Confessions of a Car Salesman
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Car Buying Articles

Confessions of a Car Salesman

Part 9: Lessons from the Lot


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In this final installment, I'd like to sum up what I've learned, and offer a few things that can help you the next time you shop for a car. I've decided to divide this chapter into two sections: Car-Buying Concepts and Specific Recommendations. The Concepts are general thoughts underlying the car-buying process. In some cases these are simple, fundamental realizations that you might already know. But it doesn't hurt to revisit them before we move on to the Specific Recommendations.

Car-Buying Concepts

Concept 1: The Stakes Are High

This realization hit me very strongly while I was selling cars — people can lose a lot of money by making the wrong choice when buying a car. This is a serious decision for the average household budget. If you are unprepared for the encounter with the salespeople and make a poor decision you can lose money. A lot of money. How? Well, say Joe Consumer decides it would be nice to have a new car. Without doing any research he heads on down to the car lot and hooks up with a sharp salesperson. Joe Consumer might be talked into buying a car in too high a price bracket. He could also be switched to leasing without his knowledge or consent. And he might also put down too much money. In the F&I Room he might be talked into buying protection packages, road safety kits and extended warranties. What would these mistakes add up to? Over the course of five years (the length of some lease contracts) this could mean he pays thousands of dollars too much for that car. This might convert into hundreds of dollars too much per month. Many people are on tight budgets. Paying a hundred dollars too much could sink the ship; certainly it would produce stress and prevent a family from saving or investing their money for the other necessities of life. The monetary loss is only part of the problem here. People become angry, humiliated and resentful once they find out they have been deceived and overcharged. And yet, once they sign the contract, it is difficult — if not impossible — to unwind the deal. I should add that there are many good dealers who wouldn't cheat or overcharge even a naive customer. But, sadly, there are enough unscrupulous dealers out there to make caution and suspicion necessary. I know that many of the salespeople I worked with would take an extra thousand dollars profit without a thought, then laughingly brag about it to the other salespeople. The management of the dealership rewarded this kind of profit taking and called it superior salesmanship.

Concept 2: Self Defense is Simple

OK, that's the bad news. The good news is that it's not that hard to protect yourself from severe economic loss. By doing even an hour's worth of research, by keeping in mind several simple concepts, the average person can be reasonably sure they won't be swindled. By doing an additional hour's research, they can get a pretty good deal. It's not that hard. In fact, some people find that they like the process once they learn how to handle it. Knowledge is power. That's almost a cliche. But it holds this simple truth: if you know the numbers of the deal it will be hard for the salespeople to overcharge you. It's like going to a store and seeing a nice lamp for $30. Then you go to a second store and see the exact same lamp for $50. Now a salesperson approaches you and tries to talk you into buying their lamp at the higher price. Will you do it? Probably not, because you know the exact same lamp is sitting on the other shelf for $20 less. What can the salesman say to you to convince you that their higher price is justified? Now let's extend this concept to car buying. If you wander onto a car lot without knowing how much the cars should cost, you have no frame of reference. As your reasoning power is reduced by a combination of breathing new car smell and test driving the car, you will begin to believe the car salesperson when he tells you the car is going to cost a lot but it will be worth it. Remember, the salesperson wants you to be excited about the car because then the rational side of your brain will become disabled. Just ask yourself this: if you buy today, how will you feel when you wake up the next morning? Is this a decision you can live with? What car buying numbers do you need to know? Find out how much the dealer paid for the car you want to buy. Find out what cars like that are actually selling for. Find out what your trade-in is worth (if you want to trade it in to a dealer). And finally, if you decide to finance the car, find out what your monthly payment should be by shopping for a car loan before going to the dealership.

Concept 3: Profit Equals Commission

I never really thought of this until I sold cars but... Car salespeople earn their living by inflating the price of the car you are buying. The more they inflate the price, the bigger their commission. This might seem very obvious, but we tend to lose sight of it when the smiling salesperson greets us on the car lot. They make us think they have our best interests in mind. The good salespeople do have our interests in mind. The unscrupulous salespeople are thinking how your purchase increases their commission. One of the dealerships I worked at had a sliding scale for commissions. The higher the profit, the higher the commission. Naturally, the salespeople tried to hit that point where the commission was bumped to the higher percentage. That might mean moving you into a higher level vehicle. It might mean increasing the profit by financing sleight of hand. In both cases, this smiling salesperson, with the personable air, didn't have your best interests in mind. I believe in paying a dealer a profit for his car. I also believe in rewarding the salesperson for their expert help. But I don't think this justifies making an unfair profit at my expense.

Car-Buying Recommendations

Now we come to the nuts and bolts of getting a good car at a fair price. This isn't a tutorial, since we have this information already posted on the Edmunds.com Web site. Instead, these are guiding principles to help you navigate the choppy waters of car buying. These are rules I saw being broken all the time by the shoppers that turned up on the car lots where I worked.

1. Use the Internet.

The Internet is an amazing tool for car shopping. It levels the playing field by giving accurate information to the consumer. It takes the anxiety out of negotiating. It forces dealers to slice profit because they must beg for your business. It allows consumers to comparison shop loans and leases, as well as extended warranties and insurance. It gives the consumer power. Use Edmunds.com to conduct research and our PowerShopper tool to solicit bids. Once you enter the information about the car you are looking for into the PowerShopper interface, the dealers will come to you.

It's likely that you will have to visit a car lot at some point in the car buying process (for the test drive, for example). The following recommendations are general tips that will help you if you insist on face-to-face negotiations with car salespeople when buying a new vehicle.

2. Don't be in a hurry.

This is a tough one because many people live busy lives with tight schedules. Their car breaks down and they have to do something about it this weekend, or on their day off, or at night. They might be overwhelmed by the problem and just throw themselves at the mercy of the car salesperson. Big mistake.

First, if your current car is on its last legs, consider sinking a little money into repairs so you don't have to make a panicked move at the car dealership. Yes, it's tempting to think of getting a new car and leaving the old heap behind. But caving in to this kind of impulse will cost you money.

If you can't fix up your old car, rent a car for a week. And make sure you rent the kind of car you are thinking of buying. There is no better way to test drive a car than to live with it for several days, using it for your daily commute or your typical errands. I guarantee you will learn something significant about the car that will help you make your final decision.

3. Walk away from any deal/salesperson you don't like.

If you aren't committed to this rule you will lose money. Car salespeople know that if you leave the car lot to "think it over" you might decide not to buy their car. So they pressure you to "buy today." This isn't good for you. It means you might buy the wrong car. It means you might agree to financing that doesn't fit your budget. It means you will probably pay too much.

If you have serious misgivings about the deal you are making, walk away. Similarly, walk away from any salesperson who seems too aggressive, overbearing, bullying, evasive or unreliable. There are plenty of good salespeople out there. Find one. And deal with that person until you have the car you want, at the best price with the right financing for you.

4. Know the numbers.

Yes, we already covered this under the heading of general concepts. Now let's look at it in a little more detail.

When you visit a dealership, and go into the sales room, the salesman will reach for a 4-square worksheet. They do this to keep track of the numbers in the deal that will affect their profit. Don't you think that if the pros do this, you should do the same thing to protect your money? If you don't, how else will you know what to pay for the car? What to take for the trade-in? What your monthly payment should be?

Using Edmunds.com, find out what the invoice, sticker and Edmunds.com True Market Value® (TMV) prices are for the car you want to buy. TMV® is a new concept developed by Edmunds.com. It's a guide that provides you updated weekly pricing on what you should pay for a vehicle — without having to spend hours negotiating with a dealer.

Write these prices down. Then find the approximate price of your trade-in. Then figure out how much money you will have to borrow and how much your monthly payment should be. Consider the difference between paying cash, leasing and financing. Make sure you also find out about holdbacks, rebates and incentives.

Is your head swimming with numbers now? That's pretty normal (unless you're some kind of math whiz). That's why you should write all this down. Then, with the numbers in front of you, get out your calculator and crunch them. When they have been put through the wringer, you will get one gleaming, shiny number which represents what you should pay for the vehicle you want to buy. With that number in mind, set a range. Start low and increase your offer in small increments until they say the magic words, "We've got a deal."

5. Shop around.

Say for a second you didn't know any of the numbers. Say you were in a jam and had one morning to get a new car. You could probably get a good deal by shopping around. You can do this in person or on the phone — or even with e-mail.

What you do is this. Contact dealer number one. Tell the salesperson, "I'm ready to buy today but I want your best price on the car." When the salesperson gives you his best price, write it down. Or, if you are doing this in person, have him write it on the back of their business card.

Now contact dealer number two and do the same thing. Only, tell them you have already been to dealer number one and you got such and such price. Then, repeat the mantra: "I'm ready to buy today. But I want your best price." Naturally, they will try to undercut the first guy's offer.

Now contact dealer number three and do the same thing. By now you should have three offers. If you want, you can even go back to the first guy and see if he will whittle a few more bucks off his offer. If not, can the dealer throw in something else to make their offer more attractive?

The beauty of this is that the market will define itself in a short period of time. And when you're done, you will be confident that you got the best price possible. Incidentally, dealers hate it when you shop their offer. They hate it because it can get you a very good price.

6. The deal's not done until you drive off in your new car.

You don't have to be a jerk about it, but you should be on guard throughout the entire car buying process. The biggest place that people err is when they have struck a deal with the salesperson. They breathe a sigh of relief and think the dealing is done. But the buyer needs to stay alert for the F&I process. Extra charges can appear in the contract. There may be a problem with the condition of the car. All these things can be addressed if you have the right attitude. If anything crops up during the F&I process that doesn't jibe with your numbers you can still walk away from the deal.

7. Always remember that it's your money.

Car salespeople are good at making us feel obligated to buy from them. They serve us sodas in the sales room. They run to get the keys for the test drive. They brave their bosses wrath with our lowball offer. So, when it comes time to make a decision we're tempted to think we owe it to the salesperson to buy from them. Yes, we certainly do owe them our business — if the deal is fair. Don't do it just for the salesperson. Do it when the numbers make sense. After all, you may be signing a contract you will have to honor each month with your hard-earned money. How will you feel about it as the years roll by and the car begins to show its age. Thinking about that can be like a bucket of ice-cold water in the face.

Final Thoughts

The world of car buying is changing rapidly. Buyers are more informed. Dealers are more sensitive to their customers' satisfaction. But, like in many industries, the old ways die hard. So it is still important to be informed and to make a good decision when shopping for a car for yourself and your family.

Of all the advice I've offered, I'd just like to stress that it's important to remember that buying a car should benefit both you and the dealer. While I have focused on deflecting the sales techniques in the dealership, I don't recommend becoming overly defensive. If you deal fairly with the car salesperson, and you get the same in return, the transaction can be enjoyable — even exciting. It really should be. So, I wish all of you a great shopping experience and many years of driving pleasure in your new car.

The End

Read Confessions of a Car Salesman: Glossary to "Confessions"


To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.

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Comments

  • jpricejr jpricejr Posts:

    Outstanding article with terrific insight and advice. Reads like a novel. This guy really went all out to do the digging. He is going places.

  • striker33 striker33 Posts:

    Excellent article...

  • siyu siyu Posts:

    Awesome article,give me ideas and confidence to deal with dealer tomorrow!

  • karl4111 karl4111 Posts:

    I have sold cars for 18 years for both kinds of dealerships, and this is the most accurate article that I have ever read, on the subject. The point that the author didnt make but is obviuos as you read it is remarkably the agressive dealers have far more floor traffic....Why?

  • karl4111 karl4111 Posts:

    Im going to answer my own question...because basiclly we are like sheep and want to be lead. Thats what the big stores do, just look how we are funneled to where they want us to go in Walmart.

  • dudemon dudemon Posts:

    "confesions of a car salesman" is a joke. it's an article wriiten by a guy who spent a few weeks selling cars at a sleazeball dealership and had an agenda from day one. I've been in the business for 20+ years and have never heard of a dealer basing commisions on gross. Dealers do base commissions on volume, for example 0-8 units pays 22% 9-12 Pays 25% Retroactive etc. Also the finance depts get margins from the lenders. if you walk in off the street to BofA and apply for an auto loan and get 3.79% the dealer may get that same loan carried with BofA but get a "buy rate" of 2.9% from the bank therefore making a .89% yield spread. Edmonds would have you believe that because we send so much business to the lender and therefore get a discount that we are somehow being deceptive.

  • "Spiff" - Poor example. "Weak" - just post a pic of yourself. Edmunds TMV is a joke and U know that! Talk about giving buyers unrealistic expectations. BTW Greenpea - 3 months does NOT a car salesman make!

  • csthreatt csthreatt Posts:

    This was great information.

  • Um... best article ever! Thank you. I consider myself a veteran haggler and have always fought for invoice deals. However, in reading this I can easily reflect back and see how the dealerships and salemen tried and used each and everyone of these techniques.

  • nita56 nita56 Posts:

    amazing and so real. The dealership where I work at was so bad. And when I mentioned that some of their salesmen should be drawn and quartered for their customer services.I was reprimanded and fired. Told I'm the new girl I don't get to have an opinion.Customers(buys a $60,000.00) car calling in six times in one day and they are to busy trying to scam the next customer. Adding 2-4% to the rate just to make a profit. Customers staying there for eight hours because their credit is so bad. Then they get charged 25.99%. Then I'm told at my age appearently I know nothing about customer service. I'm a consumer every day. I was appaulled at the behavior and your article is the absolute truth.

  • p51d007 p51d007 Posts:

    As you can guess, there are a lot of bad car dealers, and there are good ones. If you find a good one, STICK TO IT. My father retired as a car salesman after 32 years in 1999, and was ONE OF THE BEST. Small town (less than 5,000 population), but, he had clients all over the USA, and even a few in South America! I asked him long ago how he was so successful. He told me straight out, NEVER lie to a potential customer. Tell them the truth, straight out. Something I've carried with me to this day.

  • Good article. I WAS the sales manager at a very high production import dealer and not all of us were jerks. I was one of the best and ranked in the top 50 in the country. I was also the training manager for new hires. " needs based selling" like you had at the 'no haggle' store was the most effective of them all. Out of the thousands of car deals I either closed, to'ed or turned,very few customers paid too much. It was my experience that half of our customers could NOT pass a drug screen, thorough background check and basic math test, much less have the acumen to be a car salesperson.Customers lied about thier credit, lied about the condition of their cars, lied about accidents and service records, etc ad nauseum.Some of the most entertaining and intelligent men I have ever met was in the car business and although I'm not in the business any longer, I miss the comeraderie but I don't miss the hours or the lying customers who insisted on us buying their 100,000 mile 'highway miles' turd that had been hit more times than Joe Frazier, while insisting that we didn't have the right to make a profit because the 'interwebz told them so" Just do your reasearch on 3 cars you like, find a salesman you can trust and drive your new ride.

  • What is a "reasonable" profit for a dealer to make on a car?

  • izzyrider izzyrider Posts:

    This article was hilarious, brought tears to my eyes with laughter. I always wanted to be a car salesman, well aware of the hard work, long hours and lack of respect for the job. I took the week long car sales course. The description of the participants and instructor was spot on. I too was out of a job after a long career. I learned to shake hands in the correct manner. Never actually took a sales job as they wanted me to pay to take the rest of the course, another sales job by the instructor. Loved the "tuna" story, best part of the entire article, guess that is why they went out of business. I bought that brand of vehicle for my daughter, never saw another "up" in the showroom other than my self, and the sales person was a female. She was very pleasant, enjoyed the experience, but alas she was gone in two months. No tuna, no money. Next time I buy another car, I'll remind the sales person he not scoring a "pounder" on this sale, better expect a "mini".

  • dealernerd dealernerd Posts:

    Sorry my friend, this is not the normal experience for car salespeople. A real car salesperson would recognize this dealership is disorganized and go to another dealership and make a decent living for their family. To qualify yourself as a cars salesperson you need to understand how many hours it takes to become certified and believe in the product your are selling. You are no Irving Silver or even know who his is, so do not call yourself Car Salesman. Its like being the stadium janitor and saying your in the NFL.

  • sanca sanca Posts:

    Thanks for the knowledge. My wife is ready for a new SUV. Hopefully I can use something I learned from this article. One thing for sure is now I can walk away from aggressive, bullying salesperson.

  • stevie9 stevie9 Posts:

    Interesting and pretty much what I remember. Except the pay. Most just pay 150 or 200 no matter how much the dealer made. They just play with those numbers too

  • equinox27 equinox27 Posts:

    Very informative article for the vast majority. I spent 20 years in the car business, starting with selling Pontiacs, and ended up selling Jaguars and Ferraris. The majority of the new car sales information is correct. The no-haggle information is probably correct. however I worked for the only true no haggle car dealership in Florida, and no I am talking about Carmax. This dealership was so effective that the other 3 Chrysler dealerships in town bought them out. The sad thing is that it was very successful, for customers and employees. It is the way the car business should be. Would love for Edmunds to contact me about how this actually worked as it was back in the 1990's. Oh and a footnote. Prior to around 1957 new cars did not have prices on them and that is how dealers made their money, giving different prices to different people on the same car. Which is how the MSRP Manufacturers Sugessted Retail Price came into play, to help level the playing field. Which of course it did not.

  • equinox27 equinox27 Posts:

    Sorry for the typo, I meant to say, no I am NOT talking about Carmax.

  • tifypop1 tifypop1 Posts:

    I was a career auto sales man for over 32 years, and was very successful. I think it is laughable that this clown did i tfor two whole months, and pretends to know something about it. that is like me spending an evening in an nba locker room, and saying i know all about the nba life. you would need o know the highs and the lows to know what that is like, to be the best at your job, like a hired gun, in the old west, where your repuation preceeds you, and people say reverently, "i have heard of you." do you know what it is like to walk by the gm's office. and him beg you to take a three or four thousand dollar advance, cause he knows the cars you will sell to make up for it. or to have you gm advance you ten to twelve thousand dollars after a storm, because he does'nt want you to go someplace else when they re- open, this poor fellow is " a lost ball in high weeds."

  • carpoor3 carpoor3 Posts:

    My wife and I had a horrible experience with Camelback Toyota in Phoenix, AZ. The deal was done until we met with Finance. Oh, my.... This clown wanted to talk about hunting and fishing while piling on "EXTRAS" to the deal. After two hours of saying NO, NO, NO, NO and being frustrated, we finally signed the papers. You can't believe the hard pressure to purchase CAR JACK to protect your car..... After all, Mexico is 3 hours away??? Tire protection in case the helium in the tires leak??? An extended warranty for $3,000.00 in case the car fails??? Doesn't Toyota warranty their cars when they are new??? Scotch Guard the seats to protect against stains??? Uh, no kids! Be sure to take a condom with you if you deal with CAMELBACK TOYOTA in PHOENIX, AZ. You will need the protection!

  • I'm not a car salesman, but I am in the sales profession, and I sell products that are also high-dollar, on a commission basis. For someone who complains so much about stereotyping, there sure was a lot of it in this article. I'm glad you cooled off, somewhat, by the end... but you are still harsh on owners and managers. Is it ok with you that the dealership makes money? I mean, that's why they are in business. Would you not agree that they offer a service? How much profit do you think they are entitled to? If you think that the car sales world is sleazy because it is profit based, you better go off and try some "undercover jounalism" in some other places. I'd start in real estate, stock brokerage, advertising sales, a travel agency, or just about any other industry that involves producing a good or service in exchange for capital. While we're on the subject, I've met plenty of [non-permissible content removed] jounalists in my time...

  • rokster rokster Posts:

    Thanks for the great story, it reminded me a lot of Bill Bryson's writing, making one laugh and (nearly) cry a lot. At least we will soon walk into a dealership well prepared and ready to negotiate.

  • bones1939 bones1939 Posts:

    Why did you have to go undercover? ***On a mission to lie. Anyone that can fog a mirror can sense that you have no intentions on buying a car. Be a real hard working journalist and get a job a car salesperson and get the facts. YOU AS CONSUMER SHOULD KNOW WHAT YOU WANT. DEVELOPE A LIST ITEMS THAT IMPORTANT TO YOU. ie:style, fuel effieciecy, budget. BEFORE YOU STEP ON TO A LOT AN WASTE PEOPLES TIME. THAT EXPEDITES THE WHOLE PROCESS.

  • tbahama tbahama Posts:

    I have been in the car business for 18 years, and this article is the worst written article I have ever read. It's like Edmund's took ever horror story and night mare they have ever heard and put it in this article. The first thing is no one in the franchise car business roles back or employees anyone who roles back odometers. People do prison time for that sort of thing these days. Automotive specialist now days come from all walks of life, college grads, included. We are people too. Not to mention the government uses our industry to track the economy. I think the most disappointment comes from Edmund's themselves. If it wasn't for all the car people in the country, from the lowliest custodian, through the tech's that turn wrenches right up through the high powered exec's like Rick Hendrick. There wouldn't be a place for Edmund's to even exist. I think this is a prime example of "Biting the hand the feeds you!"

  • ghostsales2 ghostsales2 Posts:

    I am in car sales and have been for the past several years. This article is outdated. Much of these things aren't true anymore. Some yes, but most not anymore. First, Many dealerships don't use the sales square anymore. They have come up with different presentations for pricing. Many dealerships have become very competitive with pricing due to the increased presence of online shopping. Used car prices are so competitive that mark ups, or profit are very minimal. As far as the microphones in the booths and such, this isn't common anymore. Most dealerships have no microphones and don't use phones from the sales desk to the tower. THey just speak with the tower directly. Most dealerships are now much more Customer service oriented. Many laws have changed to make car sales easier.

  • ghostsales2 ghostsales2 Posts:

    This article was published back in 2001. 12 years ago and lots of things are different now. Take into consideration that when this was written 9/11 hadn't happened, The shootings of Colorado in the movie theater hadn't happened and the bombings that happened last week hadn't happen. So much time has past and thus so many things are different. If you are a customer and plan to buy a car, I urge you not to go into the dealership thinking you are going to experience these things, because so many laws have changes. We even have a new president since then..2 elections. Things are different then they were back then. 12 years ago.

  • jb3138 jb3138 Posts:

    If people only knew !no way ill buy a new car again ill get a year old or two.

  • pbeng12 pbeng12 Posts:

    yeah gotta love the scum bag tactic these wretched low life "sales" reps use....

  • bkenis bkenis Posts:

    I really enjoyed that. I don't remember a story of this length ever popping up on the yahoo main stories, but it definitely read as a novel, as others have said. Very informative and insightful. Bravo!

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