New Car Buying Shennanigans

[ranger]

The cheat used to be to contact fleet sales and I would assume that still works *if* you are buying and not trading. They were used to dealing via email, etc. and usually didn't mind dealing with an individual. If they didn't deal with individuals, they'd pass you off to a specific salesman and you bypassed the web site's marketing/data gathering "contact us" BS.

When I bought my Ram, I did it by a bid process. I emailed the fleet sales email address from the website of every dealer in the radius I was willing to drive. I gave them the specs of the truck I wanted and requested an OTD price minus state sales tax (as some where in different states), gave a date I would buy, and gave no other contact information. Once bids were received, I sent out to those that responded "current low bid is X, I will accept one more bid and then buy from the lowest on the date previously provided".

I went with the second lowest bid, as it was much closer to my house and once they through in a spray in bed liner it was actually the cheapest by a few hundred dollars.

Now I still had to go to the dealer to pick it up, go to the F&I office to fill out all the paperwork, etc. so it was not fully online.

I bought my 2015 Ram 1500 4x4 Laramie in Atlanta with the bid process with the caveat that i was not coming in for test drive, etc. I am a Project Manager kind of guy used to buying industrial equipment/services. I wrote a specification for what I wanted, gave options for three colors, no trade in, cash or willing to use their financing, listed out all the discounts I hoped to gain (military, USAA, etc.) then emailed to all the Ram dealers in about 50+ miles of Atlanta - that is a lot by the way. Got ignored by a bunch, several tried the old must come in, and got two firm bids. The best bid was a great deal and closed on that truck. Unfortunately, that deal still had the old finance dude trying to add extras, insurance, warranty etc. at the end but I walked out and they quit the shenanigans.

Recently had a very smooth transaction on the 2019 Subaru Outback all by email.

[BehindBlueI's]

Note: The only 'real' job I held for any length of time in the private sector was in IT for a warranty administration company. We administered warranties for companies in multiple arenas, from Toro law mowers to Maytag appliances to Toshiba computers. We did not do auto warranties, but the general concept is the same.

Warranties are simply a form of insurance. Insurance is best bought to cover you for losses you couldn't afford on your own. I can't afford if it my house burns down or I need a new liver, so I buy insurance to cover those sorts of events. Buying insurance on losses you could cover on your own is a financial loss long term, else there would be no money for administration and profit of the insurance provider. Over insuring leads to more lost money, under insuring leads to more risk of catastrophic loss. Personally, if I can't afford to maintain and repair a car I can't afford the car because I'm not going to waste money insuring components and any car that opens me up to catastrophic loss isn't for me. YMMV.

Warranties are a very profitable business. Casinos have much higher payout rates then warranties. I've broken it down before, but what you're paying for when you buy is expected costs of repair (per actuary data), costs of administration, and multiple layers of profit (underwriter, administrator, retailer). If you "self insure" you're on the hook for expected costs of repair, which in fairness is probably higher then the contracted rate the warranty company has arranged with various providers. F&I offices push warranties so hard because they are big profit for little work for them, costing them nothing but the manager's time as they aren't even paying for the glossy brochures. If it's a manufacturer's warranty, it also feeds a second profit center since you'll have to use their (or another dealership's) repair facility, which they'll get paid for by the warranty administrator.

I do not buy home warranties, electronics warranties, or car warranties with one exception. I did buy the Chrysler lifetime warranty on my truck, which they no longer offer. It is unlimited by miles or years and is a bumper to bumper exclusionary warranty (exclusionary covers everything EXCEPT what is listed). It does not "expire" until the cost of a repair exceeds the value of the vehicle, and if that occurs you will be refunded. They bank on you selling or trading, as it's not transferable. As long as I don't get in a crash and total it out, the worst I've done is give them $2050 on a 0% loan on for the interim (note my money would almost have doubled, inflation adjusted, had I invested the same in an S&P index fund at the time so I'm still probably going to lose money in the long run but the risk reduction was worth it to me in this instance, I would not have bought a 10 year/100k warranty in the same circumstances).

I paid $2050 only after shopping around and them price matching the cheapest dealership I could find (you can buy a manufacturer warranty at any dealership, not just the one you bought the vehicle at). They originally wanted $2800 before tax. A good indication of the level of profit at just the retail level. They still made money at $2050, but would have made $750 more had I not known to shop around.

They no longer offer that warranty, it was something they started post-bailout to try and get out from their reputation for unreliability. I suspect it was stopped not so much due to the lower profit margins vs expiring warranties but due to the chilling effect on trading every 3-5 years. Warranty expiration is often a catalyst for someone to trade in.

[farscott]

In general, automotive OEM extended warranties can be net financial losses. There are a few exceptions. If you are buying a vehicle with a newly designed powertrain (engine and/or transmission), something with new electronics (like the transition to large touchscreens), or a vehicle with a known design issue (e.g., Mustang HVAC, VW timing belts) the extended warranty can be a good thing as you limit your downside. Knowing the Mustang's rep for HVAC issues, we opted for a five-year/100K extended warranty. Since the expiration of the 36-month/36K mile factory warranty, the HVAC components have all been replaced, some more than once. We came out ahead on that purchase and it has another nine months to run.

Knowing the vehicle to be purchased is key to extracting value from an extended warranty.

[TGS]

I'm not sure that's quite "normal." I'm certainly looked at as somewhat abnormal for not having kids.

Could be regional to an extent. In the DC area it's not uncommon at all compared to where I grew up; chicks were more concerned with starting a family ASAP after graduating high school. I always thought that was kind of weird. It's also very common to my agency/parent department as well, at a much higher rate than "normal" occupations.

We're hiring IT people, if you're interested.

[olstyn]

We're hiring IT people, if you're interested.

I've actually never been happier in a job than I am right now, plus I'm not looking to move to the DC area, so probably not unless it would mean a massive pay raise, but I appreciate it.

[Stephanie B]

When I bought my car this year, I traded in my Jeep Grand Cherokee Summit. On the outside it looked great for a 2013 car. Luckily they did not look in the engine bay and found the two broken engine mounts or noticed the air suspension on the front driver side didn't work. They gave me a reasonable trade in value and I took it. If I took it to CarMax or had someone test drive it, nope. Thank goodness for lazy people.

Well.... a friend's kid had a 2010 sedan that was bought used. It had one problem after another. A few months ago, the mechanic said something along the lines of "put no more money into this car, just drive it until it dies." The kid mulled it over, the mom said "stop [screwing] around with that car, get rid of it,"

Kid decided to get a new smallish SUV. Presented the car as a trade-in. Dealer offered a little under KBB trade-in value for the car, but didn't do anything more than an eyeball check. Kid signs the papers, get the keys to the new SUV. Salesman goes to move the car into the rear lot, puts in the key, car is dead. Salesman ran up to the kid, who was getting into the new SUV, said the car wouldn't start and asked what's up with the car. Kids said: "I don't know, it was working when I drove it in here," started the SUV and drove off.

[LOKNLOD]

Could be regional to an extent.

This is definitely true. Those salary numbers are more than a lot of my energy-industry engineers make in OKC (granted the bonus possibilities are great in good times!). Of course other factors in cost of living are much lower.



THinking about this some more, I'll also admit a an inherent bias - I'm a mechanical engineer who grew up turning wrenches for his allowance in his dad's one-man mechanic shop. I was doing brake jobs for money before I was old enough to know that abbreviating that as "BJs for cash" had some really terrible meanings. I'm much more comfortable making judgement calls on BS from mechanics or dealerships than a lot of folks, including dealing with being wrong if I blow off a recommendations and end up fixing it myself.

Warranties still usually don't make sense but I can appreciate the peace of mind that can come with basically being able to say "sure fix it"to anything the dealership mechanics throw at you for the next ten years without paying out the nose for those repairs.

[rob_s]

Re: extended warranties...

Part of what has me considering a new truck is a series of repairs to my current truck over the last couple of months to the tune of about $3k. Most of those repairs would have been covered under an extended warranty. My factory warranty expired at 60k.

I don’t recall what it would have cost to get the extended warranty when I bought, or what the financed price would have co e to with interest (even though I paid the car off about 30 months into the 60 month loan). But if it get to the finance desk again and they say “the extended warranty is $2k” I might be hard pressed to pass it up.

If the problems continue up, as I truly fear they will, my threshold when i do buy new will get even higher.

I’m sort of interested in CPO as my old Escalade was a CPO and I had great warranty service in that (they came to my house and replaced my battery for free in my driveway, for example) but I want a 2021 Durango (not out long enough to be available used) or a 2020-2021 Ram 1500 (the CPO market is pretty slim pickins) or a 2021 f150 (even then we ones aren’t on the lot yet).

[Borderland]

I think most large gov't agencies who maintain a large number of vehicles are self insured. Basically repairing and replacing as needed. When budgets get tight they just maintain their vehicles longer. Not much different than my household finances as they operate on a balanced budget just like I do. I'm now in a position to pay cash for a new vehicle and repair as needed, cutting out the bank and the extended warranty contract. Not for everyone and I was many years getting to this point.

[TGS]

I think most large gov't agencies who maintain a large number of vehicles are self insured. Basically repairing and replacing as needed. When budgets get tight they just maintain their vehicles longer. Not much different than my household finances as they operate on a balanced budget just like I do.

Large fleet sales is a whole 'nother topic that is completely irrelevant to this topic, nor is insurance even a part of this conversation, but even the largest government fleet in the USA still gets warranty service.