Behind The Scenes – Dealerships And The Car Buying Experience
Before you head to the dealership, you need to be prepared. Here’s some advice that every shopper should know before setting foot on a car lot, whether it’s a buy-here-pay-here joint or a fancy downtown Jaguar store with all-you-can-drink espresso. Ultimately, it’s all about streamlining the process and scoring the best deal, so pay attention. This will change the car buying experience.
10. Salesmen aren’t car experts
I know. Shocking. But yeah, most dealer salespeople aren’t enthusiasts. Worse, a lot of them aren’t well-educated about the products they sell. They know just enough to move the product effectively, especially to the uninformed customer. If you’ve ever visited a dealer and realized you knew more than the smiling “expert” who tackled you as you walked in, you know exactly what I mean.
But wait—don’t manufacturers require product knowledge training? Of course they do. But in the business of selling cars, money talks and time is precious, and an industrious staffer can make a lot of cash on the side by taking other staffers’ product information tests.
Of course, the customer loses as a result. The sad part is, many customers don’t know any better. So arm yourself with knowledge before you visit the dealer.
9. Salesmen aren’t your friends
No one gets a good deal from a car salesman. Being friendly is a sales technique. Period. It lowers barriers and fosters acceptance. If you believe the salesman is your friend, you’re more likely to believe that he has your best interests at heart. Newsflash: he doesn’t.
8. History reports aren’t gospel
History reports like those provided by Carfax and Autocheck are not foolproof. At best, they’re a way to double-check what a dealership is telling you. At worst, dealers can use them to artificially increase the price of a crappy car.
Remember that these services only communicate information that was reported by previous owners.
7. Buy what appreciates, lease what depreciates
You’re at the dealership, and you’re thrilled at the prospect of buying a car. Sure, that low monthly payment dragged out over a completely absurd 84-month term may seem attractive on its face, but it’s a trap. In the end, you’ll probably get burned. Once the car is out of warranty, whatever remaining value it has will be eaten up in repair costs. The solution? Lease. Leasing can keep your payments manageable and let you get in a new car every few years. These days, many leases include standard maintenance, and all you have to pay is depreciation. If you must buy, you’re better off buying used.
6. Dealers aren’t charities
Financing companies work with car dealerships because it makes them money, and dealerships recommend certain options because—wait for it—it makes them money. Find your own loan before you arrive, or at least research which rates your bank or a credit union will give you so that you can compare them against the loans offered by the dealerships.
Some states still have usury laws that cap the interest that can be applied to a loan, but the 21 percent interest that the “special finance” division in a dealership ended up requiring is still 21 percent interest. So get financed before you set foot on the car lot.
5. Beware the extended service contract
In many cases, you won’t get your value back. The service contract is offered because it’s a profit bonanza for the dealer. They’re typically issued by external vendors that work like insurance companies. Like an HMO, each service contract vendor will have preferred care centers. The dealership will probably try to convince you to service through them exclusively so that they can capitalize on their premium labor rates. After all, the service department is where any given dealership really makes its money.
Dealerships charge a hefty labor rate because, well, they can. They’re supposed to have better-quality technicians, and a vehicle maintained at a brand dealership typically has a better resale value. Just remember: You don’t need to buy the service contract, no matter how important the salesman makes it sound, and you have final say in where to have your car serviced. Don’t let anyone tell you otherwise.
4. No-haggle pricing is for suckers
No-haggle pricing is a marketing ploy designed to ensure the dealership wins. If you agree to a no-haggle price, you’re agreeing to an unknown profit margin for the dealership. Game over. Worse, unless you’re forking over cash, you’ll still have to haggle when it comes to financing your purchase, anyway. You’re better off steeling yourself mentally and negotiating a deal the old-fashioned way. There’s a reason dealerships love no-haggle pricing, and it has nothing to do with saving you money, time, or hassle.
3. Knowledge is power
When a dealers says it can’t show you some bit of information pertinent to the car you want to buy, it’s doing so because it doesn’t want to, not because it can’t. Short of the previous owner’s personal service records, the dealer can show you everything about the car, including invoice price, holdback, and even the money spent on repairs if they performed the service. You’ll have to harass the salesperson to get this info, but the knowledge gained can be invaluable.
Ask for invoice information late in the deal as a closing negotiation. Assure the salesperson that you recognize there has to be profit in the deal but that you want to know how much profit. Don’t be taken advantage of.
2. If it seems too good to be true …
You know that 22,000-mile Subaru WRX STI you found at the scuzzy bargain dealership under the overpass that seems to have a new name every three months? Either the car won’t be there anymore in the two or three minutes it’ll take you to drive to the dealership (this is a bait and switch, and it is common), or there’s something seriously wrong with it. The same goes for oddly cheap Benzes, BMWs, Cadillacs, and so on. There’s an ocean of difference between a cheap car and an inexpensive car. You want the latter.
1. There are no great deals
There are relatively good deals that get you a good car for a period of time, relatively bad deals that leave you underwater when you want to trade in the car, and there are deals where you get screwed, plain and simple. If your salesman high-fives a colleague while you’re in “the box”—aka Finance—chances are you’re among the latter.
Do your best to prepare beforehand, stay calm, be reasonable, and try not to forget these rules when you go in to buy a car. The experience will be better for you.