Car Buying Tips - Part 4

Car Buying Tips
Part 4 - Who’s the best negotiator?

Do you think that you can out negotiate a professionally trained car salesperson, or worse, his more experienced sales manager? Maybe not. Car salesmen and their bosses negotiate with customers several times a day and dozens of times each month—even in a down economy.

You probably negotiate for a new or used car once every three to five years. Guess who has the advantage? It is not you.

Car salesmen are trained to get you to buy as much car as possible. By gently switching you to a car with more features, they’re also just as subtly causing your car payment to increase.
Leather seats, captain’s chairs, window tinting, DVD player, navigation system, dual moon roofs, in-car cell phone systems, back up parking sensors, oversize chrome rims, special paint finishes, heated outside rear view mirrors, multi-CD player, six way power seats, cruise control, you name it, the dealer offers it but it all adds up to a higher payment.

“But Mr. Jones, the DVD player only adds $1 a day on your payment. Think of how much enjoyment your children will get on car trips.”

Notice how he didn’t tell you the real price. Thirty dollars a month times 10 percent times 48 months equals $1400 for that DVD player that you can likely buy at your local electronics discount store for $300 installed.

Think about those expensive options before you commit. Two thousand here, three thousand there and pretty soon you’re talking about real money and a far higher monthly payment!

Once you’ve committed to purchase a vehicle, the salesman will keep you company until your contracts are ready to sign in the finance office. During that time, he will offer you coffee, perhaps a donut and all the while will offer you tips on getting the best deal from the finance office.

“Mr. Jones, don’t forget to ask about the extended warranty on your two-year-old car. After all, it’s already got 30,000 miles on it and the factory warranty will run out in only 6,000 more miles. And the nitrogen filled tires will increase your gas mileage and the tires will last longer than standard tires. The window etching is a great security feature too.”

Be wary of those tips. Not only does the salesman generally earn 20 percent commission on the gross profit on new cars and 25 percent on the gross profit realized on used cars, but they get a percentage of the profits generated during the contract signing interview. That back end process may find you buying additional options that may include an extended warranty, a roadside service policy, periodic detailing services over several years and deluxe floor mats. Plus, your sales associate may suggest an extra set of headphones for that DVD you added, and other costly dealer-installed options that didn’t come from the factory—the list of back end options is nearly endless and profitable for nearly all involved—except you.

It’s not unusual for the finance manager to get you to commit to $5,000 worth of options for which he also is paid a commission. See part five.