How to make the dealership bend over backwards?
 

I couldn't think of a good title for this thread. I know there are some folks that work at dealerships on these forums. I am hoping you folks can help me out.

I have a crappy loan on my Yaris. I was a credit builder loan and the interest rate was high. I also ate a previous car loan and a $1K extended warranty/service plan. A couple years into the loan I was having bad financial problems and borrowed against my car. I did manage to get a slightly lower interest but it was still bad news. So here I am over 5 years later and I still owe over $9K on my little car.

Out of curiosity I took it to a local dealer who was saying they are paying "top dollar" for trades. They quoted me $4K. There is no way that would work. Funny thing is that if I sold my Yaris right now, private party, I could probably get at least $8K for it. And Dealerships are selling the equivalent of my car for over $9K or more.

OK here is the big question:

Thankfully I have managed to take control of my finances and around this time next year I would like to have at least $6K for a down payment on an FR-S. Lets say the FR-S is $25K after tax and fees. I am probably still going to owe like $7K on my Yaris. Is there any way I can convince the dealership to offer me enough or very close to the amount that I would need to pay off the Yaris in a trade if I have $6K as a down payment? Or is my only option to hope that I can get close to what I owe on it in a private party sale and take money from my down payment fund and pay off the difference to buy the FR-S?

Would it make more sense to wait another year(ish) say, July 2013 and have over $10K for a down payment and have the Yaris paid down a little more?

What would you do?

Thanks all for any feedback you have. :thanks:

- Jason

If you want the car early then private party will get you far more money, however some of that is offset by taxes (your trade in value is subtracted from the purchase price BEFORE tax is applied, but even assuming an insanely high 10% interest, if you got, say, 5k trade, you are talking $500, so anything over $5,500 private party would still be better).

You could pay more off on the Yaris, but if you can break even on it you'll spend (waste) less on paying interest in the long run (5 years only on the FR-S vs 1 year on the Yaris + 5 years on the FR-S).

Now granted, if you wait you could also save more money for a downpayment, which would offset that.. :)

Probably didn't help you any there, so it really just depends on what you want. The FR-S "now" (next may or whatever) or a year later..

So, you owe $9k on the Yaris. You want to sell it and get the FRS and put down $7k on the FRS. Yaris is private party at $8k? So you'll need $8k cash saved up between now and next summer - or roughly $1k/month saving.

I'd save up the cash, then use it as a down payment on the new car. After you get the new car, privately sell the Yaris for close to what your loan is. The benefit is timing (not being without a car) and getting top dollar for your Yaris (could be a $5k difference!).

Since your interest rate is so high, try and pay the Yaris off as soon as you can or sell it. The longer you keep making payments, they more interest you'll keep paying. You have till next April until the FR-S comes out, about 6 months of payments. Get rid of it.

Trading in a car that still has a balance is a big mistake so don't even bother b/c you'll get screwed over twice.

^^^^ AMEN!

Challenge them to a limbo contest

lol @ quik

Toyota dealerships have trade in offers every now and then, some which offer 25 percent over Kelly Blue Book value. I would scout around.

I hate to burst your bubble but as always captain pessimist must open his yap and cast doubt on situation at hand.

So lets talk dealerships. For a dealer it is not profitable to trade in any car. Their goal is to sell cars. That means just that. They want to sell you a car for the biggest amount possible. That is especially true since all or most dealers work for commissions. As an incentive, however, they offer trade in option during which their entire goal is to get you into new car with least amount of hurt in their pocket.

Example 1:
You drive up in 2011 mercedes benz which costs $89,000 and wish to pick up a $25,000 FRS. They will most likely not be willing to give you an FRS and then give you $64,000 in cash. Unless they are a mercedes dealership they will have a very hard time selling a $89,000 car trying to break even.

Example 2:
You drive up in a Yaris which is by the way (and please do not take this personally) a hideous vehicle that is not popular, is low on horse power, low in cargo space, slow and because USA version is what it is... it does not appeal to youth unless they are high school girls driving their first car. Kelly Blue Book value may list $8,000 but car is lacking special appeal. Dealerships will have hard time selling cars like these because most americans do not live in cities and thus have little need for super small cars and those that do live in cities do not have the need for it. Back to the topic. Dealership will not give $8,000 for a yaris because it would sit on their lot forever. They will low ball you with a ridiculous price to let you know they are not interested in that trade. Only exception to above is if you were buying a car that is substantially more than price of trade in... such as if you buying a $89,000 mercedes in place of a yaris.

Example 3:
You were driving a 2007 $33,000 Subaru WRX STI with 30K miles on it. You came in to dealership and wanted to buy something like a $25,000 FRS. They will likely allow you to trade your STI at very unfavorable APR but they would do it eye for eye.

In your case I guess the best thing to do is to keep driving your Yaris into the ground. Trade in value will be low so if you can get to the point where you will not be upside down at time of trade then by all means feel free to trade in at the time of purchase. At any other option I would try and sell the vehicle prior to your purchase and hopefully pay off your car loan with money you owe to lender.

More importantly you need to approach your car purchase from a different angle. Dealer wants to hear you say the following: "Here is what I have, can I drive the car off the lot if I give you this sum." They will figure out a way to give you a loan that is not favorable. Instead of concentrating on how much cash can you give on trade try obtaining a favorable loan prior to entering dealership. In other words secure the loan at your terms. Only exception to above would be if dealer gives you a better offer which does not often happen.

And cash you are saving... save it for car payments. If yo play your cards right you can have 2 years worth of payments from money you are saving now and by end of 2 years (providing you will be setting aside car payments) you will likely repay 2 more years worth of loan and have your car paid off in 4 years instead of 5.

Holy h*ll Yuri! How've you been man?

:bow:

Good to see you alive Captain Pessimist and what a post. You mind giving a mathematical example of your last point though - I think I understand it but numbers would really help further distill the idea.

In a quick and simple answer, from my perspective I'm trading my Legacy when this car releases, most likely for the BRZ, so I see where you're coming from on this subject.
I think you are probably better off waiting for next year and save up a bit more. If you really want this car when it rolls out then go for the private sale.
I know this was not too thorough, but good luck man.

Save up your money and pay off the yaris... Then think about another car.

Hey wow all thans for all the feedback!! Gives me some things to think about.

- Jason

Continue driving your Yaris and pay it off ASAP, assuming no penalty fees for early paid off. Do not invest further aftermarket upgrades for the yaris if any and just work/ study or work and work another part time job? to safe more money. And limit your 'social' spendings. (not sure if that's the right word).

Ask parents to help you pay off Yaris and pay them back without interest!!! If you have credit card balances watch out for high interests rates! Pay them off ASAP also.

Then get your FRS!!! Wish all the best for you.

I'm hoping they have a "cash for clunkers" or whatever program, and will give me 2 or 3 grand for my POS beater civic. My brother got a deal like that when he bought a new hyundai last year.