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Posted: 12/29/11
06:31 PM
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15 Tips On How To Deal With Car Dealers
(It's a long article, but very helpful.)
Continuing with our series on buying used cars, today let us discuss some basic tips on how to deal with car dealers. If you missed the earlier parts, here is what we have covered so far :
Now, let us move on to the crucial phase in used car buying - how to deal with dealers. There is a lot to write, so I will present the information in the form of a list of tips, instead of a narrative. [In the following, I am using the terms 'salesman' and 'dealer' or 'dealership' in the same sense - they all desperately want to sell a car to you].
Tip 1 - Be very specific about your requirements: For the first few dealers we started our conversation with some lame statement like this: “We are looking for a used car - a Honda Civic or a Toyota Corolla within the price range of $9,000 to $12,000“. Although, some people might say that it’s pretty specific, it still has a lot of unproductive potential.
Here is why:
We were *prepared* with a few prices for specific cars. For example, we carried documents about the True Market Value (representing what others are paying for a similar vehicle around a given zip code), MSRP (usually the dealer sticker price), and invoice price (what the dealer pays for the car) as obtained from kbb.com or carshen.com. However, we carried these documents only for Honda Civic and Toyota Corolla models for the years 2003 and 2004 - which, by default, fell within our price range. However, when we mentioned the price range of $9,000 to $12,000, without being any more specific, the salesmen started throwing a lot of options (various model years and mileages) at us. That created a lot of confusion because we didn’t know how to evaluate the worth of each car based on it’s age and year on the spot. Basically, the generic *preparation* (deciding just the budget and the make/model) was pretty much useless and turned out to be a big waste of time.
That’s why you need to be very specific with your car requirements before you start talking to car salesmen. With “specific”, I mean specific to the exact car you want to see, not just car model, model year, and mileage. Find out what the dealer is offering through some online listings (carshen.com or the dealer’s own website), choose which of those vehicles fit your criteria. Then (after you verify a clean CARFAX history for those vehicles), call up the dealer and ask if those particular vehicles are still on the lot. At this point, don’t complicate matters by mentioning any price expectations. Just keep it simple, go to the dealer’s lot ONLY if the vehicles you want to check out are still available for sale. A few minutes on the internet and the phone will save you a lot of time and confusion when you physically visit the dealership.
Tip 2 - For each car you choose, decide your ideal price and margin before you head out: After you have confirmed that the car is still available for sale, go online and look up it’s True Market Value on Edmunds.com. Don’t just stop at the standard values ~ go ahead and appraise your car with respect to it’s with color, mileage, condition, etc.
Follow these steps to do it.
Now, check the dealer retail price in the above image and compare it with dealer’s listed price. In this particular case (surprisingly), the actual price offered by the dealer is slightly lower than what Edmunds.com predicts. However, you can see that the private party price is much lower than what the dealer’s list price. Your ideal price for any used vehicle should be near the private party value (may be even slightly lower). For this example, the ideal price is probably around $9,800. Keep a reasonable margin above this in such a way that it still makes this car worth it. In this case, say a margin of $500. So you should start your negotiation from $9800 onwards, and try to target about $10,000 as the final price. However, in the worst case, if the dealer doesn’t agree with your price, and gives you a final quote of $10,250 ~ that would still be in your margin and will turn out to be a good deal for you.
Walk out if the dealer is not ready to negotiate at all, you will find others who will gladly do it.
Tip 3 - Always wait for the salesman to make an offer first: Even if you are very confident about the prices, don’t blurt out your expectations before the salesman makes an offer. At times, you might lose a golden bargain by doing something like this. We, as consumers, do not know anything about the price wars between two salesmen in a given dealership or between two dealerships, etc. It is quite possible that the salesman who is attending you is trying to low-ball his competitor and hence may be ready to offer you an ultimate bargain ~ a chance you will blow away by opening your mouth first.
Again, consider the example in Tip #4; here don’t tell the salesman that you are ready to buy the car if he sells it for less than $10,300. Once you say that you are ready to pay $10,300 for that car, the salesman will start his pitch with something like $10,900. That puts him on top of the situation. Instead, you should force the salesman to offer his best quote first and then you should lead the negotiation by low-balling him quite a bit to start with. This will invariably end up in a better deal for you.
Tip 4 - Don’t even mention the words “monthly payments”: If you do that the salesman is going to catch you on this and raise the stakes by a few dollars every month. The pitch will be something like this: “Why are you buying this old Honda Civic when you can buy this new one for just $50 more per month .. in fact, if you put $50 more, you could upgrade you a bigger and safer Accord“. Believe me, they are really good at this game - so the best thing to do is avoid playing this game altogether. In fact your monthly payment should have been fixed in your mind when you chose your budget and type of car in the first step (see tip #1) and you should let anyone convince you otherwise.
Tip 5 - *Appear* knowledgeable and well-informed: This is a tricky one and I am going to have a hard time trying to explain this to you. If you show your ignorance, you WILL be taken for a ride ~ that’s guaranteed.
For example, we played this dirty trick on one of the dealers when we were tired (and angry) at how things were proceeding on our first day of used car hunting. The salesman was trying to sell us a 2003 Honda Civic (2 door) with 75K miles on it, but was reluctant to mention the price (even after we insisted a lot). Later, I casually lied to him that we test drove a 2002 model with 78K miles at a nearby dealership and it carried a price tag of $12,500. On hearing this, he excused himself for a moment and presently appeared with a $12,989 quote! (actual price should have been around $ 10,000). He was probably just waiting for judge our level of ignorance with the prices, and the moment he realized that someone else took us for a ride, he was ready rip us off. 
Towards this tip, if you don’t know the prices well enough, it’s better to keep your mouth shut and let it be the salesman’s burden to judge your level of ignorance. Don’t make it easy for the salesman by saying something stupid.
Also, it helps to carry a file with some print-outs in it - something that shows that you are a *serious* customer and not some window-shopper who is just trying to entertain himself on a lazy day by wasting everybody’s time.
It's a very long article. I just post 5 our of 15 tips.
For the other 10 tips, please check my site http://www.carshen.com/carshennews/50/readnews/
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Posted: 12/29/11
07:23 PM
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