I was going to create a seminar and charge a lot of money for this information, but I changed my mind and thought I could give back to the community by giving away this information - for free. It will be the last free thing you get before you set foot in the showroom of the car dealership. This is going to be part one of what will likely be a four or five part series.

A Few Disclaimers

First, I was only a car salesman for a short while for two different dealerships - a Chevrolet dealership and a Ford dealership. I was fired from the first one for not being one of the top ten sales people at the end of the month. I did much better at the second dealership. It could be that I wised up a bit. It could be that I’m a Ford man so it helped to sell something I believed in. I, did sell a Vette at the Chevy dealership - unusual for new salespeople I was told - so maybe there is something to that.

Second, I do not hate dealerships. I do not have some animosity toward them. I love selling. I love meeting people, finding out their needs, and helping them to get what they want. Some ex-salesmen are trying to burn the very dealerships that employed them. My purpose here is to, instead, help good honest people get a really great deal on a car without being taken to the cleaners. It is possible to get a great deal on a car. Unfortunately, it is very rare. In fact, most of the people who have told me about the great deals they got on their car were robbed to such a degree that I didn’t have the heart to tell them the awful truth. Sometimes people know when they got taken. They usually find out — from another car salesman — when they go to try and sell it or trade it in. Sometimes they find out earlier. Sadly, there are those who keep their car long enough to never know they were betrayed. In fact, some people will rant and rave about their car salesman (in a good way) and almost rush back to be fleeced again. So, consider this a PSA - Public Service Announcement.

Third, I’m going to refer to car salespersons as salesmen. It is more natural for me and most people reading it. In no way do I mean to suggest that women can not be good car salespeople (although I will highly suggest that most women would do well to never go to a dealership alone). But I’m just not very politically-correct - it, quite frankly, takes too much effort. So deal with it - you’ll have to be PC enough for both of us, I guess.

Meat and Potatoes

The articles will follow roughly a chronological format as you would expect to travel through the process (some might say “ordeal”) of buying a car at a dealership. For the most part, what I say applies to both new and used dealerships, whether they are little lots on the west side of town with grass growing between the 12 cars on the lot, or giant monolithic structures rising out of the desert with thousands of vehicles reflecting the sunlight like a mirage. Most “little guys” got their training from the “big guys”. In fact, their friendly, down home personality and casual atmosphere is somewhat of an advantage to them as you’ll soon learn. And much of this could apply to purchasing a boat, jet ski, motorcycle, whatever.

The general steps are as follows:

1. Deciding to Buy a New Car
2. Your First Ten Minutes on the Lot
3. The Test Drive
4. The Trade-In
5. The Negotiation
6. The Finance Office
7. Leaving (Sale or No Sale)

When I say “new car”, understand that I’m talking about “new to you”. It could be 1993 Ford Escort, but if you came on the lot with a 1978 Pinto, that Escort is a New Car. Got it? Good. Let’s begin your training.

Part One - Deciding to Buy a New Car

1. Not deciding to buy a New Car. I can’t think of one mistake more horrible that people make but to NOT decide to buy a new car. They wonder onto car lots sort of just wondering whether they should get a new car, if they could afford to buy a new car, what a new car might be like, etc. Please do yourself a favor and put a sticky note on the rear view mirror of your current bucket of bolts: “Do Not Stray Into Enemy Territory Unprepared”. You’ll know what it means.

You must be more prepared to shop for a new car than anything you’ve ever done in your life. In many ways, even more so than a house. You might over pay a little for a house by agreeing to an asking price when you could have offered less. But a host of realtors, title agents, home inspectors, mortgage and loan officers will keep you from vastly overpaying. You simply can not pay $200,000 for a $120,000 home (unless you are paying cash). Your bank will stop you. But you can easily pay $20,000 for a $12,000 car and few people will stop you - even the auto finance companies don’t know how most of the deal was structured.

Being prepared does not mean going to a few websites and printing off some data on your dream car. It does not mean checking out the Kelly Blue Book value of your trade-in (although it is a start). You’ll need to do much more. So promise yourself now that you won’t wander on to a lot. A car lot is not where you gather information - it is where you spend money.

Now, having said that, once you are armed with a bucketload of information (which I’ll get into later), do NOT, I repeat, do NOT wander again on to the car lot with papers flying out of your purse and briefcase. Do not say to any salesman “I’ve checked out the wholesale value of my car”, or “I’ve done my research”. You’ll be turned faster than you can say “Ghuzendtight”. You’ll find out what it means to be turned later. You must instead take all this wonderful information and memorize it. All of it. Percentages, interest rates, black book, blue book, etc. But you must never let on that you have done this dastardly deed. You must appear calm, patient, and even a bit unsure at all times - or you’ll be turned. Being turned is actually a good thing if done at the right time. The right time, however, is NOT within the first 60 minutes on the lot.

2. You must plan on taking up your whole day. You must convince yourself that you will be spending the day at the lot of your choice. If you get there at 10am, plan on driving off in your new car, at the price you want, around 5 or 6pm. I can tell you without a doubt that if you leave at 1pm, that you were taken. If you start with this attitude, you’ll appear more relaxed, less agitated when the dealer tries his delay tactics, and you’ll be confident knowing that you are heading ever so slowly toward the car and the price you want. If you are married and one of you is the kind who likes to pace, or snap back at troubling news (such as counter offers that seem more like ransom demands), that person should stay home. Now, typically, that whole day for most people is Saturday. However, that is pretty much a bad day to go at most dealerships. First, top salesman plan on selling at least 2 or 3 cars on a Saturday due to the increased traffic. Therefore, you will increasingly agitate your salesman, if he is a top salesman (which you’ll likely have no way to know) as he spends more and more time with you and watches his deal shrink to nothing, while simultaneously realizing that by the time he gets done with you, they’ll be no time left to sell anyone else. Chances are also good, however, that you will get a “newbie” salesman. Many dealerships require everyone to work on Saturday - no days off. So they are “extra-stocked” with all the new guys. You may not understand this quite yet, but you want a top guy if at all possible (tips on achieving this later). Now, before you say, “Well, I know a guy…”, let me warn you - seriously consider not going to your guy. You will likely get a much better deal from a stranger, a good salesman - IF you know what you are doing (which I will teach you here). Your friend, unless he is a live-in relative, will not be as helpful as you think. First, he knows you - how you think. Not good. You need someone you can convince of some things that may not be, shall we say, entirely forthright. Not lies - but not open candor either.

3. Your current car is junk. I know you just put new rims on it, replaced the rear tires, added a new 12-disc CD/MP3 player last year. Only you care. First, let me state that I highly recommend you sell your car yourself. It is a good learning experience and even a novice will likely get a bit more through a private sale than they will ever get as a trade-in. After you read this series, you’ll have a better idea how to do that. But check back, because I may write a separate article specifically about that. It requires even more patience. But, for everyone else, repeat after me, “My car is junk”. It might be a year old. It might be a Ferrari. It doesn’t matter - because now that you realize it is junk, you’ll need to start from zero and build its value up. That is what the dealer will do - you’ll need to do the same. Don’t make the mistake that because you bought it for $20,000 two years ago, it must still be worth around $16,000. The dealer is going to offer you (maybe) $8,000. Don’t let the shock and outrage show - you’ll be losing. If you had done the right research and found that the car was at auction last week, wholesale, for around $11,700, then eight grand wouldn’t seem so amazing. You still have work cut out for you at the dealership, but you won’t be coming from a state of delusion (or hysteria).

4. The car deal game is a win/win game. That’s right - a win/win game. However, you are going to begin looking at it as if it is a win/lose game. You either win or you lose. Whether the car dealer wins or loses is entirely his concern and none of yours. At some point, you will be asked (through a variety of tactics) to consider the car dealer’s position. “You do expect us to make some small profit, don’t you?” or they’ll run you through the list of expenses they’ve had in keeping that car for you - storage, taxes on rent, cleaning, inspection (if a used car - a synonym for “repair”). You’ll be asked, in some way, to focus on the dealer’s point of view. Do nothing of the sort. Let him focus on his own point of view. Don’t be cruel or spiteful in responding to this plea. Just acknowledge and continue as if the dealer had said he was as rich as the King of Babylon. In the end, the dealer will simply refuse to sell you a car that they can not make a profit on. I’ll teach you to know the difference between a real refusal and false one. So, if you fall for this trick, if you begin to think of the deal as needing to be a win/win in order for you to drive off the lot with that dream car, you’ll be only a few steps away from spending at least $500 to $1000 more than you need to - easily. It is a win/lose situation for you. Remember that.

5. Always discuss Total Price. Lastly, once you decide to negotiate a dealer to buy a car, the discussion will quickly degrade into a variety of numbers, all having similar, but different meanings. This is meant to confuse you - to keep you spending your energy on deciphering, not negotiating. Most reasonable people can be decent negotiators when given the proper environment, information, and tools. The dealer’s job is to see that you have none of those things. We’ll talk about environment in a bit, and I’ve already told you to memorize all your information, so you should have that all in your head (yes, the GS is equipped with 4-wheel anti-lock brakes, but not the traction control - that is $260 extra). But here is your first tool. You will always discuss price as a whole figure based on the selling price - you will not discuss payments (not yet), you will not discuss interest, cash back, rebates, incentives of any kind, free tires for life, etc. You will discuss the purchase price of the new vehicle in US dollars. Do not round in more than $10 increments. If a car has a list or sticker price of $22,690 and you offer (which you won’t - I’ll explain later), $17, 690 and the dealer comes back with $330/mo for 60 months, you’ll use an “assumed close” (more on this later) and say, “great, I’m glad we were able to come to terms. I just don’t see the $17,690 on the offer here, but if you’ll pen that in and initial it, I think we can shake on it” (completely ignoring the counter-offer’s different format of payments). We’ll get into this more later, but for now, you’ll need to begin thinking in real numbers - the value of your trade-in, the value of your dream car. Do NOT think about what you can afford per month. Do NOT think about the great ad you heard on the radio. Think only about (for now) what the proper price should be of the vehicle you want to buy - that’s all. You should be so well-versed on this, that if you can get a purchase price from anyone else who has bought one, you’ll know instantly whether or not it was a good deal. It always amazes me how many people walk off the lot because they got a payment of only $220. Some of my best customers were the ones who announced to me early on that they wanted to get a new truck, but they couldn’t afford more than $250/month. It isn’t often I have people hand me money so readily.

Technorati : buying a car, car sales, saving money

Article Series - Save Money at Car Dealerships

  1. How to Save Money at a Car Dealership - From an Ex-Car Salesman (Part 1)
  2. How to Save Money at a Car Dealership - From an Ex-Car Salesman (Part 2)
  3. How to Save Money at a Car Dealership - From an Ex-Car Salesman (Part 2.5)

Posted in: Saving Money