Steps to buying a car from a dealership
The Life of a Dealer – having an upper hand
How it works – Generally, a dealer is working on a minimum of a £1000 profit margin per vehicle. Ideally, they want this to be net profit (after VAT, preparation costs, warranty inclusion costs and that kind of thing.) Negotiation is usually available. They want your business and will do all they can to close a deal that day.
Car Dealers earn money in 3 ways –
- The profit margin in the car
- Profit from extended warranties, finance packages and the like
- Profit earned from your part exchange (if you have one)
Most dealers buy from car auctions, prepare the car as necessary, clean it, and sell for that profit margin.
Watching out for Pre-Owned Motability cars.
The positive with Motability is that all cars are serviced under manufacturer’s guidelines by the main dealers.
The Big Negative is their cars have often suffered unusual amounts of wear and tear.Wheelchairs, car adaptations and struggles for owners to get in and out of the car lead to excessive wear in bodywork and trim. So be mindful when a car is a pre-owned Motability.
Motability car auctions are usually cheaper than the normal fleet car auctions. Some dealers like this and will buy cars considerably cheaper than they otherwise might if they were buying fleet vehicles. A dealer will usually buy an ex Motability for considerably less than its market value and spend some money getting the car repaired. Many such cars require re-sprayed doors, wings and bumpers, all relating to knocks and dings inherited from disability adaptations. So, if the car you’re looking at is ex Motability there’s a reasonable chance it’s had new paint, seat stitching, steering wheel replacements and that kind of thing. It doesn’t necessarily cause a major problem but you’d be very surprised to see the previous condition of certain Motability vehicles prior to spend and preparation.
Your Part Ex Valuation
Watch out for exaggerated part exchange valuations. This can indicate the car you’re interested in buying as being somewhat overpriced. A big p/x valuation is a lure to hook you into a deal. Dealers aren’t giving anything away so don’t think an exaggerated p/x value means you’re getting a good deal. It’s usually quite the opposite. If you know your old car is only worth about £1800 but the salesman is offering you £2500, ask yourself, why?
Car dealers once made easy six-figure sums each year buying and selling cars but it’s now much more difficult to make large amounts of money due to increased competition and savvy car buyers such as you.
“Buying a car from a dealer can be more expensive than buying one privately, but you have more legal protection if things go wrong.
Some dealers offer special incentives to persuade you to buy, such as a year’s insurance, road tax or extended warranties. Before you buy, think whether the offer is really worth it. For example, a 12-month warranty will usually cost the dealer about £65 which is not much on the scale of the amount of money you are spending. An insurance package (i.e 3 months free car insurance) often costs the dealer absolutely nothing! Keep this in mind when striking a deal and always make sure you have proof of any special offers.
Finding a reliable dealer
Buying a car from a dealer is the safest way to buy as you get the maximum legal protection. But there are dodgy dealers, so check whether your dealer follows a code of practice, stays within the law, and gives you all the information you need.
Here are some ways to find a reliable dealer:
I recommend that you find an established dealer that’s been around for at least 10 years. It doesn’t guarantee a quality car or good after sales service, but it does minimise your risk of buying from a rogue trader.
Ask your friends for recommendations and see if they know of any local trusted car dealers.
Head over to Google and type in the dealers business name with the words “Google Reviews.” The reviews here are usually pretty genuine and you might be surprised at what you find.
You can always look for a trade association sign, which means a dealer will follow a code of practice. From experience, this tip is a little unreliable as dealer codes of practice and the associations they’re affiliated with are often poor and quite ungoverned. However, an RMI dealers (Retail Motor Industry Federation) does offer positive connotations. The RMI is a respected name in the motor industry and it’s not easy to be affiliated with them. If you find an RMI affiliated garage it’s a good sign.
Four tips when buying from car dealers
- It’s fine to make a call and enquire if a car is still for sale, and what their opening times are. But do NOT call them up first and arrange a time for viewing. Where possible arrive unannounced. This way you can hear the car’s engine from stone cold without the salesman warming it up before you arrive. You will be starting the car stone cold every day so you’ll want to know what that car sounds like on those cold and frosty mornings.
- Ask to be left alone when looking at the car. You want few distractions so you can focus on the job in hand and avoid any sales spiel. Salesmen sometimes offer useless chatter to keep you distracted from faults or liabilities.
- It’s likely to be one of your biggest investments so take your time and if you get to the point of purchase work hard to get the best deal you possibly can! Every £50 saved is money in the bank.
“How hard do you have to work to earn £50? It requires effort, yes?
4. Be knowledgeable by researching a list of cars you can take a look at. As early as you can, let the dealers know you have a list of cars to look at. If they think you’re not planning to buy today you can get yourself a particularly good deal. This is a scarcity tactic that works like a charm.
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