New car negotiations can be tricky on both sides, with both the dealer and the buyer trying to maximize profitability/savings for their end of the transaction. CarWoo! helps make this process more transparent, but dealers often still have the advantage of being much more familiar with the car buying process and the terms associated with the transaction. Here are five terms that most car buyers should, but probably don’t truly understand.
Car Dealers’ Term 1: Buy Rate
A Buy Rate is the lease or APR rate your credit qualifies you for. Often, lenders allow dealers to mark up the buy rate and pocket the extra money. As a consumer, you’ll find it hard to get a hold of buy rates. They typically change monthly and are based on your credit. If you ask the dealer to show you the buy rate, they aren’t obligated to. They just may, though, especially if they have nothing to hide.
Buy Rate Tip: You have the most control before visiting the dealer. Asking for this information up front establishes a condition the dealer needs to fulfill in order to earn your visit to the store and ultimately become an appointment. Dealers know that without appointments, they have no sales. Always ask politely and sincerely, though. If the request is made coldly, it won’t show the dealer end much confidence – and that will put you off to a bad start. Just be yourself.
Car Dealers’ Term 2: “In-Stock Only”
Dealers often write ads or send internet quotes with small print that reads, “Good on in-stock units only.” Sometimes dealers may even purposely provide an exceptionally low price on a car they don’t have in stock, with a plan in mind to switch you to a car they do have.
In-Stock Only Tip: Don’t rush down to the dealer without first checking if the car and color you want is in stock. Double-check this information against their inventory page.
Car Dealers’ Term 3: Accessories
Many dealers pre-install accessories on some or all their cars, but they don’t announce it to customers until they arrive at the dealership. You may have even noticed many dealers include this in their quotes: “Price doesn’t include pre-installed accessories.” Let this be a good reason to avoid leaping off the couch and running to the lowest-priced dealer. The car you intend to buy may be dripping in dealer-installed accessories – AKA dealer profit.
Dealer Accessory Tip: Before going to the dealer, always ask in writing if the car you want has any pre-installed accessories.
Car Dealers’ Term 4: Yelp/DealerRater/Google Reviews
Many dealers would prefer you simply didn’t know about these sites. These dealers are generally the ones you want to avoid. Too often, we as consumers visit these review sites after a bad experience, rather than using them to help guide our dealer selection process.
Dealer Review Site Tip: Be wary of reviews from inauthentic users, as some dealers employ internal staff or “review-boosting” companies to do their dirty work – writing “shopper” reviews.
Car Dealers’ Term 5: Invoice
I included this term because I thought you might expect it. Invoice amounts for cars are readily available these days, from various websites. Just keep in mind that some sites don’t include destination or regional advertising costs for vehicles, and you have to manually add them in. Some dealers may even reproduce invoices to account for their own vehicle preparation costs (or other costs typically referred to as a “pack”). Also remember that knowing the invoice doesn’t mean you’ll pay invoice. The market price on the car you’re buying may be well under or above the invoice amount.
Invoice Tip: You’re better off focusing your research on getting selling prices that correspond with the MSRP of the vehicle. This way, you know you’re getting quotes that are apples for apples between dealers on the correctly configured vehicle. Remember, your goal is to get the best deal, and the best deal has nothing to do with the invoice amount. I’ve seen countless customers pleased with a deal because it’s $100 below invoice, when actually the best deal would have been closer to $1000 below invoice.
Being familiar with these terms and how they can influence your deal doesn’t just help you, but also helps the honest dealers. In my next article I’m going to help show how to spot them.