Used car dealerships not willing to budge on advertised price?

Haggar

Haggar

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So I've been in the market for a used Jeep Grand Cherokee. I've been looking at 2005-2009 models, and the ones I've been interested in have been about $17-18,000. Twice now, I have made cash offers of $15k for a Jeep priced at $17k- just a $2,000 difference, and both times from different dealers I have been rejected. And not even willing to counter-offer. The price is the price. (Just to clarify, I wasn't talking $15,000 'out the door', I was offering $2,000 less that what they advertised, then would have to pay tax, title, DMV etc fees).

I spoke to someone who used to sell cars and they said the fact that I want to buy outright actually makes my offer less desirable, since dealers want people to finance so they make more in the long run. I was also told that nowadays, used car dealers only make around $300-$500 per used car.

I don't see how that could be true. How could a dealership stay in business if they're only making $500 per $18,000 sale?

When did this happen? In this current economy I assumed the dealers would be trying to move stock.
 
I know that there are some used car dealerships that sell their cars at very rock bottom prices, that way there's no haggling necessary.

It's true that dealerships make more money on financing, but they wouldn't turn away a paying customer. They'd still love to sell you a car no matter how you're paying.

Just compare their prices to the prices of other dealerships. If they refuse to haggle, then their price should be significantly lower.
 
So lease it at $15K then pay off the lease within a month? Be sure to read the contract and make sure there's no penalty for paying it off early.
 
[quote name='Magehart']So lease it at $15K then pay off the lease within a month? Be sure to read the contract and make sure there's no penalty for paying it off early.[/QUOTE]

Do not lease.
 
You'll find your answer is simple - spinning lariats.

But yeah I don't get it either, maybe that particular dealership just isn't worth dealing with. Back in 2006 when I bought a new car, every dealership I step foot on was willing to do whatever it took to have me leave with a car.
 
Instead of saying "15,000 cash," which the dealer will then not make any money on the backend financing, you should start saying "$15,000 and I will sign the paperwork right now."

When they ask you to fill out financing paperwork do it, you're implying the entire way that you are financing through them. If, in the end they give you a better offer than what you have from your bank take it, you win. If they can't offer you a better rate, that's when you give them your payment, in the finance office. (having multiple inquiries on loans within a certain timespan does not count negatively against your score)

It's all about how you say things.

2 things to keep in mind though;

1 - especially if it's a car they are advertising, the price they have listed may very well be as low as they can go, sometimes even at a small loss. These are the cars that get people through the door. Don't expect to be able to get 2k knocked off these.

2 - sometimes used cars are priced based on the amount of money they have into the vehicle, not neccesarily what it is worth. If they overbought on it they may be selling it $1k higher than normal. If they know the car will sell at 1k over, they will never budge on the price (unless it sits on the lot too long, the longer it sits the more willing they are to consider lower offers.)
 
[quote name='Haggar']So I've been in the market for a used Jeep Grand Cherokee. I've been looking at 2005-2009 models, and the ones I've been interested in have been about $17-18,000. Twice now, I have made cash offers of $15k for a Jeep priced at $17k- just a $2,000 difference, and both times from different dealers I have been rejected. And not even willing to counter-offer. The price is the price. (Just to clarify, I wasn't talking $15,000 'out the door', I was offering $2,000 less that what they advertised, then would have to pay tax, title, DMV etc fees).

I spoke to someone who used to sell cars and they said the fact that I want to buy outright actually makes my offer less desirable, since dealers want people to finance so they make more in the long run. I was also told that nowadays, used car dealers only make around $300-$500 per used car.

I don't see how that could be true. How could a dealership stay in business if they're only making $500 per $18,000 sale?

When did this happen? In this current economy I assumed the dealers would be trying to move stock.[/QUOTE]

What type of Dealership? If it's Carmax, the price aint moving. But a normal one, usually would try to work with you and at least meet you halfway.
 
When buying a car, see if the dealership has listings on their web site, some offer "internet pricing." When i bought my last car they had it listed for $16,000 on the lot and $11,000 on their site. I almost paid the $16,000 but i had to come back the next day and that night i checked their site.
 
What's the KBB value on those cars you're looking at? If the car books at 17k, I honestly wouldn't expect them to let it go at 15k. Like someone else mentioned as well, if you aren't financing through them, then they really aren't making much money off of you.
 
At my job, used car prices are usually less than $1,000 over what they paid so no one's going to take a $1000 loss and not make financing money off of you. Cash deals worked back in the day on used because the margins were ridiculous. Now it really only works on new because hitting goals for units moved gets you a huge bonus at the end of the year.
 
Also they don't have to move used that fast. I have talked to people that sold cars in the past and even still do and they all told me the same thing. The dealer pays so much a month for the new cars on the lot. So they want to get them off the lot as fast as they can however nothing is paid for used. So if a new car sits on a lot for 6 months and a used one sits for that much or longer the new car is costing them money when the used one is just taking up space.
 
I think alot of dealerships (around here atleast) want top dollar and dont budge on used cars because thats what they sell the most of. With the economy in the shitter new car sales are probablly pretty low as alot of people are keeping their cars alot longer and used car sales are going up since they are cheaper than new. Id say they just know people want used so they try and get everything they can out of them.

Then again maybe its just my experince since virtually every car dealer around here has a lot sitting on prime expensive location that probablly costs them a fortune and they act like sharks towards everyone and not that friendly, try and badger you into buying a car. Thats why my last car I bought I drove 45 minutes out of state to get it.
 
Why this particular vehicle may I ask? Also did you look on Edmunds.com and research the true market value pricing for this model and make? If you want to talk posh 4X4's PM me. Rovers are my kryptonite and you can score a nice 04 Discovery for 12-13K and still have cash left over for an extended warranty. Just sayin...
 
Like others not too sure why you want a Jeep per say, but regardless it's always all about the profit margins in any kind of resale business. If they aren't making anything on it, cash payment or no, then you're probably not getting it for that price. I'll admit the $300 to $500 thing does seem a bit conservative though, then again I honestly don't know much about the current value of cars unless I look them up.

One thing you may look into though if you are buying outright is auto auctions. For the good ones you often have to be accompanied by a dealer (many of them are dealer only auctions) to buy it for you, but many are willing to do this for a fee. It may seem strange but often times you can get a car for well below the book/Edmunds value even with a buying fee tacked on. Many of them will also still be under warranty for a few thousand more miles coming from rental companies, off leasing companies, banks, etc. Of course the obvious downside is you need to be specific on what you want and check things out throurghly (in some cases you can drive it but most not) cuz they are backed by the auctions for big things (engine, transmission, etc) but not always the smaller things.
 
[quote name='Duo_Maxwell']Like others not too sure why you want a
One thing you may look into though if you are buying outright is auto auctions. For the good ones you often have to be accompanied by a dealer (many of them are dealer only auctions) to buy it for you, but many are willing to do this for a fee. It may seem strange but often times you can get a car for well below the book/Edmunds value even with a buying fee tacked on. Many of them will also still be under warranty for a few thousand more miles coming from rental companies, off leasing companies, banks, etc. Of course the obvious downside is you need to be specific on what you want and check things out throurghly (in some cases you can drive it but most not) cuz they are backed by the auctions for big things (engine, transmission, etc) but not always the smaller things.[/QUOTE]

Hate to call you out but I dont think this is true. Ive worked for a major dealership for 10 years and have never heard of this. Dealers will not take you to or represent you in an auction. You can go to a regular one and buy a car for cash.

Dealers make more money outright on used cars. Its pretty simple, buy 20 or 30 cars from an auction. Then resell each for 50 to 100 percent markup. Yes you read that right.

They will not budge on used cars. Now new cars are another story. Carmakers use their own finance companies. So there are incentives for moving a lot of product using them. Sometimes it doesnt matter they will take cash at a loss because they know at the end of the month they will receive a bonus for all of the units moved. Also sales managers are more willing to take a loss at the end of the month. As long as the "numbers sold look good." Check the bluebook values. To low and they wont take a loss.

If your looking for a almost new or slightly used car, ask if they have any vehicles that were demo units. Demo units are cars or trucks lent out to managers, owners/relatives, or friends. Eventually they have to come back. We get ours back around 4000 miles. Past that the price and condition depreciates to much. We have around 10 or more on the lot depending on how much driving the person demoing it does. If they do alot of driving they bring it back and get another one.

Another option is to contact local banks. Some have their own or use a private repo lot. Banks drop the cash price extremely low just to get back some of their money.

Or go to local police seized auctions. Contact the police department for an official one. Our used lot runs a pretend seized sale. Some are actually seized vehicles but not many. Sometimes as few as one or two. We really clean up with those sales.

I could go on and on.
 
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[quote name='LiveCrazy_Joe']Hate to call you out but I dont think this is true. Ive worked for a major dealership for 10 years and have never heard of this. Dealers will not take you to or represent you in an auction. You can go to a regular one and buy a car for cash.

Dealers make more money outright on used cars. Its pretty simple, buy 20 or 30 cars from an auction. Then resell each for 50 to 100 percent markup. Yes you read that right.

They will not budge on used cars. Now new cars are another story. Carmakers use their own finance companies. So there are incentives for moving a lot of product using them. Sometimes it doesnt matter they will take cash at a loss because they know at the end of the month they will receive a bonus for all of the units moved. Also sales managers are more willing to take a loss at the end of the month. As long as the "numbers sold look good." Check the bluebook values. To low and they wont take a loss.

If your looking for a almost new or slightly used car, ask if they have any vehicles that were demo units. Demo units are cars or trucks lent out to managers, owners/relatives, or friends. Eventually they have to come back. We get ours back around 4000 miles. Past that the price and condition depreciates to much. We have around 10 or more on the lot depending on how much driving the person demoing it does. If they do alot of driving they bring it back and get another one.

Another option is to contact local banks. Some have their own or use a private repo lot. Banks drop the cash price extremely low just to get back some of their money.

Or go to local police seized auctions. Contact the police department for an official one. Our used lot runs a pretend seized sale. Some are actually seized vehicles but not many. Sometimes as few as one or two. We really clean up with those sales.

I could go on and on.[/QUOTE]

Every car I've ever owned I've bought used and always haggled with them for thousands off what they were asking...
 
[quote name='LiveCrazy_Joe']Hate to call you out but I dont think this is true. Ive worked for a major dealership for 10 years and have never heard of this. Dealers will not take you to or represent you in an auction. You can go to a regular one and buy a car for cash.
[/QUOTE]

Actually it is true, I once bought a car this way. You'll see it termed proxy buyer, proxy dealer, auto brokers (some use auctions if they have a license), brokage fee, etc. The process is simpler than you think. Also it's typically not major dealers doing this that own mutliple lots or are tied to a specific make. Seeing as the person doing the buying at an auction has to have a dealer's license (e.g. own a lot) you probably never went to one in this capacity, but I can assure you it may not be widely used but it does in fact happen.
 
why a grand cherokee? they have some of the worst depreciation out there. stay away from any land rover/range rover as well. there's a reason you can buy a discovery for cheap. you'd be better off trying to find an older 4runner or landcruiser.

as for auctions, in some jurisdictions, you can just buy a membership to bid. others, you had to have a wreckers license. the prices were horrible in my opinion (5-10% less than a non-auction price).
 
First thing you should do is quote Kelly Bluebook value, that way when they get the shyster out there to make you a deal you can talk about how much they have it marked up already over retail. If they'll let you, take the vehicle out for a test drive day and let a friend who has automotive knowledge pick out everything that's wrong with it; repairs and parts replacement should get knocked off the price after you've brought it down close to KBB.

Other things that might help:
- Pick a vehicle that doesn't have the best gas mileage, or has qualities that you might value but might be harder for the dealership to move.
- If you do buy a car from them, don't sign up for any parts replacement plan or extended warranty in the office. Say "You'll think about it and will contact them later." Most of the fine print to these things is hella confusing, and you can easily get screwed if you buy a warranty on oranges and they say "Whoops! We don't cover orange peels."
 
It may not be an option depending on your area but I rather avoid lots. They play too many games and their used cars start at 5 digits. Find a used one through a private owner or a small garage, even online sites that list cars in your local area. Check it out, drive it, take it to your mechanic to inspect it, examine prices and reviews online. My current and previous car cost only a few thousand each and were better choices than what the lots were offering. I didn't want a big car either.
 
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