If you are thinking about buying a car, you have to read this blog. It’ll detail the six sick tricks that dealers will use on unsuspecting consumers and then it gives you a number of counter-moves that turn the negotiations back in your favor. It’ll take about 10 minutes and save you a few thousand dollars. That’s one of the best returns you’ll see in today’s market. So let’s get started:
THE SIX SICK PSYCHOLOGICAL TRICKS USED BY DEALERS
TRICK 1: Salespeople are systemically psyched up by dealers
According to attorney Ron Burdge, before the customer ever steps foot on the lot, the dealership management has been conducting their periodic sales meeting. Usually conducted weekly, these pep rallies are designed to “push” the sales staff to sell. Topics include targeting of specific vehicles that are
“stale”, drilling inventory knowledge (you can’t sell it if you don’t know you’ve got it on the lot), “spiff’s” (bonus money) offered the sales staff on particular units (old iron). Dealer and consumer rebates/incentives may be discussed, as well as current or special interest rates or unusual dealer reserve kickbacks from particular lenders.
The primary purpose of the sales meeting is to give the sales staff a“pep” talk and to “push, pull or drag” the staff into an air of sales excitement that will increase sales. The atmosphere is frenzied and often desperate. The intent is make sure everyone thinks their job is on
the line if they don’t produce. It really is, too.
This is also one of the places where car sales staff learn about“body language” if they don’t already know it well. Some of the tips they are often told:
• Sitting on edge of chair – nervous: negative, bored, do not try to close.
• Hand over mouth: negative. Does not believe you. Could be lying.
• Leaning on desk – head on hand. Positive. You have control go for close.
• Hands in pocket: fear. Unsure. Put him at ease.
• Nervous hands, tapping or drumming fingers: impatient. Go for close.
TRICK 2: The First Encounter
Always expect a friendly introduction, a warm handshake and a helpful solicitation. The sales routine always starts out the same way: greet the customer. That warm handshake, and establishing eye contact, is the first step to getting a customer’s trust and car dealers know it. Then, they’ll try to establish a “common bond” between the sales with the customer. Something they have in common, like children, grandchildren, sports, hobbies, membership in social organizations. But what is actually happening is that the salesperson is gathering information in an attempt to find that way to emotionally and personally connect with the prospect. People naturally trust people who they have something in common with and car dealer sales people are looking for that commonality so they can capitalize on it
But remember that when a consumer drives onto the car dealer’s lot, he or she is viewed as a commodity: The dealer’s sales staff refer to the prospect as an “up” as in “who’s up to land this one?” Using the slang term also fosters a dehumanizing attitude of “us” against “them” and probably formed the basis of the management motto “Today, no one gets out of here alive.” Trust is but a tool in their toolbox. Warmth can be turned off as quickly as they switch it on.
In reality, you are getting interviewed. They want to know the car you want, your line of work, your income and what you’re willing to pay. So treat it more as a professional meeting than a friendly encounter.
TRICK 3: Show Me the Money
Most dealers will focus on monthly payments and avoid all price discussions completely. When asked what it costs, many times the answer will be another question like “how much of a monthly payment were you looking for?”
Or, they’ll initially ask whether you’ll be paying cash or financing. (Paying in cash is a turnoff to dealers, so don’t mention how you’ll pay until you’ve completed negotiations. Salesmen try to get people to finance the car through the dealership, because they make more money that way.) They already know that most people don’t pay cash so this approach psychologically “moves” the prospect into the dealer’s financing because they merely acquiesce to it.
Oftentimes, the sales person will leave it up to the Closer or the Finance Manager to handle the price issue and try to stick to the payment topic alone.
TRICK 4: Auto Bait and Switch
The salesperson will zero in on what kind of car you are looking for. However, surprisingly, many customers will buy by “cute and color” first and the make and model are secondary considerations. This is key, as a salesperson will often try to steer consumers to the cuter, but more expensive, cars rather than a car that will be more functional.
With used cars, many dealers want to have the salesperson take the customer on a test drive, rather than let the customer drive it off the lot, often saying it’s because “our insurance requires it”. Of course that’s not really true. In reality, this gives the salesperson a chance to warm the engine up so it’s less likely to stumble or stall if it’s been sitting cold for days. That way, if the car acts up during the test drive, the salesperson can feign the malfunction on their own lack of product knowledge, if they can’t conceal the malfunction completely.
Test drives are usually done on an established route that the salesperson is familiar with. That can help avoid road and traffic issues that can bring out a car’s problems. Bad shocks can be harder to detect if you avoid certain road surfaces. Engine hesitation may not show up if you avoid most of the traffic lights by picking the best route. If a warning light does light up on the dash, or the fan doesn’t work on high speed, etc, the sales person is trained to quickly say two things. Usually “that didn’t do that this morning” or “we’ll take care of that and go over everything to make sure your new car is in tip top shape”.
Another sales trick is that a salesperson will write up their last offer in the very bottom corner of the sales agreement, taking up all the room on the page. The customer looks at that, and sees there’s nowhere else to write. Psychologically, they feel like they’re out of space, which tells them they can’t negotiate any more.
TRICK 5: Accentuating the Profitable
The salesperson will try to get the customer so excited and wrapped up in the idea of getting the new car, and how much it will improve their life, the envy of others, family harmony, their peer reputation, etc., that they lose track of the numbers in the deal. The objective is to get the customer firmly committed to the deal. That is why getting the customer to say “yes” is so important at this stage of the sales process.
Part of that “yes psychology” is getting the customer to sign their name to a worksheet or other form of early commitment. Something, almost anything, has to be signed by the customer before the Turnover takes place. Committed to the deal, the customer will be less suspicious, more trusting, and easier to deceive later in the process.
The salesperson will likely place numbers that are far too high on the initial worksheet. Yes, they heard what you said, but they are desensitizing you to price by starting high. The sales person has no real intention of ending up the high payment because they know the customer would never agree to it. However, they do know that if they start out with the lower set of numbers, there will be less chance of landing the customer on the desired higher number in the first place. In this way, the sales person has conditioned the customer to expect that the monthly payment or cost is going to be much higher than they thought when they drove on the lot. Once a payment number has been agreed to (usually with the customer initialing or signing the worksheet number that they go along with), the customer is ready for “harvesting”.
Harvesting involves upselling the customer with high-profit, low-value add-ons. They include credit life insurance, disability insurance, gap insurance, rust-proofing, fabric protection, paint protection, maintenance packages, theft protection etching, unemployment insurance,
trip insurance, road hazard coverage and the like. The idea is that the salesperson creates the room in the monthly payment for these things to be packed into the deal later by the finance department.
They may also use the “Ben Franklin Close” technique on you. This technique makes tough decisions easy and should help you to close the deal more often than not. It starts with pulling out a sheet of paper and laying it flat on the desk. They’ll draw a line down the center of the paper and invite the consumer to write Pros on the left side of the line and Cons on the right side of the line. You better believe that they’ll then list about 10 Pros for buying the car. The Con is usually just “car is a bit more expensive than I wanted.”
TRICK 6: Bring In The Heavy Artillery
Once the customer has been “tenderized” and “desensitized”, they are ready for the “finance manager” to fleece. The first thing to know about the finance manager is that they aren’t really a finance manager. They’re a salesperson like anyone else. This person’s job is to maximize the profit and close the deal. If done really well, the customer will never know how bad it really is.
At this point, the customer actually thinks the hard part is over with. They finally got a great deal and that all they have to do now is sign some papers and drive home. After all, that’s what the sales person said they were going to do next. Actually, the selling process is still going on. The customer has just arrived at “part two”. And all of that personal background that you gave them earlier in the process gets turned against the customer.
For example, if the customer is married, credit life and disability insurance become much easier to sell (“gosh, you wouldn’t want the bank to come and take your car and leave [insert name of spouse here] stranded if something suddenly happens to you, would you?” is a question that is most effective when asked right in front of the other spouse).
If the customer had a trade in with “negative equity” (a phrase invented by the car sales business), it is easy to convince them that they really do need Gap insurance, but the negative trade in equity may be overstated or simply false.
Many times these additional items are pre-printed on the sales and financing forms. The Finance Manager may have tried to include theft protection in the deal : “you because I know you’ll want it and, besides, it only costs $5 a month.”
To avoid claims of nondisclosure fraud, car dealers will often use a “product menu” (either paper or shown on a computer screen) of various add-on packages that are priced out on either a monthly payment or total package cost amount. The menu will usually have no less than 3 choices and no more than 5 (too little looks like too little and too much gets confusing), starting with the most expensive item on the left (that is where studies show a person’s eyes go first on a document), and the sales person will work to sell the advantages of various packages. A “successful” dealership will make more money in this last stage of the deal than on the sale of the vehicle itself. Ward’s Auto Online reveals that the finance part of the process generate millions of dollars of profit.
At the end of the process, the Finance Manager will usually tear out the customer copies of the papers, line up the corners in the stack, staple them together, fold them all up, and put them in an envelope. Then the envelope is usually given to the customer with the admonition that the papers are very important and they should put them in a safe place and keep them.
Of course, doing all of that discourages the customer from looking closely at the papers on the way home. Putting them into a safe place at home also discourages the customer from looking too closely at the papers, or for too long, at home. This way, the customer is less likely to discover anything that is not quite what they expected until weeks or months later. If they do, and they return to the dealership to complain, the dealer will very often point to the “heat sheet” that they signed (a single page form with about ten separated paragraphs of content, each of which has a line to the right of it for the customer to initial). You are left struggling upstream without a paddle.
COUNTER MOVES: HOW TO OVERCOME THESE PSYCHOLOGICAL TRICKS
• Car dealers thrive on the classic bait-and-switch tactic. Most tools online are geared towards getting you in the store because that’s when car dealers have the most opportunity to sell the car. So have a clear idea of what car you want and why you want it. If you do your homework in advance, you’ll save yourself a lot of money.
• If you go to car dealership, don’t be in a rush. They’ll make it a long process. However, if you’ve already picked out a car from a dealership’s online inventory and worked out a price, do as much of the deal paperwork you can get over the phone. In many cases, you can be in and out of a dealership in less than an hour if you started the deal-making process online and over the phone.
• Many buyers will skip the negotiation process altogether and simply email local dealerships and ask for the best price. When asking for prices via email you should seek to finalize the deal with a manager.
• Don’t fall in love with one specific model or color. If he’s any good, your salesperson will pick up on this immediately, and it will cost you dearly!
• If you feel like you’re being run through the waiting game wringer, then take the initiative and make the dealer start moving—or call the deal off. Don’t agree to something because you just want to get out of there.
• End of a model year is best time to get deal.
• There are often unadvertised rebates you can score just by asking. There are often discounts for military personnel, senior citizens, college students, and first-time buyers. Sometimes, there are even loyalty rebates if you own the same brand of car already.
• If you plan to finance your purchase, you can negotiate your financing, too, and perhaps score a better rate. The key is getting pre-approved for your loan elsewhere.
• When a salesperson pops the question, “What kind of payment are you looking for?” before you’ve even talked about the price of the car, that’s a major red flag. If you’re focused on payment, they will stretch the term as far as possible to get you a ‘payment’ you’re happy with, even though you’ve overpaid on the car.
• If you really want to know what vehicle to buy, ask the service department. They see what’s coming into the shop. They know what’s having trouble.
• A weekday afternoon is a better time to go visit a dealership than weekends or evenings. You’ll get more personal attention and you won’t be mentally tired.
• Consummate your car deal during the last two days of the month because the sales people work on a monthly quota. You may well get a salesperson who’s closing in on a $1,000 bonus.
• When you’re trying to negotiate a lower sales price, give the dealership a reason to discount the price. If you’ll use the service department, say so. If you’ll refer friends, be sure to say that, too
• Check your insurance rates on the car you’re looking to buy before you buy it.
• If you’re serious about your music, bring some along to test out the vehicle’s audio system. Stereo specs don’t tell the whole story.
• When you’re car shopping with iffy credit and you want the dealership to arrange the loan, go there while banks are open. Since the dealership will be trying to find a lender to write the loan, you’ll greatly increase your chances of getting approved for a car during “bankers’ hours.”
• By the time most consumers get into the financing process, they’re exhausted. Dealers will use that to their advantage, and try to extract more money out of you when you’re fatigued and desperate to leave with a new car. That’s when they’ll start throwing on extended warranties and different types of protection you probably don’t need on your car.
• If you plan on trading in your car, check trade-in values at Edmunds.com before heading to the dealership. Focus on the trade-in and private-party values. The third value, “Dealer retail,” is the estimated price the dealer will ask for the car when he’s selling it. It has nothing to do with what you should expect the dealer to pay you.
• Bring along all the keys for your trade-in, with the registration, pink slip or payment bill and repair history, if you have it. If you don’t have the title nearby, that may be OK, too. Just be prepared to pay a small duplicate title fee of about $40.
• If you’re thinking of trading in a car, do it before your annual registration is due. You will not get a prorated value for having a paid registration.
• Make sure to keep the release of liability form you get from the dealership finance department. The car you trade in may stay attached to your name until the dealership sells it to somebody else.