Ask the CarDog....20 year dealership veteran

[Anonymous]

Hello all, 

Brief background.... long time lurker to the forums here, and this community has been of immense value to me in all sorts of ways. So, I thought I would try to give back in some small way.

As the title here states, I have been in the car business in several capacities for almost 20 years - Sales, Finance Manager/Director (majority of my time), Sales Manager,  marketing and training for dealerships nationwide, and seen a whole lot, some things you may not believe. Car buying has come a long way, but it is still very archaic in a lot of ways, and a big mystery to most who don't really understand how it works behind the scenes. So, I thought I would make myself available to any questions anyone may have, whether it be about vehicle pricing, trade ins, financing, whatever it may be. Disclaimer here is.....every manufacturer is different, every region has it's differences (vehicle valuation, local credit unions, etc), and every situation is different, but if there is something I can help with, I will certainly try. I am open to direct messages, but it may be helpful for all to post your questions in the thread, and I will do what I can to try and answer. 

99% of the population would rather go to the dentist or an IRS audit then a car dealership, but if I can help in some way - ask away.

SF

[Anonymous]

Thank you! I'll start...

I placed a custom order for a Range Rover Sport back in February and signed a purchase agreement that had an MSRP. When I reached out to the salesperson last week to begin to talk about financing, he gave me some options... but the MSRP is higher than it is on the purchase order from February. Is this allowable? If not, what should I do?

[Jannelo]

It's too late for me, but maybe  this  would be great information for others.  I researched everything before I went to look at cars not long ago.  But I realized as I was buying my car that I forgot to research more about gap insurance.  I remembered reading something online about not rolling the gap insurance into the car loan and purchasing it through your insurance company instead.    It had slipped my mind until they put the gap info in front of  me, with the cost, as I was signing all of the finance papers.  It wasn't cheap.  I was kind of shocked at the price at the time.  The last car I bought I had put a significant chunk of money down between my trade in and sizable down payment, so I didn't have to have gap insurance.  It was half of the cost of the car.

But my sister is going to be trading her 10-year-old Toyota 4Runner in this year for the same SUV but a  newer model (between 2017 to 2019) and a down payment with it also, but I think she will need gap insurance.  So your knowledge about that I could pass on to her.

[Anonymous]

Jannelo, 

In general, I am a firm believer in GAP insurance for most buyers these days - I will say this for everyone's benefit here.... if you are buying a new car with minimal or no down payment or negative equity in your trade - get GAP.

Preowned is a bit different, and really comes down the true value of the vehicle that is being purchased - and no, KBB is not a good source for that in most markets - and the amount that is being financed. If the vehicle purchased is worth 20k as an example, but the amount that is being financed is 14k after down payments, trade in's etc, then GAP may not be needed as you are at about 70% of the value of the vehicle, which in general is kind of the safe percentage.

On the other hand, if it is above that, I would seriously consider GAP. It is a relatively small expense (and yes, it is negotiable) and it is a life saver in some/most situations. Do be careful and read the details though - there are differences in GAP coverage. Some cover insurance deductibles, but only to a certain amount, some have caps on the amount paid vs the value of the vehicle, etc.

Keep this in mind - if you are buying a 20k or 30k vehicle, and GAP is $600, it really kind of makes sense in a relative fashion to protect yourself from a potential risk of thousands if something terrible were to happen. Put 10 grand down, then no, GAP is likely not necessary. 

Hope that helps, and disclaimer here that insurance is as convoluted as the car business, and I am not an expert in that area by any means.

SF

[Anonymous]

felipestrong,

MSRPs are not touchable figures by a dealership.....they come from the factory, and cannot be altered. BUT..... if this was an order unit, then there is the possibility that when ordered, the vehicle MSRP was xx, but due to changes in costs by the manufacturer since that time, it changed to yy. 

How big of change is the pricing? A couple of hundered dollars, or thousands?

And an important question is - did the MSRP change, or the selling price?

MSRPs are set once a vehicle is manufactured (99.9% of time), but incentives and discounts change monthly, and there is little control of that at the dealership level.

SF

[Anonymous]

Thanks for the reply!

The MSRP changed specifically. It's about a $500 increase. I know it's not much compared to the overall price of the vehicle, but I'm just annoyed because I'm already paying a lot of money for this thing lol.

[Jannelo]

Yeah, I went ahead and signed the GAP papers at the dealership, but I remember reading something about the fact that it's more expensive that way compared to doing it through your car insurance.    I never really looked into it any more than reading that one article.  And I wasn't about to leave the dealership without it, so I rolled it into my loan there.  With my luck these days, I could have been totaled on the way home from the dealership.  LOL  I live in Orlando, Florida, and we are probably number one in car accidents in the country.   The  ongoing construction  for years has been mind-blowing as far as confusion  and increasing the number of accidents.   At least, it appears that way most days on Interstate 4.  

[Anonymous]

felipestrong,

Your statement that it's not much compared to the overall price of the vehicle is correct in a lot of ways. Rovers are high dollar vehicles, and if the MSRP itself changed, then yes, that is probably something outside of the dealerships control. But, being that you are buying a high-line vehicle, $500 should not be a significant hit to the dealer to concede to honor the original price.

It unfortunately comes down to your need and want - if you really want that vehicle, take the additional $500 increase and go on. Or, negotiate....tell them to honor the original price, and walk if they won't. Or usually the best route..... find a middle ground, maybe $250 a piece to each side?

If you are receiving good service, have a good salesperson and a good feeling all around, understand that there are things out of their control and roll with it - even the evil car guys are people too, and the good ones are trying to do the right things. If you have one of those, work with them for a win-win situation. 

SF

[Anonymous]

Jannelo, 

It can be, and depending on the state you are in or provider, varies greatly. I cannot say this is 100% across the board, but I have seen some instances where GAP from insurance providers and/or CU's only cover the value of the vehicle, and not necessarily TTL, or negative equity that may have been rolled in from a trade. The flip side is the dealership GAP may not either - very important to read those policies!

And I feel you on the accident thing - I am in Texas, and have been hit by THREE drunk drivers. When it comes to my cars, not sure I can ever have enough coverage.

[Jannelo]

Well, thankfully, I traded in a paid-off car, so no negative equity rolled in.  I feel it is probably better to have that coverage separate from the car insurance policy.   So, ultimately, I'm fine with doing it through the car dealership.  I do need to pull that policy out and read it, though, after what you've said.