A brief piece of instructive, creative nonfiction, detailing how I got a great deal on this car in 3 hours despite no preparation or research.
It was already Friday afternoon. Late Friday afternoon, and since work started at 8 AM on Monday, I had approximately 22 business hours left to buy my first car.
Time is the one thing your (newly) local car salesman doesn’t want you to have. Debt, a record, a love for the color red? No problem, anything but time. In a business where competition is high, customer loyalty is almost nonexistent, and price is merely a cloudy impression, comparison shopping is the devil. With time, you can pit companies against each other, like this (scroll down to the section “Negotiate mercilessly with dealers”). But to win this game, you usually need time. I had none.
Time wasn’t the only thing I didn’t have. Experience and credit were nonexistant (thanks to a small college town and a household where plastic is a class 4 hazardous material, respectively). My mental state was quite degraded, a result of having just driven 11 hours through the middle of the night, including a stop at a surprisingly disappointing Denny’s near Busch Gardens.
All I thought I had was that I’d read an article about an author who’d gone undercover as a used car salesman. As I thought back to that computer screen text, the answers formed quickly in my head. My mind wasn’t up to doing the textbook plan of action (and as I said, time was not on my side), but I was just punchy enough to try something a little more unconventional. It was time for a little magic.
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The two biggest weapons a car salesman has are intimidation and deception.
Examples of Intimidation
- Tall men with deep vows and slicked back golden hair.
- Back-room financial discussions with closed doors and no windows.
- Drawn out processes increasing your time investment.
- Speech after speech about one-time offers and deals that end when you leave the room.
- Leaving you alone in the room after you’ve rejected an offer.
Examples of Deception
- Any time the words “special deal” are mentioned.
- Changing finance details between the sales floor and the finance room.
- Fake computer displays that “notify” you that no bank will provide you credit.
- The four-square sales method (from the aforementioned article).
- The “good cop/bad cop” routine.
My only chance was to turn the tables, with a little intimidation and deception of my own. The result? I’m the proud owner of a brand new 2009 Toyota Yaris, negotiated over just 3 hours at $2500 under asking price with an 8.9% interest rate. All this for someone with zero credit and $40,000 in student loan debt.
You can do it too.
Treat the sales room like a deposition.
Anything you say can aid will be used against you during the sale. Starting work on Monday? Oh, you better seal a deal tonight, even if it is a high interest, right? Have some medical bills you’re behind on? Hmm, we’ll have to increase your costs; taking you on is a credit risk! But we’ll sell you a car anyway…
Treat every word with care; volunteer no extraneous information. If you have something incriminating, don’t be afraid to hide it (when legal). Obviously, you can’t lie about your credit score. You can lie about how long you have to make your decision, or how much your great aunt is planning to give you to help out with the down payment. You absolutely can lie about how interested you are in a particular vehicle. Counter deception with deception.
Role Reversal
In the standard interaction, you, the buyer need or very much want a new car, and the dealership is trying to get you to buy one for the highest price possible. They have enormous leverage because you have to buy and they’ll (maybe not in today’s economy) be quite fine if they don’t sell.
While it’s not possible to be in complete control, you can reverse the roles to give you a great deal (sic) more power. To do this, you must convince the dealer that a new car is not a necessity. Perhaps you have a perfectly working (albeit old) car already. Perhaps you found a great used car at that Carmax down the street. Perhaps that’s just going to be your story. Make it clear you’ll buy now only if it’s worth your while; nothing bad will happen if you don’t.
Suddenly, the dealership is lowering the price and revealing “special” programs to create a sale where one might not have previously existed. Even better, they know that every dealership you visit is doing the same thing. That’s a position of advantage, of leverage.
I did it with my own good cop/bad cop play. My parents were in Charleston with me to help me move in, so instead of having the standard interaction develop in which the kid falls in love with a flashy car while the parents try to talk him out of it, we teamed up for a different appearance.
Always be leaving.
We all wanted the Yaris. There can be no denying that. But three eager beavers are more dangerous than one. Thus, we agreed, my parents would be excited about the Yaris, pushing me to buy, while I remained the inexplicable 21-year-old stick in the mud who would be content with that boring, reliable used car (and waffles for breakfast everyday).
The saying in sales is “Always Be Closing.” Car dealers do it well; they are always pushing you to accept the current deal. Every step of negotiation you dismiss is another pay cut for them. The equivalent statement for prospective car buyers is “always be leaving.” Treat every offer as unacceptable, irritating.
My parents helped by letting me be unimpressed to a level that would have forced any salesman to give up on my, had I been alone. If you keep claiming that you’re going to leave, eventually they’re going to agree that it’s a good idea. The power of a third party (a roommate, a significant other, a parent, an attorney) keeping you in the game for the dealer is surprisingly powerful.
A Rabbit in the Back Room
As Denny Crane of Boston Legal would say, the secret to life is to always be able to pull a rabbit out of your hat.
Everything I’d done could have fallen apart if I hadn’t had one last trick up my sleeve, and this is a sure winner. A final rabbit; the last move, the winning move. I had gotten what I wanted in the sales room; $2500 under asking price and at 8.9% interest loan. Unfortunately, every deal you get on the floor can be whisked away in the financial dungeon, if you let it.
The salesman will never blame the dealership. Likely candidates are banks (who “for some reason” can’t approve that level of credit), government and laws, or arcane corporate rules. Or you, but only if the guy is a complete rookie. Regardless, Mr. Finance is giving the best deal his little heart can find, even if its $40 more per month, for 3 more months than you were told!
Never, ever, believe what he says is preventing you from getting the deal the sales person told you. They’ve already crunched the numbers; they can’t be uncrunched. Mr. Finance is trained to use his perceived authenticity and the mystery of mathematics to get you to accept a worse deal than what the dealer is willing to give you.
Now, the saleswoman on the floor quoted me $255 at 8.9% interest. Mr. Finance’s opener? $296 at 10%. Here comes Peter Cottontail…
It turns out that there are only 4 variables that determine the total cost of a vehicle; the principal (that pretty (or scary) number on the sticker), interest rate, down payment, and the length of contract/number of payments. If you know a bit of algebra/calculus, you can come up with a formula for how much you’ll pay over time (and in the process, your monthly payment).
You should have seen the look on Mr. Finance’s face when I wrote down that formula right in front of him. Then I calculated exactly how much he was trying to overcharge me. How’s that for an intimidating little rabbit?
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By the way, here is that formula, for your personal use (and hopeful intimidation):
C = (P-D)(1+R/12)^(12T)
To use this formula, plug in the principal for P, the down payment for D, the rate for R, and the number of years in the contract for T. Don’t worry about knowing the math behind it (though if you’re interested, feel free to ask), it’s all a show anyway.
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He had no response. It appeared that I knew more about financing than he did (deception at its finest). How could he compete with that? Thirty minutes, and little resistance later, I had my first car.
Glad to see my math degree start paying off in the real world.
