The Consumerist has a very enlightening article from a former used car salesman about the tricks that he used on customers, and how to recognize them. It’s a long article that contains a lot of common sense advice, but I found the carefully planned psychological tactics that they employ the most intriguing. Distraction, confusion, manipulation…
At the heart of it all is the “4-square,” a sheet of paper divided into four boxes: your trade value, the purchase price, down payment, and monthly payment. This is supposed to help you and the dealership come to an agreement, but as you’ll see, it’s really more akin to three-card monte dealer’s deck of cards. Many, but not all, dealerships use this tool.
I’ve only shopped for a car by myself once, right after I got offered my first job. My experience was exactly as described by this article. They broke out the 4-square form, started high, tried to wear me down, showed me how good of a deal they were giving me as compared to the original price, all of it. Even down to the part where they made me sign the “X” to signify that if the price was right, that I would buy today.
I ended up talking about a used Toyota 4Runner that caught my eye, and somehow the price went from $21,000 down to $16,000 after 45 minutes of me saying “I don’t know, I need to think about it”. (What I was really thinking was – let me use your computer so I can look up the Blue Book value and see how badly you’re trying to screw me.) The whole sleaze factor turned me off so much I just stuck with my trusty old Nissan – which I still have today.
Also, if you haven’t read it before, check out this (also very long) expose as an undercover car salesman by a writer at Edmunds.com.
I do have a confession to make though – I have caught a few episodes of King of Cars late at night and it was pretty entertaining!
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Great article. I used to sell new cars for awhile and this is pretty much exactly how it goes down. Edmunds.com is your friend.
I paid cash for my last car, so pretty much none of this applied to me. I had checked out Edmunds and Consumer Reports before I went, so I had a pretty good idea what I ought to be paying for my car.
By my estimate I paid about $300 more than my best possible deal, but I was pretty close. Since it was cash, the only thing to negotiate was the price of the car.
I note that one of the comments after the original article said, “BUT watch out in the ‘finance office’–these guys are the real pros. Last time we bought, he sneaked a 10.9% interest rate into the contract when the agreement was for 4.9% (he then blamed the sales manager for the mistake even though the finance office prepared the contract), then he doubled the value (and tripled our cost) of an extended warranty, pure gravy for the dealership had we not noticed.”
My own experience was that the actual contract delivered from the back office was $500 too high because one of the rebates had been overlooked. They corrected it right away when I noticed…
We had to ‘fun’ of getting a car a few years ago. I made sure to request the APR my credit union was offering. It was actually a very pain LESS experience. We did our research BEFORE buying the car, knew what we wanted to pay!–Great advice to always negotiate the total price of a car not the monthly car payments. I cringe when I hear a salesperson say: What montly payment can you afford. Good Lawd!
I loved this post. It was very entertaining and informative!!!! The salesmen from Edmunds. Man, that was priceless1111
ohhhhhhh—i love that show–the king of cars!!!!
We bought our most recent car used. We lined up financing ahead of time. We used Edmunds and other sites to determine a fair price. We were looking for a deal (and actually, for a used car), but a dealership had a new last-year model they wanted to sell. This was at the end of January, so we had missed all the last-year model “deals” offered by most dealerships.
Their price was out of our price range. The dealer asked what our range was, and I gave him our lowest value. We based our price off fair value for a different model vehicle with fewer options. We expected he would offer a diffferent vehicle, but he actually offered the same vehicle at our price.
After figuring out the blue book of the vehicle he was offering, we had to go see it. He was offering to sell it lower than the same car would cost used. I was skeptical. When we arrived at the dealer, we found out that in addition to all the other options, it was also the 4WD version and had a few other options he had not discussed. I fully expected him to use that to justify raising the price at that point. He didn’t. After the test drive, I was interested, but still expected them to raise the price. Even after he had to “check with his boss”, they never talked about any other price than the one I had offered.
The dealership sold it to us at cost minus about half of the factory-to-dealer incentives. We ended up buying the car for about 80% of blue book. We could have turned around and sold it the next day for a profit, even after depreciation, taxes, and registration. The car has been great.
D’oh. That should have said we bought our most recent car _new_. We were intending to buy used, but got such a fantastic deal on the new car, we’d have been stupid not to take it.
Never trade in your car when buying a used car. This is kinda basic but still I see many people tell me they got a great deal on the trade.
Example below.
Used car sticker price $10,000
Trade in: $5000 (fake trade in value)
Pay$5000
When in reality, you could have possibly negotiated the car sticker price down to $8000, sold your used car private party for $4000. and end up only paying $4000.
If you go to ANY dealer and even look at 1999 dodge neon, most likely the sticker price would be something like $6000. This is to get the 2 types of people:
1) People who purchase cars based on what they will pay monthly
2) People who want to do trade ins.
I once haggled over the price of a car and then in the end, i told the dealer…u know what…i wanna trade in my car…he was like…u cant do that now!! 🙂
Having said that, i am guilty of trading in my car TWICE! Sometimes u are so busy….bad excuse though. Both times, I lost a lot doing that.
I read the undercover salesman story…what an interesting read!!
The best line I ever heard from a car salesman was…
“How can I cheat you today?”…..I thought that was funny.
The first time I attempted to buy a car on my own, the salesweasel used that “4-square” form on me. I was so confused because numbers were spread all over the place. I tried to leave but the salesweasel chased after me, but I finally left. Because my old car was on it’s last legs, and I needed reliable transportation for a new job, I resorted to buyng a Saturn because of their no-hassle reputation (and a 0.9% APR didn’t hurt either).
The last time I bought a car on my own — trading in the Saturn which got too small for my needs — I had my eye on a late-model Honda. One that is old enough to have taken the depreciation hit but new enough to have a little original warranty on it. On a whim, I did an internet quote on the Edmunds and KBB websites. My bottomline price from the deal er on a new better model was at the top end of the price range I was looking at for late-model used. I already had been approved for a loan with a good rate from the credit union, but the dealer gave me a better rate. And they gave me a reasonable amount for my trade.
I have no doubt that I paid more than I could have if I bought from a priviate citizen and sold my used to a private citizen, but I got a better deal than if I had done no research.
Why not buy used from a private party? I bought both my cars that way, had them checked mechanically, haggled a bit, and drove off with a great set of wheels for around KBB price. Most people don’t know the actual value of their car, so they go by KBB – even if the car stood inside for 4 years and was just driven occasionally, for fun, in nice weather.
That’s how I got my current Beetle (people constantly think it’s new).
Love the blog!
Try carbuyingtips.com it gives you advice on all the tricks of the trade and gives you a strategy on buying a car online or at a dealership.
Very interesting article. I bought my car used from a dealer last year and this was exactly what I’ve gone through.
Wake up people,
I am a Used Car Manager at a local Chevrolet Dealership. Do all you winig crybabies have jobs? At that job do they make a profit? Since when is profit a four letter word? If you went out and invested $20,000 of your own money, would you consider a five to ten percent return on your investment to be out of line? And the next time you look at KBB or NADA, do me a favor and click on the button that says”write me a check for my car.” I have a multi million dollar inventory that I purchase. detail, and recondition to the best of my ability only to have the consumer come in and want to steal it for less than I had to pay for it.
Those that have a horrible buying experience are those people that want to work you to death, take up all your time, and then have you make no profit. They are usually rude, pompous, and arrogant. Always remember,when you pay Wal-Mart prices you get Wal-Mart service. Try paying Neiman Marcus prices and see what kind of service you get!!!!!!!
Glassser…Unless your going to be carrying me on your back around town, I could give a rats ass about your sales service. What I need is a low cost form of transportation without getting gouged. Since when does great service equate to a great quality car? Wah wah wah…sounds like you should change professions. BTW not everyone makes money on investments…sometimes you lose-it’s called capitalism. Just remember—-in the end it,is the buyer that dictates the price–unless of course your changing your car dealership to storage facility.
Glassser…Unless your going to be carrying me on you back around town, I could give a rats ass about your sales service. What I need is a low cost form of transportation without getting gouged. Since when does great service equate to a great quality car? Wah wah wah…sounds like you should change professions. BTW not everyone makes money on investments…sometimes you lose-it’s called capitalism. Just remember—-in the end,it is the buyer that dictates the price–unless of course your changing your sales dealership to a storage facility.
Com Mutter—You deserve whatever you get—You jerk
This reply is more directed at the dealer (Sales Manager Glasser). Most consumer’s, especially myself included are not necessarily trying to “rape” you of your profit. In fact, I believe you should make a healthy profit. the key words here are “healthy profit” though. No I can safely say that no all sales people are the same and there are lots out thier that want to actually help thier buyer. But the majority do not. The goal of most of the is to rake you over the coals. If it was not, then why are such question asked “How much of a monthly payment can you afford?” or the ” If I could …, would you …?” Dirty tactics at the end of the sale for a warranty that some one paid more for than the previous customer. The finance guys changing the interest rate and “sneeking” in fees. All these things place customers on the defensive way before they consider shelling out thier hard earned money.
Most people’s attitude would change very quickly if all you did was show the “ACTUAL REAL PRICE” no tricks, no invoice tagging, no MSRP, etc… on a car. Everyone pays the same for a warranty, the car, extras, etc.. Then when they sat down to the paper work, they already know how much exactly the car goes for so now they are either paying it, deciding on a down payment, interest rate, etc. This will allow them to know that there are no hidden costs, no agenda’s and everything will be as smooth as silk. They can actually trust you. Another thing on the MSRP, this is a value that the amnufacturer assigns. It holds no value and means absolutely nothing. Its like me picking up a quartz rock that weighs 1 pound and saying it has a MSRP of 1k. Everyone would laugh, because I assigned an arbitrary value to an object. If I walk into a store the MSRP seems to always be 30-40% higher than the actual price. Why? Competition. Stores now have a no hassle attitude, yet they stay competitive with thier competition. They also STILL make a profit. Not as hefty as they want, but it is still there. Thy know if they go higher, peopel will go the other store that is lower.
You guys seem to also forget the fundemetal Capitalism, its only worth what someone is willing to pay for it! Yet you always preach the right to make a profit and capitalism as your defense.
Now I have a one more thing to say and for you to ponder. Why is a 25K car cost 20k when it costs only about 5k to make? I am aware of retooling that costs millions, however how often do you really need to rettol between years. Most things have not changed much between the years. Finally, do not preach to me you need to make a profit and make me feel for you when you stiff the people who work for you on commision, stand back take the lions share of the profits, and live in million dollar homes. I am not saying you do not deserve to earn that type of money and I encourage it. In fact everyone wants to do that, however, it is the means in how you accomplish those goals that make people sick and place the consumer on the defensive.
Steve, I started in the industry at a dealership you were the GSM.
I learned alot from you, have become very successful in my position at the dealership and thank you for the knowledge you provided me with.
4 years later i’m still at the same dealership and remember you’re words:
“How do you know the customer is lying? Their lips are moving!”
“Buyers are liers and liers are buyers!”
“Would you want him happy in his couch or mad in the showroom?”
Good luck buddy!
Happy selling and keep in touch if you remember who i am.
A few years ago I was walking in Los Angeles with my elderly parents when a sudden quick cloudburst started. We ducked into a Toyota dealership, and of course salespeople started on us. I was interested in a used Camry, but not in a hurry. They were offering a price about $2k too high. The cloudburst ended, we walked out, and the salespeople followed us out of the store and down the street, dropping the price by a few hundred with each step. Moral: don’t be in a hurry, walk out after about 20 minutes, and amazing things will happen!
Thanks for posting that. I got sick of going through dealers so I bought my last car off the internet using edmunds.com for research and buying the car through http://www.truecar.com and saved a ton of money and frustration.
As a car salesman I love reading stuff like this. Why does everybody hate Car Salespeople? I’m 25, served my time in the Army Reserves, and can honestly say I have never screwed somebody over on a car deal. We(sales people) only get paid if we sell you(the client) a vehicle… On that note, when you think a sales person isn’t giving you a “good deal”, just remember that NO deal is a good deal, if you don’t purchase anything. Get it? If I work with you for five hours and you don’t end up buying a vehicle from me… I just made zero dollars and wasted half my day. Most dealerships pay between 20% and 30% of the gross on the deal so when you come in and expect to pay $500 over invoice because you “did all your research and know what the car is ‘really’ worth”, the sales professional is making what we like to call a “mini” (mini deal/minimum amount of money per car deal). On a new vehicle I’ve seen dealerships pay between $125 and $250. Just do me a favor… give sales people a chance… we aren’t always the enemy. I’ve actually seen more salespeople lie to their managers about the condition of a customers trade so they can get deals done than I have seen salespeople looking to rip off a customer… Without you guys we don’t get paid. Ohhh, and the next time any of you are on edmunds.com or kbb.com, and they tell you that your vehicle is worth “x”… Go ahead and click the “print Check Now” button and just bring us in the check instead of the car!