We've noticed that our series of articles on new car buying tips for have kicked up heated debates in the discussion boards between salesmen and new car shoppers. The most hotly-contested points always seem to revolve around advice for the gritty, bare-knuckled process of negotiation. Neither car salesman nor buyers like dealing with the shifty-eyed nonsense of manipulative attitudes, hidden details and mistrustful agendas ... whether you are the one buying or selling the vehicle.
To help craft a solution to these debates that guarantee everyone's happiness long after the ink's dried on the contracts, we realized that our advice would have to make the car buying transaction a lot more transparent for new car buyers and car salesman alike. That's where Chris Ciccone, our automotive editor, comes into play. In his previous life, Chris was a car salesman, hitting the pavement for a short but educational stint. Add to that the fact that he's signed the dotted line on a new or used car as a buyer himself 10 times and you've got an individual who has a good grip on what takes place on both sides of the table.
Look at All of Your Options
The first point Chris makes is don't limit your car choice to just one vehicle, make sure you look at a couple of models that you can choose between. Incentives might unearth a winner, or maybe a test drive or some glanced-over detail from a spec sheet might upgrade one from last to your first choice. Regardless, you'll dramatically increase the chances you'll be happy with the car if you look at all of your options instead of just relying on the car salesman to single out the best choice for your needs.
"Last year my wife was looking for a new small car, something fuel efficient but fun and with good room and functionality," Chris said. "She had a strict budget and quickly decided she was going to get her first choice. However, I was adamant that she drive at least three other cars that competed with her first choice, one which was just a bit over her budget and that she never would have looked at because she 'thought' it wouldn't be her style. Low and behold, once she drove that other car she fell in love with it and we were able to get a killer deal on one that was a left-over model year. All because she broadened her options and test drove them all."
Don't Buy More Than You Car Afford
As you research, don't forget to be realistic about how much vehicle you can afford. You're asking for trouble if you try to buy a Lexus on a Yugo budget. To save your self hassle when trying to guess the price of what you can afford, factor in that a dealer, like any other person in sales, needs to make a fair profit. Of course, "fair" might be open to different interpretations but generally a 3-5 percent profit margin is common. You can go online to easily find out what the dealer invoice is on a car, so you have a good idea of what they're paying for the vehicle, and you can base your negotions from there.
"I saw one too many times a car shopper come into our dealer[ship] with our top-of-the-line SUV on their mind only to be frustrated and demoralized when we ran some figures and determined they couldn't afford one," Chris said. "There are a ton of online tools that can help you avert this situation, use them." "Car buyers should also be careful not to blame the salesman because they can't afford an expensive car," Chris added. "I know it sounds like an obvious statement, but you would be surprised how many shoppers think it's the salesman or car dealer's fault, like they are doing something shady, that isn't allowing them to afford the expensive car they want. Trust me, a car salesman would love to sell you a car, that is their job."
Bring Financing With You
The real "hot-button" debate for salespeople and car buyers alike involves strategies for dealing with the dreaded Finance and Insurance (F&I) manager. For some, it seems like you're walking into a foreign movie with no subtitles while your wallet's being siphoned. Granted, there are some dealers who work this way, but there are plenty of car dealers who would like your repeat business and are fair and honest in the back room. Here again, to avoid hassles, do your homework and come in with your own set of numbers.
Find the best financing deal you can come up with on your own from a financial institution (local bank, credit union or online lender), and see if the dealer can beat it. That way you are already anchored to your custom solution in the face of different alternatives presented in the negotiation process. While it's essential to arrange a monthly payment you can afford, never cut a deal based on monthly payment alone. You could end up paying thousands more for the vehicle in the end.
"People get in trouble going in with only the monthly payment in mind by allowing the dealer to change the term length, sale price or even the down payment in order to meet the specific monthly payment they want," Chris said. "In some cases these adjustments are necessary but don't let the numbers get out of hand without knowing how each is affected by the other." Take advantage of online calculators to help you determine actual costs. Better yet, print out various calculations you've done with online tools and bring them with you for reference.
If the finance manager tries to dazzle you with numbers you don't completely understand, tell him you'd like to "think it over." Then study the deal to make sure you understand what's going on, or consult with someone who can help you get to the bottom line. Never be pressured by the "this offer is only good today" line.
Know Where You are Shopping
Of course, you did research the car dealership before you walked in there in the first place, right? If a dealership has a habit of serving up hassle or doing a stellar job, chances are they've left a trail through Internet message boards, blogs and even the Better Business Bureau. Chris prefers the archival library nature of message boards for this purpose. "From the past I've found that message board users will post on what they're buying, what price they paid, as well as if they've had good experiences or not," he said.
Of course, friends and family will provide the best custom-tailored endorsements, if they're available. Alternatively, if you happen to be in the neighborhood of a dealership you're interested in, stop by and check out the service center. Customers waiting in their lobbies would probably be pretty candid about the type of service they're getting or how the buying experience went. If the service department is busy, it's probably an indicator that they do a good job. Of course, you don't have to take the car you purchase back to that same dealer for service, but the service center does reflect some of the dealership's culture.
Watch for Add-Ons
Another point for buyers to note is our take on advice from the National Automotive Dealer's Association (NADA). NADA suggests that you research add-ons that you're going to be offered in the deal like guaranteed auto protection, credit insurance, extended warranties and the like. We agree whole-heartedly, but if something you don't recognize comes up, relax. "Don't feel pressured into buying those add-ons right then and there. If it's something that you're interested but aren't sure about it is a good idea to get a second opinion on it.!" Chris said. "Ask the finance manager if the product is something you can do a little more research on before you purchase it. There's usually a grace period in which extended warranties, for example, can be purchased from a dealer and they're also available from many third-party vendors after your purchase is complete."
Treat Others as You Want to be Treated
Chris emphasizes that the best way for the consumer to conduct business at a car dealership is to be honest, open and up-front with the dealer ... whether you've got your own financing, a trade-in or you're cross-shopping another car across the street. Salespeople generally can judge a person's character quickly, and coming across as overly suspicious or combative can mark you as an uneducated shopper. Do your homework and show the sales rep you know it's a business negotiation, not a scam. On that note, it's good to remember that if you feel really uncomfortable during any part of the deal, don't put yourself in a tough situation just because you want the car right then and there. "Walking out of the dealer is your most powerful tool," Chris says, "the salesperson doesn't want to see you walk out, but if you are unsure about anything, just walk away."
You can always find that car somewhere else and a good car salesman will call you back and make the deal the next day. There are a lot of dealerships that enjoy a well-deserved reputation for honesty and value, just prepare like you're walking in expecting to deal with salespeople, not social workers.
"And if you think only the car salesman has tricks up their sleeves, think again" Chris remarks, "Not every shopper is a saint you know. I saw plenty of examples of buyers acting sneaky. Besides lying about their credit scores or financial situation, which by the way does nobody any good, some shoppers like to pit salesman against each other in the same dealer. Salesmen talk to each other about their customers and we would know when John Doe initially talked to our Internet sales manager for a deal, then came into the showroom and pretended they had never talked to anyone. At that point the customer would use the Internet pricing as a baseline for negotiations ... which isn't the problem. But what would happen is the Internet sales manager wouldn't get credit and ultimately commission for the deal, even after they had spent their time preparing information and dealing with the customer via e-mail and phone prior to them entering the dealer."
Sneaky tricks can be performed on both sides of the buying process. Our best advice is to be honest as a car buyer and educate yourself on all aspects of the buying, pricing and negotiating process. This will help you feel relaxed when walking into the dealer and should ultimately make the experience a pleasant one.