Ever wonder what’s happening behind the scenes when buying a car? Do you feel like you’re getting the whole story from the salesperson, or are they hiding something? We’ve got the scoop! We’ve read tales from car salespeople, and they’ve spilled the beans on the secrets they don’t want you to know. Let’s pull back the curtain on the car-buying process, from hidden fees to negotiation tactics.
They are Afraid of Autotraders and Other Online Websites
Dealerships and salesmen thrived in the past when access to pricing information was limited, allowing them to enjoy hefty profits. However, the rise of the internet has drastically changed the game. With a wealth of pricing information available online, buyers can now research car values, compare offers, and check reviews instantly. Many dealers admit they know they won’t make a significant profit when a customer pulls out a smartphone to cross-check a quote. While this shift may be tough on dealerships, it puts buyers in a strong position to land better deals with just a bit of research and negotiation.
They Don’t Want You to Know the Rebates
Car manufacturing companies offer special bonuses and discounts to consumers on meeting certain criteria, i.e., paying in cash, lease deals, government incentives, loyalty status, etc. It is the last thing that the seller will want you to know. However, it’s not something they can hide from you if you have researched enough. Asking for rebates can help you save a surprisingly huge sum.
They Hate Comparison Shopping
Bringing up a competing dealership is one of the easiest ways to shift the tone of a conversation when negotiating for a car. The second you mention that another place offers a better deal, you’ll notice the seller getting much more interested in keeping your business. It’s something they hate to hear, but it works. Their competitive side kicks in, and they’ll often come back with an offer that’s hard to turn down just to make sure they win. By leveraging their ego and drive to dominate the market, you can stretch your dollar much further.
They are Desperate for End-of-Month Deals
Salespeople often get bonuses or a percentage of profit based on hitting monthly sales targets, which means the end of the month can be the perfect time to score a better deal. As they get closer to that deadline, they’re more motivated to close sales and may offer bigger discounts or more flexible terms just to hit their quota. For buyers, this can be the sweet spot to negotiate, as the pressure on the seller to meet their target works in your favor.
They Still Enjoy a Big Margin When You Pay Below the Invoice
Dealers often make you feel like you’ve won by offering a price below the factory invoice, but that’s rarely the whole story. They frequently turn a profit despite selling below invoice, thanks to manufacturer incentives that lower their actual costs. These incentives, aimed at clearing old inventory, allow dealers to sell for less while still earning a margin. Additionally, dealers make significant profits on “backend” sales—like extended warranties or financing mark-ups—after the vehicle price is agreed upon. To protect yourself, focus on negotiating the lowest price and watch for hidden fees in the final paperwork.
Square Sales Technique
The ‘4 Square Sales Technique’ is a common method used by car salespeople to keep control of the negotiation process. In this technique, they break down the deal into four boxes: trade-in value, vehicle price, down payment, and monthly payment. While you might feel like you’re negotiating hard on one box, like monthly payments, the salesperson can adjust the other boxes to keep the total deal in their favor. The numbers may shift, but the overall cost often remains the same, leaving you thinking you’ve scored a great deal when, in reality, you’re still paying more than you should.
They Don’t Want You to Know How Long the Vehicle Has Been Sitting There
Dealerships often don’t want you to know how long a vehicle has been sitting on their lot because the longer a car remains unsold, the more eager they are to get rid of it. Vehicles that linger can lose value, which means the dealership might be more willing to negotiate on price. To get the best deal, if you’ve seen a car online, take a screenshot and note the date. This way, if the dealership tries to tell you the car is fresh on the lot, you’ll have evidence of how long it’s really been there. This tactic can help you negotiate a better price and secure a deal that works in your favor.
They Don’t Want You to Know Your True Budget
Dealers often steer the conversation toward your monthly payment budget rather than your total vehicle budget. By focusing on what you can afford per month, they can stretch out the payment term, which might make a more expensive vehicle seem affordable. This tactic lets them earn more from interest and additional fees. To avoid this pitfall, stick to discussing your total budget from the start. This approach ensures you know the overall cost and prevents dealers from manipulating you into a deal that may look attractive monthly but costs more in the long run.
The Finance Manager is also a Salesperson
Your deal with the dealership doesn’t end with the salesperson; the finance manager plays a crucial role too. Often, they are also a salesperson who pushes insurance, financing options, and warranties. This means you have room to negotiate these additional products and services separately. By addressing each area with the finance manager, you could potentially save money across the board rather than accepting the initial terms offered.
Dealerships Make Most Money On Used Cars
While new cars often come with a higher price tag for buyers, dealerships actually make more profit from used cars. The used car market and the service department are major revenue streams for dealerships. They may tack on hefty fees labeled as “transportation charges, inspection fees, and repair costs,” even though many of these tasks are performed by low-paid workers. These vague charges can significantly inflate the final price of a used vehicle.
Negotiation On Trading-In
When trading in your vehicle, it’s common to focus primarily on negotiating the price of your new car. However, you should also negotiate the trade-in value separately. Dealerships often steer you to concentrate on one aspect of the deal to keep you from realizing you can negotiate both the trade-in and the purchase price. To get the best trade-in value, check your vehicle’s worth on sites like Edmunds and Car Traders before you go to the dealership. This way, you can leverage that information to get a better deal on both ends of the transaction.
They are Listening to You When They ‘Take That Phone Call’
When a salesperson suddenly steps away to take a phone call during negotiations, it’s often more than a mere interruption. They might not actually be on a call but are instead using the opportunity to eavesdrop on your conversation with a companion. By overhearing your discussion, they can adjust their approach to better respond to your concerns or leverage your doubts to close the deal more favorably for them. To counter this, keep critical discussions private and be cautious about sharing too much during these moments.
The Road to a Better Deal
There’s a lot that car sellers might prefer you don’t know, but understanding their tactics can empower you to negotiate better. For instance, while salespeople often seem like the gatekeepers of the deal, the dealership manager usually has the final say. Salespeople may have limited power in the negotiation process, but by being well-informed and strategic, you can use this to your advantage. Share your knowledge with the salesperson to help them make a stronger case to the manager on your behalf. Remember, knowledge truly is power, especially in the world of car dealerships.
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