Statistically, most people would rather get stabbed in the eye with a steak knife than talk to a car salesman. We're just barely joking about that -- a poll found that 83 percent of Americans dread having to buy a car, and 20 percent said they would give up sex for a month if it meant they wouldn't have to deal with the soul-crushing haggling experience.
Well, I'm a god-forsaken car salesman, and despite my gold tooth and plaid sports coat, I don't actually want to screw you over. I've been hocking cars for over a decade now, so I know all the ins and outs of car sales. Here's what you should know:
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First off, if you see a dealership with a "too good to be true" price, look closer. There are lots of ways they can screw you without you ever knowing it.
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"Oh, I forgot to add in the 'buying a car on July 25' tax. They just passed it, probably won't find it if you look it up."
One thing to keep in mind is that where Walmart can undercut competition because they can always find merchandise from a lower-paying sweatshop, every car dealer pays the exact same price for their cars, regardless of where they're located. We even have a database that we log our sales into, so dealerships see one another's prices. Likewise, every dealer has to play by the same rules when it comes to manufacturer incentives like cash-back rebates and financing offers.
Why does that matter to you? Well, it means that if one dealership is offering the same car for $1,000 less than another dealer, either they're willing to take $1,000 less in profit out of the goodness of their hearts or they're not telling you something. Guess which is more likely!
"He said it was because he liked my face! It's plausible!"
So, there are a bunch of ways dealers can seem like they're coming down on the price or adding free stuff without actually doing it. For instance, their advertised prices frequently have a miniscule disclaimer at the bottom that says "all incentives applied." What this means is that all of the little bonuses and extra discounts that a dealer can offer have been subtracted from the advertised price, but that doesn't mean you're necessarily eligible for them. So, that price may include incentives for things like being a recent college graduate or a bonus for brand loyalty. Unless you just graduated and already own a Ford, those incentives don't apply to you, and the sweet price you thought you were getting just shot up $1,250. Also, dealers commonly offer either a cash-back bonus or low-interest financing, but not both -- even if the sign out front has both offers prominently displayed.
Other shady dealers will sweeten the deal by offering additional items like paint protection, extended warranties, or gap insurance while telling you not to worry your sphincter over it, because it's all "included in your payment" -- implying, of course, that you're getting it for free (since it's under the umbrella of what you're already paying for). But wait, did you actually ask for that stuff? And if you say you don't want it, shouldn't your payment be lower? Yeah, what the dealer is pretending to throw in like the toy with your $30,000 Happy Meal is called payment packing, or "charging you for shit you didn't agree to buy." If you're thinking to yourself that payment packing should be illegal, it actually is in some states, and as we all know, once a law is made, nobody ever, ever breaks it.
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"He's trying to get him to sign off on rust-undercoating. Send them in."
The point is, unless you're getting the price minus those incentives and with the interest you will actually be charged over the life of the loan, you're not getting the price -- you're getting an irrelevant string of digits. Which brings us to ...
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If you've ever bought a car from a dealership, you've almost certainly had the dealer sit you down and watch as he pulled out a piece of paper onto which he drew four squares. This is the beginning of the price negotiation phase, and you are about to see all of the salesperson's mystical mind tricks on display.
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"Obi-Wan also never told you how he got tricked into buying a PT Cruiser with spinners."
That thing he drew on the paper is the now-infamous four-square worksheet. The four boxes are for the price of the car, the monthly payment, the down payment, and the trade-in value of your old car. The salesman will bounce from square to square, scratching out and rewriting numbers to keep you from getting too focused on one block, if that block is starting to upset you. The numbers are all interconnected through moderately simple math, but if you don't have a calculator in front of you (like the salesman does), it's all just nonsense. So, your eye will be drawn to the one square with the most easily understood number: the monthly payment.
This is by design -- the dealer knows that $25,000 is a much bigger and scarier number than $350 (a month, for five years). It also allows the salesman to put things into more abstract terms. If you're haggling over $30 on the monthly payment, the salesman might pitch it to you by saying something like "$30 a month is only one bottle of Coke per day." Why, that's not much at all! I'm so sorry for having been such a miserly bastard. Please, accept my money as a token of my contrition.
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"Would you like a go at my husband as well?"
Wait a minute -- if $30 a month is such a trifling amount of money, why isn't he cutting it from the price? That's because over five years, that "bottle of Coke per day" adds up to $1,800 (not including interest), and no dealer is going to let two grand fly out his door. So, for the second time, the advice is to focus on the actual, total price of the car.
After all, that's what's actually going to come out of your pocket; everything else is just trying to make it fit into your monthly budget without resorting to catching your food. You're not renting the car, you're buying it. It makes no sense to be OK with a higher price just because they stretched the payments out for longer, unless you think that before the term of the loan is up that society will collapse and all currency will become worthless in the post-apocalypse (if you do, spring for the four-wheel drive -- I have several on the lot here ...).
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Fools. In the gas-starved wasteland of the apocalypse, the hybrid owner is king.
If you're pricing a new car, Edmunds.com is a godsend. On top of having reviews on essentially all the cars, they have another thing called the True Market Value tool. Remember that database I mentioned with all the final prices of every car a dealer sells? Edmunds has access to that, so if you enter your ZIP code and what car you're looking for, it will spit out a bell curve of what you can expect to pay for it. And in addition to that, you can also find out every incentive, rebate, and financing offer that is being offered for each model so you can work out ahead of time which combination of incentives works best for you.
If you're undecided about what car you want, you can still avoid visiting all the prospective dealers, since even if you do manage to walk away (remember, the entire point of these sales tactics is to ensure you don't make it to the second dealer), test driving a car virtually guarantees a deluge of emails, phone calls, and everything else short of flaming bricks through your window, all trying to pull you back onto the lot. But since the test drive is one of the most important parts of buying a car, CarMax is a good alternative. Because they deal with used cars in large volume, you can test drive all the cars you're considering in one trip, and since CarMax sales people aren't paid on commission, you don't have to worry about being pestered with Christmas cards and boiled rabbits later on.
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"I'm not gonna be ignored."
Once you are ready to dance with the car-devil in the pale moonlight, that's still no reason for you to actually talk to a human being. Instead, start emailing dealerships and getting quotes on the car you want. Not only will you be less tempted to make an impulsive decision (that car does look pretty damn sexy up close ...), but it reverses the entire dynamic, because the dealer knows that you're probably emailing multiple dealerships, so now the pressure is on them instead of you.
Our dealership offers special Internet pricing, because someone who is emailing us is less likely to need a car right away than someone who walks into the showroom. If you play your cards right, you should only have to step on the lot to sign the paperwork and pick up your car.
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"I'll be by at 3 to sign the agreement, and remember, no eye contact!"
And for you, all of this means ...