The Vocabulary of Our Automobiles
Ride: A substitute word for a car; Have you seen my new ride?
Chariot: A synonym for a vehicle; He's out riding in his chariot.
Wheels: A synonym for a car; I'm picking up my new wheels today.
Rig: Any vehicle but typically reserved for modified trucks; I'm hopping in my rig and heading to the desert tomorrow.
Beast: Typically reserved for fast, muscular vehicles; The '68 Plymouth Hemi Cuda was a beast!
Eye Candy: A vehicle that is aesthetically pleasing; For my generation, the 1967 Mustang GT Fastback was the epitome of eye candy.
Sled: An older, decrepit vehicle with limited value; He’s riding around in an old sled.
Hoopty: Synonym for sled; I don’t know how that old hoopty gets her to town.
Bucket: Synonym for sled and variant of Rust Bucket; I wouldn’t be caught dead in that bucket.
Clunker: Synonym for sled; She’s sporting an old clunker these days.
Beater: Synonym for sled; I can’t afford anything except this old beater.
Jalopy: Synonym for sled; Have you seen that old jalopy?
Toad: Synonym for sled; I don’t know why he keeps that old toad.
Bomb: Synonym for sled; You can’t miss her with that old bomb she drives to town.
Iron: Seldom used today. A term that referred to a vehicle when they were primarily made from steel (an alloy of iron); I’m slinging iron these days was a phrase often used by a used car salesman to describe his current vocation.
Drop: An expensive car; That is one expensive drop! Possible evolution from dropping (spending) a lot of cash on a vehicle.
Drop Top: A convertible vehicle; Have you seen the new BMW drop top?
Point: A mustang with a 5.0L engine; I'm getting a point for my new ride.
Boat: A large car, one of enormous size; I wouldn't want to drive that boat through town.
Land Yacht: Synonym for Boat; Typically, a land yacht is an expensive boat with many luxury features.
Tank: A large and typically unattractive vehicle; The 1985 Jeep Grand Wagoner was a tank.
Puddle Jumper: Co-opted from aviation slang. Typically a small vehicle that appears inadequate for the job; You driving that puddle jumper on your road trip?
Deuce Coupe: 1932 Ford Coupe lionized in hotrod culture and inspiration of Beach Boys 1963 hit "Little Deuce Coupe".
Bimmer: Cars manufactured by BMW. Often confused with beemer which is a motorcycle manufactured by BMW.
Benz: Any vehicle manufactured by Mercedes-Benz; He's tooling around in his new Benz.
Lambo: Luxury Sport Vehicles manufactured by Italian brand Lamborghini.
Vette: Chevrolet Corvette;. She's driving the new Vette.
Whip: Inter-generational slang. First steering wheels were called whips. Today, a whip refers to an expensive car. Dang nice whip!
Lemon: Any vehicle with mechanical problems. Derived from Consumer Protection Laws known as Lemon-Laws.
Sneakers: Tires of an automobile; She put some new sneakers on her car today.
Boot: In Great Britain, the trunk of an automobile. In America, a boot is a wheel immobilizing device attached to the wheel by parking enforcement to immobilize the vehicle until a fine is paid.
4 Banger: A vehicle with a 4 cylinder motor; I picked up this rad 4 banger at the car show yesterday.
4 on the Floor: Does not refer to the rhythm pattern of disco music. In the days before 7 & 8 speed transmissions, it referred to a floor mounted 4 speed transmission.
Econo Box: Inexpensive and usually poorly made vehicle; Typically an econo box comes with a 4 banger as standard equipment.
Bottom End: Parts of an internal combustion engine below the cylinder head. Typically refers to crankshaft, cylinders, pistons and rods.
Top End: Refers to cylinder head and intake manifolds.
Stock: Refers to an unmodified vehicle that is being driven with original factory equipment; He's running that whip stock.
Custom: The opposite of stock. A vehicle that has been modified in performance or visually to gain attention.
All Show and No Go: A highly modified or custom vehicle that emphasizes form over function; That Mustang is all show and no go.
Whenever people get together in an occupation, hobby or other field of interest, they form a vocabulary unique to that field. This vocabulary is referred to as slang or jargon. Like any other subculture, their shared language serves to separate them from the rest of society, to unite them and to announce to one another that they belong.
If you are a baseball fan, you will be familiar with an announcer describing a play as a routine 4-6-3 Double Play. This play begins as a ground ball to the second baseman (4) who throws to the shortstop (6) covering second base who then throws the ball to the first baseman (3) for the second out. If you are a newcomer to the game, you will be unfamiliar with what the announcer has just told you. You are an outsider and the jargon used reinforces your feelings of being on the outside.
With this post, I hope to bring you inside the world of the automobile sales profession, to help you gain an understanding of just what the heck is being discussed the next time you buy an automobile. Let's peel back the curtain and take a look under the hood.
This post, Part 1, covers the Finance Department and Part 2 highlights the slang of the Sales Department
The Slang From the Finance Department
Mouse House: Finance Company used to boost a customer down payment in order to qualify for a bank loan on a vehicle purchase.
Sticks: Furniture. Typically a mouse house will require collateral on a loan so the customer's sticks are offered as the collateral.
Double Dip: When two sources of financing are used on a vehicle purchase, it is a double dip. If a customer requires additional down payment in order to qualify for the primary loan, a deal can be structured with a mouse house as a second loan source.
Note: The loan on a vehicle can be referred to as a note.
Tote the Note: Some dealers have an in-house finance company to make loans on automobiles. In this case, the dealer is said to tote the note
BHPH: Buy Here Pay Here. Refers to a dealership that totes the note and then accepts monthly or even weekly payments on the vehicle financed.
Tattoo: Refers to a dealer principal's signature on a finance contract. Fairly rare. Some dealers will guarantee payment (essentially acting as a co-pilot) to the lender in order to fund a vehicle purchase contract with an edgy buyer; We're going to have to tattoo the paper if we want to get this deal bought.
Co-Pilot: A person who signs a loan document (co-signer) with the purchaser of a vehicle when the primary buyer is edgy, has no prior credit, or limited down.
Paper: Refers to the finance contract or promissory note for the purchase of a vehicle.
Bought: Term used to refer to the act of obtaining lender approval on loan applications; I need to get yesterday's deals bought before I can go to lunch.
Unwind: Act of returning a sold vehicle to dealer inventory. Usually happens when the dealer has exhausted all possibilities of obtaining a loan for the buyer; You're going to have to unwind that deal because we aren't tattooing any more deals this month.
Five Finger Close: In reality this technique of document signing is more fiction than fact. More braggadocio than anything else. In it, the finance manager places a hand, hence the five fingers, over the form and points with the other hand to the area where the customer should sign the contract documents. The purpose of the hand over the forms is to hide the finance and trade amounts from the consumer. In the day to day world of the retail automobile industry it is more a saying that signifies to the finance manager that they should hurry through the signing process for any number of reasons. As an example; He's coming out from under the ether. Let's get him in the box and give him the five finger close.
Down: Down payment. Synonyms include down stroke and chunk of change.
Ether: Fog like blissful state entered into when a buyer reaches agreement on a car deal.
Back End: Dealer profits made through the F&I Department. These might include extended warranty, mop & glow, pre-paid service, etch-a-sketch, croak and choke, and dealer reserve.
Leg(s): Difference between true payment required to pay for an automobile purchase and the amount quoted to the consumer during the negotiation process. Often times, the consumer will agree to purchase a vehicle for far more than the true payment required for the purchase. When that happens, the F&I Department has a far easier job of selling back end products to the consumer. A customer can be told that everything was already included in the price for their benefit and since they have already agreed to the payment they are made to feel as if everything is free!
Nickel: $500. I packed a nickel into the deal is a phrase often told to the F&I Manager prior to delivering the consumer to the finance department. Many times this is accomplished by negotiating a payment with the consumer and never discussing the cash price or difference price of the transaction. In that situation, the consumer has agreed to pay $500 more than would have been required to purchase the vehicle.
Bureau: Credit report of the individual purchasing the vehicle.
5 Liner: The top five lines of a credit application. Often times during a negotiation to purchase a vehicle, the salesperson will ask the buyer to provide a 5 liner so that the dealer can then pull a bureau for the purposes of ascertaining the credit worthiness of the buyer.
Gold Balls: A buyer with a high credit score; This guy has gold balls.
Stud: Synonym for gold balls. Can also refer to the quality of a trade-in vehicle when it is in excellent condition and a desirable used car.
Edgy: A buyer with a very low credit score; This guy is edgy. Can also refer to an undesirable trade-in vehicle.
De-Horse: Removing a customer from their trade and asking them to leave the dealership in a borrowed car. Utilized when the vehicle being sold is unavailable for immediate delivery. This can be due to low customer credit score or inventory problem such as availability. The dealer will de-horse a customer if they want to exert some control over the customer but are unwilling or unable to spot deliver the customer purchase. This strategy helps the dealer gain some amount of control over the deal since the customer has to return to the dealership at a later date with the borrowed car.
Spot Delivery: The delivery to the customer of the vehicle they are purchasing right at the time of the sale. For a cash buyer this poses no risk to the dealer but if the customer is a finance buyer the dealer risks being unable to have the loan and the deal approved (by a lender) as written. The risk to the customer is that they must return to the dealership at a later date and renegotiate the purchase with either a greater down payment, different rate or length of contract.
Throw it Against the Wall: When the F&I Department is uncertain of obtaining finance approval for an edgy buyer or a young buyer without a co-pilot, they will sometimes spot deliver the vehicle and hope for approval the next day. In this instance, they will inform the sales manager that they intend to throw it against the wall and hope it sticks (is approved). More often than not, the dealership decides to tell the customer they will let them know of approval the next day and avoid a possible rollback when the deal is not approved by the lender.
House: The dealer or dealership place of business. Sometimes also called the store.
Kink: A problem deal or customer; The co-pilot has bad credit too. That throws a kink in the deal.
Pack(ed): The act of increasing the payment quoted to the customer in order to build additional profit in a deal. The sales department will add legs to the deal so that the F&I manager has an easier time selling back end products.
Straw Buyer: A buyer of a vehicle who is not the intended driver/user of a financed vehicle. This act is always in violation of lender policies with a dealer because the intended driver of the vehicle is usually unable to sustain or support the monthly cost of the vehicle due to poor credit and/or job stability. The lender would be unwilling to make a loan to the intended or real buyer of the vehicle and is defrauded into making a loan they would not normally accept.
Box: The F&I office, the place where legal documents are signed; Let's get him in the box before he comes out from under the ether.
F&I: Finance and Insurance Department in an automobile dealership.
Mop & Glow: Paint and fabric protectors.
Etch-A-Sketch: Chemical process that etches a theft recovery number into the glass of a vehicle.
Dealer Reserve: Also known as reserve Difference between the buy rate and the loan rate quoted on a finance contract. Recent Consumer Protection Laws in some states have sought to limit the amount of dealer reserve (or markup) that a dealer can pass on to the consumer and/or require the disclosure of the dealer reserve amount.
Reserve: See dealer reserve.
Buy Rate: The lowest rate at which a bank will loan money for a purchase contract on an automobile.
Croak & Choke: Life and disability insurance on a finance contract sold by a dealer F&I Department.
Cash Price: The total price of a vehicle including tax, license and registration fees. Sometimes referred to as the OTD (Out The Door) price.
Difference Price: The price after the trade-in ACV is subtracted from the cash price.
ACV: Actual Cash Value. This is the price that a dealer would be willing to pay you for your trade-in if there was no purchase of a vehicle involved.
Rollback: Synonym of unwind.
Rate Sheet: Each lender that works with an auto dealer publishes a list of interest rates, known as the buy rate, that they are willing to accept for an automobile loan contract. It changes with the age of the vehicle, miles, credit score of borrower, new or used and length of contract. This list is called the rate sheet for that lender and it changes frequently. In addition, it will inform the dealer the maximum reserve they are able to earn on each loan they write with that lender.
This post, Part 2, covers the Sales Department and Part 1 highlights the slang of the Finance Department
Up: A customer visiting a dealership. Derived from the system used by salespeople to designate the next in line to speak with a customer; Who's up next?
Third Baseman: Person accompanying a customer to a dealership. Usually more experienced in negotiating a deal. There to assist the buyer.
Baby Sitter: Sometimes refers to a third baseman. Other times used to designate a co-signer to a buyer with limited credit.
Pipe Smoker: Other names include engineer and college professor. A thorough customer who wants all available technical information before making a decision to purchase a particular vehicle.
Tire Kicker: A shopper who just wants to look and touch, usually untethered to a salesperson. Sometimes referred to as a Looky Lou.
Flake: A customer with bad credit who is usually incapable of obtaining a loan on a vehicle purchase.
Be Back: A customer who is making a return visit to a dealership. These customers typically leave the first time by stating: "I'll be back".
Be Back Bus: The mythical bus that drives returning shoppers to a dealership to buy vehicles.
Bird Dog: A person who refers customers to a particular salesperson for a referral fee. Bird dogging is an illegal activity in many states.
Grape: An easy customer who pays full price with little or no resistance.
Lay Down: Similar to a grape. A lay down will usually pay full price and purchase anything offered to them.
Grinder: Customer who is never happy with the deal they have negotiated. They fight every step of the way and as they get into their new vehicle to leave the dealership, they ask for a full tank of fuel.
Clown: A customer who has not done any research on models or pricing and has no intention of purchasing in the near future but will gladly waste a salesperson's time.
The Sales Rookies
Green Pea: This is the newest of all salespeople. How long someone stays in green pea status is a function of the culture of the dealership where they work and how quickly they exhibit ambition and skill towards selling vehicles.
Liner: This person is typically a green pea. Their primary job is to land a customer on a particular vehicle take them for a test drive and get them to commit to buying it today. They are typically too inexperienced to guide the deal through to a close and will hand-off the customer to a TO Man once they obtain a commitment from the customer.
Shadow: This person is the greenest of the green peas. They are brand new to the business and are often derided for being unable to close a door with two handles. Typically relegated to moving cars and shagging lunches, they literally shadow a more senior green pea while they learn the ropes.
Lot Lizard: This is the group of green peas who spend their days hanging out in the front of a dealership, on the lot, waiting, hoping, for a customer, most typically a grape or a lay down to pull in or jump off of the be back bus.
The Experienced Folks
Closer: This is the most experienced and most fearless salesperson at the dealership. They are know for their ability to close a deal.
Hammer: This person is the Black Belt Closer. Typically the hammer is brought in when all other attempts to close a deal have failed.
TO: Turn Over. The act of transferring a customer from a green pea to another green pea (uncommitted customer) or a closer (customer committed to buy today).
TO Man: The name given to the person who takes a turn from a green pea. Sometimes a green pea who has exhibited a degree of success and is being groomed for a closers role at the store will take turns from more inexperienced green peas to see if they are able to get a customer commitment.
Turn: The act of transferring a customer from one salesperson to another.
Flip: A synonym for a turn.
Touch Base: In a dealership with a tight customer control system, green peas are required to check in with more senior salespeople before allowing a customer to walk. They touch base or check with someone to get help with gaining a customer commitment to purchase a vehicle.
Walk: Allowing a customer to leave a dealership is usually reserved for more senior salespeople.
The Sales Manager
Pencil: Working the deal. The closer brings an offer to the desk and the desk man writes a counter offer on the 4 Square. They don't usually use a pencil but will typically use bright red and green markers to respond to the customer offer. Penciling the deal is another way of saying they are working a deal.
Desk: Literally the place where car deals are worked. Every aspect of the deal is controlled by and goes through the desk including trade-pricing, finance terms and payments.
Desk Man: The desk man is the most senior person in the sales department. Depending on the size of the dealership there can be one or many desk men. Sometimes they are referred to as Sales Manager, General Sales Manager or even General Manager in smaller rural dealerships.
Tower: Some dealerships, particularly larger urban stores will install a desk that is above the sales floor and behind glass so that the desk man can see everything happening on the lot and the sales floor but be able to speak privately with the closers as they discuss strategy.
Bricks: The pavement outside the sales offices. When a desk man has exhausted every possibility in making a car deal with a customer, they can sometimes be heard to tell the closer, in a loud and frustrated voice, "Tell that clown to hit the bricks."
Full Bore: A vehicle sold for full asking price with no discounts given.
Home Run: A deal that is very profitable for the dealer.
Laid Away: When a customer pays more than they should for a vehicle they are said to be laid away.
Bump: Increase the price that the customer will pay for a vehicle. If a deal is unattractive or unprofitable to the dealer, the desk will tell the closer that they need to bump the price higher.
Switch: Move a customer from a vehicle that they want to purchase to one that they are able to afford. Sometimes an inexperienced green pea will commit a customer to a vehicle that they can not afford or are unwilling to pay for. When that happens, the closer must switch the customer to one that they can afford.
Low Ball: Give an unrealistic price to a customer who is not buying today and has given an indication that they intend to shop the dealer's price. When the customer looks around, they are unable to find a better price and returns to the dealer only to learn that the price was indeed an illusion.
High Ball: Similar to a low ball except that the high ball is too much offered for the trade-in.
Buried: When the loan balance on a trade-in exceeds the ACV of the trade, the customer is said to be buried.
Back of Book: An offer for a trade-in vehicle that is below ACV. A vehicle that is in below average condition. An ugly vehicle.
Book Value: Typically used to mean Kelley Blue Book value but could be a generic statement about value in general.
ACV: Actual Cash Value. The price a dealer is willing to pay for your car outright even if you do not purchase a vehicle from them.
Upside Down: Phrase is used when the payoff amount on a vehicle loan is greater than the ACV for that vehicle.
4 Square: Worksheet used by dealers to gain customer commitment on a vehicle purchase. The worksheet literally contains 4 squares and each square represents one of 4 main components of a car deal: purchase price, trade-in value, down payment and monthly payment.
Your vehicle is worth whatever somebody will pay you for it!
Like it or not, it's true. The answer is not a flip response to the question, but the only answer possible until you know the buyer group that you choose to buy your vehicle. Your first goal should be to determine which buyer group you are targeting and then to rephrase the question so that it includes your target buyer group.
Your vehicle is valued differently by the three primary groups who buy used cars. Let's take a look at the three different groups of buyers, how to market your vehicle to each group and the amount of time and effort required if you are to realize the best sale price to each group. Generally speaking, the higher the value you are seeking for your automobile, the more time, energy and aggravation you will need to expend to reach your desired outcome.
Once you know the buyer group you are willing to target, you can turn to the question of how much cash you should expect from a sale of the vehicle and how to determine that value.
The 3 primary groups of buyers of used vehicles include: retail auto dealers, private parties and wholesale auto dealers. First, we'll take a look at the difference between the groups and then turn to the expected sale price for each group.
Retail Auto Dealers
Wholesale Auto Dealers
Private Party Buyer
Whether you are selling privately, trading in to a dealer, selling to a wholesale buyer or just plain curious about what your car is worth, it is important to know how to get an accurate valuation. Fortunately, there is no shortage of websites devoted to providing this information. As you will see later in this post, there is a great deal of variation in the pricing that comes from each of the sites listed below. This is partly due to the methodology used by each to produce their pricing models. Keep in mind that most derive a substantial if not lion's share of their revenue from Retail Auto Dealer advertising and paid inclusion in listings on the site. It's best to keep an open mind and do a lot of sleuthing at each site to determine how relevant and accurate their data really is.
When using these sites it's equally important to be as accurate as possible about the condition of your vehicle. Otherwise, you are walking away with an unrealistic valuation for your vehicle and you will expend a great deal of energy and aggravation trying to sell your car for an unrealistic price.
In no particular order of importance some of the more popular sites include: Edmund's TrueMarketValue, Kelley Blue Book, Cars.com powered by Black Book, RPM's Fair Value and NADAguides Used Car Values. Our personal favorites include Black Book and Edmund's. Our experience has taught us that the prices obtained from these two sites will provide you with the most relevant pricing data.
Pricing Models Put to the Test
We decided to test drive the 5 sites listed above to learn how they compared to each other in terms of valuing a popular used car. For our test, we chose a 2010 Honda Accord LX Model 4DR 4 Cylinder Automatic with no extra equipment and 60,000 miles in a white color. We used the zip code of our office location which is 94607 and we conducted our survey on May 12, 2015. Here's what we learned.
Understanding the Price
Regardless of the websites you use to appraise your vehicle, you will be given some valuable information to help you make an informed decision of which sales method best suits your personal lifestyle and temperament. If you visit all 5 listed above, a very clear picture of your used vehicle's valuation will begin to emerge. With a clear and honest assessment of your vehicle's condition and a range of prices such as those shown above, a clear path to selling your old car will begin to emerge.
When you know the buyer group you are going to target and are equipped with a realistic understanding of what it takes to market your vehicle to each of the three groups, you will be able to know the answer to the question; "What's my car Worth?"
It's Easy To Be Real
Getting a realistic valuation for your used car is key to what you do next. Whether you choose to sell to a private party, trade it in, sell to a wholesale dealer or even keeping it for a while longer, having knowledge gives you the power to make the intelligent choice for your personal situation. By being honest about your vehicle's condition, you'll have a clear-eyed assessment of your car's real worth, not a number based on guesswork and high hopes.
The drumbeat of progress in the business world has always been about disruption, and displacement. Out with the old and in with the new. It is unstoppable. The introduction of the low priced, mass produced, Model T Ford in 1908 is a classic example. It disrupted the transportation market and displaced the horse drawn carriage as the primary mode of transportation.
Recently, the internet has been the catalyst of disruption in most markets, displacing old methods of commerce with newer, more efficient and transparent business models. The retail automobile market is no exception to this trend. The manner by which a dealer now markets automobiles to the consumer has been changed forever.
Today, anybody with a smart phone is able to learn the cost and current selling price of any car in less than 30 minutes. Before ever stepping foot on the dealer's lot, the savvy customer can know, exactly how much of her hard earned cash she will need to part with to own the car of her dreams. But what about the trade in vehicle? Is there anything this same consumer can do before visiting the showroom to prepare herself for a smooth and fair transaction with a trade? There certainly is! And knowing the trade-in value alone is not enough. You'll need to know a thing or two about dealer negotiation strategies too. Armed with this knowledge, you will be able to successfully navigate the transaction so that it works for both you and the dealer.
You have most likely heard, more than once, that the purchase of a new car and the sale of your old car (the trade-in) are really two transactions and should remain separate from one another. But what does that mean exactly? It means that these are the two items that you should discuss with the dealer individually, before you have any discussions about financing the new vehicle or purchasing an extended warranty. But that method of negotiation works against the dealer because he is forced to lay all of his cards on the table up front and he will try to resist doing so. If you forget this, the dealer will control the flow of the negotiation process and the trade-in price you receive for your old car will be cloaked in the mystery of the transaction itself. The dealer will attempt to find a way to shift the conversation away from the purchase price of the new car and the price of the trade and gravitate toward a monthly payment for the new vehicle. By negotiating in this manner, the dealer is often times able to pay less than market value for the trade and increase his profit on the transaction. If you stay focused, you will be able to stop this tactic in its' tracks
The Four Square
All car dealers use a standard work order or sales sheet to negotiate a vehicle purchase. It is know as the four square or by many other names. In reality, it is simply a worksheet that contains all 4 of the primary elements of an automobile purchase. The four main elements (hence the name) are; the selling price of the new vehicle, the value paid for the trade in, the down payment for the purchase of the new vehicle and the monthly payments of the new vehicle. While all 4 squares or elements are important, ultimately for many consumers the monthly payment is the most important square closely followed by the down payment (the dealer knows this). By moving the focus of the negotiation to the payment square, the customer loses focus on the trade and pays the greatest amount of attention to the monthly payment. This can be a very expensive mistake on the part of the customer since it allows the dealer to focus on the payment amount while ignoring the value of the trade!
The Difference Price
As a consumer, you will want to change the focus of the discussion to what is known in the industry as the difference price; or the cash payment required for the new car when the trade in has been subtracted from the price of the new vehicle. It is a rather straight forward and simple mathematical equation. You do your homework before you visit the dealer so you know the purchase price for the car of your dreams. Then, ask the salesperson to give you an out the door (OTD) price for the new vehicle which includes tax license and registration fees. Once this number is plainly in sight, you then ask the salesperson to buy your vehicle from you. The salesperson has been trained to learn if there is a trade in before you ever get to this point. It is up to you to let the salesperson know in no uncertain terms that you might want to keep your old car and are simply interested at this point in learning the total cost of the new car. You then negotiate and reach an agreeable amount for your trade in and then subtract that amount from the OTD price of the new car. In some states the trade is subtracted from the price of the new car before tax and license fees are calculated. If that is the case in your state, work with a difference price without tax and license included or you will end up getting less for the trade in as the tax was originally calculated on the higher selling price rather than the lower difference price!
The salesperson has been trained to move your focus away from the difference price and back to the monthly payment by pointing out that the monthly payment is the most important number to you if you are financing the new vehicle. He will tell you that difference price negotiations are reserved for cash buyers. Be prepared to walk out and find another dealer to work with if your salesperson insists on discussing only monthly payments with you.
Every square of the four square worksheet can be negotiated independently and the monthly payment is the final square for you to attend to after purchase price, trade price and down payment. Keep in mind that you do not have to actually write a check for the difference to be able to negotiate from this vantage point although the salesperson will try very hard to convince you otherwise and move you to the negotiating strategy that is better for him.
According to the most recent Auto Trader Automotive Buyer Influence Study, the average buyer spends 15.5 hours shopping online before completing a vehicle purchase. By the time they are ready to make a purchase, they know the year, make, model, miles and price they will have to pay for the vehicle they plan to purchase. If you expect to be successful with the sale of your used car you must possess the same information as the buyer and be prepared to use it to your advantage by pricing your vehicle right in the sweet spot of the market.
If your used car has been listed with any of the popular online classified services for more than one week and you are not receiving legitimate inquiries from buyers, then the asking price is most likely set too high. The invisible hand of the market is delivering a slap of common sense to you right now!
Vehicle pricing in the used car marketplace is driven by the supply and demand for a given model. Another less known factor known as substitution plays a vital role in determining the selling price of your used vehicle. You must consider not only how many Toyota Camrys are currently available but also any other reliable mid sized sedan that will substitute for the car you are selling. These models might include; Honda Accords, Hyundai Sonatas, Nissan Altimas, Ford Fusions, Mazda6s, Chrysler 200s, Subaru Legacys, Buick Regals, Chevy Malibus, Volkswagen Passats and Kia Optimas. Most buyers will start their buying process by considering many vehicles in a given category before zeroing in on a specific model. They are not as brand loyal as a new car buyer. When the buyer is unseccessful locating their first choice, they will substitute another model that meets their personal pricing and driving objective.
If you plan to sell your car any time soon, you should learn something from the lesson the market has delivered. Sometimes it is not just the price that is limiting the number of inquiries you receive. Correcting any of the 4 situations described below should help you achieve that goal.
Improperly Priced Cars do not Sell: If your car is listed for sale on a classified website or even with a for sale sign in the window, your goal should be to sell the vehicle. I talk to hundreds of people selling their vehicles every week and I always get a kick out of folks who tell me that they are going to test the market. I sometimes wonder what that means to them. Are they too lazy to do the homework necessary to determine the selling price for their vehicle or are they hoping for a miracle? Miracles happen in Hollywood in such classics as Miracle on 34th Street. I’ve never seen one in automobile sales.
If it has been a week and you have not received a single call on your listing then you have a problem with your price. A car buyer moves through 4 distinct phases that culminates with a purchase. During the early, discovery phase, shoppers who are just starting to look around and forming opinions about which models to target will call and ask questions such as: “Did you like it?” “Would you buy it again?” If you aren’t getting calls with these types of questions, then the price is way out of range with the market. Learn how to price your used car
Improper or Limited Photos: You need photos to sell a car! It’s true they tell a thousand words! More important than the number of photos is the types of photos shown. You need to show the vehicle from every angle. If there are problems with the vehicle, especially cosmetic problems you need to show them. A buyer is not going to waste their time calling on a listing that lacks essential information. Damage to a vehicle is subjective. Something you have lived with for many years may be a deal breaker to your potential buyer. When you describe damage to your vehicle, you need to show the damage with a photograph.
Missing Information: As simple as this may seem, I am always amazed by the number of people that do not include a complete list of even the most basic items with an online advertisement. Humans are constantly forming subconscious opinions about everything we encounter. Right or wrong this is how our brain works. Whenever I encounter an ad with missing information, I form an opinion that the seller is sloppy or lazy and perhaps treated the item being sold in that manner. I don’t even consider their item and move right on to the next listing!
Undisclosed Problems: The price of a vehicle is primarily determined by the year, make, model, equipment, mileage and condition. The market does not care if it is all freeway miles or was only driven by a little old lady on her way to church and the grocery store.
You may be able to get your phone to ring and even have folks schedule appointments to see your vehicle by leaving out essential information. But, you are wasting everybody’s time including your own when you do that. Horses are not wishes. Buyers are going to learn about all of the warts and flaws with your used car when they show up to look at it. They are not going to fall in love with it and pay you too much money for your problems.
In fact, you are delaying the sale of your vehicle when you market it in this manner. Buyers who would consider a vehicle in your vehicle’s condition have passed it over because it is priced to high for their budget. Buyers looking at vehicles in the price range you have chosen are expecting more than they will find upon inspection. They will be angry, perhaps confrontational and will leave in a hurry. I’ve been there as the aggravated buyer discovering undisclosed flaws and would never consider purchasing from that dishonest person-I am left wondering what else they haven’t told me about or are hiding from me.
Selling a vehicle is not rocket science. You have to do your homework by starting out as a buyer would. Research the market; learn what substitute vehicles are selling for as well as the price of your model. Prepare an ad with proper pictures, description, and pertinent information. Above all else; disclose, disclose, disclose. HAPPY SELLING!
Selling a vehicle with an existing lien is not difficult but it does add an additional step or two to the process. It’s best to know the ins and outs of this type of transaction before you get started with any sale. Most importantly, you’ll want to avoid the 5 common mistakes listed below!
The first step in preparing yourself for the sale of a vehicle with an existing loan balance is to contact the lender and speak with an agent. Ask her to provide a 10 day payoff. 10 days is the standard length of time quoted in payoffs because it takes time to locate a buyer and get the payment to the lender. Ask the lender’s agent for the payment types accepted, how they prefer to receive payment, the necessary paperwork required and if they hold a physical title or an electronic title.
Armed with the 10 day payoff, compare the outstanding loan balance to the expected sale value of your used vehicle. Learn how to properly price your vehicle. If you owe more than a realistic sale price for the vehicle (negative equity), you’ll want to carefully consider your options. At this stage, it’s critical to avoid a situation where emotions cloud your marketing strategy. Otherwise, you might find yourself in a situation where the payoff becomes the tail wagging the dog! The outstanding loan balance on your vehicle is not the market value of your vehicle. If you owe more than the car is currently worth, you are either going to come out of pocket with the difference or delay selling the car until the opposite is true.
5 Mistakes to Avoid
Allowing a dealer to roll the negative equity into a new car loan: If your credit is strong and you have a good amount of income, a new car dealer will find a way to sell you a new car. They may “offer” to pay off your existing loan and can even make it appear on paper that they have paid you the full amount of the outstanding loan balance. Nothing could be further from the truth. Your car’s value to a dealer is lower than it is to a private party. They might be able to make you feel good about the transaction and even have you believing that you are making the right decision. But is this really in your best interest? Most likely it is not. A new vehicle depreciates as much as 30% in the first year. If you owe more on your current vehicle than the private party value it is because you bought it when you could not afford it and are now trying to do the same thing again. A year from now the new vehicle loan balance will be further away from its’ market value than your current vehicle. Of course there are always exceptions to any rule. Try to avoid this situation most of the time but go into it with very open eyes if your personal situation dictates buying a new vehicle as a necessity.
Assuming that a trade-in is your only sales option: Owing money on a vehicle is a common situation. As many as 60% of new cars leave dealer inventory with a loan. Just because you have a lien on your car does not mean you have to trade it to a dealer. You will always sell a car for more cash if you sell it privately than if you trade it to a dealer. It will take a little longer and will require a bit of effort if you sell it yourself but your patience and determination will be rewarded.
Offering to let someone take over payments: Automobile loans all carry a due on sale clause. Taking over a loan payment or a lease payment is an urban legend that originated in the days of assumable mortgage loans on real estate. You might be able to “fool” your bank by letting someone else make the payments on your loan but the obligation still belongs to you as does the need for you to insure the vehicle. In fact, the person taking over the loan would not be able to obtain an insurance policy since they do not have an insurable interest (don’t legally own the vehicle). If someone wants the car, they will need to obtain their own loan or pay you cash.
Accepting a cashier's check for payment: If someone gives you a fraudulent or stolen form of payment for your vehicle and you turn it over to the lender or pay the loan balance with personal funds, you are the person who is left holding the bag. The lender is not going to release the lien and relinquish the title until the payment has completely cleared.
Releasing the title without first paying off the loan: Many states (New York and Michigan are two) record a lien on the title and then send the title to the registered owner (you). A common fraudulent scheme in these states is to give the seller a fraudulent form of payment and ask for the title to the vehicle. They leave with the vehicle and the title never to be seen again. They continue the fraud when they forge a lien release and obtain a new title so that they can then resell the vehicle to an unsuspecting third party.
We buy cars from private parties nationwide. We never meet our sellers in person and commonly purchase vehicles with outstanding loan balances. One method we employ to protect ourselves is processing the entire transaction through the escrow company, Escrow.com. You too can use them when selling a vehicle. The protection you receive is well worth the additional cost of the transaction!