8 Proven Tips for Dealing With Car Salesmen

gorillaThere is certainly an art to dealing with car salesmen. You may think that the trick is to be intimidating, unreasonable, and act crazier than the craziest of car dealers. But negotiating is essentially two people trying to agree on a win/win deal. It need not be overly-dramatic, although some car salesmen may believe otherwise. So take a breath, put on your best "poker face," and check out these eight proven tips for dealing with car salesmen. After reading, you may even look forward to your next visit to a car dealership. (Photo by Peter Kaminski licensed through Creative Commons.)

  1. Hold Your Cards Close to Your Chest

    Like the song says, "You got to know when to hold 'em, know when to fold 'em." Car dealers need to ask you questions about what you're looking to buy, and there's nothing wrong with that. But finding out as much as you can about the car you want to buy before arriving at the dealership will help you to ask the sales person pointed questions and control the dialogue. It's okay to be friendly, but you don't go to a car dealership to make a friend. You go there to buy a car for the lowest price possible. The dealer is there to sell it to you. Simple as that.

  2. Do Your Homework

    Whether you're buying a new or used car, the more you know, especially with regards to what type of car you want and that car's market value, the better your chances of not paying more than you'd like or can afford. Doing your homework gives you added confidence in a situation where car dealers anticipate intimidating potential buyers. Edmunds.com is a great resource for car buyers, providing customer (retail) and dealer (wholesale) prices specific to your locality.

  3. Know how car dealers make a profit

    Car dealers make more money selling extended warranties and dealer add-ons, like detailing and rust-proofing, than they do on the final price of the car. Dealers also profit from trade-ins, depending on what they pay for a car and what they get when it's sold. Also, when negotiating a price for a car, take into account the cost of dealership financing, and the possibility that the dealer is profiting from selling you a loan at a high interest rate.

  4. Know the price of the car you want to buy

    Your advance research should include finding the dealer invoice, manufacturer's suggested retail, and fair purchase price for the specific car you want to buy. The dealer invoice, sometimes referred to as the wholesale price, is the price a dealer pays to a manufacturer for a car. The manufacturer's suggested retail price is just that, the price the car manufacturer recommends for the vehicle. And the fair purchase price is an average of what buyers across the U.S. are actually paying for the car. Consider too the market in your area, taking into account any repercussions from the recent economic downturn, and fine tune your estimate of what you're willing to pay.

car lot

  1. Make an offer below the asking price

    Advice varies when it comes to how low you should go below the dealer's asking price for a car. Most dealers build a 20% gross margin into the price of a car, which means they'll ask you to pay up accordingly. Taking that into consideration, you offering the dealer 15% below the asking price is not unreasonable. Or, you can come up with an offer by increasing the wholesale cost of the car by 1% to 5%. Do the math at home, comparing your numbers with the car's fair purchase price. You can always tell the dealer you want him to make a profit, but they you're not going to let him take you to the cleaners. If he doesn't like your offer, he won't take it, and you can go elsewhere.

  2. Turn down dealer add-ons

    It's never rude to say thanks, but no thanks. When it comes to add-ons, you can probably find someone cheaper in your locality to do detailing or rust-proofing of a newly purchased used or new car. Add-ons such as these are really just there for the dealer to make even more money from the sale. If there are features you do want as add-ons, research and price them online before visiting a dealer, so you can negotiate a fair price for each.

  3. When it comes to financing the purchase, know how much you want to pay each month

    If you need a loan to finance the purchase of your car, you'll want to determine what you can afford to pay month-to-month, even if you end up with a preapproved loan from a bank or other lending institution and as a result, you don't need to negotiate financing with the car dealer. Before you visit a dealership, consider calling ahead to find out what their rates are for financing and compare their numbers with your local bank or credit union.

  4. Be ready to walk away

    When you go in to a dealership to buy a car, be prepared to walk out without buying a car. That may sound strange, but there are other dealers you can go to if you don't feel like you're getting a fair deal. Politely telling a dealer after negotiations that you plan to shop around may actually prompt the dealer to phone you later with a better offer. It's not unheard of. So unless you're attached to one very specific car, be patient, stay flexible, and remember, like the aforementioned song says, "Know when to walk way, and know when to run!"

Leave a comment