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Discussion Starter · #1 ·
Hi Everyone,

(I posted this in another forum as well, so I would get as many responses as possible. If you are reading this again, I apologize for the duplication.)
I have been mainly lurking here, trying to get information about the Element from the owners' points of view. Well, I have been trying to negotiate a fair price for the E and a reasonable trade on my current car. Here is the story...
6/25 - I go to the dealership, and I test drive a Silver E, 2WD DX Manual. I love it, but, after studying the stickers in the lot, later realize that getting the DX with all the added options costed more than getting the EX with the standard options, so we opt on the EX. We work all the numbers up, and I am telling them the whole time that I wanted the EBP. The finance guy locates one, but he is waiting to see if that dealer would trade with him. Another side note is that, after working up the numbers, the payment was within 9 dollars of my target payment (sorry, I cannot remember all the figures for this visit). I advise that I may want to consider financing with my credit union. He says that, in order to do that, he would have to add $300 to the price of the car. I figure, we have a decent deal here anyway, I could afford the payment, so let's just wait and see if the dealer will let him trade. I had to pick my daughter up from daycare at the time, so I told him to call me as soon as he heard from the other dealer. He never called.
In the meantime, I start thinking that it just isn't meant to be right now, and I start losing hope on getting the E right now.
7/10 - I receive a letter in the mail from Honda Finance, saying that they have approved my loan with certain conditions. I found this as strange, because none of the loan apps that he used at the time were through Honda Finance (I saw the screen in his office as he was trying to work the numbers...he casually mentioned Honda Finance, but he had not run the app by the time I left)
7/11 - I call Honda Finance Customer Service, and they tell me that, because I started the app at the dealer, I would need to speak to them concerning the specific terms...I call the dealership to inquire, and the finance guy is asking all kinds of questions about the E that I wanted, yada, yada. I ask specifically what the conditions of the loan were. He said he would definitely call me back today. By COB that day, I receive a call from the sales rep that worked my deal, and she said she had located an EBP E, and asked if I could come in and work a deal. I schedule an appointment, but when I ask about my original question, she stated that the finance guy only told her that they found the EBP E, and for her to call me.
7/12 - I call the Finance guy back, and he acts as if he does not have a clue about the terms, but, after persisting, comes back with a tolerable interest rate.
7/16 - I show up for my appointment, as promised. We negotiate a deal of $19,511 on the EBP 2WD Auto E, with Mud Flaps and Carpeted Floor mats (The one that they located already had these options installed), and I would be upside down $1200 on my current car (1998 Honda Accord with 107,000+ miles - the car has done me well, but I fell in love with the E, and I had wanted another vehicle for some time anyway - Honda's introduction of the E just sealed it). We went to Finance...his note was $437/mo. I could not get him to budge on the interest rate to bring the note any closer to $400, which is where I wanted my payment. He asks about the warranty, which I declined. He tries to hard sell the warranty, and I explained that the $437 was out of my budget anyway. We try to haggle, but he would not budge. I again mentioned that I would try to seek financing at my local bank, and he stated at this point that if I got financing outside the dealership, then he could not sell me the car. My husband asks why, and he goes on this speil that that's how they expected to make money on the deal, and they had already cut the deal too low to begin with, and they could not sell me the car at the quoted price. My husband asked what the difference in price would be if we went to our bank for financing. He then stated "Oh, about $800". He then left so we could discuss this, and we decided to walk away. He comes back, and he is asking us to put money down or go with longer financing, which we declined both. He then said that was all he could do, so we walked. As we are getting the key back from our sales rep, he asks her to ask us about leasing. We again decline and leave.

After saying all of that, I know I was getting the shorter end of the stick with the deal anyway, but I felt like it was something I could have lived with if I got the E I wanted at the payment that I wanted. All of this over $37/month. Have any of you heard of such practices by the finance guys? Is it ethical? Legal? What could I do to protect myself in the future?

Still wanting my EBP E in my driveway...

ale896

Hondas I have owned
95 Honda Civic
99 Acura Integra
98 Honda Accord (my current car)
(Did I mention that I tried putting up with all of their crap because I bought my Civic and my Accord from them before?)
 

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Discussion Starter · #2 ·
The end of my story somehow got cut off...here is the rest...

My husband asks why, and he goes on this speil that that's how they expected to make money on the deal, and they had already cut the deal too low to begin with, and they could not sell me the car at the quoted price. My husband asked what the difference in price would be if we went to our bank for financing. He then stated "Oh, about $800". He then left so we could discuss this, and we decided to walk away. He comes back, and he is asking us to put money down or go with longer financing, which we declined both. He then said that was all he could do, so we walked. As we are getting the key back from our sales rep, he asks her to ask us about leasing. We again decline and leave.

After saying all of that, I know I was getting the shorter end of the stick with the deal anyway, but I felt like it was something I could have lived with if I got the E I wanted at the payment that I wanted. All of this over $37/month. Have any of you heard of such practices by the finance guys? Is it ethical? Legal? What could I do to protect myself in the future?

Still wanting my EBP E in my driveway...

ale896

Hondas I have owned
95 Honda Civic
99 Acura Integra
98 Honda Accord (my current car)
(Did I mention that I tried putting up with all of their crap because I bought my Civic and my Accord from them before?)
 

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We have found that getting a preapproved loan from our credit union helps. We then negotiate the deal without any mention of how we're going to finance. When the final deal is made is when we say that we already have a loan approved and no we don't want theirs, usually they'll try to find out what our interest rate is, which we'll quote an absurb number (low of course, and our credit union usually beats most standard car loans). Actually they usually don't mind, 'cause this type of loan is like paying cash for a vehicle and the deal can be closed immediately.

I'll never again go for a dealer loan - Toyota got us once and that was enough! We were promised a loan at one low rate and ended up paying 20% instead even though we had excellent credit.
 

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I am a banker and my bank buys loans from car dealers all over the country. Commissions paid to dealers (also known as "dealer reserves") are often substantial, and in many cases probably equal or exceed what the dealer makes in markup on the car over invoice.

The reality is that the "buy rate" (the net rate the bank/finance company expects) is almost never offered by the dealer. They will mark it up another 1/4% or 1/2%, or whatever they think they can get since their reserve is a function of the rate they negotiate.

So if you negotiate a price based upon dealer-provided financing, don't expect that price to hold if you then say "I'll pay cash" or "I'll get financing elsewhere". The difference to the dealer could be hundreds of dollars.
 

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Discussion Starter · #5 ·
You mention that the markup could be 1/4 or 1/2% over the net buy. Funny that you mention that, but the last time the finance guy left the office so we could talk, I peeked at my folder, and I found that Honda was offering me 5.39% for 72 months. He offered me 7.39%. I can get 4.99% at my credit union. I asked him about 60 month financing, because I know that developing equity is almost nonexistent with a 72 month loan, and he offered me 6.39%. The finance guy that I talked to on 7/12 offered me 5.9%. This guy gave me 5.99%, and it was still $37/month more than my target monthly payment. He then tried to give me a 66 month loan at 7.14% (a big jump for only 6 months, in my opinion). My credit union is offering 3.99% for 60 months. The reason I did not prequalify is that I got the flyer from my CU the day before I went to the dealership, so I did not have the time, and would not have gotten the approval the same day anyway. The sad thing is that, to save trouble, if he could have budged a little bit, to get the note closer to my target, I would have accepted the higher interest rate just to say that I got everything done in one place.

That said, is a 2% markup on the interest rate normal, seeing that you say that most add 1/4 to 1/2%?

At any rate, I put in my app with the credit union today, and I should hear something by Monday. I saw that that dealership tried to call me while I was at work today, but unfortunately, I was not available to take the call. I was kinda curious about what she would have said today anyway. But I am thinking of just taking my cu loan and going to another dealership altogether.
 

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Who are you going to ask to unwind you on the trade-in, the CU with a higher loan principal or the dealer with a higher car price?

yelapa
 

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What jsc173 is quite accurate in how the whole finance thing works. Even if we sign a customer at the "buy rate" we generally get a flat fee ($75-$200)for sending the customer to the bank we sign them with. If we don't get a flat fee, it does help us to package deals (great credit customers along with good/mediocre credit customers so they willl approve more deals for us). It is also much easier for funding issues and helps us to get paid much quicker usually, if we sign the customers. Some credit unions and banks can be a real pain to deal with, because we aren't their customer.

All this being said, the agreed upon price should be the agreed upon price. It shouldn't matter if you are paying cash, going through your credit union or financing with us. Not all dealers do business this way and that is their choice. A poor one, IMO, but who am I to tell them how to run their business?

Your credit union should work with you, just as much as the dealerships' lenders will in regards to your trade in and the amount you are financing. Almost all banks loan money on automobiles based off the loan to value of our vehicle. That just means they will loan a certain percentage above the cost of our vehicle and no more than that. Some banks are more flexible on this than others and credit certainly affects this.

Finally, if I were in your shoes, I would either try to work things out with the dealership where they allow you to go to your credit union (if you can) or go to another dealer. Yes, they were attempting to make money on you and tried to bully you into signing with them, but if still wish to do business there, that is your decision. Having been through what you have encountered so far, I think I would want further compensation before even considering doing business with them. Not just a "we're sorry" the finance guy/gal shouldn't have done that or "great news" we magically got you a lower rate, come on in. Best of luck.
 

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All the honda dealers by me said 4.9 was the lowest apr if qualified. I asked one salesman why should i pay that much interest during a bad economy when I can get 0% with another car company. The salesman said sure go get a "not up to par" vehicle like GM, Dodge or ford. They are the only one's with the low apr right now.
Anyway I left that dealership because I just did not like that salesman.
The next place gave me the lowest price offer that I could find on an "E" and not to mention, I was told that if I get the extended warranty I could get an apr of 3.49% for 60 months, kind of bothered me in a way with that stipulation but I did want the warranty because it really paid off with my last car. So I went with this deal and the finance guy threw in for free the Aliance window etching that has some insurance policy with it that they get like $400 for so I think I did OK until I find out that Honda goes to 0% then I will kick my self in the butt LOL
 

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[quote:b30a552a60="ale896"]I posted this in another forum as well, so I would get as many responses as possible.[/quote:b30a552a60]

Now why in the world would you have to post anywhere else?!? You know you'll get the best answers right here so why waste time?

:) :D :lol:
 

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Well, that is an interesting story!
We bought our SOP, 4wd EX 2 w/SAB weeks ago. Before we went to get the car I had been pre-approved by a credit union for the financing. I actually joined the CU that day to get the 3.99% financing. They were very nice, gave me a 24 hour # and said just fax the bill of sale when we made the deal.
We called every dealership we could think of, even those 4 to 5 hours away. Got the best deal (19,900) at a dealership in MD. Walked in, met the guy we'd talked to on the phone, shook hands and started filling out paperwork. He shuffled us to the finance people and we promptly explained we didn't need financing, etc. The finance lady said let's see what we can do for you. She came up with 6.4% We said no thank you, we already have 3.99%. She met that rate. We said no thank you we feel a loyalty to our CU. She dropped the rate to 3.59% Even though it only worked out to a few dollars difference it eliminated any loyalty we were holding onto and we got Honda financing.
Also of interest, she dropped the extended warranty price by 30% from her first quote. We didn't get it, but still interesting if you do want it.
Prior to this experience I had no idea these rates were negotiable! I paid 8%APR on my Civic for 5 years without ever a word.
And you know, they never confirmed the interest rate I quoted from my CU.
 

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You guys are lucky. I was approved for 4.49% through Peoplefirst.com and i thought my dealer could give me a better rate. I was dead wrong! He offered me 5.94% and wouldn't even look for a better rate for me. He just said ok, and i left with my E. I have excellent credit but i guess the dealer didn't want a few extra dollar in their pockets. I could of gotton 3.99% but i didn't want to do a 36 month loan. Now the loan compies are offering 3.49% :?
 

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Try eloan.com.

I got a quote of 2.9% for 60 months. I then walked into the dealer with this in hand. Dealer matched this through Honda financing. I applied online on a sunday evening. I had my answer within 15 minutes.
 

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Nat i would have loved to use eloan.com but here in IL is one out of 3 states they cannot do business with :evil: So i had to use Peoplesfirst.com.
 

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You can definitely get a better deal on a new car when you go with dealer financing. My credit union offered me 3.9% apr for 60 months but the dealer wouldn't go anywhere near the invoice price. The dealer found one of their finance sources that would match the 3.9% but then they agreed to sell the car at invoice ($ 18,430 for an Element Ex, 2wd, automatic with mudflaps according to Edmunds.com) plus tax, tag, title. I too refused the extended warranty with zero complaints and no hard sell from the finance manager.

Adding "Negative Equity" to your Element deal is a bad idea. When you add "Negative Equity" plus initial depreciation together you start out way in the hole (not a good place to be). I really suggest selling your car through the classified section of your newspaper instead of trading in. The dealer offered me $1900 less than what I owed on my Accord which was completely unacceptable. I went ahead and purchased the Element as a stand-alone deal then sold the accord three days later for $500 more than owed. That made a $2400 difference in my favor and only took about three hours of my time. $800 per hour is definitely worth the trouble. All I had to do was clean up the car and run a $34 ad in the paper. The first guy that came to look at it snapped it up (the accord was mechanically sound but the paint was shot).

If you can't afford to purchase the Element while you still have the Accord financed (and waiting to sell it) then you probably should'nt be buying a new car just yet. Have patience, sell your accord then buy the Element at your leisure. Dealers can smell impatience and desperation from a mile away.

Good luck and enjoy your Element!
 

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[quote:91938ce0db="ale896"]You mention that the markup could be 1/4 or 1/2% over the net buy. Funny that you mention that, but the last time the finance guy left the office so we could talk, I peeked at my folder, and I found that Honda was offering me 5.39% for 72 months. He offered me 7.39%. I can get 4.99% at my credit union. I asked him about 60 month financing, because I know that developing equity is almost nonexistent with a 72 month loan, and he offered me 6.39%. The finance guy that I talked to on 7/12 offered me 5.9%. This guy gave me 5.99%, and it was still $37/month more than my target monthly payment. He then tried to give me a 66 month loan at 7.14% (a big jump for only 6 months, in my opinion). My credit union is offering 3.99% for 60 months. The reason I did not prequalify is that I got the flyer from my CU the day before I went to the dealership, so I did not have the time, and would not have gotten the approval the same day anyway. The sad thing is that, to save trouble, if he could have budged a little bit, to get the note closer to my target, I would have accepted the higher interest rate just to say that I got everything done in one place.

That said, is a 2% markup on the interest rate normal, seeing that you say that most add 1/4 to 1/2%?

At any rate, I put in my app with the credit union today, and I should hear something by Monday. I saw that that dealership tried to call me while I was at work today, but unfortunately, I was not available to take the call. I was kinda curious about what she would have said today anyway. But I am thinking of just taking my cu loan and going to another dealership altogether.[/quote:91938ce0db]

Nothing is unusual with dealers. When I was younger and bought my first car, a Nissan Hardbody truck, the dealership offered me 12% financing, I took the loan, my brother soon went to work for them in their finance department and looked up my deal, and said they took me hard since they actually got me financed at 8%, a 4% difference
 
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