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Here is where you will find some of the most common sales tactics you will likely encounter during negotiations and how to neutralize them. Also included from our book are a couple of not so common buyer tactics you can use on the salesperson to tip the bartering in your favor.
Salesman Tactics:
Buyer's Tactics:
Your Financing (from Chapter 6: Dealing With Dealers
- Buyers Tactics)
With no intention of financing through the dealer, and having
already made arrangements with an outside lender that offers excellent
rates, tell the dealer that you need a loan and want them to take
care of all the financing. When you fill out the loan application,
give them the impression that you hate to deal with banks and
figures, etc.
If you did not present the List of Rules tactic, the salesman will try talking to you in terms of monthly payments, but you need to switch him back to total price of the car in order to chew him down. Tell him you're not worried about the amount of monthly payments because you don't have an affordability problem. Tell him you wish to settle on the full price of the car first and then you'll adjust the payments to your liking via length of term.
Because the dealership is arranging the financing, and making extra money from it, they will be a little more flexible in lowering the price of the car. After grinding them down as far as you can, and after they draw up a contract, you check the figures and then suddenly have a change of mind. You decide that you are going to finance through an outside company because you just remembered one that offers great rates--unless, of course, the dealer can beat them.
When the salesman scoffs at you, insist that you can have the money in a couple of days. Most dealers' policies allow one week to come up with the money from an outside source. If they need it sooner, you can get it the next day because you have already been guaranteed a loan. Leave the dealership with the mention that if you can't qualify for the outside loan you will finance through them. Of course, you need some money for a down payment before they let you drive your new car home.
Even if the dealer doesn't let you fly with this, you can accept their high-interest loan and, when the first payment comes due, pay it off in full with your low-interest loan. Before you do this, though, you want to make sure that there aren't any stiff prepayment penalties in the dealer's loan or a steep loan processing fee from your bank that would negate the difference you would save in the lower interest loan. Depending on the penalties and loan fees, a difference of one or two interest points can be borderline. Figure this out in advance.
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This creates an edge for you because now, in the dealer's eyes, you have been out shopping around and you are looking to see who's going to offer the best deal. They know now that if they are to make a sale with you they will have to bend more than usual. It also gives you credibility later, during negotiations, when you tell them you saw a better deal down the street.
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This is not the way to negotiate a car deal. You will come out a loser every time. To keep this from happening, tell the salesman right out that if he is to sell you a car today, then he must negotiate on the total price of the car which, by the way, is to be negotiated separately from the total price you receive for your trade-in.
Let's say your salesman's name is John. The first time John says he has to go clear something with his manager grab him before he goes out the door and consult your watch and say "Okay, John, I have 7:25 on my watch. I'll give you five minutes. If you're not back here by 7:30 I'm heading out the door." And stick to what you say. He may try to call your bluff. If he's not back in five minutes, get up and slowly walk to your car. Trust me, he will come running after you. There's no way he'll take a chance on losing a potential sale. Do this every time he goes to his sales manager and you will nullify his delay of game.
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Later, when you continue negotiations, the salesman will be more flexible and willing to come down on his price knowing that he will make a killing on your trade-in. After grinding him down as low as you can and agreeing on a price, have him draw up a contract with the figures. Then, just before you are about to sign, you have a sudden change of heart and decide you'd rather not trade in your car after all. When the salesman's face falls, look at him and say, "I'm sorry. I forgot about my nephew who needs a car. What's the big deal anyway? The car isn't worth anything, just like you said."
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If you did not present the List of Rules tactic, the salesman will try talking to you in terms of monthly payments, but you need to switch him back to total price of the car in order to chew him down. Tell him you're not worried about the amount of monthly payments because you don't have an affordability problem. Tell him you wish to settle on the full price of the car first and then you'll adjust the payments to your liking via length of term.
Because the dealership is arranging the financing, and making extra money from it, they will be a little more flexible in lowering the price of the car. After grinding them down as far as you can, and after they draw up a contract, you check the figures and then suddenly have a change of mind. You decide that you are going to finance through an outside company because you just remembered one that offers great rates--unless, of course, the dealer can beat them.
When the salesman scoffs at you, insist that you can have the money in a couple of days. Most dealers' policies allow one week to come up with the money from an outside source. If they need it sooner, you can get it the next day because you have already been guaranteed a loan. Leave the dealership with the mention that if you can't qualify for the outside loan you will finance through them. Of course, you need some money for a down payment before they let you drive your new car home.
Even if the dealer doesn't let you fly with this, you can accept their high-interest loan and, when the first payment comes due, pay it off in full with your low-interest loan. Before you do this, though, you want to make sure that there aren't any stiff prepayment penalties in the dealer's loan or a steep loan processing fee from your bank that would negate the difference you would save in the lower interest loan. Depending on the penalties and loan fees, a difference of one or two interest points can be borderline. Figure this out in advance.
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