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Buying a Car? Here’s How to Deal With The Salesman.

Buying a car can be a stressful process, and often one that involves spending more money than you need to. As a prospective buyer, the moment you step on the lot you are entering a battle. No matter what any given car salesman may tell you, your goals here are polar opposite. There is going to be a winner and a loser. It’s up to you to determine which one you will be.

How do you prevent a car salesman from taking you for a ride (no pun intended)? Follow these guidelines to start:

 1. Figure out exactly what you want before you even talk to a salesman.

Knowledge is power here. Car salesmen (and any salesperson in general) love folks who don’t know what they want. Coming from a sales background myself, I used to see this every single day. Any skilled salesperson knows that as far as price is concerned, you start from the top and work down from there. This leaves the most room for “bargaining”. If a buyer comes on the lot and opens himself to free suggestion, the salesman will begin first by trying to sell the higher end “luxury cars” and work his way down. That Toyota with the added body kit and undercoating looks a lot better than the $50,000 Mercedes now, doesn’t it? Know what you’re looking for specifically. You want a Toyota? What model? Used or new? What year? What type of transmission? Any added features? Get this information down pat before stepping foot on the lot. The salesman then knows you’ve come prepared, and will act accordingly.

Car seller with car buyer looking at electronic tablet

 2. Save the add-ons for later.

If you’re the type of person that is looking for upgrades, it may be best to save those for after the initial purchase. Dealership add-ons are a car salesman’s favorite way to tack on a few hundred (or even thousand) dollars onto the final price at a serious markup. You want the 22” chrome rims? The spoiler? The 1,200-watt dual 12-inch sub? Then buy online later and pay a mechanic to have them installed. Don’t put yourself in a position where you’re paying more than you have to for nothing.

Read More >>> Can shopping for a car loan affect my credit score?

 3. Take the invoice with a grain of salt.

A tried and true tactic of car salesmen is showing the customer a car’s invoice. Often times, car salesmen will claim that the dealership is breaking even (or even losing money) on certain vehicles. They’ll back this up by flaunting numbers on the invoice, showing that the price you’re getting is nearly even to what they’ve paid for car. Now, this is not entirely true. What many don’t realize is that dealerships get additional money back from the manufacturer at the point of sale. This payment is called a “hold back” and is generally not labeled as such on the invoice. It isn’t always factored into the bottom line invoice price either and should be taken into consideration while negotiating.

Dealerships also get substantial bonuses from manufacturers that basically make or break their month/ quarter/ year. This inflow will certainly be taken into consideration when pricing cars. Also, for this reason, there is something to be said for buying towards the end of the month. I’m not going to say the best deal is always presented at the end of the month, but if yours is the sale that puts the dealership over the hump for their bonus, the ball is in your court. This is something to be taken into consideration.

 4. Bring your financing.

Just about every dealership is going to offer the customer some sort of payment plan to get them in a shiny new car, which is again one of the many avenues for them to make a few more bucks. The 0% interest rates may seem tantalizing, but should generally be left untouched. Those rates usually come at the cost of not receiving a larger available fixed rebate on the purchase price, and can cost you more money in the long run. That’s why, again, it is best to come prepared. Come with a financing quote from your bank of choice; show the salesman the rate you’re getting there. Often times they’ll be willing to match the rate and give you an additional discount on the sale price if you use dealership financing.

The reoccurring theme here, and the most consistently successful way to save you the most money when buying a car, is preparation. Come with your game plan laid out tight. Good salesman are like sharks; they can smell fear, indecision, confusion, and act upon it. Don’t let this happen. Come in strong. Stake your claim. Save money.

Read More >>> What is dealership financing?

Also, there is a great episode of NPR’s This American Life about a Jeep dealership on Long Island. This will bring some clarity to the whole car buying process from the dealership’s perspective. It’s also very entertaining. Link: http://www.thisamericanlife.org/radio-archives/episode/513/129-cars

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About The Phroogal Kevin

Kevin Cash is a serial entrepreneur living in Manhattan who writes about everything from finance, to comedy, to life and culture. He graduated from Bentley University in 2013 with a degree in Economics & Finance, and has been trying to narrowly avoid the corporate grind ever since.

One comment

  1. This post is right in my sweet spot so felt the need to post a comment.
    A lot of this post is true and a lot of it is geared toward buying a new car. New car salespeople and used car salespeople often have different incentives for selling you a vehicle. Used cars are typically purchased at auction and you never really know what kind of deal they got at the auction. They will tell you the same stuff about it being priced $100 over what they paid and that is all lies.

    Taking it point by point:
    1. Yes, yes, yes. Know what you want, but don’t get too specific that once you find the exact match you find yourself in love with the car and lose your ability to negotiate. Also, though, do your research. Check out sites like http://www.kbb.com and http://www.cars.com and http://www.autotrader.com and see what other cars like it are going for. Sometimes they price things to look more expensive to nab the uneducated buyer. A little research on a fair price will give you a good starting point.

    2. I thought at first someone had the same thought as me. Save the add-ons for later is right, but buying them aftermarket is not always the best option. New or used, they will try to upsell you on all kinds of stuff. Save it until you are just about to sign on the dotted line and then request that the add-ons be thrown in. “Oh, I forgot, remember that moonroof you talked about, why don’t you throw that in before I sign here.” I’ve found that once the salesperson thinks they have you sold, they have already told their boss that they have a sale (you know when they leave you alone to go talk to the “finance guy”). So now they are trapped, you have them, be prepared to walk away at this point and you will almost always get what you want (within reason).

    3. Yup. “Invoices” are garbage and another list of lies.

    4. Sorry, but I have to push back on this one. Isn’t this site about being Phroogal? If you have to finance it, that means you can’t afford it. Go back to #1 and adjust what you want based on what you can afford. Can’t afford anything? Save. Plenty of posts here on Phroogal about getting around without a car and how to put your money in buckets/funds to save for the things you want. You want power at the dealership? Pay cash. Walk in, tell them what car you want and the price you will pay. Show them you have the money in your pocket (even if virtually, they won’t take a personal check for $18,000 so you’ll need a cashier’s check). They’ll know you are serious and won’t have to fuss with the “finance guy”. Since I always buy used (new cars and leases are in the top 10 biggest wastes of money), you can often find a salesperson who just wants his commission on a sale. Show them you have the money and it will be a quick sale, and you will have them grinning.

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