Ex-Car Salesman Tells All: How to Beat the Auto Dealerships at Their Own Game
In February 2004 I worked one educational month as a car salesman. I learned you don’t need a full set of teeth to be a winning car salesman and the nicer a salesman is to a customer, the more that customer overpays. I also learned the car salesman’s playbook. And of course, I’m willing to share. If you want to protect your wallet when you’re buying a new car, here’s how to beat auto dealerships at their own game.
Be Prepared
Even if you deflect the sleaziest sales schemes dealers dish out, you can’t get a good deal without some homework. Don’t step into a showroom without reliability, safety, and pricing information (try Edmunds.com). You should know the mark-up of the car’s sticker price and how much the dealer expects to profit. It makes it almost impossible for the dealers to bluff when you already see their cards.
Call First
Auto makers and dealers do everything in their power to make car buying an emotional experience. They have you sit in plush new leather, soak up new car smell, and punch the gas and hug the turns on the test drive. The salesmen hope, by the time you talk price, you want the car so badly you’ll okay the first number thrown at you. But, ask for the dealer’s best price over the phone, you axe their edge. Lucky enough to snag a telephone quote? It will almost always beat a quote from the showroom. But be warned: Good dealers will smooth talk you into making an “appointment” at the dealership without giving a price.
Hide Your Trade
If you plan to trade in your existing vehicle, don’t let the dealership know it until you have agreed on the price of the new car. Tell them you definitely don’t have a trade-in and then act like you changed your mind. The reason? Dealers use their profit margin on the new car price to make it seem like they are paying thousands of dollars more for your trade-in. Only when you handle the new car and the trade-in separately can you get good deals on both.
Talk Price, Not Payment
“Payment” is a car salesman’s favorite word—and not just when it refers to his commission check. Dealerships love to quote cars in terms of the monthly payment, leaving the purchase price out of the equation until the papers are signed. In the negotiation process dealers try to lower the monthly payment by extending the loan term rather than cutting the purchase price.
Be Patient
Negotiations are tests of will-power. Who will cave first? Dealerships make you wait to get you dreaming about your new wheels. Why not bite back? Car salesmen’s commissions are based on volume. They want to sell lots of cars fast. And unless you’re shopping for a rare model, there will plenty of cars left tomorrow, but with every day that goes by the dealer will grow anxious wondering whether you changed your mind or found a better deal. Use time in your favor to get dealers to provide even more price concessions.
Go Rate Shopping
You wouldn’t negotiate with car salesmen without the car’s average price; you shouldn’t negotiate an auto loan without information, either. If you can, get your credit report before buying a car.
Apply for an auto loan online or from your local bank or credit union and take the approval with you to the dealership. You may get an even better rate from the dealer. Worried about too many credit applications? True, multiple credit inquiries can negatively affect your credit score. The good news? Credit bureaus now count multiple inquiries within a month as one.
Related Posts
- Shopping For Your First Car
- How to Trade In Your Car With Cash for Clunkers
- Online Car Loans Compared: Get Approved Before You Shop
- It’s Time to Buy a House (or a Car), If You Can
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I'm David, a 20-something ex-financial journalist with a mission: To help you learn about personal finance, take control of your money, and get on with life! More...Take Charge of Your Finances!
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Sound advice! My dad told me about “hiding your trade” years ago, and it was the best car-buying advice I ever got. Never would have figured it out for myself! You can get a good idea of the value of your trade-in by doing some online research, too. Carmax is a good resource for that.
My Dad also told me about he hide you trade thing. Get a price first with no trade and then come back and talk trade with those numbers. Great advice! Found your post through the Group Writing Project at ProBlogger. My How To is up also.
Good post, I hate car shopping. I love picking out what I want, but hate the negotiating thing…my husband had not one but two aces up his sleeve when we went. I was impressed…he wouldn’t even share those aces with me prior…we hit a price…great rate…very low interest..he was saying no money down, and no extra…we start to draw up the contracts..and he had GM money and big downpayment after they wrote their price down…the look on their face…they were begging us to get the glass etching..anything! Glad I have him on my side! I smiled in my new car all the way home.
Definitely. DH is in the car business and he’d say the same. Our how-to is up as well if you’d like to check it out!!
Great list! I’m learning a lot of useful things from the problogger project. I’ve been an easy mark for car dealers before, but didn’t even know it. I’m good on the research end, but didn’t know anything about how the rest works. Whew, thank you!
Great ideas. I usually cut through the crap and try to get the best value for my money. As far as I’m concerned, as long as the money is in my pocket, I’m safe and hold the keys. There’s always another dealer.
How about no trade. You will always lose when you trade your vehicle in, instead of selling it yourself- not matter what they tell you. Also, you should always go in armed with your own financing- then you cannot over spend, you know what your payments are ahead of time, and thats where they make the most money off you- F & I. I feel a blog comign on… lol
I went to 5 dealers and dealt with them on the phone. I got a quote from the first one, reduced it by $5 and asked the second one to match it. The kept doing it till I went through all 5 of them. Then called the first one back (now $50) less per month and started over until they started dropping like flies saying that they couldn’t match it. Went with the last one to stay in…..over $100 less a month than the first offer I was given.
“Do Car Salesmen Go To Heaven” is the best book you will read on the workings of the car business.Its all over the net!!
It’s funny how a guy with one month expirience is a proffessional in the car business now. He has good idea’s, but if you have to hide your trade and stuff, don’t use that dealer.
Its funny how people do not want to pay for what they want. I agree on the interest rates, get as low as possible with your own financing. But if you are looking for a car that is 20grand, and try to get it for 15grand. You are out of your mind. Buy a used one instead! Capitalism, every single one of you would buy a car for as little as possible, but given the chance, you would sell it for more than you paid to your neighbor if they would buy it. This world has problems!
Dear Tony,
The problem is with car salesmen, as a (non-auto) salesman myself, I understand how to creatively massage a deal to provide the customer with a good deal and myself with a good commission. I also know that the nicer the customer, the better the chance of a fair deal for both. The mean customer usually gets a slightly better deal because the salesman strips off the nice talk and looks at it as a quick (but skinny) deal and chalks it up to volume. Car salesmen, on the other hand have gotten it to such an extreme that there is a VERY wide rage of prices paid for the same car, and no-one trusts what anyone is saying. IF they preserved pricing structure, they would all make more money, while selling the same amount of cars, would be trusted more and save themselves, their competition and the prospective customers all the negotiating nonsense – we call it “the race to zero”. They might even find some customer loyalty!
It seems like something is missing, no?