So, I guess it’s time to come clean: I’m an ex-Car Salesman. Well, not just an “ex-Car Salesman”, I was also a “ex-Used Car Salesman”.
I sold Ford/Lincoln/Mercury (well, I actually never sold any Lincolns) in LA over the summer of my freshman year of College. It was an awesome experience, primarily from a “learning about people” perspective. You meet a broad “cross-section of humanity” in the Car business, both the salespeople and the customers. Good experience for an 18-yr old as you (hopefully) learn to distinguish between good advice and terrible advice (from the salespeople) and how to interact with many different types of people, “figure them out” at some terribly superficial level (useful, true, but terribly superficial) and ultimately sell them a fine automobile (well, actually a Ford, but that’s all we had 😉 ). This experience also had the side-effect of making me an odd car buyer. I’m an extremely lazy bargainer and have a bit too much empathy for the guy on the other side of the table, so I tend to play both sides of the process. As I said, “odd”.
Friends have asked for advice about “how do I get the best deal on this car”, and similar. Basically, here’s what I’ve learned:
There’s no “best deal”. The deal that has you driving home in the car you want with a price you’re happy with (and isn’t an obvious rip-off, like paying more than MSRP for a normal car) is the “best deal”. If you get home and find out that your neighbor paid $100 less than you for the same car you need to think “who cares!”…. it’s a multi-10’s of thousand dollar vehicle. $100 (or even several hundred dollars) is nothing in the scheme of things! I contrast this attitude to the buyer who always thinks they’ve been cheated and makes themselves sick over not extracting every last penny of margin out of the salesman and managers. I’ve known people come back to the dealership two or three times to discuss a new “counter-offer” that the dealer has put on the table. These are people who seriously under-value their own time and mental health, in my opinion.
Are you shopping or buying? There are good salespeople and bad salespeople. Here’s how you can easily distinguish the two categories: When you tell a good salesperson “I’m just shopping today, I’m planning to buy a car in x-timeframe, but am not going to buy anything until then.” they will respect that. They might try a very subtle sales opener during the process asking either why you have this timeframe or letting you know that they’ve got “some good rebates on this vehicle this weekend”, but these should be a natural part of the discovery process for the salesperson, not obvious and strong-handed. A bad salesperson, when you tell them you’re “shopping”, will ask “is there anything we can do to have you drive this car home today?” (generally in exactly these words). My approach is generally to tell them, “that’s an unacceptably stupid thing to ask me, I won’t buy a car from you or this dealership, but thanks for using that sad cliché on me and treating me like an idiot” and then I’ll walk off the lot. Damn, that particular phrase pisses me off! If I’m really pissed I may ask to talk to his manager (it’s invariably a guy that will use this approach) and tell the manager why I’m leaving and recommend that they ban that particular phrase on their lot.
Now, it’s also important to tell the salesperson when you’re ready to buy. Once you’re done shopping (see the next topic for more on this) it’s time to buy, so it’s perfectly acceptable (and advisable) to tell a good salesperson (you already know them from the phone or previous shopping trips), “I’m here to drive this car and make sure it’s as I remember it, then if we can come up with a deal that works I’m planning to buy it today.” It’s the absolute easiest approach to use because you’ve made your intentions clear up front, let them know the conditions (if you need a particular color, features, whatever you would tell them that at the same time) and they know what to expect. If they don’t mess you around you’re going to drive a car home today.
Know what you want. When you walk on the lot you should either be in “shopping” mode or “buying” mode. People generally hate car buying because a) salespeople are sometimes jerks b) the process takes FOREVER c) they allow themselves to be led thru the process without realizing when they’ve moved from “shopping” to “buying” and they think they’re being manipulated (they are and they aren’t… it’s the natural progression of the process, but most people are happier when they intentionally make the transition). The easiest way to avoid a) is addressed in the above topic, the easiest way to avoid c) is to make at least two trips to the dealer (or one trip, but know that you’re shopping and buying in one go). I’ve got to admit at this point that I don’t have a solution for b). The buying process takes between 2 and 3 hours generally and there’s very little you can do to shorten that… well the next topic helps a bit, but not enough. In any case, back to knowing what you want.
Talk to people at work who own the sort of car you’re interested in. Are they happy with it? Ask for details about maintenance problems, etc. Most people exist in a sort of foggy happiness or anger with their car that has little to do with its actual reliability or performance (take VW owners who like their cars and consider them reliable as an example of this phenomenon 🙂 ). If it’s a new car, and they’ve needed major service, that should be a HUGE red flag. You can also find out about good local service departments, because a good service department can make a mediocre car great while a mediocre service department can make a great car terrible. Read about the specs/reviews online, talk to your buddy who is a car nut (but take everything he/she says with a grain of salt, ’cause they’re generally hugely opinionated and only sometimes are those opinions based in reality… I’m a good example of this). If anyone can recommend a local salesperson you should consider using them, but only if you want that brand of car. Basically, like any other time you’d spend between 15 and 50 thousand dollars on something you should invest a couple of hours doing your homework! You should never be totally surprised by the pricing or specs of a vehicle you’ve researched when you’re on the lot. If you are you may need to go spend some more quality time online.
Finally, you should be able to arrive at a list of two or three cars that interest you. They may be cars in a similar class (e.g. Corolla, Civic, Mazda3) or models across a single brand (e.g. Corolla, MR2, Tacoma, 4Runner) or (as has happened to me) cars that have nothing in common (e.g. Accord, Tacoma, Corvette)… but I may be unique in my more “general” appreciation of vehicles. Salespeople get really spooked by that last list by the way, as there’s no way to talk about brand strengths 🙂 Now you take your list and go test drive. Tell the salesperson what cars you’re looking at, don’t be surprised if they speak badly of the other brands (but it does reflect badly on them unless they’ve obviously speaking from first hand knowledge) and let them know what you think so far. The way you’re approaching this process there’s no reason not to say things like “This is the best car I’ve driven from my list”. Saying something like that if they thought you were an emotional buyer would be a huge no-no, but you’ve got a list and you’re shopping, so you’re a rational buyer, and you’re safe!
Now you’ve driven your cars, figured out which one you want and it’s time to buy…
Consider buying it over the phone. First, go to CarsDirect.com. If you haven’t found a salesperson you like, or a dealer that hasn’t pissed you off then consider buying it from them. I bought my Tundra from them, and it was a nice experience. If you’ve found your dealer then use this as “the price”. Make sure it’s not including rebates that you’re not eligible for, and that the zip code you’re using is correct. Add the options on the car you want and you’ve got a very realistic price to bargain towards. Now call your salesperson. Re-introduce yourself, tell them which car you want and ask them to make sure they’ve got it. Do not go into the dealership until they have the car (unless they’re going to trade another dealer for it, in which case make sure they’ve got the trade lined up before you go in). Let them know that if they don’t have the car of the trade set up when you get there that you will not buy any car from them.
It’s good to have a bit of flexibility in color or options, but if you don’t then make the dealer work for you and get the car you want. Now, you can try something unorthodox at this point and make them “sell you the car over the phone”. Ask them to fill out a credit report, give you the final price on the car, etc. before you come down. Most “Internet Sales Departments” will do this without complaining, but some more traditional dealerships just won’t do it. It’s not a deal-breaker in my book, but you may want to broach the subject with your salesperson during the shopping phase and let them know that you’ll want to do this. Preparing most of the sale over the phone will shorten the amount of time you spend on the lot, but not by as much as you’d think. You may only spend an hour instead of two, but (sadly) you won’t spend 15min…
Understand the pricing variables. Lots of people hate to “haggle over price” at the dealership. Lots of people have unrealistic (optimistic or pessimistic) expectations about what they should pay. You don’t have unrealistic expectations, because you know what CarsDirect will sell you the car for, and you don’t really need to haggle (for the same reason). There are several variables involved in buying a car (represented generally by a 4-square, that horrible sheet of paper with 4 boxes on it), but they are not really the ones the dealer shows you. Traditionally, they’ll ask you about “what do you want to get for your trade-in” and “what were you looking at in terms of down payment/monthly payment”. All of that is sortof stupid.
Regarding trade-ins: The dealership will try to pay you at or below “Fair” Kelly Blue Book value for a reasonably desirable car in “Good” to “Excellent” condition. If you have a ’98 Jetta or you’re car is beat up or has a million miles on it, they’ll pay you a couple of hundred dollars. This is the nature of the beast and you will be hard pressed to get much more money out of them. They may “give you more money”, but at least some of it will end up in the amount you’re financing. If you have a car with no/low trade-in value you should consider selling it yourself, or just know that the dealership doesn’t want it. They want to wholesale out most of the cars, so they don’t want to pay more than they can get without breaking a sweat. Just know this and don’t be unrealistic about the value of your trade, it will make your life easier.
Down payment/Monthly payment: Look, your monthly payment is a function of the amount you put down, the remaining amount you’re financing and the interest rate. That is all! It’s not magic. If you put more money down (and it’s not going to pay off a trade that you owe money on), it will reduce your monthly payment. If they reduce the price of the car, it will reduce your payment. You can do the math in your head to figure out a rough payment by knowing that borrowing $1000 for 60mos costs about $25/month. This is a hugely rough number, but if you’re trying to get your payment to a certain spot it’s better to know how far the down payment and cost of the vehicle need to move. Some people are payment buyers and some people are total vehicle cost buyers. You can be both. You’ve got your CarsDirect price. You’re going to wait until the dealer tells you want they’ll sell you the vehicle for (generally after they walk back to their manager the first time), then you’re going to tell them what you’re going to pay for the vehicle. They may balk at this. You don’t care. They may ask you to consider that they need to make money to stay in business. This is not entirely true (as most dealerships make the bulk of their money in Service and Used Car sales) but you can ignore it and just state that “you’re not asking them to not make money”, but that you can buy the car at this price from CarsDirect tomorrow, but you’d rather buy it from them today. At this point things should get quite a bit smoother. If they don’t you should (quite literally), ask for them to make this easier or you’re going to leave. If they don’t, then you should leave and buy the car online. Assuming they’re not stupid and decide to sell you the car you’ve now got a vehicle price, now your payment is a purely a function of trade-in value, down payment and interest rate/loan term. You move the down payment and term to get a monthly payment. You should probably know what rate your bank can give you, and make sure the dealer can beat that (they generally can… car companies love to loan people money on the cheap 🙂 ). You should keep in mind that if you have super-crappy and/or a new credit history you may just need to put more down for the bank to finance you, this is generally not the dealerships fault.
Keep your cool in finance. I hate going to the finance department. The Finance Manager makes his money by selling you extended warranties, paint sealant, service programs, lojack, etc. I don’t ever buy any of that, but some of it can be a good deal. Just use your head and say no to things you aren’t sure you want. This guy is generally a great high-pressure salesman! If you just keep saying no and don’t get drawn into discussions of “why” you’re not buying something you should emerge unscathed. It’s not even worth complaining about this to management, the Finance Manager is just a necessary evil at most dealers. Having said that, I’ve met three Finance Managers that were really great guys, maybe you’ll get one of them 😉
One thing to remember while in Finance is RTFD (Read the Documents). That really long sheet of paper tells you exactly what you’re paying. These numbers should be exactly what you agreed on. If they’re not it’s possibly a mistake, but they should immediately correct the problem. Just make sure everything is as you agreed upon outside and take your time reading the docs. They’re very readable and generally written in plain english.
Ok, this has run on long enough. For the one person still reading, hopefully you’ve gleaned something useful from this. It’s my current approach to car buying. I may make this a guide of some sort in the future.
Coming soon, helping my buddy buy a car. The reason I started this post in the first place…