cars.com there are tons of 04 used cars for sale (nearly 450 on cars and over 900 04s on autotrader). A lot of them are low miles with asking prices just over $20k. Sales of new 8s are also slow, and with everyone getting the deals on the 04s they will probably be playing this discount game again soon on the 05 cars (for sure if the MS 8 comes out this fall). So no only is there a glut of used 8s there is a glut of deeply discounted used ones.

Yes, if you are going to drive the 8 for at least the loan term and maybe longer you are better off to buy. If you don't keep it that long, and you are smart with your lease you may be better off to lease it instead.

One way to spot a good lease. Add up the cap cost reduction, if any, plus all the monthly payments. Then figure out the payments on buying it out at the end of the lease and add those up. This would be your total cost for leasing, then buying the car. No compare this number agains buying the car on time now with the same money down. If the difference between the two is small (say $1k or less) then you know you have a good lease deal.

Also check a 3rd party leases at www.leasecompare.com with what a dealer is asking. The dealer can't change the residual, but they can jack up the money factor on you. You also have to negotiate the price of the car just like for a purchase - you do that first, then get the lease numbers. You have your own loan and lease calculators (I have them loaded into my Palm Pilot so I can check right at the dealer) and check all the numbers yourself. If they don't add up, then make them show you the problem. In one case a dealer had added an $800 "wheel and tire insurance package" to a lease quote.

Just like they have discounted finance promos, they also have lease specials. Honda just ran an Accord LX deal for $219 a month with $999 cap cost reduction for a 36/36k lease. You can touch that - getting a $20k car for so little each month. Their residual was fair but their money factor was 0.00077 (about 1.8% interest).

If you know what you are doing, leasing is a good thing - no matter if you can write off the lease payments or not.

My 330i lease payments were just over $400 and at lease end I sold the car and made money. Who would not want to drive a 330i loaded with sports and lux packs, xenons, etc for such a little payment?

My S2000 lease payment is just over $200. Who wouldn't want to have an S2000 available any time they wanted for top down for such a little outlay of cash?

Nothing wrong at all with leasing as long as you know what you are doing. Obviously it is one of the most misunderstood and dealer abused things around - so not surprising you would be so against it.

Dennis

fredw1

Not to turn this into a leasing discussion, but I agree with everything Dennis said. In another thread, I posted some calculations of buy (finance) versus lease (4 yrs, with a buy at the end), and it was a pretty much a dead heat. For the same monthly payment, buying required money $12-14K up front, while leasing required it at the end. I decided I'd rather lease, and keep what would have been the down payment and invest or otherwise use it for four years. Leasing also gave me the option to walk away in four years, only paying for what I used. This was close to what the total cost of operation would have been if I had bought the car, held the title for a day (after paying off the loan), and then sold it.

There is no right answer for everyone, but you can decide your own right answer by doing the math and figuring out the costs for buying and leasing, and for leasing with a buy at the end. I had never leased before, but when I did the math on my 8, it was not a difficult decision to go that way.

dwynne

I leased a 2000 C5 Corvette convertible. In the shop a lot - sometimes for a week at the time. Lots of power, but not as much "fun" as a tossable car. Then the bottom fell out of the 'vette market ($5000 rebates AND 0.0% financing for new ones). If I had purchased the car on time I would have been hosed - I would have been paying several hundred bucks more a month AND owe more than it was worth. Since I leased (and negotiated a good deal) I was able to walk away and the end of the lease. Actually, the lease bank did not want me to turn the car in at the auction that they discounted the buyout by close to $3k to try to get me to keep it. I found a buyer and sold it for a little profit.

Dennis

dwynne

On the topic, I found this:

$1500 Customer Cash or 3.9% APR for 12-60 months
+ $2500 Customer Bonus Cash if you finance with Mazda America Credit

MazdaUSA.com says $750 customer cash, but it is (in the SE region) really $1500. But note that you can substitute cheap financing in place of the $1500. Depending on what non-promo rate MAC offers you, this MIGHT be a better deal.

Dennis

jsh1120

Dennis,

I agree completely with what you've said, and I'm not "so against" leasing. I even agree, for example, that "if you know what you're doing, leasing (can be) a good thing - no matter if you write off the lease payments or not."

My flip comment that if you're leasing a car you can't afford to buy you're in trouble was just a warning to those poor souls who lust after cars they can't afford and believe that leasing is some magical way to solve their problem.

As you note leasing is a widely "dealer abused" financing method that can stretch car payments into the infinite future, just as purchasing new cars at MSRP with llttle or no down payment can leave one seriously "upside down" on a loan. In that case, many dealers will be happy to "solve your problem" by taking the car as a trade in and finance what you still owe on a new loan.

When I purchased my RX-8 in the fall of 2004, the lease incentives offered by Mazda were significant. So good, in fact, that running the comparisons you suggested indicated that if I were planning to keep the car for 3 years or less, leasing and buying were apparently about equal as economical alternatives. I haven't checked the numbers again, but I suspect that given the depressed market for used RX-8's, leasing might even have been a better alternative.

Nevertheless, I keep cars for a long time, often 7-10 years. Given that behavior, and having the cash available, I decided to purchase the car.

Bottom line is that you're absolutely correct that "sweeping generalizations" about this topic are almost always wrong. About the only one I can think of that seems to apply universally is that no one will give you their money to use at no cost. My daddy was wrong about many things, but that one piece of wisdom seems to hold universally.

MazdaspeedRx8

How did you get your least payment so low for the S2000? Did you have a high residual value or big down?

dwynne

Found a like new car with 1100 miles on it for really cheap, the residual is about $17k (which is fair) - on a lease you pay based on the difference between purchase price and residual so the lower you negotiate the price the lower the payment (residual is the same no matter what you negotiate). Low money factor as well.

Also good timing, S2000s held value STRONG when the first came out - low numbers, dealers jacking up the prices, etc. So the lease banks gave them higher than normal residuals. The value of the cars has declined now that there is lots of compettiion (the 8, the z, the g35, etc) and there are plenty of cars to go around. I am hoping to negotiate a lower buy out price at lease end based on this.

Dennis