Buying a Car? Ex-Dealer Remar Sutton Tells How Not to Get Taken for a Ride
Why are so many people completely unprepared to buy a car today?
Because millions of Americans haven't bought a car in several years. Meanwhile the dealers have developed some very sophisticated techniques to help sell their wares. If you haven't been to a dealership recently, you should know that you are probably going to walk into an environment in which niceness is the rule, smiles are the given, and "sincerity" permeates all. I don't know who said "Niceness kills," but it does, and what it may kill in the car business is your pocketbook.
What are some of the tactics used to disarm buyers?
One of the most effective is to hold a "sale"—and if you believe in sales, you might just as well believe in the tooth fairy. Generally speaking, the profit made during a sale is higher than it is normally, because we all assume that at a sale we'll get a better deal. Therefore we don't negotiate, not realizing that a healthy profit is still built into the sale price.
How does a "Beat the Clock" promotion work?
Dealers announce, "We'll mark down every car on our lot $25 an hour until it's sold." That sounds like a good deal. But what normally happens is that a dealer keeps marking a car down till he gets close to the cost of the car. Then he simply puts a sold sign on it. It's not sold, of course; he simply has decided not to sell it at that price.
Salesmen frequently ask customers, "Will you buy a car today?" Why?
Because the competition is cutthroat in the car business, and the salesman knows if he doesn't sell you while you're in the store, he may never have another chance. If the salesman can entice you to say "Yes," you are telling him that, if the elements are right, you will buy. The salesman's job, then—at any cost—is to make the elements seem right. He normally will do that by "if'-ing you to death. For example, "What if, sir, I can sell you this car for a payment you can afford and that you thought was fair?" If you say yes, you're usually a gone goose.
What should you say?
If you are seriously thinking about buying a car, the most important thing to say is, "I am going to buy a car, but I may not buy it from you. I'm talking to other dealers, too." You have to let the salesman know you're not emotional, that you don't feel obligated to buy from him, and that at some other place there is a car you will like as well or better than the one he's selling.
What things should a car buyer never say, and why?
A car buyer should never say, "I love this car." The only reason a customer has bargaining power is because a dealership knows he can go someplace else and buy another car. If you make the tragic mistake of saying, "My Lord, that's the car I've always wanted," you'd do just as well to hand over your wallet.
How does "lowballing" work?
Let's say you've made an offer of $10,000, and the dealership refuses to accept it. You are walking out the door, and the salesman stops you. "If you come back tomorrow," he says, "I think I could get you that car for $9,500." He is not doing that because he thinks he can give you that price; he's doing it so that when you go to the next dealership, they will not be able to equal his price. When you return tomorrow, the offer will have evaporated. The quickest way to find out if you are being lowballed is to take the salesman firmly by the arm and lead him to his sales manager. Say to him, "If you think we can do that tomorrow, why don't we go find your boss and see if he'll do it right now?" At that moment you're going to be making at least two enemies in that dealership—the sales manager and the salesman.
What is the "other customer" ploy?
You have just told the salesman you are not ready to commit to buying a car today. The salesman says, "Sir, one of the other salesmen has a customer interested in this car." His message is that if you don't buy it now, it's not going to be there. The thing you must remember is that there is always another car. If you do leave and come back and the car is sold, the dealership will try even harder to please you the next time because they know you've been disappointed once and may never come again. Very smart shoppers use this to their advantage.
What is the "T.O." system?
The American version of the Chinese water torture. T.O. stands for "turn over." It's a master psychological ploy. If the smiling salesman cannot get enough money from you by himself, he will bring in the smiling sales manager who, like the salesman, will tell you about his kids and his wife and his church and try to convince you that he's so nice he would never mislead you. Unfortunately, it usually doesn't stop there. You may begin with a salesman, only to talk to a sales manager and then to the general manager.
That can become confusing, can't it?
Of course. Confusion is the salesman's friend. If you are experiencing that sinking feeling, losing track of the offers and counteroffers, stop the transaction. Don't try to think in the midst of confusion. Come back later. Your goal is to control the process.
Just how can the car buyer gain control?
Do your homework before you even begin to shop. First, determine exactly how much money you can afford to pay. Stick to those figures. Remember, the fewer the payments, the less interest you owe.
Now can I go shopping?
Not yet. First, if you plan to trade in your old car, determine its true wholesale value. You do that by offering to sell it to two or three used-car dealers. Forget "blue books." Your car is worth only what someone will pay for it. But remember, before you start, you should clean your car inside and out. Most people think a clean car is a better car. That's a dangerous assumption when you are buying, but a great thing in your favor when you're selling.
What's the right way to start shopping at this point?
Write down the stock number, model and color of each car that impresses you, plus the price of each item on the manufacturer's sticker, including freight. Then purchase the latest copy of Edmund's New Car Prices or some other car-pricing guide. Go home and, on a separate sheet of paper, write the description and stock number of each car and Edmund's list price for the base cost of that car and all the options on the car you are considering. This is the true cost to the dealer. Add to it the transportation charge. This will be your initial offer.
Will it really work?
It probably won't be accepted, but you're on your way. Your goal is to pay not more than 2 or 3 percent profit, instead of the 10 percent every dealer would like to have. On certain hot-selling models you'll have to be prepared to pay up to list price, but the dealer would like you to think every car is hot. You'll never know unless you start with a low offer.
What's the key to driving a successful bargain?
You must control the order of the negotiating steps. Tell the salesman to have your car appraised. Let him know you have already found the wholesale value of your car but do not, at this point, tell him what it is. If his used-car department offers more than your figure, fine. If the offer is less, and he will not come up, you can sell your car separately to the used-car dealer who gave you the highest wholesale price. Or you can sell it at retail value privately if you have the time; it's usually well worth it. Next, make your initial offer for the new car. Tell the salesman to write up a buyer's order. Be aware that the buyer's order is a binding contract, so do not sign until you are satisfied you understand all the figures. If the salesman returns with his boss, or reports that your offer is too low, you probably will have to raise your offer. Do not let yourself be raised too quickly, and walk out if necessary.
At what point should the buyer write out a deposit check?
Not until the manager has approved your deal.
What happens next?
When the salesman returns with a signed buyer's order, he will begin to work you for more profits. You will be offered "add-ons" like glazing, fabric protection, special tires and under-coating. If you are financing with the dealer, you will be invited to purchase life, accident and health insurance. Consider each item unemotionally. If you want the extras, okay; if you don't, don't be pressured. In most cases, you can get insurance cheaper, and get better coverage, from your own agent.
Is the process the same in buying a used car?
Essentially. But when buying a used car, insist on obtaining the name and phone number of the previous owner. If the seller resists, don't buy the car. If he doesn't, call the previous owner and ask, "What were the major problems with the car when you owned it?" Don't ask "if" there were problems. Expect them. Use the former owner's answers to begin a checklist for your mechanic. The most important step now is taking the car to your mechanic. Ask him to test-drive the car and to estimate any repair costs. Plan to spend at least $35 for this service. It is critical and worth every penny.
Is there a best time to shop for a car?
Toward the end of every month salesmen and sales managers are under pressure to fill their quotas.
They're much more likely to meet your price then. On rainy days, when fewer people are out shopping, salesmen are under the same pressure to strike a deal. Shopping just before closing time can also be to your advantage because salesmen, managers and finance men are all tired and want to get off. But remember, in the automobile business, you will never automatically get the lowest possible price unless you negotiate.