Ten Secrets to the Car Dealership – Web Originals

Ten things you must know about car sales

I sold cars for almost four years. Before you head to the dealership, you need to be ready. Here’s some advice that every shopper should know before setting foot on a car

lot, whether it’s a buy-here-pay-here joint or a fancy downtown Jaguar store with all-you-can-drink espresso. Ultimately, it’s all about streamlining the process and scoring the best deal, so pay attention.

Ten. Salesmen aren’t car experts

I know. Shocking. But yeah, most dealer salespeople aren’t enthusiasts. Worse, a lot of them aren’t well-educated about the products they sell. They know just enough to stir the product effectively, especially to the uninformed customer. If you’ve ever visited a dealer and realized you knew more than the smiling “experienced” who tackled you as you walked in, you know exactly what I mean.

But wait—don’t manufacturers require product skill training? Of course they do. But in the business of selling cars, money talks and time is precious, and an industrious staffer can make a lot of cash on the side by taking other staffers’ product information tests. At my dealership, there was one stud who did pretty well for himself doing exactly that.

Of course, the customer loses as a result. I had to listen to veteran salesmen spout nonsense like, “Heck yeah, you can put a lift kit on this Denali and still get superb gas mileage. It’s only a V6.”

The sad part is, many customers don’t know any better. So arm yourself with skill before you visit the dealer.

9. Salesmen aren’t your friends

No one gets a good deal from a car salesman. Even when I sold cars to friends at what I thought were rock-bottom prices, there was still profit for the dealership built in.

Being friendly is a sales technology. Period. It lowers barriers and fosters acceptance. If you believe the salesman is your friend, you’re more likely

to believe that he has your best interests at heart. Newsflash: he doesn’t.

One of my worst days wasn’t actually on the car lot. It was listening to a friend talk about the “good deal” he got on a used car. He

was amazed that the salesman had been so friendly and helpful.

“Hell, he even took me out to lunch while they prepped the car,” he said.

He regaled me with the story like he’d just bagged a 10-point buck, but the reality was a horror demonstrate: he paid over blue book, the dealer stuck him for an extra point on his APR, and he sold

him an extended warranty that didn’t cover a $1500 brake job he needed one thousand miles later. But hey, the salesman was a nice stud!

8. History reports aren’t gospel

History reports like those provided by Carfax and Autocheck are not foolproof. At best, they’re a way to

double-check what a dealership is telling you. At worst, dealers can use them to artificially increase the price of a crappy car.

Reminisce that these services only communicate information that was reported by previous owners. For example, my car has a clean Carfax, but judging by the signs I’ve observed after the fact—overspray, different indication of wear, etc.—it’s pretty evident that the car was in a front-end collision some time before I got it. But it was never reported. I didn’t go after my own advice and I didn’t look closely before I bought it. As a result, I’ve been pursuing wreck-related demons ever since.

7. Buy what appreciates, lease what depreciates

You’re at the dealership, and you’re thrilled at the prospect of buying a car. Sure, that low monthly payment dragged out over a fully

absurd 84-month term may seem attractive on its face, but it’s a trap. In the end, you’ll very likely get burned. Once the car is out of warranty, whatever remaining value it has will

be eaten up in repair costs. The solution? Lease. Leasing can keep your payments manageable and let you get in a fresh car every few years. These days, many leases include standard maintenance,

and all you have to pay is depreciation. If you must buy, you’re better off buying used.

In 2006, I overlooked this rule. I fell in love with a Midnight Blue Metallic two thousand five Pontiac GTO. I didn’t lease because I desired to modify

the car, and I was too impatient to wait for a used example to pop up. I got fortunate. After four years of massive payments, I broke even. Not everyone is so fortunate. If you

roll in negative equity from a previous loan, or if the car you’re buying doesn’t randomly turn into a collector car when the company unexpectedly folds, you can find

yourself in a rough spot.

6. Dealers aren’t charities

Financing companies work with car dealerships because it makes them money, and dealerships recommend certain options because—wait for it—it makes them

money. Find your own loan before you arrive, or at least research which rates your bank or a credit

union will give you so that you can compare them against the loans suggested by the dealerships.

Some states still have usury laws that cap the interest that can be applied to a loan, but the twenty one percent

interest that the “special finance” division in my dealership ended up requiring is still twenty one percent interest. So get financed before you set foot on the car lot.

Five. Beware the extended service contract

In many cases, you won’t get your value back. The

service contract is suggested because it’s a profit bonanza for the dealer. They’re typically issued by outer vendors that work like insurance

companies. Like an HMO, each service contract vendor will have preferred care centers. The dealership will very likely attempt to woo you to service through them exclusively so that they can capitalize on their premium labor rates. After all, the service department is where any given dealership truly makes its money.

Dealerships charge a hefty labor rate because, well, they can. They’re supposed to have better-quality technicians, and a vehicle maintained at a brand dealership typically has a better resale value. Just recall: You don’t need to buy the service contract, no matter how significant the salesman makes it sound, and you have final say in where to have your car serviced. Don’t let anyone tell you otherwise.

Four. No-haggle pricing is for suckers

No-haggle pricing is a marketing ploy designed to ensure the dealership wins. If you agree to a no-haggle price, you’re agreeing to an unknown profit margin for the dealership. Game over. Worse, unless you’re forking over cash,

you’ll still have to haggle when it comes to financing your purchase, anyway. You’re better off steeling yourself mentally and negotiating a deal the old-fashioned way. There’s a reason dealerships love no-haggle pricing, and it has nothing to do with saving you money, time, or hassle.

Three. Skill is power

When a dealers says it can’t showcase you some bit of information pertinent to the car you want to buy, it’s doing so because it doesn’t want to, not

because it can’t. Brief of the previous holder’s private service records, the dealer can demonstrate you everything about the car, including invoice price, holdback, and

even the money spent on repairs if they performed the service. You’ll have to harass the salesperson to get this info, but the skill gained can be invaluable.

My beloved example is “Pay 310.” Pay three hundred ten was a line on General Motors invoices just for holdback. Holdback is a a charge—a percentage of the price built in by the manufacturer to help dealers defray the costs associated with advertising and marketing their products. Customers who asked for the

invoice knew to look for this line, and haggling over it generally saved them hundreds of dollars.

Ask for invoice information late in the deal as a closing negotiation. Assure the salesperson that you recognize there has to be profit in the

deal but that you want to know how much profit. Don’t be taken advantage of.

Two. If it seems too good to be true .

You know that 22,000-mile Subaru WRX STI you found at the scuzzy bargain dealership under the overpass that seems to have a fresh name every three months? Either the car won’t be there anymore in the two or three minutes it’ll take you to drive to the dealership (this is a bait and switch, and it is common), or there’s something earnestly wrong with it. The same goes for oddly cheap Benzes, BMWs, Cadillacs, and so on. There’s an ocean of difference inbetween a cheap car and an inexpensive car. You want the latter.

Dealerships aren’t exempt from this little rule when quoting trade-ins. I had a manager who lusted after all things Toyota. He made a fortune in

Arizona strong-arming old ladies into Camrys and the like, and he believed that any Toyota, no matter how cheap, was worth its weight in gold. So when a

customer came by promising a 60,000-mile Toyota pickup as a trade, the manager fell all over himself to give the buyer $3500 for the unseen truck. He figured he

was stealing it. The customer drove off in a fresh rail, and our best lot tech left to pick up the trade-in. He hardly made it back alive. The Toyota could slightly hit

45 mph, it had a visibly arched figure and bed, it ran on three cylinders, and it had a screwdriver for a key. But it was too late. The papers were signed.

1. There are no fine deals

There are relatively good deals that get you a good car for a period of time, relatively bad deals that leave you underwater when you want to trade in

the car, and there are deals where you get screwed, plain and elementary. If your salesman high-fives a colleague

while you’re in “the box”—aka Finance—chances are you’re among the latter.

Do your best to prepare beforehand, stay tranquil, be reasonable, and attempt not to leave behind these rules when you go in to buy a car. The practice will be better for you.

Ten Secrets to the Car Dealership – Web Originals

Ten things you must know about car sales

I sold cars for almost four years. Before you head to the dealership, you need to be ready. Here’s some advice that every shopper should know before setting foot on a car

lot, whether it’s a buy-here-pay-here joint or a fancy downtown Jaguar store with all-you-can-drink espresso. Ultimately, it’s all about streamlining the process and scoring the best deal, so pay attention.

Ten. Salesmen aren’t car experts

I know. Shocking. But yeah, most dealer salespeople aren’t enthusiasts. Worse, a lot of them aren’t well-educated about the products they sell. They know just enough to stir the product effectively, especially to the uninformed customer. If you’ve ever visited a dealer and realized you knew more than the smiling “pro” who tackled you as you walked in, you know exactly what I mean.

But wait—don’t manufacturers require product skill training? Of course they do. But in the business of selling cars, money talks and time is precious, and an industrious staffer can make a lot of cash on the side by taking other staffers’ product information tests. At my dealership, there was one dude who did pretty well for himself doing exactly that.

Of course, the customer loses as a result. I had to listen to veteran salesmen spout nonsense like, “Heck yeah, you can put a lift kit on this Denali and still get good gas mileage. It’s only a V6.”

The sad part is, many customers don’t know any better. So arm yourself with skill before you visit the dealer.

9. Salesmen aren’t your friends

No one gets a good deal from a car salesman. Even when I sold cars to friends at what I thought were rock-bottom prices, there was still profit for the dealership built in.

Being friendly is a sales technology. Period. It lowers barriers and fosters acceptance. If you believe the salesman is your friend, you’re more likely

to believe that he has your best interests at heart. Newsflash: he doesn’t.

One of my worst days wasn’t actually on the car lot. It was listening to a friend talk about the “good deal” he got on a used car. He

was amazed that the salesman had been so friendly and helpful.

“Hell, he even took me out to lunch while they prepped the car,” he said.

He regaled me with the story like he’d just bagged a 10-point buck, but the reality was a horror display: he paid over blue book, the dealer stuck him for an extra point on his APR, and he sold

him an extended warranty that didn’t cover a $1500 brake job he needed one thousand miles later. But hey, the salesman was a nice dude!

8. History reports aren’t gospel

History reports like those provided by Carfax and Autocheck are not foolproof. At best, they’re a way to

double-check what a dealership is telling you. At worst, dealers can use them to artificially increase the price of a crappy car.

Reminisce that these services only communicate information that was reported by previous owners. For example, my car has a clean Carfax, but judging by the signs I’ve observed after the fact—overspray, different indication of wear, etc.—it’s pretty evident that the car was in a front-end collision some time before I got it. But it was never reported. I didn’t go after my own advice and I didn’t look closely before I bought it. As a result, I’ve been pursuing wreck-related demons ever since.

7. Buy what appreciates, lease what depreciates

You’re at the dealership, and you’re thrilled at the prospect of buying a car. Sure, that low monthly payment dragged out over a fully

absurd 84-month term may seem attractive on its face, but it’s a trap. In the end, you’ll most likely get burned. Once the car is out of warranty, whatever remaining value it has will

be eaten up in repair costs. The solution? Lease. Leasing can keep your payments manageable and let you get in a fresh car every few years. These days, many leases include standard maintenance,

and all you have to pay is depreciation. If you must buy, you’re better off buying used.

In 2006, I overlooked this rule. I fell in love with a Midnight Blue Metallic two thousand five Pontiac GTO. I didn’t lease because I dreamed to modify

the car, and I was too impatient to wait for a used example to pop up. I got fortunate. After four years of massive payments, I broke even. Not everyone is so fortunate. If you

roll in negative equity from a previous loan, or if the car you’re buying doesn’t randomly turn into a collector car when the company unexpectedly folds, you can find

yourself in a harsh spot.

6. Dealers aren’t charities

Financing companies work with car dealerships because it makes them money, and dealerships recommend certain options because—wait for it—it makes them

money. Find your own loan before you arrive, or at least research which rates your bank or a credit

union will give you so that you can compare them against the loans suggested by the dealerships.

Some states still have usury laws that cap the interest that can be applied to a loan, but the twenty one percent

interest that the “special finance” division in my dealership ended up requiring is still twenty one percent interest. So get financed before you set foot on the car lot.

Five. Beware the extended service contract

In many cases, you won’t get your value back. The

service contract is suggested because it’s a profit bonanza for the dealer. They’re typically issued by outer vendors that work like insurance

companies. Like an HMO, each service contract vendor will have preferred care centers. The dealership will very likely attempt to persuade you to service through them exclusively so that they can capitalize on their premium labor rates. After all, the service department is where any given dealership indeed makes its money.

Dealerships charge a hefty labor rate because, well, they can. They’re supposed to have better-quality technicians, and a vehicle maintained at a brand dealership typically has a better resale value. Just recall: You don’t need to buy the service contract, no matter how significant the salesman makes it sound, and you have final say in where to have your car serviced. Don’t let anyone tell you otherwise.

Four. No-haggle pricing is for suckers

No-haggle pricing is a marketing ploy designed to ensure the dealership wins. If you agree to a no-haggle price, you’re agreeing to an unknown profit margin for the dealership. Game over. Worse, unless you’re forking over cash,

you’ll still have to haggle when it comes to financing your purchase, anyway. You’re better off steeling yourself mentally and negotiating a deal the old-fashioned way. There’s a reason dealerships love no-haggle pricing, and it has nothing to do with saving you money, time, or hassle.

Three. Skill is power

When a dealers says it can’t demonstrate you some bit of information pertinent to the car you want to buy, it’s doing so because it doesn’t want to, not

because it can’t. Brief of the previous proprietor’s private service records, the dealer can showcase you everything about the car, including invoice price, holdback, and

even the money spent on repairs if they performed the service. You’ll have to harass the salesperson to get this info, but the skill gained can be invaluable.

My beloved example is “Pay 310.” Pay three hundred ten was a line on General Motors invoices just for holdback. Holdback is a a charge—a percentage of the price built in by the manufacturer to help dealers defray the costs associated with advertising and marketing their products. Customers who asked for the

invoice knew to look for this line, and haggling over it generally saved them hundreds of dollars.

Ask for invoice information late in the deal as a closing negotiation. Assure the salesperson that you recognize there has to be profit in the

deal but that you want to know how much profit. Don’t be taken advantage of.

Two. If it seems too good to be true .

You know that 22,000-mile Subaru WRX STI you found at the scuzzy bargain dealership under the overpass that seems to have a fresh name every three months? Either the car won’t be there anymore in the two or three minutes it’ll take you to drive to the dealership (this is a bait and switch, and it is common), or there’s something gravely wrong with it. The same goes for oddly cheap Benzes, BMWs, Cadillacs, and so on. There’s an ocean of difference inbetween a cheap car and an inexpensive car. You want the latter.

Dealerships aren’t exempt from this little rule when quoting trade-ins. I had a manager who lusted after all things Toyota. He made a fortune in

Arizona strong-arming old ladies into Camrys and the like, and he believed that any Toyota, no matter how cheap, was worth its weight in gold. So when a

customer came by promising a 60,000-mile Toyota pickup as a trade, the manager fell all over himself to give the buyer $3500 for the unseen truck. He figured he

was stealing it. The customer drove off in a fresh rail, and our best lot tech left to pick up the trade-in. He hardly made it back alive. The Toyota could scarcely hit

45 mph, it had a visibly arched assets and bed, it ran on three cylinders, and it had a screwdriver for a key. But it was too late. The papers were signed.

1. There are no superb deals

There are relatively good deals that get you a good car for a period of time, relatively bad deals that leave you underwater when you want to trade in

the car, and there are deals where you get screwed, plain and elementary. If your salesman high-fives a colleague

while you’re in “the box”—aka Finance—chances are you’re among the latter.

Do your best to prepare beforehand, stay peaceful, be reasonable, and attempt not to leave behind these rules when you go in to buy a car. The practice will be better for you.

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