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You're searching at his sheet and getting nervous thinking you can not afford this vehicle! Then he asks you, "What funds were you hoping to get?" Or "What were you thinking your trade-in was worth?" These phrases are designed to plant doubt in your mind. Maybe you thought your trade-in was worth more than it is . . . Maybe the funds you would like are not average for this vehicle . . . maybe you need more money down. For instance:
At this point he whips out his sharpie pen and starts drawing circles. Saying things like, "Well, to get funds around where you need them we need to come up in trade or down in price. I need to talk to my manager and see what he is willing to do to sell this vehicle. Obviously we're a long ways apart."
First and choicest - Get pre-approved! Lenders can pre-approve you over the web and phone and the check is sent overnight to you to use at any dealership. This is the easiest way to take the wind out of their sales. When you are pre-approved it puts you in the drivers seat because YOU control the negotiating on the PRICE of the vehicle and the VALUE of your trade-in.
So, how do you keep the ball in your court and control the situation?
Then he scribbles another "commitment" on the paper and asks for your signature. By now the "four square" is searching a little ragged with numbers and arrows and slash marks everywhere. You're all right confused and tense thinking that maybe you can not afford this car - and you really want it! In terms of car negotiating he's got you right where he wants you. He's bumped you up in per thirty days cost, up in down cost, he's still holding back on the trade value (if it's worth $2,000 and he gives you $1,000 - that's even handed an additional $1,000 profit for him too), AND he hasn't touched, or only slightly touched, the price of the car!
This is where things quickly begin to go south in the car negotiating process. The trade value is perpetually WAY TOO LOW and the funds are WAY TOO HIGH. Don't be fooled! This car negotiating tactic is designed to throw you off stability. The salesman's job at this point is to get a signed commitment "bumping" you up from the unique down cost and funds you would like. Here's how he does it:
Shop with a friend or someone who is a fair negotiator. Then - put attentiveness to them when they give you advice about what to do or say!
Here he'll start drawing arrows from funds to trade-in, etc. He'll write down your cost ($600, NOT $570) and then he'll circle it, and cross it off (delicate implication, don't count on it buster).
Taking the "four square" sheet he writes down $570, then asks the next question "Up To?" Meaning, $570 to $600 maybe? So, the salesman writes down something like "I will buy and drive right now for $570 to $600 a month" and asks you to sign it. Then he is going back to "talk to his manager." So you see, already he's bumped you up by $one hundred a month, and hasn't even discounted the vehicle yet! You're thinking, well, to get to that cost he's going to have to come up in trade value (which is perpetually about $1,000 to $2,000 more than he quoted you) or come down in price (which is a ultimate resort). But even if he comes up in trade value, he's low-balled you on it anyway, so he still hasn't LOST any real profit. And the truth is, YOU haven't even begun car negotiating because HE is controlling the entire situation!
So you say, "well . . . we can give you an additional $1,000 if we eat dog food for a month." And he writes that down.
Once pre-approved, don't let the dealer talk you into "pulling your credit to see if he can get you a better interest rate." Once again, this puts the ball in their court because with another lender perhaps they can lengthen cost terms and lower your per thirty days funds without discounting their vehicle.
Also, during this phase of the car negotiating process he's taken your focus OFF the central goal - the PRICE of the vehicle you like to purchase! Now, instead of talking "purchase price" - which translates into less profit for him, he's got you searching at "funds" - which translates into more profit for him because he can control those through stretching the term or changing the interest rate, without touching the price!
So, you've found the vehicle you would like and you're ready to start the car negotiating process. The salesman takes out a work of paper and draws a large plus sign on it. This is called the "four square." In the first square he writes the sticker price of the vehicle. In another square he writes your down cost. Then he leaves to "talk with his manager" assuring you he's going to work you a great deal!
Once again, focus is OFF the price of the car and ON the funds, which can be controlled through interest rates and stretching them out! You're still at or around full sticker AND your trade has been undervalued by probably $1,000 (still), and you're growing more tense by the minute - which hampers your ability to focus.
He says you can purchase the vehicle for $700 a month and you wanted $500. You think you're miles away so you say, "Well . . . . I can afford $570 if I budget myself." So, already you've come up a bit more than you already wanted.
When it comes to car negotiating, car salespeople are masters in the art of diversion. Using tricky phrases or writing on paper with arrows and cross-offs, all designed to confuse you and take your mind off the bottom line - the actual purchase price of the car! As an ex-car salesperson (or is it a reformed car salesperson?) in Phoenix, I know the tactics dealerships use for confusion and diversion - designed to get you to say "yes" to buying that shiny new vehicle for the absolute most they can get out of you!
So what exactly are these tricks and how can you counter them and keep the control in your court? That's what this text is all about. Let's get started . . .
I could go on and on and on about these car negotiating tactics. Suffice it to say, they are designed to confuse you, sell you the vehicle for it's full price and steal your trade for less than it's really worth. At some point a sales manager steps in and pressures you to increase your down cost or per thirty days funds also. And by this time you're tense, excited, nervous, and who knows what else!
At this point you're getting tense and a little overwhelmed. You state that you just can't afford that cost and start to get up. The salesman sees his commission going out the window and stops you. He says, "If I could get the funds around where you would like them will you buy the vehicle?" Listen to the words again, "around where you would like them." In car negotiation-speak this translates into about $35 to $50 more than you've already committed to.
After making you wait what seems to be like an eternity (another tactic designed to make you anxious) he comes back with a gigantic grin on his face and says "good news!" and puts down the paper. The remaining two squares are filled in with the trade value and funds.
After waiting another eternity he comes back with more "Good News!" He's gotten his manager to increase your trade-in (or discount the car) by $1,000! Wowee! This lowers your funds down to $675! And it's all written nicely on the four square sheet and circled and initialed by the manager to look official.
Know your trade-in value. Visit Kelley Blue Book, Edmunds, or check out your local Auto Trader to see what similar vehicles are selling for. Then hold them to that value no matter what! Often lenders who pre-approve you will also give you a fair estimate of your trade-in value that can assist you when car negotiating.
Shop online first! Better yet, work through a lender that will connect you at once with a dealership that will work with you and not jerk you around. This way you will be working one-on-one with a single salesman and he'll know up-front what you can afford and help you as a result.
