Secrets New-Car Dealerships Don't Want You to Know
Car dealerships are one of the most intimidating places on Earth. You're there to spend a lot of money, everyone in the building knows it, and their job depends on getting as much out of you as possible. But there are some secrets inside the den of the dealership that can help you get through the car-buying process without having a full-blown existential crisis.
I talked to car dealers, negotiators, marketing consultants for dealerships, and personal car shoppers and found some answers that are as fascinating as they are frightening. You'll see some pretty dark stuff here; I should note that not all dealers do this. Some absolutely do ply their trade with some semblance of humanity... but not all.
The window sticker's not worth the paper it's printed on
The window sticker, aka the Monroney, isn't the real price you ever want to work with. Instead, there are several sites that provide reasonably close estimates of the actual invoice price of a car and its options. It's not the price the dealership is on the hook for, but it's generally several thousand lower than the MSRP, and it's the number you absolutely, positively need to know before making contact with a dealership.
The dealer isn't busy; you're waiting because it's an alpha-dominance trick
If you're forced to wait around and operate around the dealer's schedule, it creates the illusion that his or her time is more valuable than yours. The hope is that it puts the dealer in a position of dominance -- unless, of course, you realize it's just a mind game.
There are a bunch of incentives, but the salesman doesn't have to tell you sh*t
Knowledge is power, and I'm not even talking about knowledge of the actual car. I'm talking about all the rebates, incentives, and special financing offers that are available. Most manufacturers offer these, and if you don't know about them, it's quite literally your loss, to the tune of $500, $1,000, or more. The sales manager will usually know them, but there is absolutely zero obligation to pass that information on to you.
They want you to get overwhelmed and tired
The longer you walk around the lot, and the more you talk about numbers and trade-ins and options and percentages, the more you'll start to break down. It's a phenomenon called decision fatigue, wherein you become increasingly impatient if you're bombarded with decisions and choices to analyze. This is a big reason why you have so many options when it comes to add-ons or how to pay, and why there's so much fine print.
Always focus on the sale price, and nothing else
Down payments, monthly payments, and interest rates can wait. Your trade-in isn't going anywhere, either. You need to negotiate the price of the car based on what the car is worth, not what you can spend. Opening with, "I've got $3,000 to put down and I can afford $300 per month," isn't just bringing a knife to a gun fight, it's bringing the gun, too, then handing it to the dealer, who will use it against you.
Beware the "let me take this call in another room" trick
There's an urban legend that cubicles at dealerships are bugged. By and large that's false. But at some dealerships, a colleague will call the person you're working with, so he or she can pick up the phone, "take the call in another room," leave the speakerphone on mute, and hear you discuss the options with whomever you're with. You don't want the dealer to know your absolute bottom line, but the dealer really wants that information, and will sometimes resort to dirty tricks to get it.
If you don't shop around online first, you're already screwed
When you find a car online that’s advertised as an "Internet special," that price you're seeing is generally reduced quite a bit compared to the full asking price that's on the windshield at the dealership. If you're just some schmo on your lunch break wandering onto the lot, you'll never know there's already a lower price for the same car. If you have done your research, the dealer hasn’t lost anything, but if you happen to start haggling from that higher price point, you're giving yet another advantage to the house.
Some dealers really won't put up with your lowball offers
If you go in with a price that's far too optimistic, the dealer doesn't always have an incentive to waste time talking to you -- especially if there are other customers waiting in the wings. One guy I asked said he used to work with a dealership that spent three times as much on advertising than other dealerships. The result? More people walked in, and that dealership "could pass on a skinny deal," and made more than enough additional profit to offset the higher advertising investment.
Never tell the dealer you're paying in cash before it's time to pay
You'd think saying, "I'm paying cash" is a good move, right? Not exactly. A good chunk of dealership profit lies in the fine print of the financing, so telling a dealer right off the bat that a certain percentage of profit is out the window hurts your bargaining position. Instead, negotiate the price of the car first... always. THEN tell the dealer if you're paying cash, financing, or even leasing.
They want you to freak out about the numbers
Here's another mind trick. The goal is that you'll freak out at the first number, where the new car is too high, your trade-in is stupid low, and the monthly payment rivals your rent or mortgage. Then you calm down and start to lower your expectations; you accept that the end total won't be as rosy as you had hoped. All the while the numbers are being massaged. You'll feel much better when you see that "new" number. You're still getting screwed, but it's not as bad by comparison. And just like that, you've lost.
There's a saying: "Give 'em lips and go for the bump"
Which essentially means, confuse them so they give up and accept the lesser deal. If you see what's called a "four-corner worksheet," that's your giant red flag to be on ultra-high alert. It's not a scam, per say, but the person you're negotiating with will try to wear you out by moving the numbers around in a deliberately confusing way. For example, your $1,000 trade-in? Now it's a $500 trade-in. You can clearly see a $500 trade-in credit off the price of the car, and you can clearly see "Trade-in Value: $500," so it looks like $500 is on there twice, equalling the original $1,000. It's not, and you've just been bumped. Watch this video to see how it works, and try not to strangle your monitor.
After you agree, they don't want you to think about what you're doing
Even after you've agreed on a price, and financing, and trade-in value, and visitation rights of your second born, it's still not over. Because you haven't signed anything binding. While the finance manager gets everything in order, the salesman's goal now is to talk to you about the weather, your kids, Ronda Rousey's next fight, basically anything and everything that might distract you from thinking about the major decision you're in the process of making.
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