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Wed 29 Jan 2020 18:23

Used car buying and discounts - privateinvestor

Good evening

What expereince do useres of this forum have when buying a used car form a main dealer and negootiating a discount of the advertised price. I have used webuyanycar and caluclated that dealers will bid for a car often 2-3k below market price ie trade, so if say sticker price is, say, 10k, they would have bouht for 8K, assuming £500 costs to freshen up and service etc that keaves say £1500 profit. Do used car dealers have to pay VAT?

any comments replies appreciated.

Thank you

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Wed 29 Jan 2020 18:49

Used car buying and discounts - Andrew-T

VAT - of course, but not on vans. Your bargaining position depends mainly on whether you are part-exchanging. If you are, you and the dealer will be selling to each other, and he probably wins. If not, it will depend on whether you buy outright or with a loan, or in instalments.

Wait for SLO's reply, he will tell all.

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Wed 29 Jan 2020 19:12

Used car buying and discounts - Terry W

Basic rules of negotiating:

do your research first - price, history, age etc
inspect it very closely for even minor faults on a nearly new car
be prepared to walk away to find another if you are not happy with what's offered
understand that you are the amateur, they are the professional

Walk away courteously, leave your number, they may come back with something closer to your expectation.

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Wed 29 Jan 2020 21:20

Used car buying and discounts - catsdad

I think that used car asking prices are a closer now to selling prices than they were a few years ago. Car supermarkets and the web have made comparing prices much easier for the buyer and, although I can't prove it, I reckon price variations between dealers are less than they were. The result is prices are more realistic and the scope for discounts is reduced.

Also when buying the Golf last year from a big group I found that the salesman had little scope to discount locally. Pricing was governed by a central pricing team. I reckon local scope on sticker price was 5% or less.

You can however play a waiting game and monitor a car's price fall if it's held in the group for a few weeks. If you can then get the local 5% discount on the reduced price you are doing as well as you can.

As for dealer margins the OP shouldn't confuse gross and net margin. They need to pay a lot of overheads from the "profit" - wages, site costs, finance costs of stock etc etc. HJ has written too in the past about the costs of meeting Sale of Goods Act costs affecting the ability of car supermarkets to offer the bargain prices they once did.

No doubt good discounts are achievable but they are not as readily negotiated as perhaps they were a few years back. No harm in trying of course.

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Wed 29 Jan 2020 22:07

Used car buying and discounts - SLO76

Don’t go searching with discount as your number one priority. I’ve seen loads of people making this mistake, often walking away from an excellent car at an outstanding price because I couldn’t or wouldn’t throw it away only to buy something with major issues, fiddled mileage or faked history. No one gives away good stock so be wary of its too cheap. Some dealers price stock with heavy discounts and strong part-ex offers in mind and others keep prices lean to bring punters in but they’ll often refuse to budge by even a penny piece. At the end of the day you could look at two identical cars one priced at £10k and the other £9k, would you think you’d struck the better deal if the seller of the first car gave you £1,000 off?

As a trader I often had calls from people who simply wanted to know how much I’d discount a car by without even coming to view it. I tended to price them very keenly as it was just a sideline, more of a hobby if I’m honest so i wasn’t reliant on a big return. So to those fixated with discount I’d simply tell them that I’d add x amount on and then give them it back again in discount if that made them feel better but at the end of the day I’d take no more than £200 off a retail car and anything below £1,000 would get a token gesture like some fuel thrown in.

Dealers don’t have a fixed profit margin either, you could buy two identical cars on the same day at auction and one might’ve cost you five hundred quid more. There are no hard and fast rules here, it’s all fluid. Most dealers will have a policy regarding discount as mentioned above but in order to ascertain whether you’re getting a good deal you need to research what similar cars are selling for and be careful that you’re comparing like for like.

Discounts are irrelevant, it’s the price you ultimately pay, the cost to change that’s important and don’t forget to do your homework on finance too, I’ve seen people argue like crazy to get £300 off then sign an uncompetitive finance agreement that’s stings them for £2-3k more than the best bank loan. Yup, sure I’ll give you an extra £100 off if I’ve a fat finance commission coming. A wee trick is to let the dealer quote you a lovely overpriced finance deal then haggle hard for a discount. Get it on paper then call him later agreeing to buy but you’ll source your own money, legally he can’t change the price you pay based on how you fund it.

As for VAT, the dealer (if Vat registered) will have to pay it on the profit margin. If it’s £1,000 then it’ll be £200 for example and as you guessed it, it’ll be you who pays it as business cannot pay tax, it simply collects it. It makes no difference though as you’ll pay VAT unless you buy privately and on a new car you pay it on the full price.

Further to all this, I remember as a young trainee salesman being sent out to add £500 to the screen prices of a list of overage stock that were going to be involved in an £1,000 minimum trade-in offer. Ain’t no free lunches I’m afraid.

Edited by SLO76 on 29/01/2020 at 22:41

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