A motor vehicle salesperson recently explained to me that there are 11 steps that dealers use to get the most money out of you that they can get in a deal. I call it 11 Steps Dealers Use to Rip You Off. We posted the first four steps and now it's time for the next four ... along with some comments and tips to help you avoid wasting your money!
Step 1: Dealer Prep
Step 2: Sales Meetings at Dealership
Step 3: Meet and Greet the Customer
Step 4: Stealing the Trade-in During the Appraisal
Step 5: Qualify the Customer
This is where the salesman tries to figure out what is the most amount of money he can get out of you, by selling you as much car as your credit will qualify for. It’s may have nothing to do with what you want or what you need, but everything to do with who makes salesman of the month.
Tip: Watch out if they ask for your driver’s license while you take the test drive; if your social security number is on your license, they can run a credit check on you while you’re out on the test drive and by the time you return they will know exactly how much credit you’ve got and what the bank will probably approve. Armed with that, they then can decide what car and what price they will sell you on.
You should negotiate the price of the car first. Then negotiate your loan length and monthly payment amount. Don’t let them run a credit check on you until you’ve got those basic terms worked out. And never give a car dealer your social security number until you are ready to let them set up the financing for you.
Step 6: Land the Customer on a Car
The worst thing an inexperienced car salesman can do is let the customer roam the lot, and they know it. They don’t want you to compare one car to another because, what with dozens or hundreds to choose from, you could spend the whole day and never decide. They don’t make a commission by just showing you a car. They only get paid when they sell you one, and that doesn’t happen until they "land" you on a specific piece of iron (a vehicle).
That’s why they will ask you qualifying questions to figure out things like color, size, number of doors, performance aspects, stereo system, and much more. Once they land you on a specific car, the real sales job begins --- on you!
Tip: Know what you want before you go to the dealer’s lot. Know what the average selling price is likely to be by checking online and looking in newspaper ads. Find out what rebates are going on by checking online.
Does the salesperson seem to be pushing a specific car or model, whether you really want it or not? Most likely that’s because there’s a secret dealer-only incentive, sort of a "dealer rebate" that the manufacturer pays the dealer to get the dealer to help unload a car line or model that is a poor seller. On the lot the dealer sometimes pays the salesperson a bonus for "moving slow iron", and in the business it's called a spiff. Check it out carefully.
Step 7: Work the Deal and the Customer (puts the customer in ether)
Now it really gets interesting. Now the salesman starts on you. First they’ll take the payment approach to selling you. That means they’ll avoid the price and keep the sales conversation focused on how much monthly payment you can afford.
It used to be people bought cars based on price, but then we all started living on budgets and car dealers quickly learned that fact. Then they learned that if they could get you to stretch your budget "just a little more", then they could pump up the price and that meant more profit for them.
Expect the salesman to start with a monthly payment that is two or three times what you told him you could afford. They don’t expect it, but figure the shock will get you used to the idea of having to pay more than you thought you would when you walked onto the lot (never mind reality). They usually figure that as your monthly payment goes up, the loan length goes down, but watch out for the guy who does it both ways.
Part of all of this is "the ether." "Putting the customer in the ether" means getting the customer excited (or distracted) so they do not realize what is happening to them in the deal. That’s when the real profit can be made.
Tip: The first step to buying a car is making your budget. Know how much monthly payment you can really afford before you ever go car shopping. And then, aim to spend at least 10% less than your budgeted amount. That way you still have some "room" left over. Never go above the number ... no matter what. The more you stick to you number, the better off you will be! Don’t buy more of a vehicle than you can afford. If you do, the next time you go shopping you can be sure you’ll hear the salesperson say you’ve got negative equity (whether you really do or not).
And when you make your deal, before you sign the contract, make sure that everything (absolutely everything) has been written down on the contract. Remember: oral promises aren’t worth the paper they are written on.
Also before you sign the contract, make sure there’s nothing in it about "arbitration" or a "jury waiver" either. If you see anything like that, just take that ink pen and scratch it out on every single copy! An honest car dealer is not afraid of a jury made up of ordinary people. So if you see an arbitration clause or jury waiver in the contract, you know what kind of car dealer you are dealing with ... don’t sign the contract at all! You don’t have to give up your legal rights just to buy a motor vehicle.
Step 8: The Turnover
If the buyer becomes too difficult for the salesman to handle or deal with, the salesman knows he is supposed to "T.O." the customer (turn him over) to a more aggressive sales person or manager, sometimes called "the closer", whose job is to brow beat the customer into signing the paperwork and closing the deal on the best (highest) terms he can get for the store (the dealership).
A closer is well trained in the art of deceptive psychology. He knows how to play the customer, all the angles to work, and how to "homer" the customer on the deal. Closers have their own "style" of dealing with people. Some of them seem to be perfect gentlemen, while others have been known to pound on their desks or even scream at the customer or even get right in your face to intimidate you.
Tip: Remember: it’s all a game to them. It’s a challenge. If they start to play games with you, just get up and leave. You don’t have to do business with crazy people, liars, or thieves. That's not what you usually find a most car dealerships, but when you do ... just get up and leave.
Steps 9 thru 11 Coming Soon!
For now, if you've been ripped off by a car dealer, or if you've got a lemon, email or call us 1-888-331-6422 Toll Free. Getting rid of lemons and getting your money back, that's what we do. Every day.