I’ve found that the vast majority of car buyers who regretted their purchasing decision had one thing in common: they had no idea what they wanted, what they could afford, and no idea about the process that was about to hit them right between the eyes!
My father had a catch-phrase he liked to use on the ones in his command whose learning curve was more of a flat line:
Proper preparation prevents piss-poor performance!
The irony was that my Hungarian grandmother and I moved heaven and earth to ensure we were the only ones talking when we tag-teamed the Chrysler dealership in Kansas City on his behalf in what arguably remains the most shameless automotive deal I’ve ever had a part in negotiating when I was eight years old.
One of these days, I’ll spill the details on that one but suffice it to say that the antics that she and I pulled in that dealership that day would likely never fly now but we had the advantage of knowing that the massive truck Dad was drooling over had been sitting on the lot for months and they were at end of month and end of model year facing a massive tax bill and thus were motivated sellers. Very motivated sellers, in fact! 😉
It’s not that Dad was an idiot but he had a habit of not knowing exactly what he was after and the market conditions. His skill set as an officer were ill-suited to the hand-to-hand down-and-dirty verbal judo that is a proper car negotiation that will leave you in the driver’s seat in Happy Town and your salesman getting his arse handed to him by an irate sales manager for letting that car go for the deal you just haggled with him! 🙂
Before you ever call a dealership or step on the lot, these are the things you need to know and have sorted ahead of time:
- What vehicle(s) are you interested in purchasing?
- How much are your target vehicles selling for “out-the-door” (which means sales price plus tax/tags/registration fees and the dealer’s BS “doc fee” or “administrative fee”) in the area you’re likely to be buying. There are any number of sites that will allow you to plug in a ZIP code and the details of the vehicle and see the real prices people are paying. That will be your aiming point for your own “out-the-door” price in the negotiations.
- Are you planning on trading your current vehicle? If so, estimate it’s value using Kelley Blue Book or Edmund’s and be very critical and honest about it’s condition when you do because that’s what the dealer’s guy is going to do. Having a reasonable value for your current ride in hand allows you to choose to accept the trade-in value offered or sell it privately for more money but also a bit more hassle dealing with the transfer of title through DMV, etc.
- Are you looking for something fully loaded and luxurious or are you OK with something decent that gets you from point A to point B without having you use your feet to Fred Flintstone the thing!
- What features are absolutely essential, which ones are nice to have, and which ones you could care less about?
- Are you shopping for a new vehicle or are you OK with a used one with reasonable mileage and in good condition?
- What is the maximum amount that you feel comfortable spending on your new vehicle in relation to your household budget? Do keep in mind that insurance and property taxes on the car as well as the usual petrol and maintenance are going to figure into the spending above and beyond what your payment ends up being.
- What is the maximum amount the bank or credit union will lend you (which may be less than you think so definitely get a loan qualification letter from them where they agree to back your deal for a given principal loan amount)?
Ben and Jessica had zeroed in on the Toyota RAV4 or a similar equivalent as the target for her new ride and so Ben and I had both been keeping an eye on the dealer websites in Fayetteville and the Triangle respectively to get a sense of what was out there and how realistic getting the RAV4 she wanted would ultimately be.
Jessica was originally qualified for a number that would certainly allow her to buy any RAV4 she wanted except perhaps the super-loaded trims with the hybrid drive trains but she felt much more comfortable not going over a number significantly less than that qualification amount so the hard-deck ended up being $27,000 total.
TIP: just because the bank/credit union will lend you what seems like an astronomical sum is not a challenge to your abilities to spend to that number! The payment plus insurance, taxes, and upkeep should be what make sense for your budget!
Setting the price hard deck to where she was comfortable rather than the full amount they were willing to lend was probably the smartest thing she could do and dealers absolutely hate it when their customers know the number they will not willingly cross unless they absolutely have to!
Having a guaranteed offer in hand (even if it’s only used to knock down the rates the dealer will offer on their financing package) should take the vast majority of the anxiety out of the process right there when you remember that the salesman will do their dead-level best to control all of the aspects of the deal.
Knowing your personal spending limit and refusing to be pushed to it and being willing to walk out the door if need be means the ultimate control of this transaction is YOURS.
Never relinquish any aspect of the control of the process to the salesman because the moment you do you’re hopelessly screwed!
When you’re feeling pressured or out of control, run like hell for the door…don’t walk!
The process is designed to make you feel like a worthless turd wasting THEIR time unless you go through the process how they want you to do it.
Every aspect of the interaction is designed to keep you in that dealer’s showroom and wear you down until you’re ready to sign anything to be paroled from the car sales jail.
TIP: always be prepared to walk away if you’re not getting the deal you want or you feel like you’ve lost control of the conversation/deal. They may act hurt or make a fuss of chasing after you but I can guarantee you that if you came back the next day, they’ll find a way to “work with you” unless you were a real ass.
The reality the dealer hates is that you may choose to purchase a vehicle from them that day or you may not if the deal isn’t one you’re satisfied with.
You might well trade in your current ride but that will only happen if they actually agree to sell you a vehicle at the price you’re comfortable with and that out-the-door price is locked in and signed. And then only if they’re willing to pay you a number that will get you to hand over the keys to that current vehicle rather than sell it yourself.
TIP: never discuss the trade-in unless you’ve agreed the “out-the-door” price on the new vehicle. Until that number is agreed, that other vehicle does not exist! And never let the dealer have the keys until you’re ready to actually have them look at your vehicle and propose a price because they will hold on to those keys to keep you from leaving!
That usually catches most consumers by surprise but it shouldn’t. Purchasing a new/used vehicle and trading-in/selling the current vehicle are TWO SEPARATE TRANSACTIONS. Always!
Here’s why and it comes in the form of the most infamous and pernicious weapons in a car salesperson’s armoury: the dreaded FOUR SQUARE.
There are plenty of tutorials and YouTube videos that will go into the details but the essential point is that there are four squares on this sheet or any variation on it: the new car sales price, the trade in value, the amount of cash you’re stumping up for a down payment and the monthly payments.
The problem is that paper will be scribbled on until it’s well-nigh unintelligible and numbers will be flying all over the place and your attention will be focused by the salesman on the monthly payments quadrant.
It’s the old conjurer’s trick to get the marks in the audience to focus upon his hand whilst he wheels the elephant out on the stage right in front of them!
Even though the numbers on that paper will be changing wildly in each iteration, there’s only one number that’s actually meant to change and that’s the monthly payment amount.
That is why they’re desperate to know the answer to the question “what monthly payment are you looking for/wanting?” and they will fit the deal to fit that number or a higher one if they sense you’re vulnerable to being fleeced.
They might appear to “give” a little on the sales price but then watch what happens to the “trade-in value” quadrant which will drop and the down payment goes up and not necessarily equivalent to the amount they’re supposedly “giving”.
Those other three quadrants are levers that work against your interests to get you to agree to the payments they want.
TIP: Never discuss payment amount or terms or how much you’re willing to spend with the salesperson. Their real job should be getting you to agree to the “out-the-door” price…financing is your problem when you get into the Finance Office where the real screwing will occur. The more information you give them, the more they can use it against you!
That’s why I recommend every person I go with on these negotiations to be very cautious in anything they say to the sales person and to remember the Miranda warning the police commonly give to suspects about their rights to remain silent and that anything they say can and will be used against them.
Unfortunately, human beings are social creatures and they want to talk to fill in awkward pauses so that they feel less awkward and the salesperson will have been trained in many techniques to use that against you.
Some measure of communication is unavoidable so you can’t clam up completely or else you’ll never get anywhere in the negotiations. Be careful about the small talk or how much you reveal but there’s nothing wrong with making the time in the showroom pass a bit more agreeably as long as you’re not telling them anything they want to screw you with!
Knowing what you’re after and what the real numbers that in play are will help tremendously when the salesperson is asking pointed questions about subjects you’d rather not discuss at that particular juncture in the negotiations, those questions are usually pretty easy to deflect diplomatically and politely which I will point out in the narrative on the actual sales negotiations in subsequent chapters of this story.
Again, it’s all about keeping control of the conversation and process rather than letting them control and use you.
TIP: Nothing in the showroom is ever “off-the-record”. Be careful and cautious in what you say but don’t go to the other extreme where they’ll think you’re a closet case that they’d rather go terrorise their competitors.
Your salesperson (unless they’re truly awful or misogynist which sadly still is a thing even in 2024!) is going to try to come off as your pal and the person in that dealership who is on your side to try to negotiate the best deal for you.
If you believe nothing else I have told you to this point (and then I’d wonder why you’re still reading it!), the typical car sales pitch and process and a lot of what is said at the negotiating table will be full of a breathtaking amount of manure enough to fertilise several hundred acres of crops that it will truly amaze you.
The idea that the car salesperson is on your side is probably the most laughable line of BS you’ll hear all day until you hear some variation on “I’ve never seen my sales manager ever go for that!”
TIP: If they’re not on your side of the negotiating table, they’re your enemy until the deal (if it happens) is completely done and dusted! Very little of what comes out of the salesperson’s mouth should be taken at face value! Most of it will be some form of puffery or BS designed to manipulate you so never take anything they say or do personally!
OK, that’s the basic negotiating briefing I like to give right before telling my nervous car buyers that buying a new vehicle should actually be exciting and fun and that they should enjoy the process as much as they can in spite of the antics, BS, and silly stunts they’re likely to encounter!
When you’re in control of the ultimate decision on whether a purchase will occur or not, that ability to just say “NO!” and walk away to try for a better deal another day should be the most liberating feeling that will sustain you in the face of even the most intense pressure tactics.
You’re not their property and you’re not their prisoner and if you’ve had enough to want to walk, do follow through and actually do so.
They’ll get over it in the few seconds it takes for them to latch on to their next victim like the leeches doctors in ancient times favoured because it’s NOT PERSONAL…it’s BUSINESS.
Bam-Bam (that Hungarian grandmother tag-team negotiating partner I mentioned before) had probably the best tip of all:
TIP: They can get glad in the same clothes they get mad!