In a former lifetime, I spent several years earning my living by selling cars. With luck, I'll be able to work off that karma sometime in the next century or so. In order to speed that process along, the following is the inside scoop on what you really need to know before you ever set foot inside a dealership.
Unfortunately for most automobile buyers (but fortunately for those in car sales), most people give very little thought to the purchase of their new (or new-to-you) vehicle. Yet, other than the purchase of a home, the purchase of a car is probably the most amount of money any of us will plunk down on any single item during our lifetime.
When you purchase a house, there are all kinds of measures available, and in some cases even legally required, to protect the consumer. However, the consumer has very little protection when it comes to buying a car. Some states don't even have lemon laws in place, and those that do have consumer protection laws for car buyers often don't have the means or the interest to enforce them well, if at all. So, it's up to you, as the buyer, to learn how to protect your interests.
There are many steps you can take to avoid getting taken. Most of them are well-documented in consumer publications. However, it's hard to get the real skinny from people who work inside the business, because they want to keep working inside the business. They protect their friends and loved ones, but telling tales out of school is career suicide, and it also takes potential sales money out of their pockets.
Contrary to popular myth, today's automobile salesperson is not a paunchy, cigar-chomping old man in white duck shoes, bolo tie and a Stetson. While such holdovers do exist, for the most part, the days of the hard sell are over. Modern salespeople are well-groomed, well-spoken, highly educated professionals. They are polite, helpful and friendly. While all of this is an improvement in terms of the car buying experience, it can also be misleading.
While the vast majority of car salespeople are honest businessfolk, there are still some misconceptions about what their role is in assisting you in your purchase. Many buyers mistakenly assume that their salesperson is there to look out for their best interest. This is not true, never was, and never will be, not with any kind of salesperson. I used to describe my job this way, "It is my job to sell you the car that you want for the most money you are willing to pay." The salesperson works for him or herself first, the dealership second, and the buyer last.
This may not sound "honest" to you, but that is how the car business works and it wouldn't be able to survive without that philosophy. Owning a car dealership is a tremendously expensive proposition, which is why there are so many dealerships owned by famous race car drivers and other folks with deep pockets. In other words, it is not a non-profit organization. As a business, the dealership does, and should, expect to make a profit when they sell you a car. How much of a profit they make is largely up to you.
If you go into a car sales transaction unarmed and unprepared, then you might as well just write them a check for the sticker price on the car and be done with it. In fact, some people do just that, but it's a tremendously expensive strategy.
The average American buyer trades cars once every five years. The average salesperson successfully sells a car once every three days. They begin negotiating with a buyer an average of five times each and every day. By sheer practice alone, the salesperson is already a more skilled negotiator than you are. If you take into consideration the extensive training programs by both the dealership and the manufacturer, the continuing education seminars, workshops and often thrice-weekly sales meetings, you can see your disadvantage clearly. These people are trained to overcome your objections skillfully and in ways that you may not even detect.
Now that's not to say that you can't drive away in the car of your dreams at a price you can afford. People do that every day. The difference is that they were prepared when they initiated the purchase. Those who pay too much often never learn of their mistake. If they do, however, they are, understandably, furious. But they usually have no one to blame but themselves.
So, how can you protect your own interests when purchasing a car? First, do your homework. Know what car you want to buy and what you should reasonably expect to pay for it. Learn as much about the car as you can by reading brochures and consumer publications, researching on the internet or at the library, and talking to independent mechanics. Talk to other people who have purchased the model of car you want to buy. Study car ads in the Sunday newspaper to see what deals are being offered. Is one dealer advertising new cars at $100 over invoice? Great, ask to see the invoice. If they won't show it to you, ask them how you're supposed to know that you are getting the advertised price.
If you're buying a used car, check out the trade-in values in the current NADA guide (online assistance can be found at http://www.nadaguides.com/). If you can't access the guide online, go to your bank or credit union and ask to see their current copy. The NADA guide is the book the dealerships use on a daily basis. It is not the same as the Kelley Blue Book, which uses different information-gathering techniques and may not reflect current market values accurately. The "trade-in value" is lower than the "average retail" value. It will give you an idea of the difference between what the dealership paid for the car and what they expect you to pay for it. (It is likely that they paid less than trade-in, but not always so.)
Know what features of the car are standard. For instance, some cars come with power windows and door locks included in the base price, while some features are non-standard and added over and above the base price. There is usually some room for negotiation of add-ons.
Aftermarket and non-standard features are not free. If the car you want to buy comes standard with nothing more than an automatic transmission and an AM/FM radio, anything else you want on the car is going to raise the base price of the vehicle. Know what you want on the car beforehand and what those features should cost. If you don't, the salesperson is going to try to switch you to a less expensive car with the features you want in order to make you happy.
If you find that you will have to make a switch to get what you want, go back and do your homework on the new model before buying it. Every car is different. You need to know what you are buying before you sign the contract.
Be prepared to negotiate. Offer low and move slow. That doesn't mean offer a ridiculously low price and then refuse to budge. And it doesn't mean jump on the deal if they immediately accept your first offer (they won't). If you are a wimp about negotiation, take someone with you who is knowledgeable about the process. Consult with that person every step of the way. Never, ever agree to anything you are not comfortable with.
Take the car home with you. Even though most dealerships will offer you this option, many buyers feel that it makes them more obligated to buy the car. It does not. What it does do is give you a chance to see how it looks in your driveway, to go over it with a fine-toothed comb, or take it to a trusted mechanic. It allows your friends and family to experience the car and point out features or disadvantages you may not have noticed. If the dealership asks for a deposit (it should be somewhere in the range of $25-50), make sure they give you a receipt that states that the deposit is fully refundable.
Shop for a car at the end of the month, and, preferably, at the end of December. This is probably the most frequently asked question I've encountered. Yes, it's true. You will get a better deal at the end of the month, and the best deals come at the end of the year. Salespeople and managers all have monthly, quarterly, and annual quotas to meet. They have bonuses riding not just on the profit margin of their sales, but on their number of sales. You can sometimes get a real deal just because if your salesperson sells just one more car that month, they will get a large bonus or their overall commission on all their sales will rise significantly.
Once you have made your deal with the salesperson, then you will be turned over to the finance manager. If the car comes with a warranty, make sure you know exactly what it covers. If an extended or additional warranty is offered for sale, know what you are paying for and the likelihood of repairs outweighing the cost of the warranty. If the dealership is arranging your financing, know what your credit situation is and what rate of interest you should expect to pay. A quick call to your banker can give you that information.
Get copies of every single piece of paper you or the dealership signs. In the event that the deal does turn out badly, you will have documentation of what you agreed to. Read the fine print. I repeat, read the fine print, even if it takes a lot of extra time. Question or strike through anything you read and don't agree to.
At every point in the buying process you should be prepared to walk away from the deal. Most cars are financed for 60 months and it is likely you won't be able to trade cars again until you have owned it for at least three years. That's a long time to be stuck with a car or a deal you hate. Conversely, the sales personnel know that, statistically, you are going to buy a car within three days of the time they first talk to you. So, they are loathe to let a serious buyer get away.
Always remember that, while it can be a mistake to see your salesperson as your ally or representative, he or she is still a person. If you expect to be treated fairly and with respect, your salesperson has the right to expect the same. It's a business deal, not a personal feud.
Buying a car is often a stressful experience, but not an unmanageable one. If you keep the above information in mind and prepare yourself adequately, there is no reason why you should ever pay too much for a car. Happy motoring!
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