No one enjoys the sales process, but these tips can help you make it through
When was the last time you got excited about talking to a salesperson? If you answered "never," you're not alone. Few people enjoy the sales process, and many feel compelled to buy more than they need when pressured by a salesperson looking for a higher commission.
But take heart! There are steps you can take that will make the sales process as short as it can possibly be.
- Get a Blank Loan Check or Offer from a Credit Union
- Pick Out a Car and Negotiate
One way to shorten the amount of time you have to spend with salespeople is to either apply for a blank loan check online or get one or more offers from local credit unions before you start negotiations. Most of the time, a loan from a credit union will have a lower rate with better terms and lower fees that one from a bank. Regardless of the financial institution, however, you will have a significant advantage if you go into negotiations with your financing already in-hand. It is possible that you could even negotiate a lower interest rate with the dealer over your blank check.
Dealerships have a lot of leeway when it comes to loans. They can assign just about any rate they want. To make money, they mark up interest rates. Remember: one reason why they ask you what payment you're hoping for is because they want to know what they can get from you, not what you can afford. When a dealer offers you a rate, the dealer isn't getting instant approval. Instead, they'll try over the coming weeks to sell that loan to a bank who will pay the most for it. The more interest you are willing to pay, the more banks are willing to pay the dealer to buy your loan. There are some cases where you might have a rate so low that the dealer has to give it away to a bank without making money, but this is rare.
Don't get distracted. You're looking for the lowest interest rate and lowest price possible, not a specific payment amount. That's not to say you should completely ignore the total monthly payment, particularly if you can't afford it, but don't get taken in by the game. It's perfectly fine to say "I haven't decided yet" or "Let's see what you can offer." Don't ever give a maximum or minimum price.
It's a good idea to figure out exactly what car you want—at least the make and model—before you go to a dealership. Once you know what you're looking for, e-mail all the dealerships in your area. Internet sales departments know you're shopping around and they know they have competition. Tell them the specific options you want. Ask for their "out-the-door price" or "turn-key price," which is the total amount you're expected to pay to start the new car and drive off with no other fees. They can change the figures however they want to reach that price, but that number must stay the same when you sign the paperwork. If it changes, walk away.
Next, find the car and take it for a test drive. Don't let a salesperson hurry you along; this is a tactic designed to keep you excited so you might make unrealistic decisions. This is also a good time for anyone you brought with you to step in and give you their honest opinion about the car, even if it's negative. This will help bring you back to reality and clear your head.
When it comes time to negotiate, there are several things to keep in mind if you didn't get a final price from the Internet Sales Department. So-called "doc fees," fees dealers charge for filling out paperwork and offset any losses they experience in negotiations. This fee is usually included already in the price of the car, but if it's more than $100, keep negotiating until it falls.
In addition, you're going to be offered several extra optional features in a last-ditch effort to get you to shell out more money. Dealers will offer you everything from extended warranties (which you shouldn't take) to rust proofing (generally unnecessary as every car already has it to some degree) to interior protectant (which is useless in carpet form and unnecessary in seats, which come protected from the manufacturer). VIN etching is also unnecessary, since it won't actually prevent your car from being stolen, get it back after a theft, or give you any insurance discounts. When trying to save money, decline these kinds of extras.
The sales process is a necessary evil when you want to buy a new car. Fortunately, you can make sure you don't have to endure it any longer than necessary by following these tips.