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Negotiating The Selling Price
You take a seat in the car salesman's office. You settle back. And now the real games begin. He takes out a "customer proposal form," otherwise known as the "write-up" and asks you for some pertinent information: your name, address and so on.
Then he casually hits you with this: "So what have you budgeted for your monthly payments?"
You think for a moment. He waits for your answer. You swallow hard, then reply, "I suppose I would feel comfortable at $250 a month."
A look of concern appears on the salesman's face. "Hmm, that seems a bit low," he says. "You can stretch that monthly payment up to . . . ?"
Then silence. You think about your budget. He waits patiently. You begin to squirm. He doesn't flinch. Finally you reluctantly answer, "I guess I can squeeze out $275 a month."
BAM! You just bumped up your own bid by $25 per month. $25 times 60 months (that's the usual loan term these days) equals $1,500. In one smooth move, he got you to raise your opening bid by $1,500! And he's just getting started.
What's important to realize here is not only how slyly and easily he got you to raise your bid, but this:
No matter how much money you offer, the car salesman will say it's not enough.
Remember his goal: he wants to sell you a car at the highest possible price. The more you pay, the more he earns. So while he's acting like he's your best friend ("My job is to help you get what you want."), he's actually working very hard to extract as much money as possible from your wallet and put it into his.
Now he shakes his head. "That still seems low," he says. "Is that the most you're willing to spend to own that beautiful car?" You reconsider for a moment, then shrug. "I really can't afford any more than that," you explain. "I'm stretching my budget as far as I can."
"OK, I'll see what I can do," he says as he stands. You hand him the keys to your trade-in so it can be appraised. He smiles. "Wish me luck." "Good luck," you offer hopefully.
He walks to the Sales Manager's office and disappears inside. And you sit and wait. And wait. And wait. This is a game of strategy and part of their secret strategy is to wear you out, both physically and emotionally. So they'll keep you waiting as long as they think necessary to chip away at your stamina. Besides, you couldn't leave if you wanted to. They've got your car keys. They've got you under control.
You see, the reason the dealership is so successful at winning this game is because it's played on their turf with their rules and their methods. It's all about control.
The dealership must be in control of you and the entire buying situation in order for them to win their game.
That's why they follow specific steps. That's why they sometimes ask for a deposit check. That's why everything about buying or leasing a car is so structured.
After a long wait, the salesman returns. He smiles and tells you he's got a great deal for you: you can drive home in that car right now for only $412 per month and with a down payment of only $3,500. Then the salesman leans back and waits for your reply.
No matter what you say at this point, you're sunk. They've got you right where they want you. That's because this is a shell game. If you want more money for your trade-in, that's fine. But your monthly payments will go up. If you want lower monthly payments, that's fine too. But your interest rate will go up. The salesman explains all this to you in a manner that actually makes this crazy game seem logical. He expertly explains away any and all of your objections with well-rehearsed lines and phrases, all the time insisting that this deal is too good to pass up. LEARN MORE!
Then, after all of his explanations, he asks you for your final approval. "All you have to do is say 'yes' and that car is yours," he says temptingly. "You can drive it home right now."
You think for a moment, then explain honestly, "I'm sorry but I can't afford $412 a month."
So the salesman leans forward as if he's sharing a secret. "Look, we have a big shipment of cars coming in tomorrow and we need to move as many vehicles off this lot today as we can. We really want to earn your business. Just tell me what it will take."
"Wow," you think to yourself, "this must be my lucky day. They're overstocked. Maybe I can get a real bargain here." So you answer, "OK, I'll go $350 a month. That's my final offer."
The salesman replies: "I certainly can't promise you anything, but let me ask you this: if I can persuade my manager to get your payments down to $350 a month, will you drive that car home today?"
He's asking for a commitment. "Well, I've come this far," you say to yourself. "It would be a shame to walk way with nothing to show for it." You're in deep. And you really want that car. So you manage a nod of approval. "Sure, I'll drive it home today."
The salesman smiles, stands and strolls back once again to the Sales Manager's office . . .
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