If you are wondering how much of a new car’s sticker price you should pay then you probably can’t afford it. MSRP is simply the manufacturer’s suggested retail price so the number can be greatly inflated. Unless you have a great deal of disposable income I don’t recommend it.
However if you simply must purchase a new car and decide not to forgo this luxury, there are many things you can do to prep yourself to get the best deal.
It is important for you to understand the rules of engagement before ever stepping on a car lot. Why? Because everything is carefully structured so that you will lose and the dealer will win before you even get there. You are walking into a warzone of starving vultures ready to swoop down and feast upon you if you are not prepared.
In car sales psychology and manipulation are the name of the game. For those of you reading this you are trying to find out the way to get the best deal when you step on a car lot. You need to understand the how the game is played to set yourself up for success.
There is only one thing done all day and every day at the average car dealer—preparation for screwing folks over and making the maximum profit per car deal. From the moment you drive in, to the moment you leave, everything is carefully structured so that you will lose and the house will win. I speak from experience. Yes you are being set up, and it is worse than you think. I worked at a so-called “one price store” for over 3 years and sold both new and used vehicles. During my stay, I learned quite a bit. There are many tricks and psychological tactics used in the car business to manipulate you and make as much money as possible.
Consider this…. the average car salesperson sells ten cars per month, give or take a few. If they have made it in the business for a minimum of 6 months they will have sold a total of around 60 vehicles. This may not sound like a big deal, but let me ask you this… How many vehicles have you bought? How much time have you spent attempting to work deals over the course of your life? How much serious negotiating have you done? How much time have you spent on car lots in general? If you are like most, people, not much. In fact, most try to get in and out as quickly as possible. When you compare this to the amount of time your salesman has spent negotiation deals and developing manipulative skills there is a severe discrepancy even if your salesperson is new. Any good car salesman is a master of manipulation, telling partial truths, and avoiding questions. The longer they have been in the business the better they are, otherwise they would not have survived in the business. I know this sounds harsh, but unfortunately it is the truth.
I dare say that not many of you reading this have bought over a dozen cars in your life. If you have, congratulations, you probably lost a great deal of money. However, you still don’t have near the experience of a mere rookie salesperson who spends 8 to 12 plus hours per day on the lot attempting to sell vehicles for a living. Not to mention the experience he or she has gained in both their successful and unsuccessful attempts at sales, during which time they have worked on various aspects of negotiating a deal with all different personality types.
Don’t forget as previously discussed, that many of these salespeople work on full commission. For those of you unfamiliar with full commission sales it basically means this; If you don’t sell you don’t eat. That is… zero sales equals a zero paycheck. Working on a car lot truly is survival of the fittest. Any good car salesperson is a master of negotiation, manipulation, telling partial truths and avoiding questions. They have talked to numerous individuals every day for months or even years practicing the aforementioned skills while attempting to make a sale so they can survive. They are busy honing their skills and tactics every day just like you do working diligently to be the best at your job.
Still think you are a match for a rookie salesman? Maybe you are. Unfortunately, without education and experience there is usually no way to tell until after you’ve been told by your friends that you got screwed. Or, you find out years later after trying to trade your car in. As I said earlier, the system is designed where the house will win and there are many ways you can be taken advantage of-even if you are hip to the sales game. The bottom line… However little experience your sales person has; it is still probably a great deal more than you possess!
Here are some rules to help guide you in your purchase:
- Do not negotiate with your salesperson; ask for the manager immediately.
You will save yourself quite a bit of time by negotiating with someone who has the power to make the deal happen. If you start off with your salesperson it will take much longer to get the deal that you want. He or she will act as a go between you and the decision maker. It is possible for miscommunication to occur from the middle man plus the salesperson can be feeding the decision maker with information that you may be inadvertently providing. The dealer believes that the longer they can keep you there the more likely they are to be able to close the deal and get maximum profit. If you cut out the middleman you will put yourself in a position of power and can cut to the chase.
- He who speaks first loses
He who speaks first loses. This is one of the biggest rules in negotiation. When you are In the office after you find the vehicle that you would like to buy make your offer. Remember this offer is based on all the research that you have done on your own and with your supporting cast. Do not be swayed but what they say whether it be your salesman, his manager, the finance guys, the gm, or the owner. Remember this is not the only vehicle in the world or the best deal in the world. In the rare instance that it happens to be there will always be another deal or another sale you can come back and try again at any time. However once you make the purchase you are married to it for quite some time unless you can afford to pay cash.
When you are at the negotiating table it is very important that you remain in control.
You shouldn’t be going to the negotiating table unless you intend to buy. You make the offer first. Don’t wait. Write your offer down and submit it to the manager. If the dealer offers you a counter deal and you don’t like it you don’t have to take it. They will oftentimes write this deal down on the some sort of paper and turn it around to you and make the offer. Don’t accept the offer and don’t say a word. Even if you have to sit there for five minutes without a word being spoken. Whoever speaks first is the one who will get the raw end of the deal. Make them speak first until you get the deal you want. Once the dealer speaks if they do not accept your deal or offer you a deal you don’t like simply get up and walk out. Leave and don’t turn back around.
Fear of loss is a tool that will be used against you. So eliminate this tool by being ready to leave at any time. If they really want the deal the can call or send you an email. Also remember that there is no shortage of vehicles and places to buy them. Which leads to my next rule……
- Be prepared to walk away at any time
Fear of loss oftentimes determines an undesired outcome. Do not let fear dictate what type of deal you will accept. If the dealer will not give you the deal you want and you find yourself tiring. Simply get up and walk away and drive home. Don’t let them keep you there. Once you have made the decision to walk away. Do it. Don’t let them talk you back into turning around and coming back to the negotiating table. Go ahead and go home and let them call you before considering coming back. They need to understand that they cannot manipulate you. So it is very important that if you decide to leave for the day that you do it. If they are going to offer you the deal you want they still can. Let them experience the fear of loss. Trust me. If you were close to a deal and they feel that they have a lost sale they will call you back and try to get your business.
- Use the power of referrals to your advantage
Don’t give out business referrals to the dealer for free. Referrals are valuable to the dealership. Just think of how much money they spend on advertising to bring people in the door. Use this as a bargaining chip. When you get towards the end of the deal and are negotiating the final aspect of the deal, don’t give up money. Offer a referral or two instead.
- Don’t be obsessed with buying a car within day.
The dealer will try to get you to commit to making a purchase that day. Don’t. Also, don’t become obsessed with picking up the car the day that you have made a deal. Once you drive the car off the lot it is yours and the dealer knows this. They will do everything in their power to get you to drive the car off the lot that day. Once the deal is made you can pick the car on a different day. This keeps you in control and allows you recourse in case there are doubts or something goes wrong. If for any reason you have to back out of the deal it will be far easier if the car has never been picked up and driven off the lot.
- Get everything in writing
Don’t let all of your hard work go to waste by failing to get all offers and promises in writing. This is critical. If you don’t have it in writing it never happened. Don’t allow yourself to be had by missing this critical step. This is a fundamental business rule and crucial to protecting your interests. Make sure the offer is put in writing will the date, details and the printed and signed name of the individual who endorsed the deal.
- Don’t wait until buying a vehicle is an emergency.
This is one of the number one ways that you will lose money. It is the ideal situation for a dealer because they know that you have to buy a vehicle as quickly as possible. If you happen to find yourself in this situation then do not let the dealer know this information. I promise you, that you will get taken advantage of in some type of way you may or may not be aware of. The negotiating power will shift in the direction of the dealer if you give them this sort of information. They can leverage this quite a bit.
I don’t recommend buying a new car if it can be avoided. However the rules of negotiation/engagement on a car lot remain the same. You can use these guidelines to help regardless of whether the purchase is new or not.
