Car Buying 101: The Deal

At one time, not too long ago - say pre-"clunkers" - you could go in and work some interesting numbers with dealers who were only too willing to give you some very interesting trade-in figures, just to move vehicles.

Before the "clunkers" program, the industry was on the way to its worst performance in more than a decade. The year's pre-"clunkers" sales pace was heading toward 8.2-million units. This was after a disastrous 12-million car sales year last year, and hard 15-million unit sales year in 2007.

Think about this, for a moment. In the span of two years, car sales had almost dropped by 50 percent, so the administration had to do something. With about 16.5 percent of the workforce employed in some way with the car industry, there was no question that the "Cash for Clunkers" program was the way to go.

The first step was modest as the House and Senate authorized what they believed would be enough money, $1 billion. Well, the public liked the idea and in less than a week most of that money was spent. It was supposed to last longer than the week.

The administration had thought that it might need as much as $4 billion to help the industry and it is turning out to be closer to that figure. When all is said and done, the final sales figures will probably work about to be about 1 million cars.

Getting back to your deal, there's very little you can do because the value of your "trade" is set in stone.

It is the scrap figure for your vehicle. That's it. Then, the dealer has to add in whatever incentive money there is available, plus give you the "clunker" voucher, in this case about $4,500 because the "clunker" is gets well under 18 mpg, the tipping point, it seems for the larger voucher.

That's it. You give them your deposit and you can either leave your trade vehicle off with the plates to be transferred or you can come back with the "trade" when you schedule your pickup time for the vehicle (known in the business as the delivery).

This is a very straightforward process and it cuts out a lot of the back-and-forth of the "standard" car deal where the dealer appraises your vehicle, looks at the factory incentives and factors them in and then gives you either: a. the sale price or b. the monthly payment.

Traditionally, you then countered with your own price and you were off to the races, so to speak, as you and the salesperson went back and forth on the bottom line price of the vehicle.

In reality, the dealership manager knew within $50 or $100 of what you would be paying, but that was the way the traditional deal was/is handled. Remember, there are still cars and trucks out there that aren't "clunkers" and over which you still have to "deal" in the old-fashioned way.