Driving

    Part 4 – Tips for Working with the Dealer

    Dealer Tips — The dealer is there to make money off of the sale. They do this by buying cars at different rates than the average person, then selling them for a profit.

    They can do this because they are part of an association that has connections to the factory and to car auctions that are lease returns or rental returns. They also purchase cars from private individuals at lower rates—or trade-in value.

    After you are done with your test-drive the salesperson will sit you down and talk numbers.

    The salesperson will ask questions about how you intend to pay for the vehicle, if you will finance or pay cash. If you are financing they will have you fill out a credit application, so they can see what Annual Percentage Rate (APR) you are approved for. They will ask you about a down payment, and also about your trade-in if you have one. Then they will ask you about what payment you can afford.

    Once your salesperson has this information, they take it to their manager for approval. They input these numbers into their computer, and it gives them the exact payment you’ll have, with the down payment and your current credit score.

    Sometimes the offer they give you isn’t acceptable. If this is the case, don’t get upset and think that they weren’t listening; that’s just the price of the car minus your down payment plus the price minus your down payment times the APR divided by the amount of months the loan goes for—whew. That may sound confusing but that’s all it is, not some magical number. This is what their computer told them.

    Don’t think the deal is off either; rather, use your negotiation skill. Make a counter offer. Apparently they can’t go as low as you wanted, so go up just a bit. See what happens.

    The salesman will then take your offer to the manager. He is acting as your spokesman during the sale. Management will decide if your offer is reasonable—or doable, and then report back to the salesman, who will then report back to you. Compare this with the figures from Kelly Blue Book, or NADA to see if their offer is reasonable.

    To save yourself a lot of hassle during the negotiations process, pre-qualify yourself on your vehicle. That means don’t go after a car that’s out of your price range and expect to get them to come down on the price—most of the time that is just a waste of time. You waste your time driving the vehicle, but you also waste the salesman’s time that he is spending with you, selling you a vehicle that you can’t afford. So be reasonable.

    Finally, once that the negotiations are finished comes the finance office. The dealer has a finance manager, whose job is to get people approved for loans. He will invite you into his office and review the sale with you. He will show you all of the numbers and figures they have and verify all of your information. He will also go over the contract and have you sign it. He will also make sure that everything went well with your salesman, and with the dealership.

    Now comes the fun part, insert key in ignition, turn and drive away. You are now more knowledgeable, and have experience in buying a car. Now that was worth it, wasn’t it?

    Start Over: Buying a Car – Part 1 | 2 | 3 | 4 |