I have sold new cars and also worked for a used car dealership and I definitely have some handy knowledge for you!

 

 

 

I know that everyone first of all thinks that all car salespeople are a bunch of snakes out to rob you blind. The truth is that they are just out to make as much money as they can, just like the rest of us are! It's true that some dealerships are willing to sacrifice their good name or even tick off some customers just to try and make a sale. You must remember that car buying is one of the few places where you have to negotiate a price. You don't just walk into the grocery store and offer the store manager to pay less than what is on the price tag! I know you're thinking "I already know that", but I'm breaking it down to the very basics.

With all the information on the internet now, you can do most of your research from the comfort of home. Get some ideas of what kind of vehicle(s) would be best for you. Dream about the car/truck you would buy if you were rich later! For now think about what you need the vehicle for. Work? Long commute? Hauling the kids around? Maybe all of the above. Price of course is very important because at a dealership, the salesperson may steer you towards a vehicle that you neither need nor can afford. Salespeople don't make much money at all when selling new cars because most of the profits go to the dealership itself. The average commission for a new vehicle is only around $125 which doesn't sound too bad but if you only sell a few vehicles a week you're not going to get rich! Used vehicles are where the dealership/salesperson make their money. The reason for this is simple: you have no idea what they paid for that used vehicle you are negotiating to buy! With new cars you can easily research invoice costs, dealer holdback and such. Used vehicles are taken in from trades, auctions or just purchased outright from individuals. For example: you are looking at a vehicle with a sticker price of $10,000 and the book value is about $8,000. The dealer may have only paid around $5,000 so when you deal them down to even $7,800, they have already made a $2,800 profit (minus whatever it cost them to get the car ready for sale and pass state inspection). This can vary as well so believe me they don't always make a fortune but it is the best way for them to profit. There is no set percentage of profit for any vehicle as every sale is different.

Now that you have an idea of how things work you should also understand how difficult things can be for the car salesperson. They are under intense pressure and are constantly watched when they are interacting with customers. Management can get downright nasty in making sure that every person that enters the lot is greeted immediately. We've all dealt with the salesperson that pounces right away when you get out of your car and just won't go away. They are likely only doing this under strict orders from the sales manager(s). Just remember this when you respond to their initial greeting. Be firm but polite if you are just there to look. Their main goal is to at the very least get your name and telephone number so they can have something to give the sales manager upon going back inside. The management insists on this and the salesperson will be basically yelled at for returning empty handed. I'm not kidding, you would do whatever you could to avoid having your boss mad at you too right? Now you can understand the salesperon's persistence when first greeting you.

If you plan on going in and sitting down with your salesperson and or the sales manager(s) to begin talking numbers just remember that they are only there to make a sale. If you are not willing to sign on the dotted line no matter how low they go, you are wasting their time. It sounds harsh but it is true. You have to realize that if you are asking for such a low price that it is insulting then you are the one playing games and they will find you out easier than you think. For example: I was working for a new car dealership and we had a hot new sports car that was totally new for that year and stickered for around $32,000. We would have customers come in and sit down with us and offer around $20,000. That is just childish so of course the sales manger is going to get angry and ask the customer to leave as they are obviously wasting our time. Which is true, you can't go that low on a vehicle that is selling on average for the sticker price! You have to do some research before making an offer on any vehicle. Most people who are going to purchase a vehicle are going to need to finance it. If you are lucky enough to pay in cash, God Bless Ya! Either you are doing well financially or you're a really good saver! So one of the biggest ways to save money is in the financing. DO NOT get your loan through the dealership as there is always going to be a "markup" by the finance department. What "markup" you ask? Well the dealership basically gets a bonus by upping the finance rate you get on your loan. The rate that they tell you have qualified for is not likely the best one you could have gotten. The dealership also gets bonus money just for referring you to the financial institution in the first place. So what I'm trying to tell you is to be sure and get your financing through your own bank or your best bet is your local credit union.

When it comes to trade ins, always leave out that information until after you have worked the numbers with your salesperson. Think of a trade in as your trump card. If you don't have a trade in that is fine too as it simplifies things but it doesn't help with a down payment either. Do your research here as well because this is another important part of the deal where the dealership is going to try and rob you blind. Be firm on the range that you feel your trade is worth. If you are being lowballed then let them know that you are going to the competition before you make a purchase anyway. This will definitely help in your negotiations.

A last tip I will give you is that no matter how good you think you are at negotiating, don't go alone when making the deal. It always helps to have a second set of eyes and ears when going over the final details of a deal and signing on the dotted line! I hope I have helped you to feel a little more informed and confident next time you step onto the car lot for a battle of wits! Good luck!