Ask most people, and they will say that one of their least favorite ways to burn through a Saturday is to negotiate for a new or used vehicle at a car lot. It’s tense, most of the time it’s never fun, and afterwards, most customers feel unsure about whether they were taken or not. Some may also feel as though they are in desperate need of a bath after dealing with the occasional slimy salesperson.
In fact, a survey by DMEautomotive measured consumer trust of automotive dealer salespeople, and the results were sobering: Only 21% perceived them as “trustworthy,” which was a lower satisfaction rating than reported for lawyers, mortgage brokers and even insurance salespeople. Furthermore, according to a Gallup Poll, 95% of Americans believe car salespeople have low ethical standards.
Now, of course, there are honest salespeople out there in the industry trying to make a decent living who are genuinely looking out for the best interests of their customers. They have families, go to church and actually have friends. The good ones want referrals, and they certainly want you to come back and buy from them again. The “bad apples” in this industry, however, seem to stand out due to the high pressure to produce and to close deals at any cost.
“It’s not their fault,” said one recently retired car salesman I interviewed. “The dealership business model creates an atmosphere of competition among beginning salespeople. They take each other’s contacts and leads, and the commissions are intoxicating since the more you sell, the more you make. Likewise, idle salespeople get fired pretty quickly. There seemed to be no loyalty at all to anything or anyone at my dealership, and it showed as I watched salespeople dealing with customers and among themselves.”
Therefore, given this reality for the consumer, let’s examine some of the notable tricks of the trade with an eye toward helping you watch your wallet while you shop for a new or used vehicle.
First, know that automotive sales is a psychological game played to get the upper hand and to potentially intimidate the customer. The salesperson will assess a potential buyer in a matter of seconds and tailor their approach to cater to what they perceive the customer likes regarding topics of conversation. While it is practical for a salesperson to ask a few leading questions about what you are looking for in a new vehicle to make recommendations, watch out for a salesperson who attempts to pigeonhole you into a stereotype by asking personal questions.
This tactic is fairly easy to recognize, and it is a clever way to get you to lower your guard. “Hey, we now have common ground, and I’m just your buddy who is simply looking out for your best interests.” Yeah, right. Maintain your guard and stick to the business of the vehicle, its features and what you are looking for. Keep the conversation friendly but a bit cold and factual, so the salesperson doesn’t get the upper hand from the start. Make sure you keep them on unsure footing about gaining your confidence.
A clever salesperson will eat up as much time as possible, rattling off safety features and getting up several times for negotiation pauses to “check with the boss.” They will have you stay in the office to the point that it is almost uncomfortable. Are they inefficient? No, this is purposeful. “Most of the time we aren’t talking to our bosses about your deal. Instead, we will go into the breakroom and BS with our friends, grab a snack, and then come back with more paperwork shuffling and an answer or a different type of counter-proposal. It’s just a way to eat up time,” said one salesman I spoke to.
The goal? As the minutes tick by and time elapses, many buyers feel guilty about walking away. It creates an environment where you are placed in the fictional position of wasting the salesman’s time or your time if you don’t buy. Don’t forget that you are the boss. It’s your money, and this is all by design to wear you down. A little trick I learned for this very situation of the salesperson leaving to “talk to the boss” is to get up from the negotiations desk and walk around. Go into the parking lot and look at something else. This will create an environment of unease, and you will find that the salesperson will rush back and tend to you. It removes the control element.
According to bankrate.com, this one is an old classic. Here’s how it works: The salesman draws a line down the middle of a piece of paper, listing reasons to buy the car on one side and reasons not to buy on the other side. They may even throw out a bunch of numbers to confuse you. This might stump you, resulting in an uncomfortable silence that says you can’t think of a reason not to buy the car. Benjamin Franklin is said to have used this approach to make important decisions. It is manipulative. The best way to defuse this tactic is to name it. Say, “That’s the Ben Franklin Scumbag Close!” If you ever want an awkward moment and to own the salesperson, call it out by name. Most Skillset readers aren’t afraid to call out a scumbag for being a scumbag. Make us proud.
According to U.S. News & World Report, “While you need a car payment that fits into your monthly budget, focusing on the monthly payment alone is the fastest way to getting a horrible deal.” This online article continues by saying that “A big secret of the car business is that if you can keep customers focused on the monthly payment, you can play with the other numbers in the transaction to get the profit you want. The customer will end up paying far more in the long run, and they’ll never realize they got a lousy deal. It’s easy to make customers think they’re getting a great deal if you can keep them focused on just the one monthly payment number. Instead, you want to look at the car’s total cost, including financing, fees and add-ons.”
U.S. News & World Report also notes that “A common trick is to extend your loan out to six, seven or even eight years, which lowers the monthly payment, but greatly inflates the total amount of interest you’ll pay. In addition to the extra interest, you’ll also face the possibility of needing costly repairs on your aging car while you still have car payments to make.”
Long-term loans are a terrible deal, and most people I know who are either in or who have left the car sales industry suggest figuring out your budget and making sure you can put down at least 20%. If you have to get a loan, finance the rest at most for no more than four years and stick to that budget window. At the end of the day, focus on the total cost. Stick with that number and don’t let the potential scumbag sway or fool you with numbers games. A good salesperson will respect your position and work with you on a deal for a win-win outcome.
Also, don’t forget that jobs come and go and that the economy goes up and down. Vehicles are a use item, and they depreciate like crazy. They are not investments. You need to sleep well at night financially, so never buy anything outside your comfort zone or go over your head and get something you won’t be able to afford even if you are unemployed for a few months. You may dream about gunning the engine of your fancy, brand-new Corvette at the stoplight, but come on, it’s not like chicks are going to jump out of their cars and make out with you in traffic. Use your head and be realistic on a vehicle and price. Be practical and approach your car purchase with the mindset of someone who eats ramen noodle soup for lunch every day.
The finance manager is one of the most skilled people at the dealership. It’s a huge profit center for the organization, and usually the best math whiz and most clever negotiator in the dealership sits at that desk. This person will also do his or her best to get your guard down. In fact, the finance office is car add-on central. You might be encouraged to buy extended warranties, dealer perk warranties, car payment protection, or they may question your creditworthiness and then offer a solution to “help you out.”
Therefore, it is important that you talk to your bank first, so you know where you stand with interest rates. “Even for people with perfect credit scores, my coworkers and I would try to see what we could add on by making ‘innocent mistakes,’ hoping the customer might miss it in the paperwork. It is a great way to confuse people with lots of numbers in this final stage,” said one car sales internet manager who formerly worked in the finance office. He continued by saying that a car buyer should “Know what you want and need before going to the dealership and stick to your mission. Don’t forget that you are the boss and you can walk at any time. You don’t owe them anything aside from a mutually fair deal.”
A trip to an automotive dealership can result in unscrupulous salespeople attempting to confuse, manipulate and perhaps even intimidate you into taking a deal that is not good for your wallet, despite how tough a debater you think you are. That’s why it is a good idea to have a friend or even a professional car inspector or negotiator beside you who can offer an objective perspective on the sales process—and maybe even to prevent you from ripping the salesperson’s head off.
Nick Fascetta, owner of The Auto Inspector Inc., located in suburban Chicago, says his unique consumer car inspection and negotiating business has exploded in growth from the referrals of people who have been had by some less-than-honorable dealers in the past and who didn’t want to go through it alone again. Fascetta says, “I really like the fact that I’m taking the emotion out of the painful car buying steps and representing the consumer’s best interests on deals. I like to reverse engineer the process, so the salesperson is on the defensive.
There are so many points where you can get taken in the process, even with things like loading up on delivery fees and all sorts of useless add-ons that the dealer tacks on, even with used cars.” Fascetta continues by saying, “Things like paint protection, pinstriping, door-edge guards, wheel locks, VIN etching, nitrogen-filled tires—it’s just fluff. Most of it is nonsense and pure profit for the dealer. The goal is to make sure you are finding the right car first, then streamlining the visit, so you get the vehicle of your dreams without getting ripped off.”
Fascetta also adds, “For some automotive buyers, it is a hard and draining experience, so you need to be ready for battle or else hire someone to help.” Regardless of how you intend to proceed with your next automotive purchase, with the right homework and these helpful tips—and maybe even with a professional working on your behalf—you can stop scumbag salespeople in their tracks and walk away with a fair deal on the vehicle you want.
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