Dealer Extras

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2019 cx-5 signature
I was listening to NPR today and heard that dealers try to make their profit on the finance side since everyone knows what everyone else is paying.
People are financing for longer terms with more add ons. My gut feeling is that odds are against the buyer saving money on these items.
I say just put the money away and pay as you go.
 

Avoidin Deer

Zoom Zoom, baby
Contributor
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Central Virginia
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2019 CX-5 Reserve
I was listening to NPR today and heard that dealers try to make their profit on the finance side since everyone knows what everyone else is paying.

I read an article a few years ago that said that luxury car dealers in the DC region were hurting not because sales are poor (they are very strong), but because there's so much money in the region that people are paying cash and not financing.

It still makes one wonder where the profits lay when there is 0% or 0.9$ financing offered, knowing that the dealers' borrowing rate has got to be higher than that.
 
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2019 cx-5 signature
I read an article a few years ago that said that luxury car dealers in the DC region were hurting not because sales are poor (they are very strong), but because there's so much money in the region that people are paying cash and not financing.

It still makes one wonder where the profits lay when there is 0% or 0.9$ financing offered, knowing that the dealers' borrowing rate has got to be higher than that.

I believe Mazda is paying JPMC for the special rate. My understanding is that dealers will sell at a few hundred above cost because they make money on registration-related service fees (close to $600 for me) and all the extras they sell you (extended warranty, pre-paid service, various insurances, accessories, etc). Dealer lender rates are much higher. When I bought our Honda back in 2014, they had me wait around for 6+ hours to "prep" me for finance and they got me good. This time, I just got up and told them I'll come back the next day. My new strategy going forward is to wait no more than 1/2 hour between sales and finance. That puts pressure on them to get you to sign the contract.
 

7eregrine

The man, the myth, the legend
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Land of Cleve
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2016.5 CX5
I actually have a little inside information on this. I work at a law firm and a we represent several car dealers.

This isn't really private information, I am not disclosing anything I am not allowed to.

Car dealers make anywhere from $1,800 on the low end for the cheaper cars (example your low end sedan) and $4,000 on the SUV's. The really high end lux SUV's sometimes net a little over $5,000. Part of the reason for that is higher margins on those vehicles but also people making $300,000/yea don't haggle much over cars.
This is a higher end dealership, think BMW or Audi or Mercedes. I won't give exact make here. So skew these numbers down a bit for Mazda's. But generally the higher the sticker the more margin. So I would guess $1500-$1800 on a Mazda 3 and $2,500-$3,000 on a CX5/9.
This is the real reason SUV's are killing cars right now: more profits.
 
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2019 CX-5 Signature Soul Red Crystal
Yeah but the unwashed masses still need their economy cars. There needs to be differentiation from the plebs.
 

shadonoz

SkyActiv Member
Contributor
:
State of Jefferson
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2017 CX-5 GT AWD+
When I bought our Honda back in 2014, they had me wait around for 6+ hours to "prep" me for finance and they got me good. This time, I just got up and told them I'll come back the next day. My new strategy going forward is to wait no more than 1/2 hour between sales and finance.

Good policy. Better yet, give them no more than 10 minutes and then walk. Don't let them waste your time. "Prep" indeed.
 

Avoidin Deer

Zoom Zoom, baby
Contributor
:
Central Virginia
:
2019 CX-5 Reserve
I believe Mazda is paying JPMC for the special rate. My understanding is that dealers will sell at a few hundred above cost because they make money on registration-related service fees (close to $600 for me) and all the extras they sell you (extended warranty, pre-paid service, various insurances, accessories, etc). Dealer lender rates are much higher. When I bought our Honda back in 2014, they had me wait around for 6+ hours to "prep" me for finance and they got me good. This time, I just got up and told them I'll come back the next day. My new strategy going forward is to wait no more than 1/2 hour between sales and finance. That puts pressure on them to get you to sign the contract.

The trick back in the day would be for one of the salesguys to walk up to you and tell you that your car was blocking someone. "Just give me the keys. I'll move it for you." Then he would disappear. You were stuck.

These tricks are as crude as trying to sign someone up to sell Amway or whole-house water filters.
 
I walked out of a dealership a few years ago and obnoxious sales-kid physically blocked me from reaching the door. I told him to move and - luckily for him - he did. He came very close to being put on the ground with a lot of pain.

I told him that when I came in to pick up the vehicle which I bought from another salesman.
 
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2018 Mazda CX-5 GT
I actually have a little inside information on this. I work at a law firm and a we represent several car dealers.

But generally the higher the sticker the more margin. So I would guess $1500-$1800 on a Mazda 3 and $2,500-$3,000 on a CX5/9.
This is the real reason SUV's are killing cars right now: more profits.

I think that without cheap gas, SUVs wouldn't be selling as well. However, it appears our energy future is secure since we're a net exporter of petroleum products. There was a Jalopnik article that opined that no one needs an SUV when a minivan is more versatile. I have to agree with the article; however, I wouldn't be caught dead driving around a minivan unless I had kids. :D
 
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2018 Mazda CX-5 GT
I was listening to NPR today and heard that dealers try to make their profit on the finance side since everyone knows what everyone else is paying.
People are financing for longer terms with more add ons. My gut feeling is that odds are against the buyer saving money on these items.
I say just put the money away and pay as you go.

I agree with you. Don't finance something you can't afford with a 7 year loan. By the time you are 4 years into the loan, you may get tired of your car and you still maybe upside down on your loan with depreciation accounted for. Save more for your down payment and shorten your loan term to no more than 4 years.
 
I'll echo all of the above in saying NO to all. You don't say where you are, but if If you are interested in extended protection, consider moving your insurance to GEICO. They have a "mechanical breakdown insurance" option that costs about $30/year, yes, that's per YEAR, covers virtually everything, with a $250/incident deductible, and is good for seven years or 100,000 miles, for repairs anywhere, even at your dealer. I've used it in the past and it's great in that it avoids catastrophic expenses at the risk of only pennies.
 

Avoidin Deer

Zoom Zoom, baby
Contributor
:
Central Virginia
:
2019 CX-5 Reserve
I was listening to NPR today and heard that dealers try to make their profit on the finance side since everyone knows what everyone else is paying.
People are financing for longer terms with more add ons. My gut feeling is that odds are against the buyer saving money on these items.
I say just put the money away and pay as you go.

When you can get 0% or 0.9% financing, what difference does it make?

I agree, you don't want to be making payments for 10 years when the car's estimated life is 5. And there's certainly no sense in buying more than you need (except there's a number of Reserve & Signature owners here, including me).

But 0% is better than pay as you go...you're using someone else's money for free.
 

Avoidin Deer

Zoom Zoom, baby
Contributor
:
Central Virginia
:
2019 CX-5 Reserve
The cars estimated life is... 5?!?

I was hyperbole. I kept my last 2 vehicles for 15 years each.

The point is you don't want to still be paying for something you're no longer using, but financing over the useful life is perfectly fine.
 
:
2018 cx5 GT
I actually have a little inside information on this. I work at a law firm and a we represent several car dealers.

This isn't really private information, I am not disclosing anything I am not allowed to.

Car dealers make anywhere from $1,800 on the low end for the cheaper cars (example your low end sedan) and $4,000 on the SUV's. The really high end lux SUV's sometimes net a little over $5,000. Part of the reason for that is higher margins on those vehicles but also people making $300,000/yea don't haggle much over cars.
This is a higher end dealership, think BMW or Audi or Mercedes. I won't give exact make here. So skew these numbers down a bit for Mazda's. But generally the higher the sticker the more margin. So I would guess $1500-$1800 on a Mazda 3 and $2,500-$3,000 on a CX5/9.
This is the real reason SUV's are killing cars right now: more profits.

I worked as a assistant service manager for 10 years up until 2 years ago at the Mazda dealer here. A Mazda 3 they make maybe $700 or less. A cx5 about $1500 and a cx9 about $2000. There is so little mark up in there cars from cost to what they sell. That*s why they can*t give you that much off the car. As they don*t have much to work with.
 
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Avoidin Deer

Zoom Zoom, baby
Contributor
:
Central Virginia
:
2019 CX-5 Reserve
I worked as a assistant service manager for 10 years up until 2 years ago at the Mazda dealer here. A Mazda 3 they make maybe $700 or less. A cx5 about $1500 and a cx9 about $2000. There is so little mark up in there cars from cost to what they sell. That*s why they can*t give you that much off the car. As they don*t have much to work with.

I can't imagine this varies that much by region/state, but here in Virginia I could hardly get them to budge on price, while others talk of 10% off.
 
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2019 cx-5 signature
When you can get 0% or 0.9% financing, what difference does it make?

I agree, you don't want to be making payments for 10 years when the car's estimated life is 5. And there's certainly no sense in buying more than you need (except there's a number of Reserve & Signature owners here, including me).

But 0% is better than pay as you go...you're using someone else's money for free.

I*m not against financing. I financed 100% because the rate was so good. It*s the stuff they try to sell u once u get to finance. Warranty, service contract, insurance, alarm, anti theft, etc. about 20years ago, a Mazda finance person tried to sell me anti corrosion undercoating in the Bay Area on a Miata because salt is a major problem. She saw that I had a masshole license
 
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2019 cx-5 signature
I worked as a assistant service manager for 10 years up until 2 years ago at the Mazda dealer here. A Mazda 3 they make maybe $700 or less. A cx5 about $1500 and a cx9 about $2000. There is so little mark up in there cars from cost to what they sell. That*s why they can*t give you that much off the car. As they don*t have much to work with.

I was told this by multiple sales guys. They were adamant that I should come back for dealer service because that*s where they make money. I tried to use this as a negotiating leverage with a dealer that*s 2 miles away. I told them to give me a good price because I always dealer service for the duration of the warranty. No bite
 

Avoidin Deer

Zoom Zoom, baby
Contributor
:
Central Virginia
:
2019 CX-5 Reserve
I*m not against financing. I financed 100% because the rate was so good. It*s the stuff they try to sell u once u get to finance. Warranty, service contract, insurance, alarm, anti theft, etc. about 20years ago, a Mazda finance person tried to sell me anti corrosion undercoating in the Bay Area on a Miata because salt is a major problem. She saw that I had a masshole license

Oh, I gotcha.
When you said "extras," I heard "options."

I agree, that stuff is a huge waste of money, even when "It cost less than the price of a cup of coffee (or a Slurpee) every day."

I recounted my tale of the guy trying to sell me the paint & interior protection service. When I asked exactly what they were going to apply to my leather interior, he said "I'll get back to you on that." Yeh. Right.
 
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2019 cx-5 signature
Oh, I gotcha.
When you said "extras," I heard "options."

I agree, that stuff is a huge waste of money, even when "It cost less than the price of a cup of coffee (or a Slurpee) every day."

I recounted my tale of the guy trying to sell me the paint & interior protection service. When I asked exactly what they were going to apply to my leather interior, he said "I'll get back to you on that." Yeh. Right.

U kidding me? I love my signature. Most of all, my wife loves the signature. I love the ventilated seats and wiper de-icers. (cabpatch) she loves the heated steering wheel.