Why do Car Dealers Lie? The Games Dealers Play
Have you ever asked one of these questions?
" Why does the salesperson keep getting up to talk to the manager?"
"What are they laughing about at the sales manager's desk?"
"Why won't they show me every car on the lot?"
"Why do they quote the payment instead of the price?"
"Why did they offer me so little for my trade?
"Why doesn't the Salesperson have the authority to make a deal? Why is the deal subject to the Manager's signature?"
"When my negotiation with the Salesperson has reached an impasse, why does the Manager come over?"
"Why do I have to talk to so many people?"
"Why does it take so long to buy a vehicle? I've been in the dealership for 2 hours."
And the list goes on ...
Typically, these are fair questions, since the only way to understand is to ask. Unfortunately most advice articles use the consumer's lack of knowledge to instill fear. Typically, an article written about the auto dealer's behavior is written by either: (1) a person without auto experience, or (2) a disgruntled and immoral car salesmen who uses their past bad-behavior in an attempt to redeem themselves by confessing to sins that only foster additional mistrust and disdain of the car dealer.
The solution to perceived "tricks," "games," bad information, and mistrust, is information. An educated consumer can enjoy the pleasure of buying a car. Below are ten common questions and rationale behind the dealer's behavior.
1. "Why do they want me to come to the dealership? Why can't they just tell me everything over the phone?"
There are 3 reasons you should go to the dealership. First, you must drive the vehicle to make sure it's right for you. I would never recommend buying a vehicle without driving it. A car is not a shirt you buy because it looks good on the manikin. And if you are looking at a used vehicle, it is a one of a kind. There are no two alike. You must see its unique condition, evaluate how it drives, and even consider how it appeals to your senses: touch, feel, sight, even smell. Second, if you have a trade, it must be appraised. Your trade is a used car which the dealer is considering for purchase. He needs to see it to buy it; just as you would need to see a used car as well. Third, to discuss any financing issues. It's easier and actually quicker to sit down and discuss your financing needs in person so there are no misunderstandings as to the terms of the transaction.
That is not to say that you can't call around and shop online. The phone and internet are necessary tools in your car buying toolbox. But understand that they should, in most cases, lay the foundation and not be a substitute for the actual sale. You should be able to obtain most basic information on your credit, the vehicle's options, pricing, incentives and rebates, and trade-in guide valuations before ever going to the dealership. However, the web and phone should not be substituted for a test drive, a vehicle appraisal, or the final negotiation of all terms.
2. "Why must I share my personal information with the Salesperson? I just want to buy a car."
At first, expect to share your name, address, and phone number when shopping for a vehicle. For those consumers who want to remain anonymous, please remember, that you are not buying a box of Cheerios. Buying and selling a vehicle is a serious transaction. Salespeople want to deal with serious buyers. Dealers want to avoid scams (yes people scam and trick dealers) and comply with the law. And it's a telling sign of caution to a dealer and Salesperson if you won't share your name or address. Ask yourself, if you were the Salesperson, would you share your time with someone who will not share their name? Wouldn't it be easier to find another customer who will?
As you continue down the path of the purchase, you will be asked for more information. The Dealership requires your personal information under the law. After 9-11, a federal anti-terrorism law was passed requiring all businesses to check the Specially Designated Nationals List to ensure that you are not a Specially Designated Person - meaning a terrorist. A business is prohibited by law from doing business with you if you are on the list. In addition, the dealer may require your personal information to satisfy the Patriot Act, as well as the IRS Cash Reporting Rules. Secondly, if you are financing or leasing the vehicle you will need to fill out a credit application. And finally, you will need to sign various documents which contain your personal information attached to it - including the vehicle registration and title work, the warranty information, etc. Bottom line, the Salesperson is only asking what he/she needs to complete the sale. They are more afraid of offending you and losing the sale than they are of asking for too much.
3. "Why is the Salesperson asking me how much payment I can afford? And whether I am financing the vehicle?"
Two reasons. First, the Salesperson's primary job is to find the right vehicle for you. Most consumers think in terms of monthly payment not price. If you are looking for a payment of $300 a month, the Salesperson knows that you cannot afford a $30,000 vehicle; or he has to demonstrate basic math. CAUTION. You should always negotiate price (when buying or financing). An educated consumer will have used a finance calculator to figure out their monthly payment before they shop so they know the amount of money they can borrow for the desired payment. There should never be an excuse that you overpaid because you shopped by payment. As a quick rule of thumb, if you have good credit, you will pay $20 for every $1,000 borrowed at 7% for 60 months. So $10,000 is $200 a month. $20,000 is $400. And so on. The Salesperson is simply trying to set expectations and find the vehicle that fits your budget.
Secondly, the Salesperson will offer different vehicles that have low interest rate incentives as a means to help sell a vehicle. If you fail to disclose that you are financing, you may fail to learn about financing incentives. And just for the record, not all incentives are published. Lenders will offer coupons to dealers to help lower interest rates. Dealers may earn additional money based on the volume of transactions. An honest discussion is the best way to save money and make your best deal.
4. "Why does the Salesperson want to know about the car I am currently driving? Who cares? I want to get a new vehicle."
A car deal involves 3 transactions: the car you are buying, the car you may be selling to the dealer (the trade), and the financing. The Salesperson wants to know about your car for two reasons. First, is it going to be traded in? If so, he will need to appraise it. Then he will have to determine how your vehicle will affect the transaction. For instance, do you own it outright? If so, the trade is treated like cash. If you owe money on your car, the question becomes whether you have any equity; or whether you have "negative equity" and how to deal with that. Additionally, the Salesperson will want to learn about you and your needs. How long do you keep a car, how many miles do you drive, whether you maintain your vehicle, what you need the next vehicle for, your likes with your current vehicle and your dislikes. All important information in helping you buy your next vehicle.
5. "Why does the Salesperson have to keep getting up to talk to the Sales Manager?"
This one frustrates consumers to no end. And dealerships are insensitive to the effect it has on the consumer. The reason the Salesperson is getting up is that you have asked for a price that is below his authority to accept. If you agree to pay the sticker price, the Salesperson does not have to get up and find the Manager. But, if you are negotiating like a merchant in a bazaar, then the likelihood is high that the Salesperson will have to argue your case to his Manager.
6. "What are the Salespeople and Sales Manager's talking about at the Sales desk?"
Forget the movie Fargo. They are not discussing the weather or last night's sporting event. Typically, a Sales Manager is responsible for 6-8 Salespeople. His desk will be active, especially on a busy sales day like a Saturday. The Salesperson is trying to convince the Manager to accept your deal or something close to it; and the Manager is trying to convince the Salesperson to ask for more money. The Salesperson has the need to sell this one car, for he/she is a commission salesperson and without the sale, they make no money. The Manager, on the other hand, has less skin-in-the-game and is less committed to any one individual transaction. So the Salesperson has their own vested interest at stake in negotiating a deal which the Manager will accept.
7. "Why did the Salesperson go get the Manager to talk to me? Why didn't he just bring him over in the beginning?"
If either, you are unrealistic with your offer or you and the Salesperson are at an impasse (the Salesperson feels "stuck" - they believe they cannot convince you to change your position and they risk losing your sale) the Salesperson will then ask his Manager to speak with you. This will happen after: (1) you have picked a vehicle to buy; (2) you have completed a test drive; (3) you are negotiating the price; (4) the salesperson has visited the Manager's desk on more than one occasion; and (5) you are almost ready to walk out. This is a last ditch effort to save your transaction. The Manager will attempt to explain his position and better understand yours. Bottom line, if you are at this point in the negotiation and you end up making a deal, it's probably for a lower price than most other similar vehicles.
8. "Why do I have to talk with a Finance Manager after I bought the vehicle? Why can't the Salesperson arrange the financing?"
The Salesperson finds the right vehicle and should be an expert in product knowledge. A Finance Manager has the responsibility of arranging financing for all of the dealerships consumers. He/she will be an expert in the different financing products. The reason to split the tasks is efficiency. The Finance department is much more complex and requires a different skill set than selling an automobile. Each person plays an important and separate roll in the dealership. Just as a mechanic fixes the vehicle and a Service Advisor will write up your repair order and work as a liaison between you and the servicing of your automobile.
9. "I hear that a 'spot delivery' is a very bad thing. Why does the dealer do it?"
A 'spot delivery' means that you have taken delivery before the dealer has sold your finance contract to a lender. Both the dealer and the consumer are taking a risk. Typically, a car transaction is "subject to" the dealer arranging financing, and selling that contract to a lender. It can take up to 10 days for that process to be finalized. In an effort to better serve the needs of the consumer, a dealer will risk delivering their vehicle to a consumer upon the belief that they will be able to sell the loan. In the event they cannot sell the loan, the consumer would have to return the vehicle or agree to new terms which could be sold. That being said, the risk is proportional to the severity of the credit. If you have bad credit, do not take delivery until the financing terms have been completed. Yes; postpone your need for instant gratification until the transaction is complete. However, if you have good credit, there is virtually no risk; and the dealer is delivering his vehicle to you before your transaction is completed. The dealer is providing a faster transaction to avoid delaying the delivery.
10. "Why does it take so long? I've been at the dealership for 2 hours."
Buying a car will take 2-4 hours. Set your expectations. It will take time to test drive, negotiate, arrange financing, clean the vehicle you are buying, and properly deliver it to you. If you really think about it, it is very fast. Usually the time is used in part by the consumer's decision making (meaning you need time to make decisions); and the functional side of preparing the paperwork and vehicle. The dealer does not need time to decide whether to sell the vehicle. Nor do they need time to decide whether the price is acceptable to them. Their parts of the transaction are a function of human speed. How long to print paperwork. How long to detail a vehicle. Serving other consumers who arrived before you. When you are ready, plan on enjoying the process and taking the time to learn about the vehicle you'll likely drive for the next 3-5 years. Remember, you are in control. You can cut the process off at any time; you can make decisions faster and speed up the process; and you can send the dealer information or arrange your financing beforehand if you want to accelerate the transaction time.
If you have a question, add it to the comments and I'll respond. If you have comment or a thought - let me know. Add your comments.
