What to Expect Once Negotiations Start
Consumers often allow the many negotiations in the car-buying process to become one big, confusing deal — and that's a big mistake. All the different decisions you make represent different profit opportunities for the dealership. Throw them all together into one complicated equation, and you'll lose sight of what each one is costing you.
The salesperson will ask you up front if you plan to finance the vehicle or pay cash, if you intend to trade in your current car and so on. He or she may try to frame the discussion in terms of monthly payments because, psychologically, anything can be made to sound affordable if broken down this way.
Most consumer advocates recommend that shoppers refuse to discuss monthly payments and instead focus on the sale price. Put off all questions about your other intentions by saying you don't know what you're going to do with your current car or whether or not you will finance — with the dealer or elsewhere — or pay cash. Answering those questions just complicates matters. The only thing that matters in your price negotiation is one thing: the price.
But it's not in your best interest to be rude. Explain that you haven't forgotten the destination charge, tax, title and license fees, or insurance payments. If you come across as knowledgeable about the products and process, then the salesperson should be all business as well.
There's a hitch to this approach. Dealers attempt to combine the different deals into one in order to make a profit somewhere. A bargain on one deal can cost you in another. So if you go in and say you have no trade-in and you already lined up your financing, the salesperson may not give you the lowest price on the vehicle. But if you say that you don't know about those other issues but don't want to address them yet, the salesman may hedge his bets, resulting in a better sale price. If you've followed this guide, it will also be completely true.
You might want to take a dealer's quote and move on to the next dealership for another offer. The salesperson will resist letting you go. The sales team is under pressure to close every deal, and if you walk out, you may not come back. When you stand up to go, two things can happen — the sales price will magically decrease, and/or one salesperson will attempt to hand you off to another.
If you get a magical price drop, write it down on the salesperson's business card. Insist on leaving, and you may be told that the quote is good today only. That's unlikely. It's probably another attempt to keep you in the store. Call the bluff. Ask if there are exceptions to that policy, because if not, you won't waste the time driving back.
Arriving at the Dealership
When you set foot on a dealer lot, expect to be greeted quickly by a salesperson, though not necessarily hounded. He or she will seem in a hurry to sit you down at a desk to discuss a deal — a process that typically involves sheets of paper with the sticker price marked boldly and conspicuously.
You may be negotiating directly with a salesperson, but you'll likely find that he or she often leaves to talk with the sales manager, whom you'll probably never see. Dealerships operate a classic good cop/bad cop approach, and the salesperson is the one who gets to know you, poses as your advocate and brings or phones your counteroffers to the bad cop (the sales manager), who "bumps" them up or shoots them down entirely.
There will be some back and forth between just you and the salesperson, but a few of those sales manager trips are probably inevitable and not necessarily a bad thing. In fact, trips to the sales manager may mean that your negotiating tactics are working. However, negotiations can take hours, sometimes in a conscious attempt to wear the customer down. You can't avoid this stuff entirely, but you have options if a salesperson goes overboard. Say you want to talk with the sales manager — someone who can negotiate directly. If refused, suggest you'll find a dealership where the negotiators are more accessible.
Your most potent play in this entire game is to leave — or appear that you might. (Never give the dealership the only keys to your car for an appraisal, because you'll be stuck.) If the salesperson goes off one too many times, get up and stretch your legs. The salesperson may reappear immediately.
Salespeople will act like they have all the time in the world, yet they still seem to be in a hurry to get your signature. You should act like you have time, too, but within reason. If time really is an issue for you, decide how much your time is worth and then settle. Salespeople don't have all the time in the world. They want to sell you a car. The more time you spend, the more obligated you may feel to settle. But don't pay more than you want because you think the salesperson is a nice guy or because you want to be a nice guy.
If ever you don't like the way you're being treated and you don't want to give up on the dealership itself, you can ask to work with another salesperson. If you don't want to confront the one you've been dealing with, go off to the sales manager yourself, who will set you up with another seller or take you on himself. Don't feel guilty — the first salesperson will get a piece of an eventual commission.
What's the Rush?
Dealers are in a hurry, for several reasons. One is that the sense of urgency works on buyers' psyches. If you think you have to act now, then you're more likely to do so. This happens from the start, and sometimes in subtle ways. The model or trim level you've chosen is "one of our most popular," which suggests both that you've shown excellent taste and that these cars sell fast. The car that meets your exact specifications is "still available," which means it might not be if you dally. Sales events serve the same purpose — the dealer's, usually not yours. Some buyers may actually pay more at a sale because they believe the deals are going fast. Don't knock yourself out to attend a "tent sale." The dealership has full discretion to make you a great deal anytime. Unless the sale is tied to an incentives period, the same prices are available before, during and after the sale.
Dealers also want your signature now because they know if you don't buy now, you may never do so. They invest time with you, build momentum, and hope to close the deal before you're able to get away and shop around.
There are other internal reasons. The car-selling culture is based on units sold. Salespeople are usually paid a commission. No sale, no pay. They also are judged by how many cars they move. People who sell a lot reap bonuses and other rewards. The profit on each car is important, but some profit is better than none — especially from the perspective of the dealership as a whole, which can expect repeat business in the form of service.
Then there's the inventory, or "floor plan," financing. Dealers don't own the cars on their lots; banks do. Dealers pay interest on the cars, and the longer those cars sit around, the more it costs them. In some cases, for some models, the manufacturer may pay the financing for the first, say, 75 days that the vehicle is on the lot. Show up at the end of that period, and the dealer will be more anxious to sell the car, and possibly at a lower price.
It's a natural inclination to be willing to pay more to get exactly what you want, rather than whatever the dealer has on the lot. But bear in mind that if you order a car from the factory, the dealership will deliver the car to you immediately and not pay to keep it on the lot. Whip this tidbit out if the dealer tries to put a premium on a factory order.