Dear Meredith: How do I get the best deal at the car dealership?

by Meredith on February 11, 2014

Dear Meredith,

dear meredith

When purchasing a new vehicle, how do you get the sales people to take you seriously? How do you best negotiate to get what you want and not end up thinking you’ve won, when you really didn’t get all you could have? 

We’re going car shopping this coming weekend, and while I know my hubby thinks he’s a brilliant negotiator, I worry they get to him too easily with praise… Think that episode of South Park when the kids are all playing with the Pokemon-type toys and the company keeps shutting down the concerned parents and officials by telling them how big their penises are.

Thanks!

Serious Shopper Sarah

***

Dear Serious Shopper Sarah,

I offer a unique perspective. I’ve been working at car dealerships for over eight years.

I used to be a Senior Manager (Human Resources Director). In that role, I had access to unlimited financials, sat in top secret meetings with and without the manufacturers, I’ve launched giant investigations and fired snakes who do the wrong things, I’ve hired the best of the best, and I’ve been involved in forecasting the next year’s profits… I’ve pretty much seen and done it all… on a top level scale. So I know some things.

I will tell you exactly how it all works… at the risk of getting fired.

The goal of the car salesman is to give away as little money as possible on the deal and to sell as many vehicles as possible. You obviously know this, or you wouldn’t be asking this question.

I get paid commissions. The more money I give up in the deal, the less my paycheck amounts to. So let’s chat first about the pay plans you are up against. This way, when you go into that car dealership, you can look that dude in the eye and try to figure out where he’s at in the process in his own head.

The Pay Plan

I’ve written countless numbers of dealership pay plans over the years. The number one goal of any dealership pay plan is to drive numbers up and hold as much gross profit as possible. Essentially, the more you sell, the higher your commissions pays out. Sell more than ten cars? Get paid a higher percentage. Sell more than fifteen cars? Get paid an even higher percentage.

Most dealerships pay out for things like “Top Salesman”, “Fast Start” (meaning you sold a certain number of cars before the 15th of the month), and for hitting certain overall unit count levels. This bonus money tends to be pretty substantial.

This Actually Works In Your Favor

Okay, so now you are in a total state of panic.

HOW CAN I EVER WIN?

Stop panicking. This isn’t rocket science.

Think about it….

I am trying to hit at least ten cars each month because my bonuses don’t pay anything unless I get there. I will whore those cars out to get to that number. I don’t care if I lose money on some of these deals because I need to get to ten. Nothing will happen for me commission-wise until I start hitting these plateaus.

That being said… You know how you think you’ll get a better deal at the end of the month? Pfft. We’re whoring them out in the beginning of the month when I am panicking that there won’t be any traffic! These snow storms are killing floor traffic, and that totally works in your favor.

Chevy also pays me bonus level money. I have to sell at least three new Chevys every month to get an additional paycheck from Chevy. When I hit eight new Chevys a month THEIR MONEY TRIPLES ON EACH CAR I SELL RETRO BACK TO THE FIRST CAR!

So I make most of my money on bonus levels, not on the deal itself.

New Cars = Better Deal

Car dealerships make their money in the Used Car Department.

There. I said it.

New cars have hardly any mark-up. And to add to that, the manufacturers give discounts to suppliers, employees, and then stack on steep rebates.

The manufacturers do not care if we lose money on these vehicles. They just want them sold so they can send in trucks with 22 more from the factory on a random Tuesday. And trust me… we lose money on these vehicles all the time!

But? If we sell enough of these new cars, the manufactures pay the dealerships BIG cheddar. Sometimes this cheddar is enough to take a new car department from red to black for the quarter. The dealership needs this money, and the manufacturers know we need this money to keep our doors open.

So the manufactures set ridiculous goals. That? Somehow? We manage to hit. Even though there are fourteen other Chevy dealerships within a 40-mile radius of ours. They pit us against each other. And again, they do not care. We hit them by going below invoice price on a lot of deals. Invoice is the price the dealership paid for the vehicle.

(YES, WE PAY FOR THESE CARS – NO, THEY DO NOT SHOW UP ON TRUCKS FOR FREE – YES, WE HAVE TO TAKE HOWEVER MANY THEY ALLOCATE TO THE DEALERSHIP EVEN IF WE DO NOT WANT THEM).

So buy a new car.

balloons sell cars

We think balloons sell cars. This is our last desperate attempt. Go to places with balloons.

But if you really want the best possible deal… LEASE a new car.

Leasing a vehicle is the same as selling a vehicle in the eyes of the manufacturer and my boss. So the same process of giving-away-the-farm exists to move them off the lot.

If you can’t afford a new car payment… consider leasing.

With leasing, your monthly payment is typically less, you get the same great new car warranties (oftentimes these even pay for your oil changes), and your friends will always wonder how you can afford such an awesome car.

You pay for the use of the car right up front instead of paying for interest. Car loans stack interest in the front of your loan, and you pay very little for the value of the car. Many buyers are shocked three years into the loan to find out they still have a giant pay-off when they go to trade it in for a new car.

When you lease, say for 27 months, you can choose to buy out your lease. You’ve basically been renting to own the thing for the past two years, and very little of that rent-to-own payment was interest (unlike on a car loan).

Are you worried about your miles? Who cares! You’re planning to finance the residual value of the car anyway. OR? You take it the dealership, they pay off your residual value, and then they add it to their used car collection. A dealership can get you out of a lease – EVEN IF YOU ARE OVER MILES. We just buy the car on your behalf! Why? Because we need to sell you another new car! (see above)

Leasing is the way to go.

I want to sell you this car as much as you want to buy the thing.

I fully expect you to negotiate with me. And just so you know, I told my boss you could afford $50 less than whatever you told me.

CUSTOMER: I can afford $400 a month.

*walks into Sales Manager’s office*

ME TO MY BOSS: She can afford $350 a month.

Remember, I am your friend now. I am emotionally involved with you, and SWEET MOTHER I NEED AT LEAST 10 CARS THIS MONTH!

Set the pen down and shut up.

Lazy car salesmen will show you the numbers on the vehicle right away.

I do not show the numbers until I have trial closed you so many times that I know you love this car more than anything.

Once I feel like you have picked the car for you, and you like me… I will show you numbers.

If you’re just out collecting numbers… you’ll know right away who sucks at their sales job. The guy you end up buying from was either A) really good at his job the first time, B) you were tired of shopping so he wore you down or, C) you went back to him because you felt more comfortable.

If you don’t feel comfortable WALK.

I am going to show you the numbers after I feel confident that you are a serious buyer AND YOU’RE BUYING FROM ME. I will show you these numbers, and then I will set my pen down and shut up. I am waiting for you to let this payment set in.

I feel like right now is when you are going to tell me the truth about what you can afford payment-wise. After all, I lied to my boss and you lied to me. Probably by about $50.

We say to each other, “Buyers are liars.”

We think you’re a liar, too. That is… until we get emotionally involved in your deal, and then we feel like we are besties. And then we’re shocked when we find out you’ve been lying to us this whole time.

So start talking. Don’t stand up and walk out. Tell me you want a different payment. Tell me now what you can really afford. Tell me you wanted more for that trade.

TALK.

I wish you would have talked to me sooner. We would have saved a lot of time today.

So how do you get me to take you seriously?

DO. NOT. BE. A. DICK.

I won’t work with a dick. I’ll let you go out those front doors because my time matters, too. I am moving on to the next customer who I think will actually buy from me. And if we spend half a day driving cars, going over payments, and signing up on a car… I would rather do it with a nice customer.

I had a guy once tell my boss we have two invoice books. Fuck that guy. I don’t need your business. That shit makes the dealership not take you seriously.

But we expect you to negotiate. So do it! But when we come back and tell you that’s the best deal – THAT IS THE BEST DEAL. I can go back in again, but I’ll come back and tell you the same thing. That’s how you know you’ve arrived.

You’ll give me A+’s on all my surveys BECAUSE YOU WANT TO. Your salesman wants to be your new best friend. The good ones are emotionally involved in each deal. We want to be your Facebook friend after you’ve finished because we like your kids and dog, too.

Extra Tidbits:

  • They don’t tell me how far we can go into a deal. The Sales Manager is a former Car Salesman. He knows I am working his desk harder than I am working you. So when I’m in his office for thirty minutes – WE ARE FIGHTING. I am begging him to get you to $350 a month anyway he can.
  • Let the dealership run your credit. We have 30 banks competing for you. We can probably beat the rate at your credit union, and we don’t really care who finances you, and you probably don’t either.
  • You do NOT have to buy a Kia if you have bad credit/no credit. Places like Taylor Kia “allegedly” (and by “allegedly” I mean my customers have experienced this for themselves) stuff you into a shitty car and tell you that’s your only choice. LIES. Go someplace reputable first, or you may wind up with a $456 car payment for 72 months on a $10,000 car.
  • $7,000 cars tend to have a super high interest rate. Even if you have good credit. It’s just how it is.
  • Try to get a hold of a supplier or employee number if you’re buying a new car. And tell me things. Recent college graduates, farm bureau members, military… all of these things qualify you for additional savings. This will save you thousands of dollars.
  • If someone says, “Do you need to check with your husband/dad?” WALK. Women make the major purchasing decisions in most households. Anyone who can’t see that is old school and slimy.

I hope this helps!

Yours truly,

Soon-To-Be-Fired-Meredith

If you have any questions for me, ask away!

 

{ 37 comments… read them below or add one }

Katie

Wish I had read this when I was buying my baby truck, It started out fun and ended up a nightmare with me balling my eyes out on their sales floor. I did end up with the car I wanted, and I’m still pretty sure I got the best deal, but I’d rather have read this than ended up balling my eyes out as a grown woman because I was so frustrated with the process. Good advice!! The only thing I would add is to do research on the car you want and check kbb.com (Kelley Blue Book) to help get an idea of ballpark.

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Meredith

We are all using NADA now. Look it up there. KBB is out of date.

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Katie

Doh! Never heard of NADA before now. I got my baby truck about a year and a half ago.

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Gemma

You are awesome and you shouldn’t be fired cause even though I’m gonna walk into a Canadian dealership next month and apply all these tips, I have lots of family in Maryland, West Virgina and, oh yes, even Bowling Green and I’m passing your name on! Booyah, you gave away the milk, but you’re going sell a cow.

(now I’m not even sure any of that makes sense lol, but I still think you rock and wish I could buy my car from you!!)

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Meredith

I wish you didn’t live in Canada! Thanks, lady!

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Kelly

Where were you last April when I was trying to navigate my new car purchase? I’m sending this to my daughter! She needs a new car and has zero credit history….all of this information can only help her.

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Meredith

That’s great! Thanks for sharing!

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Amy

So, I have purchased 2 used honda civics in the last year (two total loss car accidents… my insurance loves me). Anywho, when driving to every freakin’ dealership in the tri-county area, I ended up at a honda dealership and went to the wrong side of the lot (why aren’t dealerships marked where used and new are?). The sales guy who walked up to me wasn’t from the used side and seemed new to the whole thing. I asked about a car I had seen online and told him I wanted to test drive. He didn’t know where the keys were, didn’t know the area so we got lost on the test drive, and was generally really annoying and dumb. I liked the car, but wanted to wait on final negotiations until my husband could meet me in a few hours.

When I returned later, I went to another sales guy. During negotiations, the first sales guy saw me and got mad, telling his boss and my new guy that I was his customer. I had to tell my new sales guy and the boss, that no, I didn’t want to work with him because he obviously didn’t know what he was doing.

Was that terrible?

Also, I ended up not buying from them because they wouldn’t bring the price down $500. They seemed to think I wouldn’t walk over $500 (even when I showed them a higher model in down going for that price). I walked.

I bought a much nicer car for a great price a few miles away. I brought my sales guy brownies (still warm) the next day to thank him. Because he was nice and didn’t hassle me.

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Meredith

Amy -

Not terrible AT ALL. That first guy sounds new to the dealership.

However, you can TOTALLY switch sales guys at any time. Will that first guy be hurt? Sure. But he shouldn’t have sucked. So if you like the dealer, but hate the dude, get a new dude.

I like brownies.

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Caryn

I love this post! I had been thinking about asking you this same advice since you are rocking at your new job :) I suck at negotiating and my husband hates dealing with this stuff, so it’s up to me and I always feel like I’m being taken advantage of by the salesman. What’s the deal with special pre-negotiated prices when you are a member of Costco or AAA? When I do that I have to see a fleet person and they tell me there is no negotiating on those prices so take it or leave it. Are those deals really not the best deal? I always buy new cars, and after reading your advice it sounds like leasing may be the better way to go because I end up with a new car every few years because I keep changing my mind about what kind of car fits my needs. Thanks for all your wonderful advice!

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Meredith

Caryn,

EVERYTHING is negotiable. Don’t buy into that hype. Employees and suppliers get the BEST prices. There is nowhere else to go. So if those numbers come out to employee or supplier prices – YES. That is the best price. No more room. Ask the dealership to see the employee and supplier price. If they don’t show you – WALK.

Negotiate your trade. In this instance, that is where you can find some room.

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Nuala Reilly

I love this!! When we bought our new car last year, the first brand new car ever for us, I talked to the dealers and a lot of them treated me as if I was either invisible (and they ignored me and talked to Shawn) or they acted like I obviously knew nothing and needed Shawn to make the final decision. This infuriated us both and we walked A LOT. I have been the one to make purchase choice on every vehicle we’ve ever bought and I’ve also been the one to deal with mechanics so I know more about cats than he does.
When we finally made our purchase, it was from. Guy who was awesome like you describe. He talked to me a lot, listened to what I wanted and then gave us the space to make our choice. We loved him.
You are doing a great thing to remind everyone that there should be chemistry with you and you sales person, not just in buying a car, but with every major purchase. Great post Meredith. Seriously awesome!

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Julie

Thanks for the tips. And for sure, the next car I purchase, I’ll come looking to you if I can!!

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Nicole

If your credit sucks, is it easier to lease a new car than
to buy one outright?

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Meredith

My credit sucks. I lease. Bad credit is a matter of having a Finance Manager who gives a shit. The guy who gives a shit will call and work every bank until he gets you bought. They have connections at these banks. So they call in a favor.

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Meredith

Another reason to go with a dealer who cares about getting people into cars the right way.

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Nicole

Thanks! Ohio is only 12 hours away.

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TinkerBell

Thanks for the inside scoop. The whole leasing statement blows my mind. That goes against everything I’ve ever heard. I was also told to never buy New because of the immediate depreciation.

We typically keep our cars until they die. Our current SUV is a 2001 and we bought it used in 2002.
Do you still think we should buy new and/or lease? We don’t plan on trading in the SUV. We’re going to keep it.
We’re thinking of buying a Nissan Murano or Cadillac SRX. Was originally thinking 2012-2014 used but I’d like to hear your thoughts.

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Meredith

If you are actually going to keep the car for the life of the loan – BUY. But you should always ask what the residual value of the lease will be after you’ve finished payments. If works out in your favor – lease and then buy it out.

Both are very nice. Have you considered an Equinox? I’m die hard Chevy. But I would shop both. I can help you with the Nissan, since we have a Nissan dealership, if you’d like some information.

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Victorria

Oh, man. I would have loved to have read this before my Subaru adventure last weekend! I have a friend who buys/sells cars for a major rental company. He loaded me with tons of information, but I went to the wrong dealer at first.

My friend makes the introduction for me with the general manager, and the GM texts me when he gets back into town to come on down and he’ll show me around. I get there, ask for the GM and a sales guy shows up to talk me through whether I want a Forester or Outback. The sales guy, let’s say his name is “Bill”, says that the GM has a used 2014 Forester with only 4,000 miles on it, and can give me a great price for it — I like the price, it’s lower than what my friend was showing me at total market value & invoice. It’s in detailing, but Bill takes me out for a test-drive in a comparable 2014. But then they look at my 2011 Prius, package 3, great condition, everything breaks down. They are $2000 from what I need to trade-in. They budge to $1000, but I can’t come down–I have negative equity on my trade-in, and I need to get a certain price for my Prius. The GM finally arrives, introduces himself, looks at my numbers and disappears.

Bill asks me to fill out an application, and since my used 2014 is in detailing, I’ll need to come back tomorrow night regardless. I leave the dealership around 8pm. I call my friend who then calls the GM. “Can’t you give her the extra $1000 for the trade-in?” My friend then also looks up all the Toyota Prius cars with a package 3 in the city. There are 20 of package 2 and ONE of package 3. This is a big deal.

The next day I expect a call from “Bill”. Nothing. I call at noon. Ok the GM will come up to our price for the trade-in, but financing is backed up because it’s the last day of the month and they are swamped. Ok, so I wait. And then it’s 5pm on a Friday and I email Bill to say what is going on? “yep they haven’t gotten to it yet, sorry about that.” Saturday morning rolls around. Nothing. No communication. I email again. Nothing. I’m done.

I go to a different Subaru dealer that Saturday afternoon. I have a woman sales person who is awesome and who listens. I give her my absolute numbers–no, I don’t need a test drive. I love the car, I don’t care what color it is, and I want to leave with one today. Oh, and here is what I absolutely need for my trade-in. She walks into her boss’s office and comes back 5 minutes later — you’ve got a deal. As they ran my financing, we discovered a bit of a credit issue. !! Seems that my credit cards are a little too full for my debt/income ratio and my credit score is lower than I thought. But they STILL give me a deal with the same monthly payment as I was paying on the Prius. So I win. And I’m out of there in 4 hours with a brand-new Subaru Forester.

What a difference between two dealerships and how they treated my buying experience.

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Meredith

I have the same experiences.

Question – was the bad dealership the bigger dealership? I find the smaller ones care more. We cannot afford to treat people wrong.

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Victorria

Actually the bad dealership was smaller. The one I bought from was a family that owns most brands of cars in the north suburbs of Pittsburgh. They also had a Toyota dealership so I think maybe that made it easier for them to take my trade-in, who knows? My husband will be in the market as soon as he finds a new job, and he’s going there first to trade in his 2004 Subaru.

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Adria

I’m with whoever said the leasing thing goes against everything I’ve ever heard. I drive a LOT. Like 60k miles/year. I go through cars quickly because I devalue them so quickly. I do buy new and relatively often (every year or two). I’ve always wanted to lease because it looks cheaper and I’ve already resigned myself to always having a payment, but the mileage restriction has always held me back. I feel like I need more details here. I lease a car, then go horrifically over the allowed mileage. What then?

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Meredith

Then you just buy it out at the residual value. They will tell you what your pay-off is at the end of the lease, and you finance that number. It’s typically about half. So you basically paid for half of your loan with the interest spread evenly instead of stacked in the front.

OR? You decide to let the dealership take it. I just ran into this yesterday. Our pay-off was $2,000 less than the customer’s pay-off. So we took it in on trade, put it on our lot, paid off her car, and she got a new one.

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Kymber

I wish you sold cars in Maryland, cause I’d totally buy one from you! I’ve been in car dealership hell for the past month … and I’m paying with (verifiable) cash! Apparently, I have a knack for finding douche bag car salesmen.

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Meredith

I hate douche-bag-car-salesman. I refuse to be one. REFUSE.

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Christina

Kymber, I just purchased a csr in Bel Air, MD. I was very pleased with the dealership and the salesperson. Everyone I dealt with were respectful and easygoing. Jones Chrysler. Talk to Calvin.

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steph gas

great advice, meredith. i’m in my first lease (up 11/2014) and am on track to be bout 4K miles over. i was planning on buying out my lease through my credit union. however, what you’re saying about leases makes me think that i can check with a few other dealerships and get what i want.

because what i want is to walk out with another new car and NO money down. so far i’ve been told that’s impossible at every turn. i refuse to believe that they don’t want to sell me a new car over $2k down when they’ll have a clean, well-maintained used car to mark up and milk someone else on. i think one thing i’ll have going for me is that i’m jumping ship from hyundai to another manufacturer. all because i was treated like an idiot when i went back last year to see if they could get me out of my lease early and into a cheaper car for a better price. they wanted to take my 2012 sonata turbo and put me in a 2014 ELANTRA for the SAME MONTHLY PAYMENT and an extra $1300 down! WHAT? why would you even come back from the office with those numbers? ugh.

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Meredith

You should ABSOLUTELY check with a couple dealerships. Think about it, your car is VALUABLE to them. It’s a newer pre-owned with low miles. Hard to find at an auction. It’s like a gift.

Just keep shopping. If they show negative equity, decide what is cheaper. Buying it out or trading it and rolling some. At the end of the day, what you REALLY want is a payment that fits in your budget. That’s what everyone wants.

And they should BEND OVER BACKWARDS to get you out early. They should see that as, “Hey, this is going to be some good repeat business when she wants out of this one.”

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Amanda

This is amazing. I wish more women had the confidence to just ask for what they want when they go into a dealership. While some salespeople are “old school and slimy” I think a lot of women feed into that by not being their confident, bad ass selves when they walk onto a lot.

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Meredith

Bad ass it up! Just don’t be mean.

But say what you want. Come in with information. Research online.

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e3writing

Thanks for all the awesome info! I feel much better prepared for when it’s time to replace one of our cars (up in Canada, otherwise I would totally come visit you!). Last time I bought, I had a great experience with the sales guy – he was upfront, no pressure, open about negotiating – then when he brought in his sales manager, that guy offered me a price that was more than sales guy and I had already discussed, then lied to my face saying they had done work on it in the week since sales guy and I last spoke. I had the service record IN MY HAND while he fudged dates. I called him out on it but he was really condescending to me. He kept saying he hoped I wouldn’t leave a great car over the cost of a nice dinner out (we were arguing over a $200 difference), then offered to fill the tank for me instead of coming down in price (a tank in this car is $45). I felt like screaming, I can do basic math!

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Meredith

Walk out. Just walk out.

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Michelle

Meredith – I’ve been following (and rooting for you!) and I can’t thank you enough for offering this perspective! Because my hubs is a Teamster, we get (what I believe is) supplier/employee pricing on many makes/models. So, armed with my PIN for those prices, am I correct that it is a “this is the price, no negotiating further” situation? It sounds like that is what you were saying up above, but I need to be sure that I understand. Also, we are in Columbus, so it sounds totally reasonable to me that we can come to you when we are ready – remind me where to reach you? Thanks! Michelle

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Meredith

YOU SHOULD COME TO ME!

The price is the price on employee and supplier deals. That’s all there is. The advantage of having these numbers is that you don’t have to haggle.

BUT the trade? That’s where you get fancy. Negotiate the trade.

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jenna

hey… if my parents are super cool and have a GM card and want to transfer the rewards to me, can they do that?

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Christina

I just bought a used 2013.I walked the lot and found my car. I already had my financing at 3% and knew exactly what I wanted. Left the dealership down the road because they close at 5pm and practically pushed me out the door. I walked into the next one, found the car then walked into the showroom and asked for a salesperson. I drove it, walked around it and said ok. I told him here is my financing and I have to be at 110% LTV. I will not negotiate any further if you get me to this number. I don’t know if I got screwed or not but I am happy and he is happy. I didn’t have to negotiate and I got everything I wanted. My time is valuable too. He treated me with respect and I am willing to pay a few extra bucks to save myself time and stress.

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