Think for a moment about the last time you purchased a vehicle at a dealership. Does it bring back fond memories? For most people, the answer is no. In fact, Edmunds.com did a survey of over 1,000 people in 2014; to say the results were enlightening is an understatement. Let’s review a few of the findings.
- 90% of respondents said they would be more excited to purchase a vehicle if it had a set price that they felt good about
- 94% of respondents would buy a car from a dealership where they were guaranteed to save thousands off the sticker price of a new vehicle
- 83% prefer to avoid haggling over a car’s price (91% of Millennials and 78% of Baby Boomers)
- 33% of Americans would rather go to the DMV, do their taxes, or sit in the middle airplane seat than go through the process of buying a car
- 44% of Americans would give up social media for a month to avoid haggling
- 29% of respondents would give up their smartphone for a weekend to avoid a trip to the car dealership
WOW! Those are some incredible statistics. Americans really dislike the way the average car purchase process works. But the good news is your visit to a car dealership doesn’t have to go the route of the average car purchase. I’m here to share some tips, tricks, and shortcuts to help you avoid or reduce the haggle, shorten the time spent in a dealership, and walk out the door with the keys to the vehicle you want at the price you want it.
- Do your homework ahead of time –I can’t stress this one enough. If you know the make and model of vehicle you want, check price points of that vehicle at several different dealerships. If the prices are all similar, compare the features, mileage, and color of the vehicles. There are many websites that allow you to compare vehicles side-by-side from the comfort of your own home without even having to visit the dealership. You can even print out similar offers at other dealers to take with you. This homework allows you to be better-prepared when it comes to test time (i.e. when you do visit the dealership) as you’ll be prepared to have a discussion on comparative price points of similar vehicles.
- Analyze the deal in pieces – There’s a variety of techniques dealerships use to muddy the waters for a buyer. Sometimes they use the “4 Box” method or other similar concepts to put so many numbers on the page it’s hard to keep up with them all. Ask them to take you step-by-step through the process (i.e. purchase price, interest rate, loan term, trade-in, and so on) instead of looking at every facet of the deal simultaneously. Another piece of advice: if you’re planning to trade a car in, do not tell the salesperson ahead of time. They will use that as leverage to get you to purchase (and add extra numbers to the page). If you’re satisfied with the arrangement on the car you’re buying, then you can share your intent to trade-in. This couples the separate pieces of the deal together at your pace, and you can let them know if they don’t work with you on the trade-in then the vehicle purchase isn’t going to happen.
- Don’t be intimidated – There are tactics used at various dealerships to intimidate you. A few that come to mind are: making you initial the potential deal, getting endless approvals from sales management, and keeping you waiting for what seems like hours to get the simplest of answers. These should, in no way, make you feel compelled to execute the deal if you’re not satisfied with the terms. If you’re shy about conducting a deal face-to-face or don’t want to spend hours at the dealership, call them on the phone! There’s nothing in the car-buying rulebook that says the groundwork for the purchase can’t be laid via phone!
- Go on the last day of the month – Most dealerships have some form of quota system or sales targets for the salesforce. If you go on the last day of the month, the salespeople are generally more willing to work with you, or even negotiate on your behalf with management, if they know it will make the difference between making and missing their monthly goal. True story – I once walked into a dealership to buy a truck on the last day of the month, and right before closing time to boot. We did the entire deal, start-to-finish, in less than two hours because the salesperson needed one last sale to hit his monthly quota. And I even had a trade-in as part of the deal (and got full-ask on the trade-in price)!
- Leave them guessing – What I mean by this is: visit the dealership to have a test drive, look the car over, maybe do a little light haggling, and then tell them you’ll be back if you’re interested. This plants the seed that you have the potential to buy, and they may be willing to knock some money off the sticker price if you wait a week or two (disclaimer: buyer beware that if you don’t put a deposit on the car it may be sold in the meantime!). I used this strategy one time, and the dealer called a week later offering to knock $500 off the sticker price because they needed to get rid of the vehicle to turn inventory.
- Bring your own money – This is a great way to avoid spending lots of time in the Finance office. If you’re financing the vehicle, secure your financing at a bank of your choice ahead of time. This takes advanced preparation and a little extra work but can help you sail through the closing process much quicker! Most banks will give you pre-approval up to a certain amount of money, based on your credit score, the car you’re purchasing, etc.
- Avoid the upsell – As an extension of the last point, spend as little time in the Finance office as you can. Most people consider a vehicle purchase to be successful if they’re able to haggle down the price on the vehicle. And that is a success, but the real secret is dealers make most of their money in the Finance office. This is where they upsell you on the warranties, the extra bells and whistles, the maintenance plans, and dealer financing. These items are the meat and potatoes where the dealer makes a killing. The margin on most vehicles is comparatively slim. Some people end up spending thousands of extra dollars at the last step in the process, adding even more to the monthly payment (if you’re financing).
- Ask for the “freebies” – As the old saying goes: “If you don’t ask, the answer will always be no.” This holds true with buying cars as well. If you’re looking for the last little kicker to sweeten the deal, ASK FOR IT! They should always fill up the tank and give you a spic-and-span vehicle (inside and out), but if not then ask for it. If you want that specialized coating to protect your paint job at no charge, then ask. If there’s a nice set of all-weather floor mats you want, tell the salesperson you want them thrown in free of charge. The possibilities are endless, especially with all the bells, whistles, and accessories available on most vehicles. And the salespeople typically get compensated a fixed amount for pushing these on the buyer anyway, so it’s a win-win!
- Be open to traveling further than your hometown – This isn’t something everyone is willing to do, but it can pay off in a big way. The markets for certain cars are highly fickle—especially for used vehicles. A specific vehicle that might sell quickly in your hometown because of high demand may take six months to sell in another city or state, or vice versa. I once flew 2 ½ hours to another state to purchase a used vehicle. It was several thousand dollars cheaper than any comparable ones in my immediate area, and the dealer had it in stock for over three months. They’d done multiple price reductions, and I was able to negotiate another reduction by telling them I was flying from out of state to purchase (you know…to offset the cost of my plane ticket and time spent traveling!). The salesperson picked me up at the airport, we did some paperwork, and I was on the road home in no time!
- Be willing to walk away –If you think of how the “normal” process works, the dealer creates the perception they have all the power and you have none. And in several ways, they do have power. For example, you’re on their “turf” because you showed up at the dealership with an interest in buying a vehicle. By nature of the fact you even showed up, they make you feel like you must buy a vehicle from them that day. The truth is you don’t. In no way, shape, or form are you obligated to buy anything at all, and you must be willing to walk out if anything in the process isn’t to your liking. What that does is it transfers 100% of the power to you—the potential customer. If you start walking out the front door, it shows the dealership that you’re serious about getting what you want.
Hopefully this information is helpful to any readers who are considering buying a vehicle. I’ve learned these lessons (most of them the hard way) over many years and many vehicle purchases. If you follow a handful of these simple guidelines, you’ll have a much better overall experience. Happy buying!
