The Inside Scoop
May 03 '00 (Updated May 04 '00)
People in other, ordinary purchasing situations- buying a dress, ordering dinner, with car salesman-like pressures coming from the people helping them, these are the newest Autoweb commercials. I probably find them funnier than most, because I've said these things to people- each and every one of them. Yes, ladies and gentlemen, I used to sell cars. (There goes the readership. *sigh*) But today, for a limited time, because I don't care if my manager goes nuts, I personally like you, I'm going to tell you how it really works, and arm you with tips the dealerships don't want you to know.
The Advertisements
At Dealer's Invoice!!! - Invoice sounds so good that people don't listen to the word that comes right before it. Dealer's. Who's the dealer? The guy selling you the car, and their invoice is on the window of every single car on the lot- it's the same price you're offered every single day. Be wary of "Invoice" sales- "Below Dealer's Invoice" is going to get you what you'd normally get in the bargaining process, "At Dealer's Invoice" is going to make you work harder for what you'd get in bargaining, and just plain "Invoice Sale" is a worthless promise. All cars are for sale, all cars have an invoice. The only time an invoice sale is actually worthwhile is when they're selling at the manufacturer's invoice- and it's still not as good as buying a car at tax time.
Get Model X for just $159.00 a month!! - Yeah, you can definitely get the car they're advertising at that price for $159.00 a month- with two thousand dollars down, and a sixty-six month loan. No ifs ands or buts, you will have to have a down payment to get that low, low price on the commercial, and you will have to have a long-term loan. You can figure out what your car payment will be on the lot with simple math- take the total amount on the invoice, subtract your down payment (if any) and subtract about 1500 dollars for your trade-in. (And that's if you own your trade in outright- if you're still making payments on it? Forget it.) Divide the amount left by sixty six, forty eight, or twenty four (depending on how long you want to pay in months) and that's approximately your monthly payment.
It's Tax Time! All Cars Must Go!! - This one is actually true. Dealerships are taxed for every single car on their lot at tax time. Now, dealerships actually pay taxes more than once during the year, so if you pay very, very close attention, you can see price dips throughout the year. However, tax time is a great time to buy a new car because you can use your return for a down payment, the manufacturers usually include rebates as well, and the dealerships are crowded. Car sales is by commission, folks, and the faster they get you in a car, the quicker they can get to the next customer. Corners are cut on the hard-sell, because there just isn't time for it. The only bad thing about buying a car at tax time is your trade-in is going to be less valuable than other times because- once again, the dealership is taxed for the cars on their lot. Including yours.
Lease Model X for X amount/Month - The lease is one of the best ways to screw you up one side and down the other unless: 1) you could afford to buy the car anyway and 2) you drive a ridiculous number of miles a year. You see, a lease requires a down payment, just like buying a car- and usually a fairly hefty one because you're only borrowing this car. The credit check on a lease is much more stringent than purchasing because, once again, you're only borrowing this car. Lease cars come with a built in number of miles you can "spend" in a year- if you go over that, you pay for it. You can "buy" additional miles per year, at a fairly reasonable rate, but you need to make sure that's going to be enough before you sign on the dotted line- "buying" miles retroactively is much more expensive. In many states, insurance rates on a lease are much higher than on a new buy, and you're still responsible for monthly payments, license and registration, plates, taxes and destination. After spending all of that, when the lease is over, you don't have an investment- you can't trade this car in for credit. So unless you drive a whole heck of a lot and are likely to kill a warranty within a year, buy the car.
At The Dealership
The sales staff are there to sell you a car. They are not there to be your friends, confidantes, or buddies, they are there to sell you a car. That said, most of the people you'll meet in car sales are pretty genial people. (This, my friends, is why I don't sell cars anymore- I'm not a particularly genial person.) They don't mind chatting with you about your cat, your grandmother or your cute kids. They'll talk to you about the same- but they're paid by commission, and they're only going to talk to you at length if they think they can put you in a car.
This is not to say you shouldn't listen to what the salesman has to say about the car. They've driven them, and they'll tell you the secrets on how it works, any little quirks it might have, and even how to set the radio stations. A new car may have design problems, and your salesman will probably point them out-- because he can't do anything about it. Walking around, looking at the car, and going on the test drive, this is when the person helping you is going to be most honest because this is when they have the most to lose if they lie. Unfortunately, this is also the part of the sale most people research, and it's easy to get comfortable with staff when what they say about the car matches the available information. Crash tests to comfort level, everybody's going to agree on what the car has, and doesn't have. So here's what to look out for at the lot.
You Ask: Can I get this in blue? They Say: Do you want it in blue? - Repeat ad nauseum regarding power steering, electric locks, remote entry, etc., etc., etc.. It's to the sales' advantage to get you in a car that's on the lot RIGHT NOW. Yes, they can special order a car for you, or trade a car on their lot with another dealership to get you the car you want, but they don't want to. From the dealership position, it's more trouble than it's worth and for some companies, special orders and dealership trades count against them when it comes time to order new cars. If you're really intent on blue/electric locks/whatever- insist on it, or go to another dealership.
What will it take to get you in your new car today? AKA If we can get your price, will you take YOUR car home today? - Technically, whatever you answer, this promise means nothing. You can say yes all day if you want to, but if you don't sign the papers, it doesn't matter. What these questions do, however, is get you emotionally attached to the car. It's not the lot's car, it's your car. You want the car, it's your car. While it sounds pretty lame, buying a new car is both scary and exciting. The more someone identifies with a car, the greater the sense of sheer desire and ownership, the easier it is to screw with the details. This is YOUR car, what are you willing to do to take it home?
This is a popular model, it might not be here tomorrow. - This is both the truth, and a ploy to invoke a knee-jerk reaction. Another popular variation on this theme- one you'll often see posted on the walls of the sales office is, "The car you're going home to think about tonight, is the car someone else thought about last night, and is coming back to buy today." Once again, they're trying to evoke that sense of ownership in you- some other jerk wants to steal your car!! It's possible that if you go home to think about it, that car might be sold while you're gone- but if you want to go home and think about it, maybe the car isn't quite everything you want? Keep that in mind!
In The Sales Office
The banks like to see a 10% down payment. - Of course they do! Ten percent is better for them because more of your money is involved, it makes them more confident that you're willing and able to pay for the car long term. However, the banks do not require a down payment of any percentage, and if you don't have one, you can still get a car. However, it may be a case of getting the car you can afford, not the car you want.
Let me talk to my manager. - Much as you might have suspected, a salesperson talking to his manager means about as much as "let me consult my magic eight ball." Here's the plain, ugly truth- the sales staff already knows how much they can wiggle on a car. If you have an unusual request, they may actually go to talk to their manager, but more likely than not, they're going to go get a cup of coffee, check some old paperwork, or just stretch their back. What "Let me talk to my manager" means to you is that you're playing the game, they're playing the game, and pretty soon, you're going to be down to filling out paperwork and waiting to find out if you qualify.
The extended warranty. . . - Is a great way for a salesperson to pad their commission, for the dealership to make more money, and for the billing office to work their calculators a little more- and they all love that. An extended warranty pump your monthly payments up anywhere from $25 to $125 dollars, and chances are, you will never use that extended warranty, but you will pay for it for the life of your loan. Don't get the extended warranty. Don't get the extended warranty. Don't. Get. The extended warranty.
How to Buy A Car
If you know what you want, without a question, and you are ready to buy a car, here's the best way to go about it. Be ready to spend most of the day at the dealership. Hit the lot you want, find the car you want. If you haven't been approached by a salesperson, seek one out. (Sales people spend a lot of time trying to figure out if you're serious or not. If you're grabbing them, they know you are, and they're ready to go to work.) Take the test drive, and go to the sales office.
If you have a car you own outright, here's when it goes to get appraised. Don't expect to get a lot for it- if you do get a big number, rejoice. The average trade in is usually about 1500 dollars. More than that, you lucked out. If you have a trade-in on which you're still making payments, find out how much your pay off is (how much you still have to pay on it.) Then get a copy of the blue book, and find out how much it's worth. If you have less to pay on it than it's worth, congratulations- you'll get to subtract the difference from the new car price. If you have more to pay on it than it's worth, ouch. That's called being upside down. Most people with sixty six month loans are upside down. You will have to ADD the difference of the pay off to the price of the new car, so it may not be worth it to you to trade it in, depending on the difference.
Have a down payment on hand, in cash. Two hundred fifty dollars is really the least amount anyone will take seriously as a down payment, because it's approximately the same as one monthly payment. The more you have as a down payment, the better your chances of getting the car you want, and the smaller your monthly payment will be. Don't lie or play with the salesman, or they will lie and play with you. The first day I was on the floor, my manager told me that people will get upset if you don't go back and forth, because they don't feel like they're getting a deal. This is absolutely true for some people, but the sales staff can't tell that kind of person on sight.
It's perfectly acceptable to tell your salesman right away, "I will take this car home today if I can get a payment at X/per month, give or take ten dollars up or down. I have X amount in a down payment, and I (own my trade in outright/owe X amount on my trade in.)" Remember- they work on commission. The faster they process you, the faster they can get back on the lot to sell another car. I know I, and everyone I worked with at the dealership, always appreciated these people- and they were more likely to get exactly what they wanted on their terms. There's no wiggle-room with someone who is confident and knows how it works.
If there's going to be more than one name on the title, have both people present that day to sign paperwork. A car sale can be held up indefinitely until all the necessary signatures are gathered. Have your insurance information ready, because they won't let you take a car off the lot without insurance. Finally, if you don't get the price you want- and by now, you should be able to figure out what you should be paying, don't threaten to leave. Just leave. Don't say you'll walk away if you're not prepared to, and really, don't go into buying a new car unless you're prepared to walk away. The car you want can be found at another dealership, there is no reason to allow yourself to be battered into a higher price, or extra options you don't want.
Finally, be realistic. Sometimes you really do have to buy the car you can afford, and not the car you want. You can figure this out before you even walk into the lot- how much can you pay a month? Multiply that by sixty-six. That number is your target total price, pick a car that you like that's around that price, or less. A salesman doesn't like to have to tell a customer they can't, according to the bank, afford a car, so be realistic. 300 dollars a month can get you into a car that's 19,000 dollars or less. 250 dollars a month can get you into a car that's 16,500 dollars or less. There are a lot of wonderful cars out there in that price range, and as you build your credit- buying a car is one of the best ways to do it, later, it's possible that you could get approved for a bigger loan with lower interest rates. The car of your dreams is the one that doesn't get repossessed.
And even though I was a car salesman, you can trust me on that.
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