- To navigate the potential “pitfalls” of buying a car effectively, it is important to have the proper mindset. First, it is rare for a customer to deploy a negotiation strategy that salespeople haven’t already seen. For example, when a customer says, “If the price isn’t good enough…I will leave,” one must keep in mind that the salesperson experiences this strategy on a daily basis. They know exactly how to be successful when a customer acts this way and they actually prefer that type of combative negotiation.
The best deals are made by customers who know exactly how to navigate the dealership’s system and are equipped with accurate pricing, financing and leasing information. The best deals are made by customers who know exactly how to navigate the dealership’s system... Keep in mind that informed customers can make things difficult for themselves if they act like experts or “know-it-alls.” It is never a good idea to “tip your hand” and start quoting the information that is outlined in this guide until the proper time.
For instance, customers should not walk into a dealership and say “Who wants an Up? I’m only going to pay a Nickel over net-cost after Hold-Back. And tell the F&I guy that I’m not buying any Mop-and-Glow.”
It is counterproductive to go into someone’s workplace and act as if you know everything about their business practices. Instead, customers should use this information to control the process secretly. The ideal mentality is to work within the dealer’s sales system and employ its own methods to your advantage. To navigate the system successfully, you must first familiarize yourself with the dealer’s “7 steps to a sale.”
The dealer will want to negotiate from its MSRP or “sticker price” and show a discount from this price. You must base your offer on the net dealer cost. For example, if the buyer has established the net dealer cost after hold-back to be $23,000, he could offer a profit over that amount. It is very important to explain to the dealer how you calculated your offer. Do not make an offer without this justification. The dealer will see this as a jumping-off point rather than an actual calculation.
Again, one of the biggest mistakes a customer can make is to adopt a, “Who blinks first” attitude. Do not say, “I will walk out of the dealership if you don’t sell the car for my price.” This strategy is used so widely by the majority of customers that car dealers have become very skilled at handling this type of negotiation.
When a customer plays hardball and makes a low offer without any accurate cost justifications, the salesman’s strategy will be to go back and forth and hopefully make the customer “feel” like he is receiving a good deal. Even if they don’t make a deal, it is a massive waste of time for the customer. On the other hand, when a customer makes an offer based on actual cost, the salesman and dealership must negotiate from an amount over the cost.
For example, if a customer offers $100 over dealer cost, the dealer usually will “Pencil” a counter-offer relative to the dealer’s cost. They might counter that they won’t sell it for “$100 over;” however they will sell it for “$500 over.” As the buyer has completed the calculations before he arrived to close the deal, he knows exactly what the dealer’s net cost is on the vehicle he intends to purchase.
The best way to present your offer to the salesman is to work within his system. When customers try to divert the salesman from what his sales-managers have instructed him to do, it could prolong the process and many times make the customer’s offer unclear. In other words, let him perform his “Foursquare Write-Up,” but give him clear mathematical reasons for your pricing and payments. If he uses a “Cardone Method ” or starts the negotiations by providing the customer with an offer from the “Desk,” you should wait until you receive the offer and then supply the salesman with a counter-offer. However, nine times out of ten, the negotiations will begin with the “foursquare.”