How NOT to negotiate on a Used Car

I ran across this article on Jalopnik today. Basically it's a gameplan on how to beat up your salesman and get the best deal. In actuality, it's a path to failure and making the salesman hate you.

It gives "tips" like "Don't be excited" and "Don't tell the salesperson exactly what you want".


You are trying to get help from me on how to buy a car. Why would you not give me all the information that I need to help you? Doesn't that sound counter-intuitive? And you're buying a car for myself, why wouldn't you be excited? We feed off of your excitement; it causes us to take you seriously.

And really, that's what it boils down to. You have to appear to be interested, otherwise we won't take you seriously. You want to be taken seriously, don't you? Then act interested. Listen to what the salesperson has to say. Hopefully you test drove your salesperson so you know that you're working with someone that you're compatible with. Once you've gotten that perfect salesperson, it's more than ok to let your guard down and tell him or her what you need.

If you want actual good advice on buying a used car, here's my used car buying guide.



Managing Money on a Commission, Part 1

One of the questions that I get asked pretty frequently is this:

"How do you manage money when you get paid commission?"

The answer? Very, very carefully (I assume, more on that later).

I have made quite a bit of money by selling cars. To give you an idea, I make about as much as someone who is 4 years into a normal entry-level job would make. You see short gains every year, as more and more customers refer their friends and family members, and as those customers start to replace the cars that they've purchased from you. From personal experience, a lot of my business comes from repeat customers and referrals. I have one young family that sticks out in my mind, as they've purchased three vehicles for themselves, and referred in their parents and one of their neighbors. One family, 5 cars. You can't ask for much more than that.

Money still doesn't come in at a constant rate, even for the best and most seasoned salesperson.

So how do you manage money that comes and goes in spurts?

In short, I don't.

You're probably thinking, "How can you write a post on managing money when you work on commission if you don't do it yourself?"

Because it's a two-part post and it's my blog.

I recently came across The Simple Dollar, a money management blog. The author, Trent Hamm, went through a self-described "financial armageddon" as he tried to sustain a lifestyle that he could not maintain without burying himself in credit card debt.

As I read his story, I began to recognize some of his destructive behaviors in my own financial life. I wrecked myself with credit cards, TWICE. I have a crapload of debt I'm trying to manage, including a metric ton of money from my time at Michigan State University. I've begun paying off my debt, but seeing someone else pull himself out of a situation similar to mine is inspiring to me.

Growing up, I had everything I needed. Both of my parents worked for the most part (my mother stayed at home when my siblings and I were small), so I always had food on the table. I had a Nintendo, then a Sega Genesis. But one thing I never quite got the grasp of was delaying gratification. My girlfriend will attest to this. I always have a new cell phone (though I recently purchased an HTC EVO 4G, so I think I'll be satisfied for a good long while). I recently bought myself a new laptop. I bought an iPad when those first came out, simply because I wanted one. Clearly, I have work to do.

So, I'm going to adopt some of his strategies for saving and frugality and apply them to my own life. After I feel like I've accomplished some things, I will do a follow-up post. Maybe watching my climb from the depths will inspire someone else to do the same.



Model Year End Clearance "Deal"

"I'm looking for a 2010 Chevy Malibu." the woman says. She is the standard customer, the one you always picture when you are picturing a retail customer.

"Well, ma'am, we sold out of 2010 Malibu's in June." I say, trying valiantly to prevent my eyes from rolling. "Would you like to look at a 2011?"

"Will the 2011 have the same rebates?"

"No, the 2010 will have more rebates. But there aren't any 2010 Malibus left." I reply. I've heard this question 100,000 times over the past 4 years.

"Can you check for me? I would rather have the big rebate." she says, impatiently.


August and September are usually very, very frustrating months for the new car salesperson.

Not because of the weather, or because there aren't any customers on the lot. It's because of new model year changeover. Late summer is when we tend to get our new models. Because we might still have a ton of inventory left over from the previous model year, General Motors tends to throw extra cash on the hoods of whatever they might have tons of. 

"Tons of cash, hmmm?" you might be thinking. "Might be a great time to get a great deal..."

Not so fast, there, Sparky. 

Usually these great deals turn out to not be so great, after you check out the figures beyond the original purchase price. Let's dig a little deeper, beyond the upfront costs. 

- You're getting a vehicle that is already a model year behind. If you're going to be keeping your car until "the wheels fall off" (I'm so tired of that statement), then this might not matter to you, but if you're anything like most customers, you're going to want to get out of that car sometime in next 3 to 4 years. When you go to trade that vehicle in, it will not be worth as much as a vehicle that is in what is now the current model year. A 2010 Chevy Impala isn't worth as much on the market as a 2011 Chevy Impala.

- Most automakers, General Motors included, include something new on the new model year cars, even if the vehicle was all new the previous year. For example, the 2010 Chevy Camaro has a 304 horsepower V6. The  2011 model has 312 horsepower, as well as the addition of heads-up display. Safe to assume, you'll want the additional features that the new model will have.

Sometimes, though, going with a leftover model can be a good idea. If a model hasn't changed very much from the previous year, saving a ton of money by going end-of-model year is probably a good thing. For example, our half-ton trucks haven't changed much from 2010 to 2011, and you can save about $1,000-$2,000 by going that route.

Just be warned, though, your selection of previous year vehicles is going to be greatly limited. You're getting the bottom of the barrel. You're getting what everyone else didn't want. We can check other dealers' lots to a certain extent, but the likelihood of a trade happening is pretty much non-existent. Go for the deal if you want, but remember, you are at the mercy of the current supply. We can't build any more 2010s!



Time Off

I work a lot. When I say a lot, I mean, A LOT. Where we are, most salespeople have to work 6 days a week. In places like Detroit, salespeople have a union that has negotiated weekends off for salespeople. Lucky them. Though I can't see how not working on a day like Saturday could be a good thing. Most of our sales and leads for the upcoming week come in on a Saturday. It's the day that most people have off. At any rate, I only take one Saturday off a week.

This weekend is not one of those weekends. I need to make one more sale to really make my paycheck pop. I'm scheduled to work, but if I needed to take the day off, I could. After work, a few of the guys from the dealership are getting together to grab a few beers and watch the game at our GSM's bar; he co-owns a blues joint not far from downtown. Because I don't want my beautiful girlfriend to worry, I'll be calling a cab to get home or hitching a ride. No DUI for this guy.

Since salespeople are just that, people, we all have different ways we blow off the steam from being pressure-cooked on a parking lot for 60 hours a week. Some drink, some hunt, a lot of us play golf (a sport I've never gotten into). Poker nights are also normal events.

Myself, I'm a foodie. I love going to restaurants and comparing them, trying new things. I've become a big fan of authentic Italian and Mexican restaurants. I also make the hour drive to visit my aforementioned beautiful girlfriend twice a week.

My point? The same point that I've made countless times in this space; Car salespeople are people. We just have better methods of persuasion than you.



How to get the most for your trade-in

One of the things that people hate most about the car-buying process is getting what they believe is a proper amount for their trade. Most of the time, a customer is a bit out of step with reality, because they have an emotional attachment to their old car; it ferried them and their family to various destinations, it was a unique color, maybe it even saved their life. Because of the emotional attachment, customers tend to think their car is worth a lot more than it is.

We dealers, however, have to look at the car from an empirical standpoint. Your average dealership probably looks at 10 trade-in vehicles a day, and countless more on various auction sites. (Auctions are a great way to bolster inventory.) If you have a blue 2008 Chevy Impala with 42,091 miles on it, we can probably put a valuation on it without even seeing it. We don't have an emotional attachment; further, we can't afford to price ourselves out of the market on your vehicle by giving you much more than the vehicle is actually worth on the open market. So, to arrive at a value for your trade-in vehicle, we will do the following:

1. We will write up an appraisal form, with all of the pertinent information about your vehicle, including the VIN and the equipment.

2. We will get a CARFAX on it. (yes, dealers use this, too)

3. We will check the Manheim auction reports to see how much a vehicle like yours would bring if we were going to purchase it from somewhere else.

4. We will also check the NADA book to see how much a bank would loan for your particular vehicle.

That's how it works. That being said, it isn't that hard to get us to go a little further for you and try to earn your business by getting you a bit more for your trade that it's actually worth. This is called an over-allowance. Here's how to get one.

- Don't be a prick. Dealers are people too. We are far more likely to try to help people that we like. If you are nice, we will try to help you as much as we can. Honestly. I can't stress this enough. Acting like a jerk will make your salesperson hate you and attempt to add your name to his wall of fame of sky-high commissions.

- Clean up your vehicle. I know we should look past the dirt and Cheerios that your kids ground into the deep fibers of the backseat, but we can't. If the outside of your vehicle is unkempt, how likely is it that you took care of the mechanical soundness of the vehicle? Take it to a car wash and vacuum the seats. I promise you, that alone is worth another $300 at least.

- Tell the dealer how much you want. If we know going into the appraisal that we need to hit a certain number to put a deal together, the likelihood of us getting to that number increases dramatically. If you're unrealistic, most dealers will tell you.

- Tell us what is wrong with the vehicle up-front. Just be honest. If it has a check engine light on, and you know what the cause is, tell us. A check engine light could be as much as a $1,000 swing in the value of the vehicle.

- If you have a "niche" vehicle (think Hummer H1, Corvette, Pontiac G8) please be patient as we put a number on it. And don't even think of trying to have us put a number on it when the vehicle isn't present.

That's it. It's simple. Just be nice, and be realistic. Doesn't sound too hard, right?


Why You Should Buy an American Car

It's about time I talked about this. I work at a domestic (read: American) car dealership. We sell General Motors products. A lot of them. We have people that occasionally ask us, "Why should we buy American? Aren't foreign cars better?" A few of us cringe when we hear that question, because we already know that there is an extra wall of psychological mishmash that has to be dealt with, as well as a customer that already thinks our cars are no good.

I guess I should make one thing clear: I have no problems with people that buy import cars, as long as they do the following:

1. Research ALL the competition, not just imports. If you're looking at a Toyota Camry, you should also be looking at the Chevy Malibu and Ford Fusion. If you're looking at a Toyota Tundra (I wanted to use a different make, but Toyota is the only import make that actually has a real truck. Shut up, Nissan.) you should definitely be looking at a Ford F-150, Chevy Silverado/GMC Sierra, or Dodge Ram as well. Consider all the alternatives, especially given the level of quality coming out of American factories.

2. Have a need that a domestic car simply cannot fill. I had a customer one time that was looking at the Chevy Traverse and comparing it to the Honda Pilot. The Pilot would fit in her garage, the Traverse would not. I have no issues with her decision to purchase a Pilot based on that fact.

A lot of people think that import cars are somehow "better". I challenge this assertion with one of my own: Import cars now are not "better", they are simply different. The average consumer in this country has been buying American cars for most of their adult lifetime. If they lived through the all-but-implicitly-declared American garbage in the 80's and early 90's, and then a smug Honda salesman puts them in a brand new Accord, of course they are going to marvel at how well put together the Accord is.

But here's the thing: It's 2010. Everything is well put together now. The import manufacturers simply looked at what American makers were doing wrong in 1993, improved upon it, and released cars that were a notch or two better assembled. A brilliant move on their part, because General Motors (for example) didn't figure out how to build a good midsize car to combat the Camry and Accord until 2007 with the 2008 Chevy Malibu. That's enough time for a lot of midsize car customers to jump ship. And they did. Now American midsize cars are equal to if not better than the imports, and our fight is to get people to look at us again.

Back to my point about imports being different. I had a smartphone addiction for about a year and a half. I had every new phone that came out. Every phone did everything that the phone before it did, it just did it differently. I got addicted to the different-ness. Autos are the same, albeit with a far greater financial investment. People can get addicted to different.

What is far more important, at least for this country, is that the domestic automobile companies essentially created the middle class. By working with the United Auto Workers and getting higher wages, a new economic class was created and bolstered, allowing ancillary services and goods to flourish. Drawing the parallel, if not for Ford, GM, and Chrysler, would we have flat-panel TVs and smartphones? Maybe, but how many of us would be able to afford them?


Selling Cars to Family

One topic that I haven't touched on at all in this space is how car salesmen sell cars to members of their own family. Almost everyone in my family has purchased a car from me, as well as a few members of my girlfriend's family.

It's always a sticky situation. You have to take care of everyone involved; the family member, the management, and yourself. It seems like no matter what you do in a family situation, someone always has to sacrifice. Normally, it's the salesman. We get crunched from both sides; the family tries to get a car for free, and the management tries to maintain a healthy profit margin.

Perfect example: My girlfriend's aunt and uncle came in to buy a vehicle. Let's call them Bob and Sue. My girlfriend's father wanted me to take care of them. I did, giving them a deal on a pre-owned Chevy TrailBlazer. The TrailBlazer had leather, seats with heaters and memory function, sunroof, CD changer, and premium sound. I gave them a $2,500 "family" discount, and I certified the vehicle at no extra cost to them (giving the vehicle an automatic warranty). They were happy.

My girlfriend's father, however, wasn't convinced that we gave them enough of a discount. I countered, saying that by covering the certification, we in effect gave them a $3,000 discount. There's no way we would have taken that much off for a normal customer. (A note: Perhaps we might end up taking that much off for a normal customer, but whereas a normal customer would have to fight tooth and nail to get us to that price, I made sure the deal was sweetened for Bob and Sue enough to not have any further discussion.)

Pressure. From all sides. A good deal is a deal that makes all sides happy. It's not something that happens often when family is involved.

It's a little different when you're working on a new car. I sold my father the first Buick Regal in town. There weren't any rebates available on the Regal, so we could only offer a slight discount on the vehicle. We made it up on the trade-in, giving him $500 more that we had appraised the car for. He was tickled, though, because the Regal is a gorgeous car that has earned him a ton of respect and kudos.

In the end, when it comes to a family deal, we salespeople try to take care of our own. It's just a little harder than everyone thinks it is.


The book is on hold

Well, due to some things going on in my life, namely working too freaking much, I've had to put the book on hold. Though, it probably wasn't time to do a book anyway. So, I'm just going to concentrate on the blog for now.