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Car-Buying Scenario:

What follows is a realistic dipiction of a fictional couple going through the trails and tribulations of buying a car from a dealership. Observe in step-by-step detail how Mr. & Mrs. White strip the salespeople of their power from the time they walk onto the lot until the final signature.

NEGOTIATION SCENARIOS (from Chapter 7: Dealer Negotiations)

If you ever wanted to be an actor, here is your chance for a starring role. The part you will be playing in the first act is that of Mr. Uninformed Buyer. However, by the second act your part will have evolved into a well-informed, shrewd negotiator. How much does this part pay, you ask? Anywhere from the low hundreds to well over a thousand dollars for one show. It all depends upon your experience and how well you can role play. The part involves thorough mental preparation, the ability to perform in front of a small live audience, and plenty of ad-libbing. Knowledge of the auto industry is helpful, but not required.

SCENARIO #2 (from Chapter 7: Dealer Negotiations)

Paul and Lisa White are prepared to buy a car today. They know the exact model and features they want, have been pre-approved for a low interest loan with their credit union, and know the current value of their trade-in. They also have $2,000 in their checking account to use toward a down payment.

Two nights ago they shopped around and found just the used car they were looking for, but it was priced $7,995, which is about $1,000 higher than they wanted to spend. After a test drive, they left the dealership with a salesman's offer of $300 below the listed price. Lisa scribbled $7,695 on the salesman's business card.

Earlier today, Paul went back to the dealership and drove the car to his mechanic for inspection. Although the car needs a front-end alignment and brakes, everything checked out fine. Paul dropped the car off at the dealer late in the afternoon and told the salesman he would get some dinner and be back with his wife later. Before he left, Paul found out how late they were open so they could plan on arriving about an hour and a half before they close.

The Whites know they are looking between two to three hours of negotiating with the sales staff. By getting there 90 minutes before closing, they plan to wear down and tire the salesman the same way salesmen do with most of their customers.

Paul and Lisa took a refreshing shower, ate a light dinner, and stopped off at a coffee house for a cappuccino and to plot their strategy. Not only are they are refreshed, they are mentally prepared as well. Their salesman, however, is near the end of a long day and is likely tired from a full day of sales babble.

After carefully looking the car over again and taking it for another test drive, they seemed concerned about the price. Tom, their salesman, reads them.

"Have you already sought outside financing?" Tom inquires.
Paul and Lisa are good actors and exchange an unsure look.
"Well, no," Lisa says.
"We were hoping that you could take care of it for us. You do offer financing, don't you?" Paul asks, playing dumb.
"We sure do. The best you'll find anywhere." Tom smiles, thinking about the extra commission he will make from their inflated rate. "Why don't we step inside and you can fill out a loan application. It will only take a few minutes."
Tom leads them into his office and hands them the loan app to fill out.
"I tell you what. While we are doing this why don't you have your guys check out our car." Paul tosses Tom the keys and points to his car through the window. "It's that baby right over there. Take her for a test drive if you like."
"Well, our manager needs to have you present when he checks over your vehicle," Tom says. Paul looks at him confused.
"That's okay, I trust you guys," Paul says, fibbing through his teeth.
"It's in case he has any questions," Tom adds.
"Don't worry about it," Paul insists. "If he has any questions he can ask me when he's through."
"Do you have your title with you?" Tom asks.
"Oh, yes. It should be in the glove box with the registration," Lisa says.

Lisa actually has their car's title and registration in her purse along with a spare set of keys just in case they try and pull the misplaced-keys-tactic.
Paul and Lisa finish with their loan app, and Tom strolls back in shortly after.

"So what did they think of our car?" Paul asks eagerly.
"My manager has been busy with other customers and didn't get a chance to look at it. Why don't we have a look at it now. He shouldn't be much longer." Tom gestures them toward the door.

Paul and Lisa know what will happen next. They will be forced to watch his manager go over every inch of their car, touching every flaw in front of them to set them up for the low-ball offer.

"Did you say the title was in the glove box? I didn't see it there," Tom inquires.
"Oh, I'm sorry. I have it right here. I forgot we were over at (name of competing dealership) and I had it out for them," Lisa says.

Lines like these precondition the salesman and do wonders for you at the negotiation table. For Tom this means he has some real shop-around buyers on his hands. He knows he can't be too stiff with his bargaining if he's to make a sale with Paul and Lisa or they will just head back to the other dealer tomorrow. Paul and Lisa know what's out there.

When they get out to their car, Tom's busy sales manager has miraculously broken away from the other customers. Tom introduces "Jack" to them. Just as they expected, Jack starts his silent inspection by touching a scratch on the fender. Paul and Lisa know to act unconcerned and to ignore as much as possible. Lisa pretends a nearby car has caught her eye and strolls over for a closer look, thwarting the manager's game.

"How much is this one going for, Tom?" she asks. Paul follows her lead.
"That looks like it will be a bit out of our range, hon," Paul says.

Annoyed, Tom tries to get their attention back. This is where Paul and Lisa get creative and disagree about some aspect of the pricey car, such as its color, etc. They get unhappy Tom to answer their questions.

Once Jack has finished his inspection he must check his books before he can make them an offer. Tom leads them back to his office, where the Whites inform Tom they don't like the price of his car.

"How much did you have in mind for a monthly payment?" he asks.

Lisa and Paul know to avoid this question. If they tell Tom what they want for a monthly payment, Tom can easily calculate a way for them to afford their desired car by either stretching the loan term or increasing the down payment or a combination of both. Of course, this will be figured at the maximum profit for the dealership. With a quick juggling of figures it's easy to twist things around to make it appear you are getting a good deal.

Worse yet, the Whites will be forced into negotiating the sale of the car by adjusting the monthly payments, which is not a fair method of negotiation for the buyer. Dealers sell many cars this very way without the buyer ever knowing the actual amount of the purchase price. The salesman tries to hook them with the low-monthly-payment carrot. Fortunately, Paul and Lisa are hip to this

"We aren't worried about monthly payments as much as we are about the price of the car," Lisa says.

Even though monthly payments are a main concern for Paul and Lisa, they already know how much car they can afford through their pre-approved loan from their credit union. They also know exactly what their monthly payments will be if they stay within their predetermined limit. Although the car they have targeted is $1,000 above that, they are confident that they can get very close to their goal through negotiating.

"Tell me what you can afford. What's the most you are comfortable with? If I could, say, get you in at $350 a month, would you take the car tonight?" Tom persists.
"The issue here isn't what we can or cannot afford in terms of monthly payments. The issue is what price we are willing to pay for this car," Paul asserts. "If you want to sell us this car tonight, you'll have to negotiate in terms of the total price of the car. Once we agree on a price for your car and the trade-in value for our car, then we can figure out our payments."

This is nicely put. Tom is annoyed because his favorite selling ploy has been nullified. But he's not worried. He has plenty more.

"So what did you have in mind for a price?"

Paul knows to avoid making the first offer, whether it's for his trade-in or the car they want. The person who makes the first offer loses an edge by taking that risk of testing the bargaining waters. Offer too low, the dealer scoffs at you. Offer too much and your dollars are flying out the window. Do everything possible to get him to make the first offer in both cases.

"Well, we're still wondering what you're going to offer us on our trade-in. Shouldn't we figure that out first?" he asks.
"Yeah, what's taking him so long to decide?" Lisa adds.
"He has to look it up in the books and make all those considerations. You can't just come up with a figure off the top of your head, you know."
"How long does it take to look it up and decide? Why don't you check with him," Paul insists.

Tom agrees and goes to his sales manager. Even though it may be safe to talk after Tom leaves the office, Paul and Lisa know not to discuss their target prices or strategies. Sales offices have been known to be bugged and they aren't taking any chances. Inside the office they engage in small talk. If they need to discuss figures, they go outside the office. Leaving the office for a soda or a stroll around the showroom always brings the salesman back quicker, thwarting the salesman's delay of game. Tom finds the Whites out in the showroom.

"Good news. Jack is in a generous mood tonight and has made a better offer than I would have thought," Tom says.
Lisa's eyes light up. "How much?"
"Why don't we go back to my office where we can sit down and discuss it." Tom leads them back to his office for the "good" news.
"What's the good news?" Paul asks.
"We will give you $800 for your trade, which would cut the $7,995 price down to $7,195. Now, on an '89 that's a good deal."

Paul and Lisa exchange another one of their confused looks.

"But I don't understand. Our car is worth much more than that," Paul says.
"Not with that dent in the fender and the engine leaking oil like it is."
"The fender isn't dented. It's just a scratch," Paul says, defending his car.
"Our car doesn't leak oil," Lisa insists.
"Yes, your car is leaking oil from behind the rear main seal. Do you know how much it costs to replace a main seal?" Tom says as if it was a $5000 job.

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Paul and Lisa have no idea what a rear main seal is, let alone how much it costs to replace it. They do know, however, that their car hasn't leaked oil before tonight or they would have noticed the drops on their clean garage floor. This is news to them. Could it have just started, or is the salesman just making up a story to use to his advantage. Paul figures the salesman is B.S.'ing them, but that's okay because Paul and Lisa have no intention of trading in their car anyway.

"So I guess that means he won't go up anymore for us on that?" Paul asks.
"Not with the problems it has."
Paul looks at Lisa and she gives a shrug and a nod.
"Okay, that means we're looking at $7,195 minus $300 is $6,895."
"$300? Where did the $300 come from?" Tom asks.
"From you two nights ago." Paul produces Tom's business card with the quote written on it. "Remember? You're not going back on what you said, are you?"
"Oh, that was with the assumption that you were going to buy the car outright."
"What does it matter if we buy it outright or if we finance, you'll still get paid."
"Okay, I tell you what. I'll run it by Jack and see what he says. If I can get him to approve it will you take the car tonight?" Tom asks.
"We'll figure that out when you get back," Lisa says.

Again Tom goes back to his manager and the Whites head for the soda machine where they discuss their next strategy. Paul and Lisa don't want to pay more than $7,000 for their next car. They know that it is quite common for dealers to mark up their used cars anywhere from 20% to 25%. This means the dealer likely gave a trade allowance between $6,000 and $6,400 for the $7,995 car.

Even though the Whites' $800 trade-in has brought the price down below $7,000, in the end they won't be trading in their car and will have to add this amount back onto the price. So in Paul's and Lisa's minds the car is still at $7,695 ($6,895+$800) and they need to bargain off another $695. Obviously, they have some haggling left to do.

After about ten minutes, they mosey around the showroom to get the attention of either Tom or Jack. Back in the office Tom presents them with a contract.

"Okay, you win. Jack is going to let you have the car for $6,895 plus your trade." Tom pushes the contract towards them. Paul and Lisa exchange a look.
"We never said we'd take it at that price, Tom. We are definitely interested in the car, but only if the price is right," Paul says.

Tom looks him dead in the eye. "Look, you're getting a great deal on this. We couldn't possibly go any lower. We have to make some profit to survive. We have to eat, too, you know." Tom nods to the photos of his wife and kids displayed prominently on the desk. His timing was perfect. But Paul doesn't go for the guilt trip.

"Well, we don't have a problem with that, Tom. We expect you to make a profit. We just want it to be fair for both sides. We have kids too, and times are tough. Believe me, we know what it's like. Now, we both have a lot of respect for you and your dealership. We have friends who bought here in the past and were very pleased with their car and the service they received. They especially raved about how Jack was willing to go out of his way for their business. So, like I said before, we are interested in buying this car tonight but only if the price is right," Paul says.
"The price is right!" Tom says.

Paul turns to Lisa who produces a mechanic's report from her purse.

"Our mechanic looked over the car and found it to be in pretty good shape, except it will be needing brakes soon and the front end is out of alignment. His estimate is $250 for the brakes and another $50 for the alignment. When it is all said and done it amounts to over $300 with tax. Now, if Jack is willing to compensate us for this, we would still be interested in making a purchase tonight," Paul says.

"Wait a minute, let's back up a bit here. Our price for the car from the start was $7,995 and so far we have gone down to $6,895 to accommodate you. That's $1,100. We have compensated as much as we can.

"The trade-in allowance is irrelevant, Tom. That's a separate deal which you will make another profit on. And the $300 that you knocked off was an offer that you made to us before we even started negotiating. So the way we look at it $6,895 is just the starting point for negotiating. We are really counting on you to help us close this deal. Go ask Jack to compensate us the $300 for the brakes and alignment," Paul says. Tom looks at him, shaking his head. "He's going to think I'm crazy," Tom mumbles as he heads out the door.

Paul and Lisa again walk out of the office to discuss their strategy. Lisa checks her watch and it's 9:45pm--45 minutes after closing. Hopefully, Tom and Jack will start getting frustrated and give in soon. She just wants to go home in their new car. Unfortunately, the salesmen are using the same strategy on them. After 15 minutes go by, Jack shows up.

"Tom had to take an important call and may be tied up for a few minutes. Why don't we go back to his office and see where we are." Jack leads them back to Tom's office.

Now, Paul and Lisa know that when there is a turnover from a salesman to the manager, they have been tight negotiators. This means that Tom was running out of steam and Jack is moving in to do the clean-up. He will most likely go over all the same points, but from a different angle.
When Jack tries the monthly payment game, Paul and Lisa forcefully tell him, just as they told Tom, that they only negotiate through the price of the dealer's car and their trade-in. Jack changes gears.

"Okay. We are willing to give you $800 on your trade-in, which is being very generous. With the number of miles on that car and all its problems we will just have to wholesale it out to an auction company. We are not going to make any money on your trade, which means we need to make a few dollars on our car. Now, our price started out at $7,995 and we have knocked off $800 for your trade and another $300 which Tom promised you, which he isn't authorized to do, no less, but he's my employee so I can't take back what he promised. Now that adds up to $1,100 in deductions and brings the price down to $6,895. And at that price, believe me, you are getting one good deal. Tom has already drawn up a contract. You do have something for a down payment, I presume?"

"How much would you need?" Paul asks.
"Fifteen hundred would be nice."
"That isn't a problem," Lisa says, "but the price you want for this car is."
"As you know, we had our mechanic check it out and he found the front end out of alignment and the car will soon need brakes all the way around," Paul adds. "Now don't get me wrong. We like the car, and we are ready to buy tonight, but only if the price is what we think is fair."
"And what to you think is fair?" Jack asks.

"Well, first we want to know if you're going to compensate us for the brakes and alignment, or are we going back to (competing dealer down the street) where the sales staff will bend over backward for our business," Paul says.
Jack stares for a moment with a smirk on his face. Paul and Lisa can tell he's an unhappy camper.

"Okay, tell you what I can do. I'll have the alignment checked over by our mechanic and knock off another hundred dollars for the brakes. What do you say?"
Paul realizes that having the "alignment checked over" doesn't mean anything.
"Have the alignment checked over? We don't need it checked over. We already know it's whacked. We need it fixed!" Paul barks.
"Now honey, calm down," Lisa says.

Paul acts very upset. Maybe he really is or maybe he's just acting it up a little bit. Paul knows that acting upset in front of the salesman will usually get them to bend. They will fear losing you if they don't give in to something.

"Okay, we'll fix it. We will fix the alignment," Jack says.
"We would like that in writing on the contract, if you don't mind," Lisa adds.
"That's no problem," Jack says.
"Now, what about the brakes? Our mechanic gave an estimate of $250. A $100 isn't going to cut it," Paul says.
"But the brakes on there are fine. Why should we compensate you for full price when you may get another ten, fifteen thousand miles on them?" Jack asks.
"Our mechanic told us soon, which may be next month. The way we see it, the car needs brakes now. But because we are willing to bend to make this deal fly, and it is getting late..."
"That it is," Jack adds.
"Just deduct an even $200 instead of the $250. That should more than make up for whatever life is left on the brakes," Paul says.
"All right. A deal is a deal. Take the car for $6,695 plus your trade-in. I'll go have Tom write it up," Jack says, offering his hand to Paul for a shake.
"Wait a minute. I never said I would buy it for that. We still have some negotiating left to do," Paul says.

"Mr. White, please, be reasonable. We couldn't possibly go any lower in price. We are barely making any money as it is. We have to pay bills too, you know," Jack says.

"I know, I know. I don't have a problem with that. We know you need to make a living and we also know you make that living by selling cars. On some cars you make a huge profit and on some you make a marginal profit. It all balances out over the long run, right? So it is well worth it for you to move cars as fast as possible. Now, we are willing to write a check right now for $2,000 as a down payment if you let us take the car for an even $6,000 plus our trade-in. We would finance the rest through you, of course. How about it?" Paul asks after his beautifully prepared speech.

"I'm sorry, Mr. White, we just can't do it for that low of a price. That's way below book," Jack says. Paul gestures to Lisa. They both stand up.
"We need a break. Why don't you take a minute to think it over, Jack. We're going to grab a soda real quick and be back in a few minutes."

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Jack acknowledges with a wave as the two exit the office. Out at the soda machine Lisa notices it's 10:15 now. She and Paul are stressed from all the haggling, but they feel they have made progress and are very close to closing the deal. They both look forward to leaving in their new car. They notice Jack walking by, not looking very happy.
About ten minutes later Jack shows up.

"Are you guys ready to close this deal?" he asks.
"That all depends on you," Paul says. They all stroll back to the office.
"So, did you have a chance to think it over?" Paul asks.
"Yes, and if you want to make this work you're going to have to do better than that," he says.

"Wait a minute, I made you the offer of $6,000 last. If you don't want to accept that, then it's your turn to come back with a counteroffer. That's the way negotiation works, at least in my book," Paul says.

Jack sighs. It's clear that he's tired and frustrated. He'd rather be home.

"Okay, look, I really want this deal to work. I'll take another hundred dollars off, but that's it and not a dollar more. You can have the car for $6,595 plus your trade and that, Mr. White, is the best I can do," Jack says forcefully.

Paul and Lisa exchange a look. Is that the best he can really do, or is he just holding out? They both wonder if they pushed him to his limit. $6,595 plus the $800 for their trade means they would essentially be paying $7,395 for the car which is $395 more than they want to. That means they only talked him down $600; a respectable sum, but it's still above book value. Paul decides to forgo the dealer's warranty in lieu of more cash discount.

"I tell you what, Jack, this car comes with a warranty, right?" Paul asks.
"That's correct."
"And that warranty has to be worth something, right?" Paul continues.
"Of course," Jack says.
"I thought so too. Why don't you keep your warranty and let me take the car for $6,000 plus my trade. Think of it this way: you'll never have to see my face in here again," Paul says jokingly. Jack smirks as if he likes the sound of that.

Because Paul took the car by his mechanic earlier in the day, he knows the car's mechanically sound and will unlikely need anything throughout the warranty term. Therefore, why pay for something that he won't use? Paul's trip to the mechanic is his warranty, and a much better deal for the price.

"When people want to go without a warranty, the best I can do is to discount another $100 off the price," Jack says.
"Your warranty is only worth a hundred bucks?"
"You can't put a price on a warranty, Mr. White. You will probably never need it, but it's there as a safety net, so to speak. If you are willing to take that risk, then I can discount you another hundred bucks and not a penny more," Jack says.
Paul makes the simple subtraction on his calculator. "That brings us down to $6,495, Jack. We're only $495 apart!" Paul laughs, but Jack doesn't.

It's late and everyone wants to finish this up and go home. Paul thinks that maybe Jack is truly at his bottom and, considering that the car is now theirs for $7,295 ($6,495 plus the $800 for their trade), they have brought the price down to within $295 of their goal. Paul and Lisa excuse themselves to have a conference.

Outside the office and out of sight of Jack, they quietly agree that the price of $7,295 is acceptable to them, but before they give in Paul will try one last round of dickering just to make sure that, indeed, Jack is at his bottom. They re-enter the sales office, not smiling, but rather, looking very stern.

"Okay, we talked about it and this is what we are willing to do. Considering that we are only $495 apart, we will meet you halfway at $6,250 plus our trade and you keep your warranty. Come on Jack, what do you say? Let's close this deal and go home," Paul says. "I already told you I can't go any lower, Mr. White. We would be losing money at that price," Jack claims.
"Why don't you just let us have the car for $6,250? You can make it up on your next sale. Come on, Jack."
"Mr. and Mrs. White, let me explain something to you. We have to make a certain percentage on each car that we sell just to cover overhead. This car that you have bargained us down to $6,495 is right at that overhead cost now. If I go any lower we lose money," Jack says.
"But if you add the $800 for our trade to that, we are really paying $7,295 for your car, which is still above book, and then you're getting our trade, which will give you another profit," Paul pleads.
"I told you before that your trade-in isn't going to make us any profit. We'll have to wholesale it out to an auction just to get rid of it. We are doing you a favor by taking it off your hands at $800," Jack says, getting frustrated.

Paul knows this is a line of B.S. Even though his car isn't perfect, he knows it's worth between $2,500 and $3,000. Jack is going to make a killing on it and then has the nerve to say he is doing them a favor? It won't bother Paul one bit when he suddenly changes his mind about trading in their car.

"I tell you what, Jack, I'll give you our final offer of $6,300 plus our trade and you keep your warranty. Now, we have come up $300 and you only need to come down $195. We are really trying to close this deal with you, and I think this offer is being very fair to you." Jack looks at Paul like he's the customer from hell. "Come on, Jack, what's another $195?" Paul adds.
Jack looks at his watch and starts laughing. "You just never quit, do you?" Paul smiles. "Considering that it's very late and I'm very tired, I'm going to succumb to your offer of $6,300. Let me find Tom, and he'll go through the paper work with you."
"Don't forget about fixing the alignment. We'd like that in writing, please," says Lisa who seems to have come alive now that they have made progress. Jack acknowledges and leads them to the closing office and leaves them. A moment later their old buddy Tom shows up with a bunch of papers.
"You made it! Congratulations! I heard you were pretty tough on him in there," he says.
"He was pretty tough on us!" Paul claims.
"We're really sorry about keeping you here so late," Lisa says.
"Don't worry about it. I'm used to it by now... Okay, before we finalize I want to go over a couple of things really quick," Tom says.
"If it's about an extended warranty we're not interested," Paul says.
"We already gave up our warranty that came with the car," Lisa adds.
"This is actually a service contract and buying your car without a warranty is all the more reason to consider this. It covers any defects with your engine or drive train for two years with only a $100 deductible. Your timing is good because normally it's $600, but this month we are running a special on it for only $495." Tom does a couple of quick calculations on his computer and looks up, "It would only be another seventeen dollars a month."
"Tom, why would we cash in a measly $100 for your dealership's warranty and then pay $495 for this one?" Paul asks.
"Because this is much more thorough coverage. What if you developed a transmission leak and burned up your transmission? Do you know how much that can cost?" Tom says, trying to sell them on their fears.
Paul and Lisa exchange a look. They know what he is trying to do.
"Pass!" They both say.

After trying to sell them a car alarm, fabric protection treatment, and rustproofing, of all things, Tom reaches the end of his list of extras unsuccessfully. He reluctantly prepares the final paperwork when he notices Lisa seems to need to say something to Paul.

"Will you excuse us just a second?" Paul says as he and Lisa stand up.
"Sure," Tom says.
They exit the office and have a make-believe conversation. This is where they are going to change their mind about their trade-in. After a couple of minutes they re-enter.
"We changed our minds," Paul says.
"What!?" Tom says in disbelief.
"Don't worry, Tom, we still want the car; we just decided to keep our trade, that's all," Paul says.
"We almost forgot about our nephew who's in need of a car," Lisa adds.
"So add the $800 to the price and make it $7,100. Our credit is good for it," Paul says.
Tom's mouth drops open. "Mr. White, I'm afraid I can't do that."
"What? Why not?" Paul asks.
"Because we had an agreement already worked out with your trade-in."
"But that was for $800 and now we are giving you that $800 in the loan amount. Jack told us over and over how our trade wasn't going to make him any money anyway. He was just going to wholesale it out to an auction. So what do you care if we change our minds? You should be happy that you're getting $800 more," Paul says.

Tom jumps up and excuses himself. He has to let Jack know what's going on. After a few minutes Jack steps in.

"What seems to be the problem?" he asks.
"No problem, Jack. We just decided to keep our trade-in, that's all," Paul says.
"Actually we had forgotten about our nephew who needs a car," Lisa adds.
"But we had already agreed on the trade," Jack says.
"What difference does it make? I thought you'd be happy about this. You're the one who kept telling us that you were going to wholesale it to an auction at no profit. Instead, we're giving you $800 dollars more for your car. Why the hesitation?" Paul asks.

Jack seems to be at a loss for words. Paul and Lisa knew his story was a bunch of bull. He was going to sell it from his lot and make a huge profit.

"Well, it just makes it inconvenient having to rewrite the paperwork and all."
"That's okay, Jack. Just scratch out the figures, make the changes, and initial them. You didn't forget about including the alignment repair, did you?" Paul asks. Jack wants to pull the hair out of his head. He excuses himself. Momentarily, Tom shows up with a new contract and proceeds to cover the points.
"Okay, with $7,100 for the price of the car plus tax, license, and dealer prep fees brings the total to..."
"Wait a minute. What's this $150 charge for?" Paul asks, pointing to the contract.
"That's the dealer prep charge for preparing the car for sale. All our cars are subject to this fee," Tom says.
"Tom, we're not paying a $150 for a car wash. Take it off. When we negotiated a price for this car, aside from the tax and licensing, we were under the assumption that all those fees were included. I'm sorry, but you'll have to eat that one," Paul says forcefully as if the fate of the deal hinged upon the prep fee.

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Being this far into the closing, Paul would only pay it if it was necessary to save the deal. But instead of readily paying it, Paul pretends to jeopardize the deal by refusing to pay the phony prep fee. No dealer will allow a sale to fall through after having all this time invested. They will remove the fee. But in the unlikely event that they do refuse after you threaten to walk out, you can simply reconsider. It costs you nothing to try and your efforts can result in hundreds saved.

Tom excuses himself to go clear it with Jack who, Paul figures, will be steaming by now. He wonders how he will run the financing change by. He may just have to take their high-interest loan and then pay it off in full with their lower interest loan from their credit union; that is, if the dealer's loan doesn't have stiff prepayment penalties.

Tom re-enters with the news that he was allowed to take off the prep fee. Tom starts going over the loan terms while Paul is plotting in his mind how he should break this to him. He certainly doesn't want the deal to fall through because of their sudden change of mind in financing. When Tom gets to the part about interest rate, Paul decides to test the waters.

"Wait a minute stop right there. Did you say 15% APR?" Paul asks.
"Yes, and at 36 months that comes to..." Tom tries to brush it off.
"I thought you quoted us 13% earlier. What happened?" Paul asks.
"I never quoted you that. I told you 15% right from the beginning," Tom says.
"Where am I getting 13 % from?" he looks at his wife.
"I think I mentioned our bank was offering loans at 13%, hon," Lisa says.
"Well, if that's the case I think we should get a loan from our own bank, don't you?" Paul looks at Lisa.
"Definitely," she adds.
"Mr. and Mrs. White, you had already agreed to our terms for financing. Breaking that agreement would be in violation of our contract," Tom says.
"What contract? We never signed anything," Paul says.
"We're sorry about changing our minds again, but we misunderstood a crucial point about the loan," Lisa says. Tom is clearly upset.
"Look, just give us 48 hours to see if we can qualify. If we don't, we'll take your loan as it stands. Here's a check for $2,000 for the down payment. We'd like to take the car tonight. Is that a problem?" Paul asks.

Tom is fuming under his collar. He jumps up and excuses himself again. Paul and Lisa realize that this might not fly with Jack, especially after stripping him of the profit he was counting on from their trade-in. The dealer loan was the last avenue for any extra profits they could possibly make. But if Jack refuses to accept their outside financing, Paul and Lisa have another option. They can always accept the dealer loan and then turn around and pay it off in full through their credit union's lower interest loan. As long as there isn't a stiff pre-payment penalty on the dealer loan, this is another great way to save money. Tom comes back.

"I'm afraid we can't let you do that. Not after our agreement," Tom says.
"But we never signed anything," Lisa says.
"It doesn't matter. We had an oral agreement," Tom says.

Paul suspects they may be bluffing. He figures if they threaten to walk out, Tom and Jack will reconsider. But before he goes to this extreme, he decides to have a look at the loan contract. He skims through it looking for information about prepayment penalties. These are penalties the loan company will charge should you happen to pay the loan off early.

Paul finds the information he was looking for; there's no prepayment penalty. Now they can accept the loan and turn around and pay it off with a lower interest loan from their credit union.
Paul looks at Lisa and nods. "Okay, if we have to, we have to. Where do we sign?"
Tom is relieved that they didn't call their bluff. Jack is already upset with him enough as it is. Tom shows Paul where to sign on the loan agreement. Paul takes the contract and reads through it carefully, making sure everything is correct. He then hands it to Lisa, who double checks everything.

With tax, licensing, smog, and documentary fees, the total price of the car would be $7,783.75. Minus their $2,000 down payment, the loan amount would be $5,783.75. With a 36-month term at 15% APR the payments will be $200.49 per month. Although their payments at 13% would be $194.88, $5.61 less, that would add up to $201.96 in savings over the term of the loan. Their credit union charges a $60 documentation fee for their auto loan, which means they will save $141.96, thus making it worthwhile to switch.

When checking over the loan document, Lisa knows it is important that no blank spaces are left open. If there are blank spaces that don't apply, she fills in "N/A" for "not applicable". Lisa finishes and nods her approval to Paul. Just before they sign, Paul asks which copy is theirs.

"The bottom yellow copy is yours," Tom says.

The Whites know it's important that they get a copy of the contract right after signing it and not later that night or the next day. Some shady dealers will try to tell you otherwise so they can take the contract and alter the interest rate, etc. So get a copy of everything you sign immediately.
The next contract is for their car. Lisa double checks it after Paul.

"I don't see anything about having the alignment fixed," she says. Paul was so wrapped up in the loan figures he'd forgotten about it. He's thankful that she remembered.
"We have a special service contract that we've written up for that," Tom says showing her the document.
"I'd still like to see it on our original contract as well. Is that a problem?" She asks
"No," he says.
"Why don't you just hand write it in somewhere that it's included in the price and have Jack initial it. That should be fine," Paul says.
"I know there's no one in the service department this late, but would you have any idea when we could bring it by to have the alignment corrected?" Lisa asks.
"You'd have to call the service department and find out from them, Mrs. White. I know they are busy this time of year so it may take a week or two. I would call them first thing in the morning and set up an appointment," Tom says.
"That sounds like a good idea," Paul adds.

Now with the contract in front of them, Paul and Lisa confirm the selling price of their new car along with the down payment and the total amount of the loan they are paying. They also make sure that any details on the contract that are not applicable are filled in with N/A. They both sign and get a copy.

Paul and Lisa also sign the little service claim check that will allow for the repair on their car. They all stand up and shake hands. Tom is relieved that this transaction is over. He just wants these two out of his hair. Never has he made such a small commission in his life, and he hopes this will be the last.

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