1. Shop around to see what other dealers and private sellers are selling cars for. Get a working price range before you talk to any sales people.
2. Have a list of car choices. Don't put yourself in a buying corner by limiting yourself to a single choice because. . .
3. Don't fall in love with a car. If you fall in love with a vehicle, you will lose objectivity, and you will get hosed.
4. When talking to a salesman, be disinterested in even doing the deal at all. In fact, be a little uncomfortable with the whole idea of changing cars because you are. . .
5. In love with your current car. It's going to be tough to get you to trade up or out of your current car. Let the salesman see that for you, buying a car is not an emergency. You're in no distress. You can take it or leave it and you know what? You just might want to leave it since you love your car so much anyways.
6. Handle only 1 deal element at a time. Deal elements include: total sales price, financing / interest rate, monthly payments, trade-in value, and the kind of car you might purchase if you do the deal. Start with the total sales price of the vehicle and don't move off of that subject unless or until you are satisfied with the price. No deal is good if it costs too much. So forget monthly payments, interest rates, and trade-ins. There's plenty of time to get to that because. . .
7. You are willing to close the place down if that's what it takes. What time does the dealership close? 9pm? That's OK. I cleared my schedule so I can take as long as it needs to take. By the way, would you be helping those people over there if we were already finished up here? Make the salesman uncomfortable about losing the commissions from all of the other customers he could be helping if he would just quit giving you the run-around.
8. Know your credit score and debt to income ratio before going to a dealership. Remember, financing is irrelevant to you until the other deal elements are worked out anyways. When you know how good your credit is, you'll already have a pretty good idea of how good of a financing deal you are going to get.
9. Make them show you the Black Book. I know this thing exists, but has anyone ever seen it besides the dealers. I had a guy tell me that they don't use Blue Book values. They use the Black Book. So, I said, "fine, bring me that book so I can see it too." For some reason, he agreed to my price instead of showing me the book. I thought that was interesting.
10. When the salesman starts to make too many trips up into the manager's office, just demand to talk directly to the manager. You don't need a middle-man to get this deal done. That middle-man's not on your side anyways, so try to get rid of him and go straight to the decision maker.
11. Make a ridiculously low offer to get started. If you know the average sales price of a particular vehicle is $20,000, then offer $15,000. This anchors the negotiated price range lower and certainly closer to the average sales price. Otherwise, the dealer is going to start high and then you'll be forced to work too hard. Make the dealer work instead. And if the dealer makes a ridiculously high offer, let him know that it's ridiculous. Don't be scared to speak your mind. It's your money.
12. Never offer to split the difference - ever. That's the dealer's job You're not willing to settle for the difference anyways, so don't bother. However, if you want to pay $18,000 and the dealer is stuck on $24,000, but offers to split the difference, then guess what? The dealer's new number is $21,000 (splitting the difference of $6,000 lowered his price to $21K). Now, you're only $3,000 apart and you say, "well, we're only $3,000 apart from what I want to pay and what you're willing to accept. Surely there's some way we can make this deal work." You'll probably end up paying $20,000, but you only had to go up $2,000 and the dealer went down $5,000. That's a success!
13. Be ready and willing to walk away. You're not in love with a car and certainly not with the deal. So, when you hit an impasse, just walk away. This is very powerful because believe me, they don't want that, especially after you've spent the last 3 hours of his time working a deal only for him to lose it along with all those other customers he couldn't help because he was giving you the run-around.
14. Be reasonable, but keep it to yourself.
15. Recognize the right deal when it presents itself and take it. At some point, the dealer has really done all that he can. You need to recognize that and make a decision.
Nice post.
ReplyDeleteI have worked in quite a few sales jobs including car sales.
Number 6 hit home. Anytime I have a friend purchasing a car, I freely give the same advise. Specifically, I tell them to ALWAYS negotiate the price of the vehicle they want first. Never talk about trade-ins or even down payments until after the price of the vehicle has been established. And, never ever discuss payments with the salesperson.
As far as number 9, there is a "Black Book" (though it is actually Yellow), and is usually the NADA price book. Where people miss when trying to determine value is options and mileage. Dealers NEVER factor in options (power locks, windows, etc...) When speaking in terms of actual dollars (which you should always do), the dealer will almost never give you over the lowest base price for that model at that mileage.
All of this is great advise and should definitely be considered before making a purchase.
Now, speaking from the other side as an ex car salesman, these guys are just trying to make a living the same as you. Regardless of what people think, the minimum amount a car salesperson makes per unit is usually pretty low. ($75-$125). Most salespeople sell around 15-20 cars a month. As far as commission goes, it is almost always a percentage of the profit margin in the vehicle (Cost=$20,000, sells for $21,000, commissionable amount is $1,000. Most commissions are between 25-35%). As a buyer, you have to decide how good a job that salesperson did in presenting the vehicle, how much you like them, and how much you feel comfortable paying them.