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 Dealing With Dealers - Consumer Information You Can Trust!
What's Really Happening Down At The Dealership?"
"This beautiful custom van can be yours for $1 under invoice. Unbelievable! And we got zero percent financing. Even more unbelievable. Take it home tonight! We're open to midnight. No gimmicks, just good deals. Come see us."
To listen to the ads, you'd think saving money on a vehicle was as easy as going down to the showroom and signing your name. But it's much more complex than that. Did you know a dealer can sell you a car for exactly what he paid the manufacturer and still make $500 to $1,000 on just the car? Or that "zero percent" financing may cost you more than financing at your credit union - even if the credit union's rate is much higher?
The entire automotive market is about the last place in America where you must survive on your bartering skills. To save money, to get the car that's right for you at the best price, you must know what you're up against and how to negotiate in that high-pressure arena. Our CU Auto Online site will give you that valuable education. If you will read and work carefully, you might keep up to $3,000 or so hard-earned dollars in you pocket-rather than putting them into the dealer's. Ready to learn how?
Start By Looking At What You're Up Against.
We have already discussed how to go about "Selecting A Car". It is very important that you have reviewed this information before you select a dealer! Then we will discuss "Negotiating the Deal" the right way - the CU Auto Online way.
The pressure game starts even before you get to the dealership. Just look at dealer ads: They promise low payments, big sales, big money for your trade, and respect for your intellect. But, often, these promises come with some crossed fingers.
For example, did you know that many dealers make more during sales than they do at "non-sale" time? That's because we consumers automatically equate the word "sale" with "save." That's dangerous math. Dealer advertising really has another purpose: to get you to rush down in a fit of excitement ("Really? Just $99 a month?!) Without stopping to think or, not coincidentally, stopping to compare costs or products. Then dealers put you in the dealership "track system," a tried-and-true selling process with one objective in mind: to get more money from each part of the transaction than you were planning to pay. Want to spend $250 a month? A savvy dealership will get you to pay $300. Or they happily will sell you a car for $250 a month – but it will be a car you could have bought for $200 a month.
Even if their ethics are clean, face it-they're pros at selling cars, and you're likely an amateur at buying them. The people at the dealership, nice and smiling though they may be, simply have a different objective in the car transaction than you do. Their goal always is to maximize profits.
And that might mean leaving out an important fact or tow. To take one example, what would you do if you owned a dealership that sold cars ranked lowest on the government crash safety reports? Would you tell all your customers, "Oh, don't forget – our cars are the most dangerous on the road."
See the problem? To survive, dealerships generally can't give you all the answers you need to questions about such maters as a car's safety, reliability, or resale value, or its cost to the dealer, or the amount you should budget to pay for a new vehicle.
But those questions are important, aren't they? And you'll need the answers before you even look in the direction of the dealership. Why? Because once you're there, the "track system" will take over – whether you like it or not.
What Are Track Systems?
Track systems are simply different ways to control you, confuse you, and put you on the approach to maximum profit for the dealership. Recognize and understand the system, and put yourself on the approach to saving big money. Here are the most popular track systems and selling techniques:
The Deposit/Driver's License Technique
You're barely seated when the salesperson requests your driver's license, or your Social Security number, or a deposit "to show my boss you folks are serious." Tow things are happening here: If they get your money, you won't leave; and if they have your driver's license and/or Social Security number, they can run a credit check on you. Oh, did they forget to ask you first. Why would they do that? To plan the amount of profit they'd like to make.
The "T.O" System
T.O. stands for "turnover." You're sitting in a salesperson's office, thinking about how much more fun it would be to live in a dentist's chair than go through this, when your salesperson returns with reinforcements. The new smiling face asks for more money. And then the salesperson asks for more. And then the dealership chaplain comes in.
The T.O. system operates on the principle of "fresh faces can work miracles." A miracle, in this instance, is defined as more profit. And as long as you give, they'll keep asking.
The Note System
Rather than send in reinforcements, the salesperson steps out, returning with a nice note from the sales manager asking for more money. And then another note, then another. Usually, they come back with five, and usually the last two ask for raises of odd amounts of money – for instance, $113.29, or, finally, $23.19. The note system has one basic problem. It makes you think the dealership is negotiating when it's really only play-acting.
Consider the odd raises. These are designed simply to make it look like you're really a shrewd bargainer. You know, you think you've got them "down to the pennies." At note system dealerships, customers generally are given all five notes asking for more money – even if the customer already has agreed to pay full list price!
The "Foursquare" System"
The salesperson divides a piece of paper into four squares and then asks for your "wish list": What do you want to pay a month? What do you want for your trade? What do you want to pay for the new car? However ridiculous the sums, each is written in a square. Then they ask for your signature in the fourth square and a large deposit.
Then they begin to "work" you on each square separately, starting with a figure far from yours and very slowly negotiating down, constantly scratching through figures. By the time they finish, the paper is illegible, you're so frazzled you've forgotten your name, but the salesperson is smiling. You've agreed to pay an additional $1,200 to $1,500 profit.
The foursquare system probably is the worst system in use today because it negotiates the four squares as if they're not interrelated. For instance, as if changing the down payment and trade-in allowance doesn't affect the payment. Baloney! Don''t deal with dealerships that use this system.
Spot Delivery
"You can take it home today!" That is the most expensive statement any car dealer can make. Spot delivery means emotion is ruling you, rather than good sense. It also means you (very conveniently for the dealer) wouldn't have the opportunity to compare costs and terms. Never buy a car on your first visit. Wait a day and the price will tumble.
Track systems, in any shape or form, are not friends of your pocketbook. And daily, the methods grow more sophisticated and subtle. For instance, many dealerships now track customers' movements by computer, rate their moods on scales entered into computers, and flash their progress in the buying process on computer screens so managers and other salespeople throughout the dealership can monitor the careful plan to sell.
Don't want to deal with a car dealership or salesperson? We can help! Check into our CU Auto Buying Service or Contact Us.
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