Buy Here Pay Here Used Cars

Q.Dealer invoice is one of the biggest scams that I have ever seen or heard of. The dealers do in fact get an invoice. However, the final price that they pay the manufacturer will be anywhere from 25-50% less than the invoice price. The basic price that the dealer will pay is called dealer-net by most manufacturers. Dealer net averages around 25% less than the invoice price. Most manufacturers also give the dealer an additional 5% or so discount commonly referred to as dealer-net-net. This discount is paid in the form of free showroom demos when next years models come out.In addition to these two basic discounts, dealers are also eligible for many additional quantity discounts, specials, rebates etc. The bottom line is this: That deal you made for $50 under invoice that the salesman said 'well looks like we lose money on this one' he actually probably made $5000-10000 dollars on an average sale. Now, I don't actually begrudge the dealer this money. He needs that money to run his dealership. I merely dislike being lied to. Most businesses won't tell you what their wholesale cost really is on an item. Why, because many people would be horrified to know that the 50 cent candy bar that they bought cost the store around 25 cents. They would be horrified to know that even discounters like wal-mart mark things up over 100% when they can. Department stores figure out what items are the most price sensitive, then they sell these things at a low price or even at a loss. But right next to them on the shelves are items that can be marked up from 50 to 200% and the consumer will still buy them. Back to the Dealers. I walked into a small town dealership the other day and looked around, there were about 25 employees on duty. They had about twenty new units for sale and maybe 30 used ones. Lets assume that they sell 500 units per year. That would mean that they turn over their inventory 10 times per year (pretty darn good). Now lets again assume that the average person in their employ makes $15,000 per year(pretty low). That means they this dealer needs to make a $375,000 profit each year to make payroll. That boils down to $750 per sale just for payroll. They need to make thousands more to pay their other bills including the mortgage/rent, financing costs on their inventory, electric, heat/air, telephone, insurance, payroll taxes, etc. Those bills dont get paid by selling at $50 or even $1000 over cost, not even close. But those bills do get paid selling at $50 over invoice because the dealers costs and a hefty profit are already figured in at the invoice price. Why was this dealer invoice fairy tale invented? It is simple. The bigger the price tag, the tougher it is to get people to plunk down their money. It makes it much easier for them if they can show you the invoice price and say 'see I'm only making $50 on this sale'. If they said to you I'm only making $5,000 on this sale you would get up and walk out. Why do I care? Because I am sick of looking around at one of the most dishonest retails scams going (the entire industry). This industry even gets support from many so-called consumer publications and websites(are they blind or 'in on it'?).

A.If you are trying to make us believe that dealers make 5400 on the sale of a car or truck, I must correct your logic. 1st of all , let me start by saying that I am a Service manager at A large Ford Dealership In Western NY. I have performed this function for 12 years. Now the first thing that will come to mind for most of you is "don't trust anything I have to say". For those of you that feel this way , you may stop reading , as I won't persuade your train of thought anyways. For the rest of you , Allow me to give you the truth. I am not interested in selling anything over the internet so be aware that I post this for educational purposes only, I am not trying to lure anyone to buy a car from our dealership. There is a huge misconception on the way cars are priced and the lofty profits that dealers make. The factory invoice , minus the hold back IS what the dealer pays for the car.Holdback is on the invoice and any reputable dealer will show you.(2-3% of the invoiceis about avg.) There are also incentive plans to customers and dealers at various time (ie: rebates) that will effect this. Those incentive plans are advertised nationally and regionally. That is it . there is no SECRET. That being said, I would like to take you through a short training excersize. How do you pay for these cars if you are a dealer. Lets say you have 150 new cars on the lot. Do you think the manufacturer just loans them to you as a dealer? NO. you have to buy them up front. I know very very few dealers (none) that can afford to buy 150 cars (or more) with some spare cash laying around. (think abvout it 150 cars time an average in voice of 15,000 = 2.25 million. So....just like you and I , they finance them. A dealer in good standing financially can get a decent interest rate on this bulk purchgase(called floorplan) of around 7%. Not a bad rate but multiply it by 150 cars and then compound the interest on 2.25 million monthly! This is what the holdback is sometimes used by the dealer to pay for. The latest average I saw in the country as far as profit per vehicle goes was 7-800 per vehicle BEFORE you pay payroll/rent (all the bills). Anyone that wants further incite into this can call me , but the message is. Do your homework. Know the invoice and realize that the big bad wolf isn't all it seems. If you don't trust your dealer , you are at the wrong dealer. Ask freinds , call the BBB, call AAA get references. The clothes you wear have a sometimes 300% mark up. If we try to get 5% we are crooks. It's just frustarting when you know the truth and try to make a living on a honest sale price and then you see a post that says we make 5 grand a car. Absurd. Sorry for the misspellings , the more agravated I get on the misinformation the worse I type

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