Buying a car is stressful. Everyone knows that. Most people do not like to negotiate or haggle. Also, other than your home, for most people this is the biggest expense that you have. And you probably have to do it again every few years. So I want to give you the tools to be successful when buying a car. So here are 5 things NOT to say to a car salesman.
“I’m going to pay cash.” or “I have financing elsewhere.”
These are two big no-nos when buying a car. Most car dealers inflate the interest rate that you are going to pay on your car loan.
For example, if you go to your bank or credit union for a car loan, they might give you a 6% interest rate. If you have the car dealership do the financing, they will submit your information to several different financial institutions. One of those institutions might also come back with a 6% interest rate. However, the dealership will charge you 7% and they will keep the “spread” of 1%.
A bank might even come back with an even lower interest rate of 5% but the dealership will likely charge you 6% and still keep the difference of 1%.
If you tell the salesman that you are going to pay cash or that you already have financing, they will be less likely to negotiate the price down because they will be getting less money overall from you.
If you do plan on paying cash or you have your financing already set up elsewhere, that is completely fine. Just don’t tell the salesman that until you negotiate the out-the-door price.
“I love this car.”
Next on the list of things to not say to a car salesman is letting on how much you like the car.
When you are looking at a car, test driving it, and talking about it, with a salesman you want to be as ambiguous as possible about your feelings for the car.
Regardless of whether you love the car or hate it, keep that to yourself. ESPECIALLY if you love it.
If you tell the salesman that you love the car, they will have dollar signs flash in front of their eyes because they know that there is a really great probability that you will buy. And if they know that you will buy, you have lost all of your negotiating power.
This is also true for the make and model of the car. If you are looking for a specific make and model, don’t let them know that.
For example, if you are looking for a Dodge Ram truck, don’t let the salesman know that that is the only make and model that you want. Tell them that you need to see a Ford F-150, Chevy Silverado, Toyota Tundra, etc. before you can make your decision.
And even if your heart is set on a Dodge Ram, it would probably be beneficial for you to test drive the other makes and models. This is a really large expense and you want to make sure that you do your due diligence.
“I want my payment to be _____.”
This statement to not say to a car salesman might be the biggest one.
Vehicles are extremely expensive. Most people cannot afford to pay cash for them.So naturally, the payment is a really important part of the car buying process.
And car salesmen know this.
Most people will just blurt out a number when the car salesman asks them what they want their payment to be.
They’ll say things like:
- I want my payment to be around $500-550.
- The maximum payment I want is $700.
- I don’t want my payment to be more than it is now, which is $475.
DON’T DO THIS!
Car dealerships are really good at packing profit in. If you tell the that you want your payment to be, they will do whatever they can to get you there. And that often means stretching out the loan term to get you in the payment range or inflating the price altogether.
This will cost you A LOT of money in the long run.
Yes, they might be able to get your payment in a particular range, but it will cost you a LOT of interest.
You should not negotiate the payment size of the car. You should always be focused on the out-the-door price.
“I have a trade in.”
Another thing to not say to a car salesman is whether you have or do not have a trade in.
Yes, you will have to disclose this to them sometime in the process. But wait until you have negotiated the out-the-door price.
This is another way that car dealerships bake in profit for themselves. If you tell the salesman early in the process that you have a trade in they will use that as a negotiating tactic.
They will likely either offer you less money for your trade in than it is worth or they will be less likely to negotiate other aspects of the vehicle.
If you want to trade your vehicle in, that is totally cool! Just make sure to hold that card close to your chest until you have negotiated the out-the-door price.
“I really need this car.”
At the end of the day, you don’t ever want to seem desperate with a salesman of any type.
If you tell the salesman that your car was just totaled and you need to get one today or something similar, they know that they have you over a barrel.
Your biggest piece of leverage that you have in the car buying process is your ability to leave and go elsewhere. If you give that away, the dealership can essentially charge you whatever they want and they will likely be unwilling to do any negotiating.
Even if you do need the car. Don’t let them know. If they don’t give you the deal that you want, get an Uber and go to another dealership.
Final Thoughts
There are really two things you want to do when buying a car.
- Negotiate the out-the-door price and nothing else.
- Give as little information/leverage to the car salesman as possible.
There are several other things to not say to a car salesman but these are the most important in my opinion.
You can do this!
I am here for you!
Until next time!
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