It's all very well for Dulwich & Patently to run a brand new car
Thanks (I think..)
I admit that our new (and nearly new) private cars have been funded from cash. On both occasions, the dealer was very keen to interest me in a finance deal, which is indicative of something. Both times, I let them work out some figures for me. The crucial number to look at is the total at the bottom - i.e. how much you have paid for the car when all is said and done. On one example, this was 25% more than the list price of the car. Quite enough to frighten me away.
|
>>I admit
That's no admission. 'I am proud to announce...' would be more suitable.
|
Finance is often going to cost more than cash in total, but not always, I sold a Mondeo the other day that was going to cost £13,995 cash, the customers ended up financing by paying one lump now (roughly half) and the other half in one year. The total payable wasn't much more that £13K, so they saved nearly £900 and on top of that they get to keep half the money in the bank earning interest for an extra year.
I was so pleased with that deal that even I had a warm glowy feeling when it was done, everyone won :-)
For the cheapest total payable cash is often best, but, ALWAYS look at what finance is been offered, 'cos sometimes it really is better to finance than shell out all the money in one go.
Blue
|
|
Agreed, Blue - that was why I let them quote. It wasn't so for me, though, that time!
|
|
It's very unclear to me, Blue, why you think that your employer won out of that - they didn't have the money in the bank & they didn't earn the interest on the money.
|
The car may well have been paid for by the finance company at front, albeit at a reduced price, say £12,500 - but one with enough profit in it for the employer to make it worthwhile? On top of that there may well have been a commission from the finance company.
Alternatively, if it's anything like a "buy now pay later" deal in retail stores, the employer gets paid in full (probably more than full) on the basis that the purchaser, finding himself with a bill for £6,500 for the car in a year's time, will probably (though probably unwisely) want to arrange alternative finance through the existing finance company.
This may simply be in the form of "Pay the lump sum now (and no interest) or £200 × 36."
|
I agree with both your scenarios, David. But in both cases the profit is for the finance company, not for Blue's employer. The latter comes off worse.
As the customer was in a position to pay cash up front, there was no suggestion that the car would otherwise not have been purchased.
Car could have been sold for 14k cash.
Instead sold for 13.1k cash. Finance company gets cut, so garage gets 12.5k cash (maybe a bit more if it gets a kickback from Finco).
If Blue thinks that doing that has made his employer more money, then he's wrong...
Consequently, when faced with a customer offering cash, Blue should not try to offer them one of these deals. (It's not often I would try to stick up for a main dealer against the customer...)
|
was going to cost £13,995 cash
Doesn't say where the cash was coming from.... plus the same car might well have been £12k at a broker or supermarket.
|
People who buy second hand cars from nice young men like Blue at main dealers don't go to car supermarkets.
I think he does say that the cash was available as he mentions that the customers got to keep it in their bank account for the next year.
Anyway! Blue can settle this: was the 13995 the lowest you could go for cash?
|
Mapmaker,
If you have a sheep and you want to make money from it, there are two ways.
First, you can grab the sheep, drag it into an abbattoir, slit its throat, butcher it into nice lamb chops, and sell them to hungry people.
Second, you can treat the sheep with respect, gain its trust, persuade it to let you handle it, shear off the wool, release the sheep back into the field, and sell the wool to cold people who want to make jumpers.
One of them you only do once. The other you can again, and again, and again.
So Blue's employers may make more than it looks like, if the customer leaves happy with the feeling that Blue had their best interests at heart.
|
|
Or using your analagy they may just feel that they have been well and truly fleeced......
|
Your day-to-day life obviously doesn't bring you in contact with fleece prices. Currently about worthless. Whereas a nice lamb chop...
Whilst I take your point patently, I do not believe for even one second that people have such devotion to a brand of cars or to a dealer that it is worth losing £1500 today in the hope of selling another second hand car in 6 years time. That nice warm feeling doesn't last very long, and even my father has never bought a car from the same place twice (excepting a car supermarket where such shenanigans of false prices do not apply). £1500 is a lot to pay for some rather transitory goodwill. imho.
|
Sheep are a very good example, as oversupply in the sheep world is as high as in the car world.
A ewe is worth something because she produces offspring. Her female lambs are worth something because they can produce offspring. Her male lambs are virtually worthless (the profit after bringing them up & getting them to the abbatoir is virtually nil).
So her only worth is in producing further ewes whose only worth is in producing further ewes... as the fleece is worthless & there's no profit in the male lambs. An entirely false market. And now to the Rover thread...
|
Yes, I thought we might end up discussing the travails of sheep farmers. But the point is there, and the amounts involved affect the balance but not the principle. Many buyers do return to the same dealership.
An entirely false market.
Unless you think the market for fleece or lambchops is going to improve in the future.
And now to the Rover thread...
LOL. and again. Oh dear. My sides hurt.....thanks...
|
Don't even *try* and get sheep into Motoring, not even in Wales.
They're not motoring and they are most certainly not related to "Terminating Finance Agreements".
Now cut it out before you all get sent to the naughty corner.
|
Don't even *try* and get sheep into Motoring, not even in Wales.
Yes - imagine the rise in CO2 emissions if they all discover the joys of personal mobility!
And think of the congestion on those previously empty roads....
[oops - where's that corner, then? Is it where the communal coat is kept?]
|
>>But the point is there, and the amounts involved affect the balance but not the principle.
But the balance is (apparently) so far off balance that the principle is shot out of the water. I don't know what a car dealer makes on a 14k car, but I doubt it is over £3k. So would you throw away 50% of your gross profit (so probably the entirety of your contribution) for the hope of another sale 6 years hence?
And the market for wool isn't going ot improve whilst people insist on having polished wooden floors. Or leather seats in cars*
_______________________________________
* I did it!! I did it!! A motoring link to sheep. And don't ever buy a second hand car from Wales if you can avoid it.
|
|
[sigh] ...and its not even Friday.
|
[sigh] ...and its not even Friday.
We're in training ... wait til you see how good we are by then!
[Now ... where's that coat?]
|
so far off balance
In this case, possibly. OK - probably.
There are be cases where it is not - I see them often when dealing with clients. And I have returned to dealerships that treated me well; I won't buy from them regardless of cost, but they have an advantage.
A motoring link to sheep
Beat you to it!
|
>>OK - probably.
Huzzah! I won.
Ner ner ner ner ner!
I'm going to take the afternoon off from the BR to celebrate. I'll let you know if I see any sheep on the WAGN railway line*.
_____________________
*alternative transport - motoring link.
|
Or using your analagy they may just feel that they have been well and truly fleeced......
Lol :-)
I had typed out a reply explaining how I was not an idiot, and would not have persuaded customers, who were happy to give us £13,995 in cash, to take a finance package if it was going to lose us any profit, or indeed if my finance manager didn't encourage me to do it, unfortunately I lost it thanks to forum time out!
Anyway, can't be botered to retype it all other than to say that the garage didn't lose out, my manager was happy, and the customers were so happy with that deal that they immediately bought a second new car off me, at least we stand a vauge chance of seeing some repeat business.
Blue
|
immediately bought a second new car off me
I win after all! Ner ner ner ner ner!
|
I missed this reply.
People who buy second hand cars from nice young men like Blue at main dealers don't go to car supermarkets.
Aww thanks :-) But I must point out that the car was brand new!
I think he does say that the cash was available as he mentions that the customers got to keep it in their bank account for the next year.
It was.
Anyway! Blue can settle this: was the 13995 the lowest you could go for cash?
Yes, they may have managed a small reduction, but no where near the saving they made by financing it.
Blue
|
>>>> Anyway! Blue can settle this: was the 13995 the lowestyou could go for cash?
>Yes, they may have managed a small reduction, but no where near the saving they made by financing it.
Oh please, please tell us how your boss was happy. I know it's a pain to retye it, but I'd love to understand how this stacks up.
Somehow or other, somebody has lost out on the opportunity to get 1,000 out of your buyer. Leaving aside the second new car (how lucky was that! how often do people buy two new cars at once?) for a moment, it is bemusing me!
|
Well of course someone is out of pocket, I don't know if it is Ford or the finance company for certain, but it wasn't us and it wasn't the customer. All I know is that the manager was happier with the finance deal than with the customers paying cash, when they would have been happy to pay the cash, I think that says it all really :-)
This also leads to an interesting question about how much profit people think a garage actually make from the sale of, for example, a £10,000 car when bought brand new and using cash, but that is an entirely different thread.
Blue
|
::scratches head::
So whom do you work for Blue? A Ford main dealer? And who owns the Ford main dealer - Ford?
I'm happy to agree that the customer wasn't the loser!
I can understand that the dealership might not have been the loser.
But Somebody was, and whoever it was needs to think a bit straighter, if you ask me!
I suppose that there may be a target for quanity of finance sold in the month, and your dealership was under target, so was deperate to sell the extra finance, whatever the cost - in this case £900 (which was the bait the customer had to be given to take the finance), plus whatever you had to pay to the finance company - say a minimum 8% (?) on 6k, so £500.
::;;continues to scratch head::
|
Yes, but we don't pay the finance company any commission, they send us the full sale price of the car, as well as sending us our finance commission.
Lets use *totally random* figures to illustrate roughly how a car finance deal might work.
Cost of car £10K
Cash buyer, we get - £10K
Finance sale - we get £10K plus £xxx finance commission.
I know that the above doesn't explain the circumstances that I have described, but it at least clears up a seperate misunderstanding.
I was only trying to give an example of how finance isn't always bad for the customer, I didn't particularly want to go overboard with in depth explanations. I am only a salesman, I do not understand the complexities of car finance myself, all I know is:
Customer - Happy
Manager - Happy
That's all I care about.
Blue
|
|
Mapmaker - about time to let it go, I think.
|
|
>>I admit That's no admission. 'I am proud to announce...' would be more suitable.
A very good point, MM, but it's a question of tact. A few posts above my comment is a BR member who can't meet his finance payments on a Focus. I, on the other hand, can pay cash for a 911 and an X5. I feel genuinely sympathetic to sealey, as there have in fact been times when I was very nearly in that situation. If I shout to the rafters about the achievements that I am in fact proud of, this could mask that sympathy.
I regard myself as incredibly lucky. I hope some comes your way, too, sealey. Best wishes.
|
|
|
|
|
