Mythbusting Made Easy

There’s a lot of common knowledge about what goes on between dealers and customers.  Even more about how to buy, when to buy, and how much to pay.
Most of that common knowledge is wrong.  But don’t feel bad.  A vehicle is not something we buy every day, so none of us is really experienced enough to completely know the ropes.

Here are some of the common misconceptions about the process.

Myth:  The end of the month is the best time to buy.

Fact:  While it’s true that dealers can be a bit more aggressive toward the end of the month as they try to reach sales goals, the time of month matters little in today’s buying process.   Factory incentive money and the current month’s lease and finance specials begin during the first week of the month.  Always.  And since most of the incentives require a dealer to reach a set sales goal, most dealers are eager to “make the month” early. 

Myth:  You can go online and find out exactly what the dealer’s cost is.

Fact:  Wrong.  Sort of.  You can get in the ballpark, for sure.  But as good as Edmunds and The Complete Car Cost Guide can be, they only get close.  Many buyers have been shocked by dealers giving them “the rest of the story” on cost.
Like any online or published pricing tool, it’s just a guide.  A good one. But still just a guide.

Myth:  The dealer has 25% profit, so offer him 20% below sticker.

Fact:  And see how fast he loses interest in your business.  The fact is that most production vehicles, barring the exotics, sports cars, and “hot” new models, are commodities.  There isn’t that much mark-up in them.  For example, the average Toyota dealer makes about $750 on a Corolla – on a good day.  Now, that might seem like a nice amount.  But subtract his inventory costs, commission to his salesperson, etc., and he’s left with a somewhat less than princely sum.

Myth:  “I got $10,000 off MSRP

Fact:  Not likely.  What happens is this:  dealers add up the incentives, rebates, and other factory funded programs to get to a bombastic “dollars off” claim.  In reality, the dealer isn’t negotiating his price at all. He’s playing a shell game with the factory’s money.  In the dealer’s defense – these programs are legitimate.  But a wise buyer goes to the manufacturer websites and finds out what the programs are before ever visiting a dealer.

Myth:  Incentives, rebates, same thing

Fact:  Definitely not.  Factory-to-dealer incentives represent an enticement from the factory for the dealer to sell  a slow-moving product.  The dealer might or might not pass that incentive on to you. Or, he might pass half of it on to you.
Rebates, on the other hand, are total funds to your bottom line price.  But be careful.  A dealer might want to end his negotiation with you at just the rebate point.  Remember that the rebate, unlike the incentive, is not his money to play with.  Not understanding the difference between the two can cost you.

Myth:  Dealers are out to take advantage of you.

Fact:  Sure, some are.  But most are not.  By its nature, the car-buying process is complicated.  It’s really only one of two things in our lives that doesn’t come with a set price. The other is your house.  Yes, the dealer is trying to make as much money on the transaction as he can.  But in the world of 2007, he’s more likely than not a savvy businessman and marketer who knows the value of being above board. That being word-of-mouth and your repeat business. 

Knowledge is power:

There’s absolutely no excuse for buyer’s remorse.  The internet puts everything you need to know just a few key strokes away.  Every manufacturer’s website will list accolades as well as specs.  And independent sites such as edmunds.com and consumerreports.com give unvarnished information about performance, quality, even dealer costs.  Know what you’re getting into – and why – and drive away fully satisfied.