Okay, I'm in the market for a late model used vehicle and I see some financial "tricks" used by car dealers to increase their bottom-line profit on each transaction. It's been reputed that dealerships actually make more money on used car sales than new car deals. A lot of that is because it's difficult to determine how much a particular unit actually costs the dealer as he has ample opportunity to "steal" it as a trade-in.
The terms "used," "pre-owned," or "certified pre-owned" (CPO) are mere semantics. CPO can actually add to the price of the car. Dealers tell you about the "warranty" for buying from them rather than a private party - this is because the state mandates up to a 90-day/4000 mile limited warranty on all vehicles sold by a dealer, assuming that the remaining factory warranty is less than that. Then, the F&I manager tries to sell you an extended warranty on a used car. This happened with my current "wheels," which actually already had a transferrable extended warranty already in effect!
The areas of concern are the "fees" added to the price of the car. We can't do anything about the G.E.T. of 4.712% that goes to the state, but what about "documentation fees" ($200-275) for the paperwork taken to DMV to transfer ownership and "car registration" ($150 and up, depending on the weight of the car). Let's take a look at these.
"Documentation fee" - it costs $10.00 to transfer title, but that may have been increased nominally in recent years. But NOT up to the minimum $200 dealers charge. Many times, when the dealer takes the car either in trade or an outright purchase, it is COMMON for them not to actually take title. They keep the certificate of title signed over by the former owner and process it with the new buyers name added in as though the old owner sold it directly to the new owner.
"Registration fee" - it is highly likely that the former owner had re-registered the car to the next renewal date. Let's assume that the current registration was paid in October 2009. If you pay the $200 fee to the dealer, you will find that the DMV will send you a renewal notice for October 2010. That $200 you forked over is pure profit for the dealer.
One of the vehicles I'm looking at is from a private party. No G.E.T., no documentation fee, no registration fee. I'll take the certificate of title in and transfer it myself at any satellite city hall (Thank you, Mayor Fasi).
With the dealers, I'll take the price I'm willing to pay, add the G.E.T., and offer that sum as an "out-the-door" (OTD) price. The dealer can manipulate his sale price if he wants to add in the "doc fee" and "registration" on the contract, but if the OTD price doesn't increase, it won't matter to me.
I made an offer of $23K OTD on one car and the salesman said: I'VE GOT GOOD NEWS. WE'RE ONLY $300 APART." WRONG! He presented $23,337 + FEES ($24,917 OTD). That's over $1900 apart ..... NO DEAL!
The terms "used," "pre-owned," or "certified pre-owned" (CPO) are mere semantics. CPO can actually add to the price of the car. Dealers tell you about the "warranty" for buying from them rather than a private party - this is because the state mandates up to a 90-day/4000 mile limited warranty on all vehicles sold by a dealer, assuming that the remaining factory warranty is less than that. Then, the F&I manager tries to sell you an extended warranty on a used car. This happened with my current "wheels," which actually already had a transferrable extended warranty already in effect!
The areas of concern are the "fees" added to the price of the car. We can't do anything about the G.E.T. of 4.712% that goes to the state, but what about "documentation fees" ($200-275) for the paperwork taken to DMV to transfer ownership and "car registration" ($150 and up, depending on the weight of the car). Let's take a look at these.
"Documentation fee" - it costs $10.00 to transfer title, but that may have been increased nominally in recent years. But NOT up to the minimum $200 dealers charge. Many times, when the dealer takes the car either in trade or an outright purchase, it is COMMON for them not to actually take title. They keep the certificate of title signed over by the former owner and process it with the new buyers name added in as though the old owner sold it directly to the new owner.
"Registration fee" - it is highly likely that the former owner had re-registered the car to the next renewal date. Let's assume that the current registration was paid in October 2009. If you pay the $200 fee to the dealer, you will find that the DMV will send you a renewal notice for October 2010. That $200 you forked over is pure profit for the dealer.
One of the vehicles I'm looking at is from a private party. No G.E.T., no documentation fee, no registration fee. I'll take the certificate of title in and transfer it myself at any satellite city hall (Thank you, Mayor Fasi).
With the dealers, I'll take the price I'm willing to pay, add the G.E.T., and offer that sum as an "out-the-door" (OTD) price. The dealer can manipulate his sale price if he wants to add in the "doc fee" and "registration" on the contract, but if the OTD price doesn't increase, it won't matter to me.
I made an offer of $23K OTD on one car and the salesman said: I'VE GOT GOOD NEWS. WE'RE ONLY $300 APART." WRONG! He presented $23,337 + FEES ($24,917 OTD). That's over $1900 apart ..... NO DEAL!
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