Car dealer scams | Chapter 1: Consignment

[Michael_]

Today i found this very cool website that tells you how dealers scam you when buying or selling a car on consignment:
http://www.gatewayclassiccars.info/

Note that those prices are excl. tax!
Note that you do not get a warranty because the dealer is only selling the car for a private individual. (Despite you paying all those fees)

Its just one of many scams but i found this quite interesting and thought i'd share it with you guys.
It really gives you deep insight in how those comission deals work.

 

[Slap Stick]

Here in Missouri where this outfit is located, no dealer charges sales tax. That is done by the Department of Revenue when you take all your paperwork to register and license the car.

 

[dadsbee]

And of all the dealers to post a "scammer" disclaimer warning!

EDIT: I see it's a pissed off customer going after Gateway's practices!

 

[BeatersRus]

And of all the dealers to post a "scammer" disclaimer warning!

lol !
i was thinking that exact thing when i opened this topic
wolf/sheep/fox/henhouse

 

[dadsbee]

Agreed Rob, and going to the link it's actually someone trying to take Gateway down!

 

[Michael_]

For me those fees look pretty high. Thats what i mean by "scam".
If they sell a 50k car they charge 11k from the buyer and seller (combined) without giving a warranty or anything else.
Dont know how the tax situation is in the states but it seems not to be included.

For me thats not cool, considering the dealer does nothing you cant do yourself saving thousands.

 

[69L48Z27]

Very common practice. Mecum auctions gets 10% on both sides of the deal and people line up to sell and buy cars. Only winner in that deal is usually Dana Mecum.

Also, keep in mind these brokers offer a place to keep the car (storage) and keep it clean. Then they can also offer the buyer financing, which they make more more on that. Individual seller can’t do that.

Brokers/Consigners and auctions are not scams. Just have to find one that charges less than the other. I’ve never used one and probably never will but I’m not turned off to it.

 

[Michael_]

Also, keep in mind these brokers offer a place to keep the car (storage) and keep it clean. Then they can also offer the buyer financing, which they make more more on that.

Agreed that (and the fact that they sell the car for him) is good for the seller.
One just has to realise that if they sell your car for 50k then your paying 5,5k for this service.
If you think thats a good deal than look no further. I certainly would not.

But its much worse for the buyer, as he pays 5,5k too and gets basically nothing for it.

As far as financing goes, wouldnt it be better to get a loan from a regular bank and pay cash if you need financing?
I guess if you cant get a loan from a bank you better should not buy a classic car anyway?
Apart from that i think its not a good idea to buy cars on loans at all.
But of course its better for the seller if they approve more people. (obviously)

At the end each to their own i guess.

 

[66 Sat]

Car dealers (like any business) have to make money, and try to make as much as possible. The buyer shouldn't come into it - if he likes the car and agrees the price he's not being ripped off (as long as the car isn't being misrepresented). If the seller wants to use a consignment company then they should expect to end up with less than selling privately. It's like trading a car in at a dealer against a new one. They give you say $10,000 for yours and tell you all the faults it has, and it's back on the lot the next day for $17,500 with a glowing advert saying how good it is.

 

[68BabyBlue]

Having bought five and sold four GTXs and one Chrysler 300F over my lifetime, I've been on both sides of this fence. I purchased all the cars with cash from private parties, which I've come to realize is not typical, even more so as the values have gone up over five decades. Selling has been a lot less enjoyable than my purchases. I went the auction route one time, in disgust after dealing with 30 dreamers on a nice car that was fairly priced. After fees, I ended up with what I felt the car was worth.

I never realized the role financing plays until I bought a classic Corvette from a reputable dealer a decade ago. They were candid about their mark-ups and fee structure, approximately a 20% spread. They told me that 97% of their sales were financed, which shocked me. They bought the car back from me a year later, after I got the GM thing out of my system.

As a seller I learned that the only way to get past the issue of unqualified buyers was to buy my way out of it, through consignment, or with deep discounts to connections within the hobby. As a buyer, I prefer to do my due diligence, and bypass dealer fees. Caveat Emptor applies in both cases.