Tactics for Dealing with Dealerships

"CarFanatic" (carfanatic) 10/24/2014 at 11:01 • Filed to: None

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In light of recent articles and discussions on both Jalopnik and LifeHacker, I thought I would explain some of the tactics I utilize for getting what I want for the price I'm willing to pay. Having purchased and assisted with purchases of many vehicles over the years for my wife, my kids, my parents, my in-laws, and myself, I've developed strategies for various buying scenarios.

Some absolutes:

- Research pricing beforehand. For new vehicles, locate the invoice pricing and set a dollar amount in your mind that you are willing to pay over invoice (my personal max is $400 over invoice). That's your personal limit.

- For a used vehicle, a price limit is purely subjective. Researching to see how much similarly equipped pre-owned models are priced in a region is your best guide. Edmunds, NADA, and Kelley Blue Book can also serve as guides, but in the end, demand dictates price.

- Always try to target the end of the month. Dealing seems to go better when sales people and managers are trying to meet their end-of-month sales goals.

- Always get pre-approved through your credit union or bank. Obtain pre-approval for at least 10% more. This gives you flexibility for purchasing an extended warranty or moving up in equipped options (e.g. you went in to buy the base model, but you found you liked the sport model better). Being pre-approved allows you to bypass the line salespeople use of, "What do you want your monthly payment to be?" Anytime I get that question, I simply say, "Zero, but it is irrelevant because I'm pre-approved through my credit union."

Residing in a large city certainly has its advantages because of the presence of multiple dealerships for each car brand. (I realize this doesn't meet everyone's scenario, including my parents', so I offer advice in the next paragraph.) I simply pit dealerships against each other by forwarding the emails containing the price the dealer is presenting. Dealer A comes down in price via email, I then forward to Dealers B and C, and so on until my personal limit is met. If the vehicle I want is only available at one dealership, then I contact the fleet manager or fleet salesperson and bypass the floor sales people. This saves a lot of time, money, and hassle because the fleet salesperson has a fixed price—sometimes invoice, sometimes a few hundred dollars over invoice, and sometimes below invoice. Those prices will almost never be attained via a floor salesperson.

My parents are Nissan fans. There's only one Nissan dealer in their town. So when I go with them to negotiate, and the dealer doesn't come close to our offer, I look at my parents and say, "When you all come to visit us in Dallas next month, I'll take you to the 4 Nissan dealers near us and we'll get the price you want." We get up to leave and that's when things change in our favor. Simply standing up to leave and saying something like, "Well, guess we'll head over to (insert big city name here) where they have more dealerships. Competition means lower pricing..." will get their attention.

For used vehicles, after the test drive, I make my offer and stand my ground, which usually means leaving without the vehicle. I wait patiently and usually within a few days, the dealer calls/emails me and agrees to my offer. If you are emotionally attached to the vehicle and show it, you aren't going to be successful in getting your price until you leave.

In situations where we have no choice but to deal with a floor salesperson, my wife and I have successfully used the good cop/bad cop routine. She's the bad cop. Every time the sales person comes back with their price and it doesn't equate to our offer, she stands up and says, with an irritated tone, "Let's go." I look at the sales person, shrug my shoulders and politely say, "Guess we're leaving." Every time, this results in a panicked response by the salesperson, begging us to give him/her one more try. A few times, they have returned with their sales manager. It is evident my wife has had an impact because the sales manager comes out and talks to my wife, not me. In our last incident, the sales manager made the mistake of talking in a condescending fashion and insulted her intelligence when he tried to lecture her on how businesses make a profit. She fired back and rendered him speechless. That's when I stepped in a kindly upped our offer a small amount and the sales manager immediately agreed.

Sales people sometimes use tactics, e.g. making you wait a long time while they are supposedly talking to their sales manager. If that's happening, advise the receptionist that your salesperson never returned and you are leaving. As you walk away, your salesperson will emerge and break into a sprint to catch you.

Lastly, be aware of what's going on with the paperwork. My wife's career is overseeing the lending side of a financial institution (credit union). She has her people trained to screen the worksheet/work order that is faxed/emailed over from the dealership. They frequently find added fees or items that the customer never knew about, or worse: the worksheet shows the purchase price to be higher than what the customer agreed to. Her loan officers will contact the dealership on behalf of the customer, and advise that the worksheet is being rejected and the credit union will help the customer find a car at a different dealership for the appropriate price. This always results in the dealership correcting the worksheet. If you are doing dealer financing, you will need to scrutinize the worksheet yourself. Don't be afraid to ask for clarification on fees. Every dealer charges a documentation fee. That is normal. But if that documentation fee exceeds $150, then something is wrong.

When working with the dealership financial person, be aware that extended warranties are negotiable. If you aren't including the warranty in your financing, simply say you need time to think about the extended warranty. This will sometimes result in the price being lowered.