Waging War at the Car Dealership

I did something pretty crazy in the last week—I purchased a truck.  What’s so odd about that?  It wasn’t the act of buying a vehicle that was so strange—it was how I went about it. (More about that later.)

When it comes to purchasing a big-ticket item, I’m one of those people who typically does not rush into things.  It isn’t in my nature to make snap decisions when it comes to spending large sums of money.  One of the ways I’m most like my dad is I have to do many hours of research before I’m comfortable making my decision.

The act of buying a vehicle can be highly stressful if you are unprepared for it.  You must see through all the smokescreen, which is a hallmark of many car dealerships.

When I walk onto a car lot, I know what I’m willing to pay for a vehicle.  It requires a lot of self-discipline not to fall in love with the shiny new toy.  You have to be prepared to dodge a variety of landmines that the shady salesperson may throw at you.

There are many traps that your friendly car salesperson sets before you arrive. It isn’t that I love this whole game, but I’m pretty good at playing it.

Here is my list of things to be mindful of when it comes to buying a car or truck:

1. The dealer is not your friend.  He/She may project a friendly face, but the main goal is to get you to spend money.  Some will exaggerate claims and perhaps lie right to your face to make a sale.
2. Just about everything at a car dealership is negotiable.  That includes the cost of the vehicle you want to buy, the trade-in value for your current vehicle, and any extended warranties (often one of the biggest scams thrust upon us by car dealers.)
3. Never pay the asking price for a car or truck at a dealership.  The dealer has purposely set this high so that he/she has some room to come down while still making a healthy profit.  That includes never paying the MSRP (Manufacturer’s Suggested Retail Price).  You can always get a vehicle a few thousand dollars below MSRP.
4. You do not have to own any vehicle.  Remember, it is still merely a means of transportation.  Don’t let your emotions drive your decision making.  Would you pay $25 for a hamburger?  Why overpay for a car or truck?
5. Knowledge is power at the car dealership.  You need to be aware of what people are paying for the exact model (including extras) that you want.  Price differences can be quite startling depending on what area of the country you are purchasing the vehicle.  If you go to an urban area with a more extensive inventory, your chances of getting a good buy are better.
6. After you make an offer on a vehicle, the salesperson (who acts as a middleman) will take it to the sales manager.  If your offer is too far below what they want to sell the car, the salesperson will come back without any counteroffer.  At this point, you need to get up and leave because you are too far apart.  Do not make a counteroffer to your original bid without an offer from the dealer first.  That smacks of desperation; you are negotiating against yourself by giving them the upper hand.  At some point when negotiations hit a sticky spot, the sales manager may make an appearance and give you a sad song and dance (cue the violins) about how they can’t possibly sell the vehicle for any less.  That tale is fiction (okay, a lie).  Be prepared for some sales pressure at this point, but don’t waver because you know what the vehicle is worth.  I’ve had dealers run after me in the parking lot when they think they are losing you to someone else.  It’s incredible how many times they suddenly will revise their “can’t go any lower than this offer” when they feel the deal slipping away.
7. There is much more information available to the consumer that has leveled the playing field if you are willing to put in the time.  Consumer Reports and Edmunds are two valuable resources who test cars.  They rate all vehicles in the same class in terms of safety, price, and performance.  Consumer Reports tells you (for a reasonable fee) the wholesale price of each specific extra on your vehicle.  One of the things that makes this tricky for the consumer is the dealership will offer several items as part of a package.  In other words, the dealership may add $2,500 toward the price of a vehicle for the “entertainment package.”  If the wholesale cost of the items in the package is $1,200, the dealer is marking this up by $1,300.  Is that fair?  One of the things I like best about Edmunds is this site allows car buyers to post what they paid for their car (including the extras that may come with a vehicle) at a specific dealership.  What a powerful piece of knowledge when negotiating at the same dealership. 
8. Another great resource when buying a vehicle is the site, CarGurus.  They tell you how long a dealer has had an automobile (the longer the time, the greater the likelihood they will be willing to bargain) and the price changes the dealership has made on the vehicle.  For example, I can look at Car A and see the asking price was $18,000, but forty-two days later is now being listed at $16,400.  I can also observe that Car B was listed at $19,700 and is currently listed at $19,500 six days later.  Sometimes dealerships will raise the price of their vehicles as well.  It comes down to the old supply and demand principle.  If lots of people are showing interest in a car, the dealer is less likely to drop the price, and in some cases will raise the price.  CarGurus also shows how many people have saved that specific vehicle on their save list.  A car with many saves indicates that many people are following and interested in that vehicle.  CarGurus also compares the asking price to the market and will tell you how much the specific model is going for, on average, in that geographic region.  It breaks down vehicles and lists them as great, good, fair, or high-priced.
9. Many sites such as Autotrader and CarMax come with free Carfax reports.  This report is valuable because it shows the history of the vehicle in terms of service and accidents.  I’m much more likely to be interested in a car that has had regular oil changes, few mechanical issues, and no accidents.  Carfax gives you all of this knowledge.

I researched information about trucks for close to six weeks before I made my first offer.  I walked away twice from potential deals because the dealership was unwilling to waver, and I knew that I could get a similar vehicle for a better price somewhere else.  If the dealership feels like they can sell the car to someone else for more, they are less likely to negotiate with you.

Since I knew what people had purchased the exact vehicle for weeks earlier, I came in with much more knowledge than the average consumer.  I was sure if I were patient, the right deal would eventually come along.  I tracked the prices of a couple of brands of trucks (Ford F-150 and Ram 1500) that I was interested in throughout northern California.  Out of curiosity, I looked to see what similar vehicles were going for in southern California. I found one truck that had every feature that I wanted.  The price was excellent too, but the dealership was a full ten-hour drive (more than 600 miles away).  I had to weigh the cost of time and money in making this trek. 

I also had to consider how I was going to get there.  I knew my wife would not be interested in going that far.  It also was too long a drive to ask a friend to drive down with me.  I considered renting a car or riding a bus, but I eventually settled on buying a one-way ticket from our little airport to Los Angeles.  The flight would cost $300, and I figured it would be another $40 to take an Uber to the dealership.  I also had to think about the expense of coming home if I bought the vehicle.  Knowing the dealer would fill up the truck as part of the sale, I approximated that the cost of one additional tank of gas would be about $80.  Then there was the cost of depreciation of driving the vehicle back as well as the time.

When the vehicle I was tracking dropped an additional $1,500, I realized it was now selling $3,800 below a comparable truck would go for in northern California.  At that point, I decided to take the gamble and hope that the vehicle would not sell in the one day it would take me to get there.  Before I left, I researched to make sure there were other vehicles that I would be happy with, if my truck sold.  It was a large dealership with competitive prices, and I found two other backup trucks that met my standards.  There were other dealers close to this dealership who also sold similar vehicles, so I knew I had options.

Sometimes a brilliant plan can go astray.  First, my flight was delayed two hours due to visibility issues.  That put me in Los Angeles closer to 2:30, and the workday commute home was beginning.  The dealership was only twenty miles from the airport, but the Uber ride took an hour due to the heavy traffic.

When I walked into the dealership carrying my travel bag, I saw the strange looks on the faces of the salespeople. The dealership, owned by a well-known celebrity athlete from Los Angeles, is the largest Ram dealer in the area.  The vibe in this place was different than any other car dealership I’d ever visited.  There were cars and salespeople everywhere.  It was like walking into a club; loud music set the atmosphere.  I had not scheduled an appointment for a test drive because I wasn’t sure when I would be arriving.  One of the young salesmen caught my eye and immediately came over.  I told him the purpose of my visit and asked to take the car out for a test drive.  The lot was so large that the used vehicles were sold at a separate lot about a mile away.  We got to the area, and every inch of usable space seemed to be taken by their many trucks.  The dealer walked over to the area where he thought the vehicle was, but I started to get worried because he seemed surprised the truck was not there.  He compared the vehicle number to many others in the vicinity, but it was nowhere in sight. 

We drove back to the main showroom, talked to one of the other salespeople, and got on a computer to run a search.  As luck would have it, the vehicle had been sold the previous night right at closing time (9:00 p.m.)  I wasn’t the only truck buyer doing research looking for a deal.  It was very disappointing because that vehicle was the exact model I wanted for an outstanding price.

Knowing this scenario was possible, I had chosen two other vehicles before I left (if the truck I wanted was no longer available).  We drove back to the used lot and quickly located them, nearly side by side.  They were both in excellent shape, and the asking price of both was fair.  After choosing one of the vehicles, I took it for a test drive with the salesperson.  The problem with trying to test drive a car/truck in the Los Angeles area is the heavy traffic.  The vehicle ran comfortably in town, but I asked if there were somewhere, we could drive it out on the highway.  I was surprised to learn that their dealership didn’t allow this.  The increased traffic leads to so many accidents that it was company policy.  Since I had already driven the same model at home, I knew it had plenty of acceleration.

We went back to the dealership, and I made my initial offer.  For the next hour, we performed the same song and dance I was familiar with between offers and counteroffers.  I knew we were close when the sales manager made his first appearance.  He told me that he could not sell the vehicle for the price I was asking because they would not make any profit on it—such a touching story, but pure horse manure.  I stayed firm because I knew what similar vehicles were selling for in the area.  It was like a game of chicken as neither of us was going to budge.  Finally, I decided to get up and walk out because I felt that he was bluffing.  As I approached the door, the original salesman came running after me saying they agreed to sell the truck to me for my price.

It would be easy to declare victory at this point, but my past experiences had taught me that there were more hurdles to overcome.  Before I agreed to sign anything, I asked for the out the door price.  Dealerships are famous for tacking on extra costs after the final sale.  Some of these charges are legitimate (tax and registration) as both buyer and seller have no control over those fees. There are other charges which dealers sometimes try to slip in.  One of these is a fee for preparing papers on the sale.  I’ve read that dealerships will sometimes charge as much as $600 for the documentation fee.  That is outrageous!  My dealer set the price at $80, which seemed fair.  We were one step closer.

About the time you think you are all the way done, out comes the finance manager.  He asked me if I was planning on financing through them.  That is another trap.  I told him I was going to pay the full amount for the vehicle upfront, (Either pay cash or come in with your financing in place.  A bank will give you a cheaper interest rate than a car dealer.) and for the second time the deal almost fell apart.  The finance manager told me that the agreed-upon price of the vehicle was based on their company financing the loan.  We hadn’t even discussed this during negotiations, and I asked to speak to the sales manager again.  I thought it was a pretty shady move on their part to pull this trick, and I told that to the sales manager.  He said that he needed to talk to someone about the situation and came back with two proposals.  One figure was paying for the vehicle in cash, and the other was making the first three payments to the dealership before paying off the loan myself.  The costs were quite similar, and this was the one concession I made during the day.  I agreed to make the first three payments to their dealership and then pay off the rest of the loan in cash.

I was sure that we had a deal, but there came one more sticking point that almost blew the whole thing up.  When I was on my test drive, I never got to back the vehicle up.  One of the extras that I had insisted upon was a backup camera.  This feature helps you back a truck up safely because a small camera is mounted (usually by the tailgate) to increase visibility.  I asked the salesperson during the test drive if the vehicle came equipped with a backup camera, and he said that it did.  Right before we signed the final papers, the salesman appeared and apologized for giving me incorrect information.  My truck did not come with a backup camera.  I could tell that he made an honest mistake, but I agreed to the price on the vehicle based on his word.  (True, I should have checked it myself.)  I said that this was a problem, and I would not agree to the price unless the dealership did something to make it right.  He asked me if I would be happy if they took off $500 off the price, and I thought this was fair.  He said that he thought they could do that, but that he would have to check with the sales manager.

I started to get sick to my stomach when I saw the sales manager approaching again.  I knew that was not a good sign.  He once again cried poor and said the best he could do was to take off $200.  It may seem trivial to fight over $300 when talking about buying a vehicle that is several thousand dollars, but for me, this was a matter of principle.  Neither of us budged, and he asked me what I wanted to do.  I decided to call his bluff.  I told him that if they weren’t going to keep their word, then I was going to look for a deal elsewhere.  I reached down to my travel bag and pulled out my laptop and began searching for other vehicles.  He walked away, and I didn’t know if he was coming back.  I wasn’t bluffing; I would have gone to a different dealership at that point.  Two minutes later, the salesman was back and said they would take off the $500 after all.

I drove off feeling like I had withstood every challenge with a good deal, but it felt like I had just gone fifteen rounds in the ring.