I used to be a car salesman. I know, I'm sorry, I've seen the error of my ways, attended confession etc etc....
The used cars on the pitch all had their mark ups, but it generally differed from car to car, depending on what was wrong with it.
Take this for an example. A car comes in on trade in and is worth "Forecourt Price" around £5000. Depending on the condition of the car from the outside, all relevant documents and history etc will depend on the offer that is given to the customer at deal time. If it's good and the salesman wants a deal, the higher the offer, so say that this car, given the once over by the salesman and a clean bill of health is offered at £3300.
That gives the salesman £1700 to play with. But the car will go up on the forecourt for £5500, so that he has something to play with when a prospective punter enquires. Before tha car goes on the pitch, its given a condition report by a garage or in my case, the dealership workshop. Everything on this car that is wrong, dodgy, faulty etc that the salesman failed to pick up is noted. An estimate is raised and offered and placed in the cars file. On this occasion we'll say that it requires £600 of repairs. The car is then placed on the forecourt at the £5500.
Great price for a weekend offer this as stickers will be spread all across the car saying £500 off !!!!, but for now, we stick to the average daily occurance.
In this now supposedly mark up of around £2200 is a number of things. Firstly, most main dealers, not all of them, will offer some form of warranty, this can be in the cars price and if offered seperately, be aware. This warranty, for about 12 months is roughly £200, take that off the mark up and we have £2000 left. It requires £600 worth of repairs, theoretically, this would reduce the mark up to £1400, i'll be back to this again in a moment.
Roadtax can be negotiated in the price but don't expect to get more than 6 months in the deal, Salesmen don't tend to budge any further and if they do, well done, you've got your own back. So expect say £85 for the tax disc. That takes it a little over the £1300 mark up price.
The dealer is aware how much they want to earn on this car, the salesman is after a bigger bonus as it's calculated on the percentage of the profit he makes, less VAT on the total sale, so this is where you either get it or you don't.
Now, back to the £600 repairs. These won't be done, just yet. The car will sit on the forecourt and will attract the normal amount of punters. Whatever you do, take heed. A good deal on the car isn't always the best thing as it could cost you problems later.
If you are the kind of person that has relatively not a lot of car knowledge, then don't worry, take someone along with you that does. Whether this be from a main dealer or not. Anyway, should you not notice any of the problems that were picked up by the workshop, you are about to buy ( should you like it, that is ) a car that requires £600 of repairs. If you don't pick it up, this makes it easier for the salesman to tempt you into the car with extras etc, because he now has £600 more to play with at your expense. A set of mats, a full tank of petrol, furry dice, heck !, lets throw in a CD player, fitted by a backstreet fitter for a tenner. Looks great to you, lets buy it !.
If the car breaks down, it's covered by the warranty, who cares, not them. Not once he's earnt his money. If you should pick up a few of the problems on the test drive, you are well within your rights to ask for them to be sorted before you pick the car up.
If you pick up £300 worth of stuff that needs doing, you may be able to get a better deal, but theres still stuff that needs doing. All down to you when you've driven it away. Some things may not be covered under the warranty, so it's worth checking that out as well.
If you pick up everything, well done, but it doesn't leave a huge opening for a bargaining tool. The dealer will have a set margin and will let you walk should you cross it. However, a dealer is not allowed by law to sell a car in a dangerous state, so things like tyres and brakes are normally thoroughly checked and replaced if neccessary. But, other little things that can go un-noticed by the untrained eye will haunt you later.
However, it also depends on whether you have something to trade in at which point, your car can be valued less than what you think in order for them to make it back in exactly the same way i've explained above.
Ask for the cars condition report. They shouldn't hide it from you. Ask how much work needs doing to it and whether it will all be done on collection. If you're happy with what your'e about to buy then go for it, just make sure you have all the relevant information on it and whatever the outcome, you should be able to take £500 off the screen price straight away, before you haggle for more, but remember, if you find everything thats at fault, you get a lesser deal, because the gaps tighter.
Also, someone mentioned finance on here. Regardless of how the vehicle is being paid for, you still have a bargaining tool in yourself.
Try not to go with the dealers finance company and use a high street bank instead.
The finance is as much important as the car your'e financing. It's a product your'e effectively buying also. If your bank offers you 5% APR, try to get 4 or 4.5% out of the dealer. Despite all these deals available, you should still be able to customise your own deal. The dealers work with a base rate and they won't do it at that, but they will go as low as they can in order to earn some commission out of the deal. All money in the salesmans pocket at the end of the day. Just ask the question ?. Whats the best rate you can offer me ?.
Soon, you'll be tootling along in your car happy in the knowledge that you beat the system.
Good Luck......
P.S. Sorry, I'm not being sexist as I recognise there are saleswomen out there as well. Better to deal with as well. A refreshing experience and your'e looked after better.
