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"Confessions of a Car Salesman"

| 17 Comments

In light of the events related here, I am reading up on buying cars.

If you're in the market, too, then read, "Confessions of a Car Salesman" at Edmunds.com. Enlightening!

I have not bought a new car in many years. One of the advantages of buying a used car (apart from letting the original buyer get soaked by depreciation) is that it's much harder for a salesman to "bump" you - get you to agree to high-cost extras. The car is what it is. Its options are already installed. All they can do is try to sell you high-profit items such as a used-car warranty, but these are easy to turn down.

I saw a new car in a display in the local mall last week that had $2,500 of dealer-added cost, things like "anti-theft engraving" on the windshield, "paint protection" (a plain wax job), fabric protection" (Scotch-Gard sprayed on) and other junk like that. Another article on Edmunds told of a man who was thrilled to get a price via fax for a new, hard-to-find Lexus that was only $500 over invoice. So thrilled that he closed the deal before he even saw the car or closely reviewed the sales documents. He just signed his name away.

Later he discovered that while the basic sales price was indeed $500 over invoice, the dealer had added more than $5,300 for chrome plating the wheels. It was a "dealer added" option that Edmunds says a local specialty shop charged $850 to do.

Always carefully review all the sales documents the Finance and Insurance salesman hands you. Yes, that right - the guy or gal who draws up the paperwork is not a clerk, s/he is a salesperson, and often the highest earner in the dealership. In 1986 I bought a Subaru that this guy just loaded up with extra charges. I just handed it all back to him and told him that the salesman had agreed on a certain price plus nothing but TT&L, and that I was going back to the salesman to tell him that the F&I guy had just cost him his commission. It was amazing how quickly all that stuff came off.

Never get attached to a particular car. Always be prepared to walk away from dealers who pre-load their cars with dealer-added options and won't budge on them (by "budge," I mean remove the cost completely). A Dodge dealer once tried to sell my Dad an $850 "acid rain protection" job, I kid you not. They'll tell you that they add such things to all their cars or that they come from the factory like that. Those things are about 90 percent profit. So walk away. Otherwise, this is what you are!

17 Comments

Alive is good. I’m glad to hear it. I’m also glad to hear you made the move to the new digs. I’ve still been checking your old blog spot.

My wife and five-year old child were in an auto accident about a month ago and it seems like the "gift" that keeps giving, from the insurance companies, to the finance companies to the bank, it continues to be something. For one thing, we were given about 3 days to buy a replacement vehicle, so we ended up violating all of my tenants of making a studious decision (including having a walkway posture). But alive is good.

Always be prepared to walk away. Ive sat in a dealership and threatend to tear up the papers after beingg there for 3 hours - my daughter was almost in tears but I got what I wanted. There are dozens of the same car dealerships within an easy drive of anywhere - but you maybe that salesmans only customer that day. They will make the money on a few areas -- lower trade in, extras mentioned but also finance. You can dicker on financing also since they will send it to their favorite place not necessarily the best for you. Some banks will take B credit if you send a few A along. Ive haggled on the rate too. It's all a game. HecK you can search inventories on line now although they maybe out of date a bit. Compare dealerships and cars - then walkin and haggle knowing what you want is there.

Spent a few months selling cars. Didn't do too badly - it ain't hard in the middle of that "employee pricing" mess, after all. But it's not an honest business and I got back out. However, I learned things that will continue to help me my whole life when it comes to buying cars...

If you need to shop for a car, go do your test drives. You are not there to buy a car. The salesmen will attempt to sell one to you anyway. That's their job. They're not getting paid to provide you with customer service, they're getting paid for sales. You're wasting that person's time. You need to be willing to do this, because the dealerships set things up this way precisely so that you feel compelled to do business with the guy that took you for the test drive. Don't do it. If you ever talk with this guy again, it will be purely by coincidence. Don't talk numbers, don't even worry about them at this point, just find the make and model you want.

Then go home and do your research. Edmunds is a good site for this. Read up on the car you want, make sure that you've got the right one, check out possible options. Be CAREFUL checking out options. Just because it's theoretically available doesn't mean anybody within 500 miles will be able to lay hands on one, and if you're ordering a special one from the factory, kiss your wallet goodbye on the pricing. ;p Basically, for every option you select, it increases the chances that you will have to also take other options you don't really want. Narrow it down to the stuff you can't live without.

Look up the invoice price of the car you want. This is your victory condition - if you can buy a car for this price, you've done a good job, and haven't been cheated. (Plus the destination charge, keep in mind. You can't negotiate that away and the dealer won't appreciate you trying to.)

At this point, go to the bank. Yours if possible, but at least a bank. Get a quote for a car loan for your invoice price plus tax, and maybe $500 extra to cover any unanticipated fees or a cheapo option or two. Make sure the monthly payment is something you can handle; if not, you're buying too much car. Why are we getting this quote? Because it gives you a baseline interest rate when dealing with the car dealer. If you go in there with no idea of what kind of loan you qualify for, there's nothing to stop him from getting you a loan for 7% and selling you one at 9%; that sort of monkey business is why dealer financing is the most profitable portion of a car dealership, way more than the cars themselves. But if you have an honest outside quote, the dealer doesn't have any choice but to play straight with you - either they beat your quote and get you a better deal, or you just go with the loan you've been approved for and can afford already.

Now, go online and spam out your requirements to the e-mail contact for a few car dealers in your area. Make it clear you're prepared to buy immediately and that you're only interested in talking with (a) the lowest priced dealer with (b) the car with the specifications you want © on their lot. You won't get 100% response rates, but you should get enough. These responses should have attached prices; good ones will usually compare to the invoice already, but you know the invoice price.

Go to the dealer you've chosen, after calling the internet guy and setting up an appointment. You definitely want to talk to the internet sales guy. He works differently from the rest of the dealership - he's there to get people like you, who've done their homework, in and out with a car. This will save you a lot of the song and dance associated with buying a car.

If you have a trade-in, you're hosed - there's no quick and easy way around dealing with the normal evaluation. Consider selling it independently, especially if it's old and has a lot of mileage on it. (If you still owe on your trade AND it's old or has a lot of mileage, good luck...)

Go to the dealer and buy the car. It'll still take a while, so don't go if you have something to do that night. If at any point you feel like you're not getting the deal you were proposed (i.e. they don't have the car they told you they had, they're not willing to sell for that price, etc.), walk away and try again with someone else.

This won't always work. If you want an unusual configuration, or if the model's in a lot of demand, or if you live in an area with few car dealers, you might not get good results. And it's a lot of work to do it, so if you're buying a model where there's only a small gap between invoice and sticker, maybe you don't need to do every step. (But at least check out your financing options!)

I found it well worth while to pay the money for the Consumer Reports information on the two car models I was considering seriously.

Another good trick is to get phone information from a different dealer (perhaps the one on the other side of town) about whether they have approximately the model you want on their lot.

Keep in mind that the sales manager is the only one who can actually approve the deal. Once you have made an agreement with the salesman, he has to take it to the sales manager, who may turn it down if you've done too good a job. So be prepared to talk with the sales manager.

Once the sales manager is there, trying to explain that you have to pay more, you can point out that his rival dealer on the other side of town has the car you want on the lot, so if he doesn't want to deal tonight, maybe you'll just go over there and talk with them. This seems to clarify his thinking quite a lot.

After I had concluded my deal, the sales manager offered me a job!

Rev. - I read the whole article. Thank G-d you are alive to write about it.

Heh, I recently purchased a 'new-to-me' car, the first in 13 years. Two weeks after I have it, I am rear-ended on a rainy, snowy night. Fah! Karma can be a real b-tch sometimes. I am now dealing with getting the car repaired, lost value claims for the wreck and having the chiro straighten my back out.

Nuts.

Edmunds is ok, but Fighting Chance is better. Its worth the 35 bucks he charges, plus you can call him and he will talk about what you are looking for. They also list the prices that your car went for and where which is helpful. I've never paid retail price for any vehicle, nor have I ever paid more than 5% over dealer invoice pricing, this includes not paying for any dealer holdbacks and other ripoff fees.

Carbuyingtips.com is probably the best source for information you can find. His spreadsheets are the only thing I take to the dealer with me, if I even go to one.

When it comes to wheels, dont buy them at the dealer. I was offered a "great deal" on chrome wheels from the dealer at a price of 1250 for my new GL450, I got the same wheels for 750 at a local tire group. 500 bucks doesn't seem like a lot, but it adds up when you start digging.

Edmunds is ok, but to really save, go to the other sites. Also, hold dealerships to task with the factory holdbacks. I had a Mercedes salesman try to explain to me that they didn't exist, which was a lie, and I called over the sales manager and called him on it. I've gotten to the point where I actually like to go to the dealerships and haggle, and offer to do it for friends. When you are armed with the right information, its amazing what you can accomplish.

Brilliant thread - for links, and the reader tips. Thanks to all, Avatar especially for his own insider tips. This one will be in my "permanent reference" file - and I'll throw it in Winds' "Best of..." too.

"After I had concluded my deal, the sales manager offered me a job!"

Great story, Beard.

You can haggle with the sales manager, but unless he's under the hammer, you're going to do just about as well off the internet guy up-front. The entire purpose of the internet department at a dealership (usually just one guy, but it can be more if they're huge) is to segregate the picky, well-informed shoppers from the herd. If someone has looked up your pricing and talked to six dealers and has a loan in their hand when they walk in the door, they're not going to appreciate the normal hemming, hawing, and outright deception that accompanies the usual car-purchasing process.

The normal negotiation process focuses on the down payment and monthly payment, for two reasons. The ostensible one (and it's pretty sensible) is that you have to be able to afford the car, if you're gonna buy it; it doesn't do any good to spend an hour dickering on the price of the car, or the price of the trade, if you can't come anywhere near the payment required to actually buy it. The real reason is that people are sensitive to changes in the price and the trade, but not so much to the monthly payment - "can you do another ten bucks a month?" is a lot less expensive-sounding than "can you come up another $500?", even though the former is more actual money than the latter. Ultimately, the dealer wants to get you to commit to the highest possible monthly cost - at which point they'll jigger the numbers to make that the cost of the car. I, er, accidentally sold my first car for $200 over sticker this way. ;p (Last time that happened, I tell yez.)

When you talk to the internet guy, he knows that you don't want to talk monthly and down payment. You don't even really want to talk about the price of the car - you've already gotten the quote there, and if it wasn't a good quote, you wouldn't be there at all. It's very much an in-and-out process, focused on throughput more than maximizing profit from each sale. The dealer isn't making the money on the cars or the financing, but it's providing sales numbers that help the dealership (and the managers, heh) hit their monthly sales targets, which means financial incentives from the corporation (and in the managers' pockets, heh.)

There really is something to the "end of the month" thing, if you're forced to deal with the floor salesmen and the sales office. However, there's a couple of caveats - the end of the month means the end of the sales month, which doesn't always correlate to the 31st, and whether it provides an advantage or not is heavily, heavily dependent on where the dealership is in sales that month. If they're doing gang-busters business, and they blew by the sales goal last week, they don't have any particular incentive to move one more car (except for possible financial incentives from the manufacturer - it can be more profitable to move a particular car on a high-sales month than a low-sales month, though it's better to hit your sales goal and the bonuses on both months...) If their sales suck, and they have no hope of hitting that goal, then they're going to be trying to make every buck they can on each sale that they do make, which means no deals for you. What you're looking for is a dealer who's just a few cars short of their goal - this is about the only time you'll be able to do a below-invoice deal, and not far below at that. I don't know how you'd spot one from the outside, though, so realistically this isn't too helpful...

And yeah, don't buy anything else at the dealer unless your time is more valuable than your money. You'll pay double on accessories or add-ons. On the other hand, if you literally know nothing about that sort of thing, at least with the dealer you'll get a good something for your double money; there's plenty of people who will rip you off out there besides dealers. So if you really want that spray-in bedliner (don't get a drop-in), but you just don't want to deal with finding a reputable provider...

Beard, I hate to say, but I always complimented the customer on their aptitude in negotiation after closing a deal. Costs nothing, they feel better about themselves, and it helps take their mind off "whoa, I just said I'd spend that" and puts it on "sweet, I am awesome and I now have a new car!" So that sales manager may not have been entirely sincere. (Or rather, are they ever?)

Joe, thanks. I figure I gained more in knowledge about the car business than I did in actual pay, heh. And Rev, glad you're okay after your wild ride. Any one you could theoretically have walked away from, huh? Glad we don't get that ice and snow stuff down here...

My father was a small town Chevy dealer when I was a kid, and the business has changed more than I like to admit. A couple of pointers to add:

a) check with the online Car Clubs for faq's & such on the car you're looking at. This way the quirks of the car are known to you (and yes, all cars have quirks).

b) Ask around for which local dealers to avoid. Most dealers on warranty service give better service to their own customers (so try to buy from one you can live with).

What about using an auto broker. These seem to becoming more popular. Are they worth it?

The F&I (Finance and Insurance) managers at a car dealership are really not all that bad. Times are changing and transparency and compliance is required these days. There are still some bad apples, but they are the exceptions not the norm.

http://www.AutoFinanceInsider.com

Well, like I said, if you have one honest quote, you can afford to deal with the finance guy at a dealership; I've seen them get better deals for people than what they walked in with. But I've seen it go the other way, too, and if you don't have that baseline "I know I qualify for a loan at this rate" before walking in there, you'll never know whether you got taken to the cleaners.

Thanks for the link to the finance insider site. Great stuff there!

BTW, the last new car I bought was a 1998 Accord. A spinout on a chemical spill on a country road (unmarked and unwarned, the road was slicker than Teflon) demolished my '95 Jetta. I bought a new Accord LX at darrell Waltrip Honda in Franklin. Tenn. I had been badly injured in the crash and made the deal still bandaged up and walking with diffculty. (My wife was with me to dribe home.)

As the salesman turned me over to the F&I guy, he said, "This is the fellow who does the papewrwork, but (chuckle) he's going to try to sell you a lot of other stuff."

I replied, "He will be spectacularly unsuccessful."

The F&I man took one look at me and said, "No, I;m not even going to try." And he didn't. I got the car for exactly what the salesman had agreed to, plus TTL. And that was that.

But beware of buying there: I later discovered that without prior notice or even a mention, they simply add on (are you ready?) $500 "to file the paperwork with the state." Yes, the dreaded "doc fee." Five. Hundred. Dollars! And there are other bogus charges, too. So yes, their standard F&I procedures are the ones that give the trade a bad name.

Bare link, drive-by, probable boilerplate text. Hmmm.

AFI, if you care to stick around and converse, great. Any further generic or linkspam posts will be frowned upon. Persistent advertisement will result in a ban. Thanks.

Nortius Maximus, I always check back to good web sites. No drive by here!!!

AFI

Check the redneck mailbox pic - didn't expect this, but Link actually has a legitimate, and pretty interesting blog. And Donald (#14) thought the AFI site was useful.

It certainly looks like linkspam, but the comment is relevant, and a follow-on from a blog is legit. This will make a very interesting discussion case re: the comments policy.

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