Making Sure You Have The Advantage
Throughout this process, you might wonder how you can
triumph in this deal. Who has the advantage - you or the
dealer? The best odds lie with the informed buyer. Here
is a list of advantages that the dealer and the buyer have.
The Dealer's Advantages:
The salesperson is the expert in the field. He knows the
product thoroughly. He understands the economy and the market.
He is familiar with all available options, prices and all
the numerous relevant details.
The salesperson sells on a daily basis. He understands buyers
because he practices these negotiations with customers every
day. He knows what it takes to join a reluctant buyer and
his fantasy car. He knows how to close a transaction. You,
on the other hand, have only one shot to be successful.
You are faced with the choice of spending a major part of
your disposable income. You may not have prepared as well
as you could have. The salesperson can spot all this and
uncover exactly what will make you commit to a new car.
He is naturally attuned to discovering these things, and
his sales training on how to sell you a car more efficiently
will work in his favor.
The salesperson has the personality for high-pressured sales.
A successful salesperson is smooth and aggressive and can
easily force or defuse a confrontation. In many cases, he
can impose his will on a customer. He is drawn to sales
because of his personality. As a rule, he has a much stronger
personality than the general population.
You are on the salesperson's turf. It is much easier to
give in to a salesperson's pushy personality in the showroom.
It's not your home turf.
Chances are, you need a car right away. Only the car dealer
can meet this need. If you wait until the last minute, when
your car breaks down, you will lose much of your bargaining
power in the dealership. It's tricky fighting for a fair
price for your trade-in when it doesn't run, and it's hard
to threaten to leave the showroom if your car won't start.
The dealer is focused and decisive. Even if a customer desperately
needs a new car, the typical customer still has many questions:
Should I buy a car? Can I really afford one? Should I fix
up my old one and make do? The salesperson, however, only
has one thing on his mind: making that sale.
The salesperson has reserve troops. If he can't sell you
a car because of a personality clash, there are other salespeople
who can and will. If he needs more help, he has "closers"
and general managers to convince you, to wear you down,
or to give you more information. He can also tempt you with
flashy brochures displaying the car you want to purchase
- making the buy even more tempting.
Dealers have their own system. The salespeople know the
system like the back of their hands. Their plan moves into
action the second an interested buyer ventures into the
showroom. Their system is designed to extract as much cash
out of the buyer as possible. All the car companies use
the same system.
The salesperson has limited authority. Regardless of what
he says, he cannot be held to anything because he has to
"check with his manager". Your authority, on the other hand,
is binding. No matter what you say, you are held to your
word. This tactic is used extensively by many negotiating
professionals. If you change your mind or back away from
the deal, the dealership may challenge you and might even
call you dishonest. But a salesperson always has his boss
to fall back on, who just won't allow him to give you that
big price break.
The Customer's Advantage
Have heart; as a car buyer, you do have some advantages
as well. These advantages are so strong that dealers have
devised a whole system to counteract it. In order to benefit
from these advantages, you have to grasp how to use them.
You choose the time and place. While the dealer is languishing
in the showroom, you have the freedom to go to any dealer
you want, at any time. You can buy a car when it is convenient
for you. Of course, only you can determine when that time
is. Remember that the typical best time for purchasing a
car is one to two hours before the dealership's closing,
on days near the end of the month, or on a rainy weekend,
when most customers would rather stay home. If you are able
to combine all these factors, you gain a definite competitive
edge. This timing will give you a few hours to test drive
the car you want, inspect the car and have your trade-in
appraised before getting down to serious negotiations. Salespeople,
as everyone else, strive to go home early. If you arrive
in the middle of the day, they have the rest of the afternoon
to quibble with you. The later you keep the sales staff
after hours, the more they want to finish the sale quickly.
Buying a car at the end of a month adds a further advantage.
All dealers are rated by their monthly volume, and at the
end of the month they are more willing to yield on pricing
to get in one more sale. Holidays and any time the economy
is suffering are also times when dealers are anxious to
make a deal and may bend easier under pressure. Purchase
your vehicle when the sellers are tired, distracted or in
need of a sale. They can't pick a time to sell a car, but
you can pick a time to buy a car.
You can walk out. The dealer cannot. As long as you stay
in the showroom and haggle over the purchase, the salesperson
must also stay. He can't walk out and leave you stranded
in the middle of the showroom, but you have the luxury of
dropping the negotiations at any time to try elsewhere.
Threatening leave is a risk he can't match. If the salesperson
is confrontational or pushy, your implied threat of leaving
is often enough to control his conduct and convince him
to make his best bid quickly - before you disappear. You
have the power to initiate the deal and to terminate it.
The salesperson does not.
It's your money. Sales staff is trained to respect the customer
as king. The staff may not like it, but it realizes that
the customer must be satisfied with the deal to spend his
money at the dealership. The salesperson is limited to following
a "script," yet you can speak or act pretty well the way
you want, even if you are indecisive or make an outrageous
offer. Don't be afraid to remind the dealer of this.
Your power grows over time. As the bargaining progresses,
the dealer's position grows weaker as yours grows tougher.
Many think that the longer they sit in the negotiation room,
the weaker their position gets. This is not the case. In
the early stages of the deal, if you walk out, the salesperson
has not wasted much time and effort on you and won't be
too phased by your departure. However, he has invested hours
of effort, he will be more concerned about losing the sale.
His position in the company may be at risk. The finance
employee is in even more of a predicament. After a vehicle
has been sold, if the deal falls through, he must answer
not only to the general manager, but to the salesperson
as well (who was banking on the sale). A car buyer's power
multiplies up to the point these he signs the contract.
As soon as he signs, his prowess immediately decreases.
Therefore, the longer you keep a salesperson tied up in
negotiations, the better deal you can drive, since he has
invested more time in selling the vehicle. So take your
time.
You may reach a point where the negotiations reach a deadlock,
in which you and the salesperson cannot agree. You can deliberately
create a deadlock and resolve it later if you wish. You
can give in for a later concession, or you can refuse to
concede and walk out on the deal. Don't worry if you can't
agree on every point. It is not a sign of weakness or lack
of skill on your part, but the opposite. Deadlocks are especially
useful if the dealer has classified you as a serious prospect.
In that case, he will bend over backward to reach an agreement
and break the deadlock. Remember that your negotiating power
plummets once you sign. Never worry about losing control
as the negotiations proceed.
To demonstrate this concept, consider how a salesperson
would explain to his manager if he claimed two hours of
overtime to close a sale that fell through at the last minute.
Even worse, what would the finance and insurance (F&I) employee
say to the salesperson and manager if he lost the sale after
everyone else stayed two hours after closing?
Even though the dealership appears to have a huge edge,
we see that on closer inspection, that is not true. Remember
that a well-informed consumer carries the advantage.