ALT-1 What to know before you Walk into a Dealership
When making a major purchase such as that of a car, it’s not a good idea to walk into a dealership without knowing what to expect. In fact, this is a very bad idea. If a potential buyer appears to be totally oblivious as to how sales personnel and dealerships as a whole operate, that person will figuratively become a sitting duck in a shooting gallery. In other words, he or she will either end up spending far more money than originally planned, buying a vehicle that is worth far less than its asking price, or driving away in a car loaded with features that they will never use.Thus, there are many things a conscientious car shopper should know before ever setting foot on a lot or in a showroom. This applies both to those shopping for brand new cars as well as used cars.Determine what fits your needsThis is the first and perhaps the most important step to take. If you are single, that 2-door coupe may be adequate, but what if you have a family? A midsize or large sedan will make more practical sense. Do you haul lots of luggage on trips? Do you spend much of the time moving large amounts of cargo from place to place? Maybe a van or sport-utility vehicle would be more suitable. Once you’ve decided just what type of vehicle fits your personal needs, it’s time to take the next step.Check pricesBefore ever going to a dealership, learn what the typical retail selling price is for the car you have in mind. If you plan on buying a new car, check the Sunday paper and find out what dealerships are charging. Look at auto price guides. These can be found in any reputable bookstore. You can also do Internet research. If you’re interested in a used car, the Kelley Blue Book serves as a good starting point, but also check prices of comparable models of the same year and condition in print ads and on used car-selling websites. Autotrader.com and Carsoup.com are two excellent places to seek that used car. If you’re the adventurous type, visit various dealerships when they are closed and take notes.Factory invoice or wholesale valueIn the perfect world, the“factory invoice”many dealerships refer to would be just as the name implies: the amount that the dealership paid for the car in question. But it doesn’t necessarily work that way. For instance, an auto-buying guide may state that the invoice price of Car A that retails for $24,000 is $22,000. However, dealerships; particularly the big ones, will buy several cars of the same model in bulk, so when this happens, they could have bought 20 units of Car A at a further discounted rate than what that auto guide may quote. Thus, what could happen is that the customer may think he or she got a great deal by only paying $1.00 “over invoice,” but in reality, the dealership still might have made thousands of dollars in profit.In regard to used car inventories, the products typically arrive by one of two ways: they have either been traded in or purchased at dealer auctions. While one can research a used car’s wholesale value, there is no way to tell just how much a dealer actually paid for a specific car. Since profit margins are usually much higher for used cars, chances are good that the dealership acquired the vehicle in question for far less than what you may believe.Shopping dayNow you know what you’re looking for. You’ll likely never know what the car you’re interested in actually cost the dealer, but you should have a good idea of its average retail cost nonetheless. The split second a salesperson sees you pulling into the lot, he or she will approach you, make introductions, and ask what you are looking for. Once your names have mutually been exchanged, the salesperson will ask where you work. What he/she is doing here is trying to gauge how much money you make.
In fact, if you are a young twentysomething and show up in ripped jeans and a T-shirt , a perception has already been made. It will be assumed that there is no way you could afford a new car, so you’ll be shown used cars, and well-used ones at that. Conversely, if you are older and show up in neat clothing and a decent car, it will be assumed that you make the big bucks, and as a result, the salesperson will try his or her best to lure you into a more expensive car.If you have a trade in mind, this should ideally not be discussed until a price has been negotiated on the new car. Mentioning a trade earlier will allow the sales consultant to perform mental math in an effort to make as much profit as possible. They are trained to do this, and are quite competent when it comes to crunching numbers. Of course, he /she may ask you point blank if you intend to trade in that older vehicle.If an equitable price has been agreed upon, you’ll now experience the waiting game. You’ll be told to relax in the lounge or the salesperson’s office with a cup of coffee or soda while he/she “checks with their sales manager.” This will take about ten minutes or so. At last, the salesperson will return and give you the “good news” that the deal has been accepted.The finance managerFinally, the last step involves a visit to the finance manager. This person will check banks and other lending institutions for financing rates and terms. Even if you intend to pay cash for the vehicle right on the spot, the finance manager will try like mad to sell extras, which will all raise that final cost. Examples of such “extras” include things like rust protection, paint sealants (a fancy name for a wax job), and interior protection ( a $6.00 can of Scotch Guard at Wal Mart will do the same thing), all for the low, low package price of just $500!Truth be told, rust protection can be a good feature if you live where salt is used on winter roads. However, most cars will not rust as badly as they used to, either. Some manufacturers like Volkswagen have a 12-year warranty against corrosion. It also must be remembered that rust protection warranties do not apply if it is determined to be “surface rust,” that is; rust that forms from damage by accidents or rock chips. Rust that originates from the inside out is the only type of corrosion that is covered. Moreover, it is quite difficult to convince a dealership that this is indeed the type of rust your car has. The bottom line? No matter how careful a driver you may be, rock chips in particular are inevitable, so it may be in your best interests to pass on the rust protection and simply have a body shop fix these future mishaps.
The finance manager will also try to sell credit life insurance, which is all but worthless when considering that people who bother to replace their cars generally don’t plan on dying before the loan obligation is met!The biggest expense that finance manager will try to add is an extended warranty, even on used cars. Such extensions beyond the standard factory warranty typically cost hundreds if not a few thousand dollars. If you were to buy a car with questionable reliability, this may prove to be advantageous, but in the overwhelming majority of cases, you would never recoup the cost of such an extended warranty. One must remember that wear and tear items are never covered by these warranties, anyway. So basically, the only way such in investment would be recovered would be if your engine or transmission bought the farm. Even then, you’d have to prove that it wasn’t caused by your negligence.Also, why would you buy a car known to be unreliable in the first place? Most importantly, look out for the shady finance people who try to catch unwary customers off guard by sneaking these aforementioned “extras” costs into that monthly payment!Having an understanding of how car dealerships work before ever setting foot onto that lot will help greatly in preparing the potential car buyer for just what to expect once that salesperson sees you pulling in.
