I have bought many cars in my long life, some from dealers, and some from private parties. Some cars were lemons, and others were pure quality. In most cases however I paid too much or got too little for my trade in. The cause is simple: Americans don't know how and don't like to bargain. They think it's beneath their dignity or they trust the seller (Wow!).
There is a very interesting article on Edmunds.com that was written by one of their employees who went undercover to get a job as a car salesman in various dealerships. Read it! It's an eye opener. An elaborate play takes place behind the scenes that deserves a chance on Broadway. The poor sap - you and me - is calmly sitting in the office waiting for the magic word from the salesman's boss of bosses (capo di tutti capi).
"Mr. Jones, I have good news, my boss says we can give you more money for your trade in." You sit up, all excited, thinking you pulled a fast one on the dealer. Actually, you are simply swallowing hook and sinker while they reel you in. You see, that value is what they planned to give you from the first, but they started $1,000 lower just to make you think you convinced them.
The little shuffle game, the salesman (are there any saleswomen?) going back and forth between you and the main office is designed to make you believe that they are seriously desperate to sell you the unit. And most buyers, especially women, will succumb to the charm game and end up paying more than they planned on.
What You Should do First, Before Going to the Dealership
- Thoroughly research the resale value of your car as a trade in. You get more from a private party, but most people are too busy to handle all the bureaucratic steps.
- Find out exactly what the market value of your dream car is. The MSRP is what the dealer would like to charge; the real price depends on the market.
- Check the financing and the special offers on the Web. Make sure you have a copy when you walk in the dealership's office.
- Establish your bottom and top prices at home. You will not accept anything lower (trade in) and you won't pay a penny over your maximum (new car). Stick to it! The salesman does that every day and he may be in for a bonus. Tell him: "These are my conditions, take it or leave it." You'd be surprised how few people they let walk out without a good counteroffer. But don't be afraid to leave if they don't give in; there are a lot of businesses selling cars and competition is fierce.
What You Should Never, Never, Never Do
- Get excited over a car at the dealership. Some women friends have asked me to go with them to the dealer. I told them: "I prefer going alone, you are too excitable. I'll get you a price and call you to come in and sign the papers.".
- Go unprepared with prices, options and special offers
- Say yes to the first offer. I have a younger friend who spent 4 hours haggling over the price. They caved in first. He saved $4,000 in total.
- Leave the lot without a test drive. Another friend who weighs around 340 lbs. has to make sure the cabin will be comfortable for him. Check the dashboard, check the overhead space and check how smoothly it drives. But don't display emotions while driving, like "Whoopee, fantastic, the power, I love it, etc.". You get the idea!
- Always check with other dealerships for the same brand and compare offers. That'll keep the salesman honest (well, a little more, anyway).
Buying a car nowadays with high gas prices requires a lot more research. Is the hybrid worth the extra $5,000? If I save $400 a year on gas, how long will it take me to reach the $5,000? Will I keep the car that long? How much driving do I actually do? Is a smaller car safe in case of a collision? Congress will vote on bill that will again offer tax deductions for eco-friendly cars. Maybe I should wait until it's approved.
