YOUR CAR STORIES
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The used Camry or “Customers are more important than Family?”

A few months ago, I was shopping for a reliable car for my son.  I was at a local new car dealership and browsing the
lot.  I found a Toyota Camry that had possibilities.  Soon a Salesman appeared and I told him that I was looking for
basic transportation and that I was interested in the Camry.  “How much for the Camry,” I asked.  The Salesman said
he would have to check and he would be right back.

About 5 minutes later, the Salesman is walking toward me with a cell phone pressed to his ear.  I can hear him say
things like:  “Oh yes, we still have the Camry”, “I have someone looking at it right now”, “I’ll have to call you back”.  
Hmmmm!  His voice seemed kind of loud for a cell phone call, but loud enough for someone to clearly hear from about
100 feet away!

When he arrived he quoted a price (I don’t remember how much, but it was considerably more than I was willing to
pay).  I said to him, “Sounds like you have another buyer”.  He said, “Oh, not to worry, he was only talking to his
daughter who was also interested in the Camry.”  Really?   I decided to play along.   I said, “Well if you daughter’s
interested, I don’t want to take the car away from her.”  He assured me, “Oh not to worry, our customers come first!”  
Really?  Over family?  Then he said, “She and her husband will be here in an hour to see the car”.  I asked, “Are they
coming far?”  “They are about an hour away, she is picking him up at work.”

What a coincidence that at 10:00 on a Monday morning, I would arrive at a Dealership, select a car and within 10
minutes of my arrival the Salesman’s daughter would be on her way to picking up her husband from work to look at the
same car.

I still played along.  I could see where this was headed.  Perhaps I gave up too easily.  I said, “Look, why don’t you have
your daughter look at the car, if she doesn’t take it, maybe I’ll come back.”  I never went back as I found a better car a
few days later.
Great Deal on Honda Accord or (Was It?)

I was “previewing” new cars at several local dealerships after doing some searching for pricing on the Web.  One of my
targeted vehicles was the Honda Accord.  According to the Web, I should expect to pay about $200 over dealer invoice.  
There were no customer rebates and there didn’t appear to be any factory-to-dealer incentives.  I figured, the dealer
would make about $800 to $1,000 at this price considering Holdback and other monies like advertising.  Maybe I could
get this car at dealer invoice?  I test drove the Accord and then asked for a price.  The dealership quoted $1,500 under
dealer invoice!  I couldn’t believe my ears.  Did he say dealer invoice or MSRP?  No he said dealer invoice.  Wow?  I
said OK can you give me a good price on my trade-in?  He said sure our trade-in allowances are always competitive.  I
knew about what my trade-in was worth based on pricing I had seen on the Web.  Unfortunately, the best he could do
on a trade-in was about $3,000 below what the websites said my car was worth as a trade-in.

So I was ahead about $1,700 on the new car, but behind about $3,000 on the trade-in, for a net difference of $1,300.  Or
was it worse than that?  Was there a factory-to-dealer incentive that I didn’t know about?  Could that explain the low
asking price on the Accord?  Perhaps they were breaking even on the new car sale but making all their profit on the
Trade-In?  There were about 30 brand new Accords on the lot.  Could I get the $1,700 off at another dealer and a better
trade-in value?

I told the Salesman, that I was pleased with the price on the Accord but that the Trade-in was off by $3,000.  Could he
explain why the trade-in was so low?  He couldn’t and neither could the Used Car Manager.  I decided to pass.

Although I intended to follow-up with some additional research on the web and even call a few Honda dealers, I never
got around to it.  I ended up with another car that I liked just as much but the purchase price and the trade-in made
sense to me.
Financing at a Mercedes Benz dealership

I am probably not a typical Mercedes Benz customer.  However, my wife and I had recently attended a car show and we
both liked the entry level Mercedes Benz, I think they call it a “baby benz”.  Pricing was within the upper end of our budget
and we decided to visit a local dealer for a test drive.  We both really liked the car.  We got an initial price we liked, so we
started to ask a lot of questions about the car, the factory warranty, and aftermarket products.  It became clear that the
Salesman was giving us answers to our questions that were “what we wanted to hear” but seemed to lack accuracy.  A
red flag went up!  Even thou were planning to pay cash for the car, I decided to ask about financing.  With a background
in finance and a lot of familiarity with loan agreements, I decided to run a test.

The Salesman said he had a great program provided we had good credit.  I said our credit scores are very high, no
problem.  He proceeded to tell me they had a very competitive program and the APR quoted was close to what I thought
was a market rate.  I asked if the interest was calculated on a “simple interest basis”.  The Salesman said yes!  I asked
if there were any prepayment penalties?  The Salesman said no!  I asked to see the loan agreement.  He said he
would try to find one.  Ten minutes later he said he couldn’t find one.  OK, we will think it over, if you find a copy of the
loan agreement, why don’t you call me and you can fax it to me.

We started to leave.  Before, we got to our car, he came running out saying he found a copy of the loan agreement,
waving it in the air.  It only took me a few minutes to see that the loan agreement was not simple interest.  It was what is
called “pre-computed” interest with an “interest rebate” computed based on the “Rule of 78s” for early payoff.  These
contracts greatly favor the lender over the borrower if there is an early payoff.  Since it was clear that he lied about the
financing, we had to question everything he had told us about the car, the factory warranty, and the aftermarket products.

Side note:  We thought it was entertaining that the Salesman wanted to talk about all the celebrities he had sold a
Mercedes Benz to in the last year.  We could not have cared less.
Overheard in a Toyota Dealership

A salesman was on the phone and talking with a buddy.  I overheard the following, “Oh yeah, Toyota has a special
program going.  For every car sold the salesman gets $125 from Toyota.  This is in addition to what I get here.”

That was an interesting bit of information.  Glad to hear he is not solely dependent on the dealership’s profit margin.  
Should I be paying $125 less?
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