A Typical Dealership
Before you go to a dealership to purchase a new or used car or truck, you should be aware of the forces at play in an automotive sales environment. Read below for some insight into the traditional dealer sales model.
Be aware of your environment
The dealer is NOT your friend...
When you go to an automotive dealer you must understand that they are equipped with a well trained team of sales professionals who likely have a lot of experience in predatory sales techniques designed to fleece you in short order.
In addition to your salesperson most dealers have a sales manager, several assistant sales managers, and a finance manager who fall under the direct supervision of the General Manager. These people all make some form of commission and have absolutely no reason to let you out the door with anything resembling a good deal. This salesforce is picked and trained to maximize the dealers profit from each and every sale. You must be aware of your environment and the forces directed against you when purchasing a new or used vehicle.
Beware of big "sales"
SALE doesn't mean savings...
Dealers typically will make more money during a "sale" than on non-sale days. Why? Because the only "sale" is the word on the sign. Dealership "sales" are well choreographed events aimed at getting a lot of people to show up on a given day. Getting excited about $99 down and $99 a month, a "free" television set, a trip to a casino, or some "challenge" from a credit union doesn't mean you'll get a good deal. That just shows how gullible you are.
Dealers advertise for one purpose only, to get you on the lot. Once you are there then they can have their sales team hammer you into submission. Don't fall for slick or cute commercials promising good deals or newspaper ads that detail a popular car at an unbelievably low price. Dealers are not set up for giving good deals, they are primarily staffed with people who make 100% commission.
There is absolutely nothing inherent in a commissioned sales environment which provides any incentive to give you a good deal.
Know the process
One PART of a whole...
Buying a car is a process. It is very important to realize that buying a car is a complicated process which entails many separate steps, including picking out your new car, negotiating a price, negotiating your trade-in, and negotiating your financing
A salesperson WILL lie to you...
Be aware that they have every motivation to lie to you.
There is a reason people don't trust car salesmen and saleswomen. Many, if not most, are simply liars who will tell you whatever it takes to get you to sign on the bottom line. If it sounds too good to be true then it probably is too good to be true. Anything important to the deal is important enough to get in writing. Any salesperson who will make a promise but not put the promise into writing as part of the deal is lying to you and you should go to another dealer.
When you buy a new or used vehicle from a dealer the salesperson, sales manager, finance manager and general manager all get a portion of the profit generated by your purchase.
When you take your car to a dealer for service the service advisor, service manager, mechanic and general manager all get a portion of the profit generated by servicing your vehicle.
You must always be mindful that, no matter how nice any of these people appear to be, they see you as a portion of their paycheck and it is not in their best interest to let you leave without making as much as they possibly can from you.
Everything a dealer employee does in the selling process is designed to get you to agree to a higher monthly payment, a longer financing term, a lower trade-in allowance, a higher selling price, etc.
There is nothing in the dealer sales process which promotes your interests other than yourself.
Know your way around
There is nothing FREE at a dealer...
Many times dealers offer a "prize" to people showing up on the lot, free groceries, a free vacation or a free car are good examples. The "prize" is usually that they will run an inquiry on your credit using the information YOU PROVIDE when filling out the "prize" form.
Never, ever fill out for these " prizes" at a dealer, and usually it does not pay to fill out for the "free" giveaways you see in stores and malls. The information you provide simply goes into someone's marketing catalog and you get inundated with offers via telemarketers and mail.
Hold on to your KEYS...
Unless you are ready to deal on a specific car, don't give anyone at a dealership the keys to your trade-in for any reason. Otherwise you may end up asking for your keys for several hours while they hammer at you to buy their vehicle. I recommend that anyone who asks for their keys back more than twice without receiving them call the police and wait until an officer arrives and have the officer make a full report of the dealer's effort to hold you against your will. Then contact your lawyer.
Don't show your EMOTION...
Don't let them know you are excited about a particular car
If they know that you are emotional, and that you have already decided on a car you absolutely must have, then you are screwed. If you are a person who tends toward making emotional decisions you should take someone with you to help you through the car buying process.
You don't have to PROVE you are serious...
If a dealer asks for a deposit to show how "serious" you are about buying you should get up and leave.
Don't fall for this trap or you could very well end up suing the dealer to get your deposit back. The whole point of the "deposit" is to get some of your cash and give you a strong incentive to deal with them as opposed to another dealer. Getting a "deposit" back from a dealer is a protracted process by design. Many people give up trying to get their deposit back from a dealer. The whole "prove you are serious" proposition is a ruse to ask you for some money. Don't fall for it. The same goes for giving them your driver's license or social security card, unless you are asking to test drive a vehicle there is no reason to give a dealer any of your identification.
Guilt doesn't add ANYTHING to the deal...
Don't believe the salesperson's guilt trip. Salespeople will have pictures of children on their desk, talk about sending their kid's to college, summer camp, the low pay from the dealer, etc., all in an attempt to "guilt" you into paying their proposed price. Don't fall for this tactic, it's a cheap shot aimed directly at your sense of fair play.
Don't let them flip you to a LEASE...
Why would you sign a lease? Unless you are leasing a vehicle for business purposes, and I don't mean a home-based business, then you are likely throwing away a lot of money. Leases generally do not benefit anyone but the dealer and salesperson. Dealers provide very strong incentives to salesmen to flip customers to a lease when possible. A typical car sale might pay the salesman $250 commission when a lease will pay $1700 commission.
Don't forget there's an EXIT...
You can leave at any time. Don't feel obligated to listen to any deal, meet any sales personnel or talk to their managers. You will typically get a better deal if you make sure that everyone understands that you will not be pressured in any way.
Credit worthiness is NOT a sales factor...
Never, ever, ever fill out a credit application until you are ready to buy a specific car. Many times a salesperson will ask that you fill out a credit application to determine your "credit worthiness". Don't fall for this tactic.Your credit worthiness or lack thereof is of no importance during the sale and should have no relevance to the price of a vehicle.
Credit worthiness only affects your ability to obtain financing.
If you must obtain financing from a dealer, DO NOT, UNDER ANY CIRCUMSTANCES, FILL OUT A CREDIT APPLICATION UNTIL YOU HAVE FOUND THE CAR YOU WANT TO BUY. I cannot stress that enough. Otherwise the dealer will accomplish two things, he knows how much you can afford to pay for a car, and he posts an inquiry against your credit. If you cannot come to terms on a vehicle and you end up at another dealership, they can see that you have been to at least one other dealer and couldn't or wouldn't make a deal. If you get three or more inquiries on your credit from a Saturday out car shopping, then you will have serious problems actually buying a car using credit.
Your purchasing goals
The less they know the BETTER OFF you are...
Telling a salesperson a lot of information up front is not in your best interest. Never tell anyone what you are prepared to pay, what you can afford to put forth as a down payment, how much you can afford to pay monthly, what you are trading in, etc.
This information only helps a well trained sales team maximize their profit while leaving you holding the proverbial bag. Keep your mouth shut and parse out information only as needed. They don't even need to know your name until you have decided to make a deal. Don't give a dealer any contact information unless you just like to be hounded by high-pressure sales calls. Instead, give them the number to the local Zoo and tell them creative names like Harry Lions or G. Raffe.
Enter at your own RISK...
Dealers make as much or more money from financing your vehicle than they do in selling it. The finance manager's only goal is to ensure that each deal reflects the highest possible payment that they can extract from the car buying public.
To achieve this goal they will use a variety of tactics, such as selling you a useless extended warranty or credit life insurance, deceiving you into signing a 72 month loan instead of a traditional 60 month loan, claiming your credit is bad and that you are being charged a higher interest rate, etc.
I cannot overstate the importance of arranging your financing at your own bank prior to car shopping or of knowing your credit rating and exposure.
Know your car's WORTH...
Don't get stuck on your trade-in. Most people buying a new car have an older car to trade in. Make sure you have a clear and realistic understanding of what your trade-in is worth before you go to a dealership. Don't let any dealer trick you into believing they are giving you a great amount for your trade in. This is a trick that dealers use frequently to get you to pay top dollar for a new car. See if they will purchase your trade-in outright for the stated trade-in amount. In most cases you would be better off selling your used car to another person than to a dealer.