Homestead mailing list

[Clansgian AT wmconnect.com]

In a message dated 11/3/2008 5:11:13 PM Pacific Standard Time, 
bobford79 AT yahoo.com writes:


> James, car dealerships are closing around the country because they cannot 
> finance enventory.  There is '"dealer cost", though you will never get it 
> from 
> the dealer.
> 

Sorry, Bob, but here you are just mistaken.  What passes for dealerships not 
getting credit are in actuality the banks and title companies not being able 
to negotiate the credit and thus not being able to floor-plan the 
dealerships.  
The dealer never owns the car you buy.  It is not possible for there to be a 
cost of something you never own.



>> Dealerships are not simply a sales agaent for the manufacturor, most 
> deakers handle many different makes and brands, today. 'Consumer Reports' 
> is the 
> best source, 

What does handling different brands have to do with it??

If by "dealer cost" any of you are talking about the "factory invoice" you 
are shown, you are God's own rube.  The "factory invoice" has nothing 
whatever 
to do with how much profit for the car title holder nor the dealer is making.

A dealer makes a proposition to a financial institution specializing in 
contracting car sales  that if they will buy a car (and even here "buy" isn't 
in 
the normal sense of the word) from the manufacturer and put it on his lot, he 
will pay the interest on the money tied up in the car until it is sold and 
vouchesafe that he will cover the title holder's investment.

The dealership NEVER owns the car.

The car comes from the maker with a document stating what the manufacturer 
would themselves sell the car for if that car were the only one being bought. 
 
This is the 'factory invoice'.  It is NOT what is actually paid for the car, 
it 
is a theoretical number.

When you sign a loan with a lending institutuion for a new car, the title 
holder who make the contact with the manufacturer is paid the money and the 
dealer is given the amount he has dickered above the contact amount with the 
owner 
(title holder).

As I said, the dealer is paying interest on the value of the cars on his lot. 
 When a car has been there for a while and he is faced with paying more 
interest on it or moving it off his lot, he will sometimes be glad to forego 
part 
of the money due him in order to not pay that interest for the next cycle.

But the idea that a dealer paid $XX,000 for a car and you managed to get the 
car for $XX,500 is a myth.  He never paid anything for it.  He never at any 
time owned it.