What you mustn't say to any auto dealer

Posted on Tuesday, 7 July 2009 , 18:07:06 byEmil

Filed under carsayautodealerNone

What you mustn't say to any auto dealer

You're shopping for a brand new car? We bring you a discussion with an AAA auto-buying expert plus a car dealer, let's find out now what NOT to say to a car dealer and what TO definitely say.

"Under no circumstances should you start talking about monthly payments," says John Nielson, the Director of Auto Repair / Buying for AAA. "You should just focus on negotiating the purchase price. Once you start talking about monthly payments, everything gets confusing, because suddenly you don't know if that's the payment for 24 months, or 36 months, or how much of that would include interest charges if you're financing the purchase through the dealer."

"Dealers will absolutely try to get you to negotiate monthly payments instead of purchase price, because we make more money if we do it that way," states Bill. "We'll say something like, 'I can get you into this car for $300 a month,' but we won't say how many months that's for. If we can get you to commit to a longer payment structure and we're doing the financing, we're making more money off you in interest payments."

Fundamentally, adffirms Bill, "dealerships like to move money around. So it probably also is not in the buyer's best interest to mention right up front that he or she has a car they want to trade in. Because once we know that, we know you're looking to get as much money as you can out of the trade-in."

"We'll assess the value of the car, and if it's worth, say, $15,000, we'll tell you we'll give you that amount. But once we do that, we'll be pretty hard to budge on the sale price of the car. So in that instance, you'll probably end up paying full MSRP for your new car."

Bill: "These days, with CarMax being so prevalent, consumers might want to consider not trading their car in at all, and just selling it via CarMax. You will almost always get a better price for it if you sell it than what a dealer will give you in trade-in value."

Nielson of AAA "It's OK to mention that you might want to trade your car in, because you don't want to get caught telling them something that isn't true. But just tell the sales rep, 'We'll talk about that later, let's just focus on the price of the new car for now'" Nielson says.

"Anytime you add the trade-in value for your existing car into the negotiation of the price for the new car, the numbers start moving back and forth, and you could end up being confused about how much you're really paying for the new car," says Nielson. "The number one way consumers can go wrong in this scenario is to lose sight of the purchase price of the vehicle, which is the number you are in best position to negotiate."

Nielson is laughing "You probably also shouldn't tell them that you recently had a car repossessed, or that you have bad credit. That kind of information probably won't work in your favor."

"Face it, dealers are trying to make a living," Nielson says. "So if they think you're just out kicking tires and are six months away from making a purchase, they might think you're wasting their time, so you won't get as much attention from them."

Bill affirms "One tactic dealers sometimes take is getting the buyer lost in the numbers, by asking them, 'Where do you want to be? What's your budget?' And then once we know that, we start talking about financing through us, which is a way we make a lot of money on the back end of the deal.

That is why Nielson is advising prospective auto clients, "Do your homework, find out what incentives are out there, and use a payment calculator you can find online so you're educated on how much car you can get into for the price you want to pay."

Bill: "That way, if we know up front you're pre approved to get your financing elsewhere, we're not going to try and hit you with a high interest rate. That's what a lot of dealers will try to do without even knowing what your credit rating is."

"When dealers are negotiating the purchase price, they anticipate making money on the back end, via financing," Bill says. "So if you tell them up front you're paying cash, the dealer knows he has no opportunity to make money off you from financing. So, he might not be as moveable on purchase price if he already knows he isn't going to make any money off you from financing."

"The buyer CAN get a better deal if he does that," says Bill, "because all along, in that scenario, the dealer is maybe knocking something off of the top of the purchase price thinking he's going to get some interest out of you on the financing."

Finally, Bill confirms "It's OK to say you've been to other dealers, because cross-shopping between two dealers is always a good idea. From the dealer standpoint, customer service is what separates one dealership from another dealer who sells the same brand. Some customers are willing to pay more money if they were treated right during the purchase process, because that's a pretty good indicator that you'll also be treated right later on, when you come back to have your car serviced or repaired."