Gather Little by Little

This article is the final part of a series on how to get a great deal on a new car. Part I of the series focused on research and selection. Part II helped you determine how much you could afford, determining how much you’ll pay, and getting some initial deals either over the phone or on email. This article, will provide you with valuable information on how to deal with the sales staff, finance team and drive your new car home.

When to head to the dealership

Armed with your price limits, your product research, invoice information, and your quotes from other dealerships, the time has come to head to the dealership and buy that car. Instead of visiting early on a Saturday as you did when you were looking, this time you should go late on a week night. The least number of auto sales happen during the weekdays, the dealership is going to be more hungry for a sale. If you can, I’d also suggest going late in the month. The dealership might be short on their sales numbers for the month and want to make some quick sales.

I recommend going late in the evening to avoid a very common sales tactic: making you wait. Dealerships love it when you get there early in the morning. The sales team typically works all day, and so if you’re there all day, no harm to them. The tactic is to make you wait at the dealership for as long as they can. Their hope is the wearing you out, you will succumb to a less than ideal deal just to get out of there. The longer they make you wait, the better their chances as you won’t want to walk out due to the time commitment you’ve made. The longer you’re there, the more commitment you’ve made. This waiting game is a classic strategy that works very effectively. But not for us.

By going to the dealership and hour or so before they close, you throw a wrench in the gears. The sales and financial team have to stay as long as you are there. More than likely, they have families too and want to go home on time. By visiting late, you really put the pressure on them to get you out quickly instead of making you wait. Trust me, it works.

Look on the internet or call them and find out their hours and arrive at the dealership and hour or two before they close.

At the dealership

The dealership closes at 9:00pm, and you arrive at 7:30pm. You’ve eaten already, you know what you want to buy, and you have all of the documentation and paperwork you need, you’re ready to buy. Find a sales person, or ask for the sales person you’ve previously spoken with (before visiting, I’d recommend you make sure they will be working when you plan to arrive).

Tell them the car you want to buy, and even give them the stock number you previously wrote down. Be clear that you are ready to buy and drive it home tonight as you won’t be available to return back for a few days after today. This will put a little pressure on them to sell you the car tonight.

In the box

At this point, they will take you to “the box”. This is the sales person’s office and it’s typically surrounded by glass. As I said before, this is where the dealership works their magic, and is the place where “the game” begins. Thinking of it as a game is VERY important. Remember, the purchase process is not personal, the sales person is not your friend, and it’s purely a game that you must win. Remember, if you don’t win, you lose money, real hard earned cash. Always keep this in mind. The sales person will do everything they can to make you relate to them on a personal level, tell you about their kids, how slow sales have been, their sick mother, you name it. I’ve bought many cars and have heard lots of sales person stories, don’t let them play you.

Once in “the box” the sales person will most likely ask you if you need anything to drink and probably even start a little “small talk” with you. I like to call this kneading the bread. They’re trying to soften you up. Do not engage them; do not let them control the situation. They will do everything they can to make you think they are in control. Always remember, you are truly in control: You can leave whenever you want AND you have the money.

The first offer

Once I sit down I immediately pull out a sheet of paper and write on it what I am willing to pay for the vehicle. This is important in setting the tone, and showing that you are in control. Start WAY low and negotiate up, they will want to do the opposite. You making the first price offer will set the tone for the negotiation. I would start at $1000.00 to $1500.00 below invoice. Do not factor in any rebates or cash down at this point. We’re talking pure price of the vehicle. Cash down and rebates come off the negotiated price. Pay attention to this point, because the sales team likes to throw all of this in and confuse you with numbers. There price worksheets are designed to confuse you.

Once they see your initial offer, they will do everything but have convulsions on the floor (they might even do that). They’ll gasp, laugh, act hurt, shocked, pass out, you name it. They will everything they can to act like you are completely out of your mind. That’s alright, just let them do it, but stand firm and tell them to take it to the sales manager. They will eventually do it, although they’ll act like they are going to be fired for doing it. Don’t worry, they won’t.

Set time limits

Before they walk out of “the box”, tell them they have 10 minutes to come back or you are leaving. This will keep them from playing the waiting game on you. If they aren’t back in 10 minutes, walk out. Trust me, they won’t let you and it will further put you in control of the deal. I actually like it when this happens. They become a whole lot more attentive to you at that point.

Whenever the sales person leaves, set a reasonable time limit for them to come back. I generally go 5-10 minutes depending on what they are going off to do. Don’t believe they do this? When I bought my current car, I was waiting in the office and after 10 minutes I walked out. As I walked out the door, the salesman was standing their talking to a bunch of other salesman with my paperwork in hand smoking a cigarette. When he saw me, he just about swallowed it. We talked, I explained to him I knew all the little games and wasn’t going to play them. The whole tone of the negotiation process changed at that point.

Don’t discuss anything in “the box”

While the sales person is away, if you have someone with you, do not discuss anything about your finances, the deal, or how much you are really going to pay. If you want to do this, walk out of the office. “The box” is most likely rigged so the sales staff can listen to your conversation. I usually walk out of the office until the salesperson returns. Edmunds.com sent a reporter into a dealership to work undercover and write about it. At the dealership he worked at, the phone’s were set-up so they could listen to your conversation without you knowing it. Others actually have microphones. This is not a myth.

You will most likely go back and forth for a while, but only give-up small amounts at a time. Don’t “meet them half way”, just give a hundred here, a hundred there. You can tell when you are getting close to the dealership’s final price when the sales manager comes into “the box” to meet you. They will start to explain how they don’t have much margin on the car, how sales have been slow, and anything else he can think of to try to persuade you. They will also try to do the payments game with you. Stay focused on price, not payments.

Time to walk

When you are at the point where the dealership is telling you they can’t give it to you for your offer it’s time to make a tough call. You can believe them and make a deal for that price. By this time, you’ve got a really good deal. The other choice is to say “Well thanks. Can you write that deal down for me? I’d like to visit some other dealerships before making a final decision“. Get up and walkout. If they let you, you know what their bottom line is. Chances are they won’t and even if they do they will call you back the next day.

We had a sales manager chase us out into the parking lot, and I got another $300.00 off the price while putting our children in the car. They don’t want you to walk, because statistics show you won’t come back. Walking out is a key strategy to getting the best deal. Granted, it’s hard to do especially after all the work you’ve done, but it’s worth it. The car or another one just like will be there tomorrow. Don’t let them make you think otherwise.

Dealer fees and add-ons

New cars often come with fabric protection, special paint coatings, undercoating, etc, etc. Don’t pay for these, just refuse. You didn’t ask for them, so don’t pay for them. They have a HUGE mark-up on these things, and you don’t need them. If they tell you since it’s already on the car, you have to pay for it. Tell them to special order one for you and not put the add-ons on it. Don’t worry, they won’t make you pay for them. Just stand firm and refuse.

You’ll also have to deal with various fees, the most common being a doc fee. Depending on the dealership, this is anywhere from $50 – $1000. Sometimes it’s negotiable, but many times it isn’t. So understand the doc fee during your negotiations and use it when negotiating. A reasonable fee is $100.00, anything above that is just a way for the dealership to guarantee profit. I generally refuse the pay for them, as documentation is part of their cost of doing business, but I have paid them as well. When I did pay them, I just worked harder to get a better price on the vehicle to make up for it.

In the financing office

After you make the deal, you’ll now be sent over to the finance office. Buyers generally think the negotiation process is over at this point. Wrong. Dealerships make money with financing as well. But by getting our financing in advance, we made this part easy. Tell the finance person that you already have financing, but if they can beat it, you’ll go with them. Generally they can and will beat it. But even if they can’t, you’re good as you already have it taken care of. This is a win/win situation for you.

The finance guy will push hard for an extended warranty. Don’t buy it. You have until the end of the manufacturer’s warranty to purchase an extended warranty, so just say no. They’ll also offer things like discounted oil changes and other service related offers. Use your best judgment on these. If in doubt, decline.

Now for the paperwork. I cannot stress this enough…READ EVERYTHING BEFORE YOU SIGN IT. Check the numbers, ask about the forms if you don’t know what they are, and understand EVERYTHING before you sign it. There have been many instances of dealerships inserting extended warranty contracts in the middle of the stack of paperwork so you’ll sign it and no know it. I have also personally experienced them telling me one rate, and changing it on the paperwork. Check their math, read the fine print, and ask questions if you don’t understand. If you don’t get the answers you want or if you aren’t comfortable, walk out.

The drive home

Now you can breathe. The deal is done, paperwork is signed, and it’s probably late. Slide into the driver’s seat of your new car and drive home. Enjoy it, enjoy the smell, wonder at how great it drives and rides and most importantly relax. You did good. You made an educated purchase, got a great deal, and were smart about your financing.

Again, I want to stress that I personally don’t advocate buying a new car, but prefer purchasing a slightly used car instead. But I recognize not everyone will agree with me, and for those that want or need to purchase new vehicles, I hope the tips and suggestions I have provided will be useful. Please contact me and tell me about the great deal you got. Would love to hear your story!

For a really good read on the inside story of car dealerships, read this article on Edmunds. It’s a long read, but well worth it.