How to Save Big at a Dealership

First off, lets picture the last time you visited a dealership. I can pretty much play the scenario back to you. You pulled up to the dealer, looked around and within a few moments you went from shaking hands to filling out a credit application. Am I at least close? Well you may be stunned to find out that I don't drive, I never bought a car from a dealer, by myself at least. Nope, I am married to a car salesman. So deal after deal I know what goes on, because I married a car salesman.

Okay, so let first break the myth that "all car salesman are greedy and are going to rip you off". This is not because my husband is a salesman, it's to let you know that if all salesmen were dirty players in the game, we would not have successful dealerships established in almost every neighborhood. But I am not saying there are not greedy salesman either, or even bad dealerships out there, yes they do exist.

First lets understand how a salesman gets paid. Now this varies from dealer to dealer, but these are the averages. A typical salesman makes between 20-30% (25% being the average)commission off the PROFIT the dealership makes. Now you would think that means if a dealer buys a car for $4,000 and sells it for $6,000 that the salesman would make a $500 commission check. But there's something you don't know. The dealership often has something called "Pack" this is money added to the cost of the car including detailing, washing,filling the tank, oh and making sure the company owner and manager above the sales man all get paid first. At the dealership my husband worked at the "pack' was typically $500. So now that $500 in commission turns into only $375. This is what gives the salesman the pressure to keep the asking price high. This is also why most people don't pay asking price.

Now in addition to commission, the salesman is given a salary, usually very small. This salary guarantees the salesman he will take home a paycheck even if he/she sells no cars. But the salary is usually less then $100 per week, so if a bad month happens, your salesman will bring home a GROSS of only $400 a month, so just imagine, if you are his only customer that month, he is not going to want to wiggle on the price.

In addition to Salary and commissions, a salesman is paid bonuses. With some of the incentives dealerships offer their sales staff, the salesman can make most of his/her money by hitting their bonuses. A salesman is offered a unit bonus(example 10 units out per month = $10 per unit 12 units out = $15 per unit)
They are also awarded for hitting the quota for the month (example $300 for selling a minimum of 8 cars for the month). In addition to this they are given bonuses on back-end products, warranties, paint protection, after market parts etc.

What does all this mean to you? Well lets take it step by step. A salesman who wants to earn top dollar usually will never give in to the "below invoice" offer you make, but a driven salesman who is eager to make his monthly bonuses will look at every sale as one car closer to his bonus, and will be more flexible in giving you a "steal of a deal". He also may give you the best price possible and be able to sell you on back-end products that will give him a higher payout.

There is still another level to this though. Salesman are pushed by their managers to sell you the car, even if you came in "just looking" they are looked at as a weak sales consultant if you walk out and don't buy. Salesman catch a lot of mouth for their "ups" (a potential customer) that don't buy or buy from other dealers. It's often their managers and higher ups who make a salesman the bad guy, you know the one who called you 4 times in 3 days to see if you were still interested in the 2003 Dodge Ram.

Now, if you notice the bonuses I mentioned are monthly, this gives consumers yet another advantage. You will typically get the best deal towards the end of the month. This is because they want to get as many cars out as they can before the month is up to be eligible for all the incentives offered by their dealership.

Okay that was interesting right? I didn't hear here you, right? Right! But now let me tell you how to figure out what you can do to make your car buying experience work in your favor.

1) Always speak to the same salesman, whether on the phone or on the lot. salesman "log" every customer they speak with and if another salesman has worked with you they have to split the deal, making them more "greedy" because they are only entitled to 1/2 of all the commissions and bonuses made from your deal.

2) Know what you want first. Don't walk to the lot without even knowing whether you want a 4 door, or 2 door, a used or a new, a 7 passenger or a 2 passenger etc. This make it easy for you to get swept away in a vehicle a impulse buy, and then feel the buyers remorse few days later. your salesman wants you to be happy in the vehicle you choose, that way you recommend him/her to others.

3) Shop within 4 days before the end of the month and agree on a deal within the last day of the month. Not only does this give you power because the salesman want "1 more car out for the month" and he's working hard to get you to buy before tomorrow, so he's moving numbers in your favor.

4) If you love it, put a deposit on it, but don't sign the papers until you have thought about it. This is bothersome to many salesman as they watch their "up" walk out the door, they feel you are not a solid deal, and you aren't, but if you leave a deposit you are showing enough interest in the vehicle to keep him on your side. Take the next day or that night to research your vehicle.

5)After you have signed the papers, talk to management to let them know what you liked about your experience at that dealership, this way, even though you got a great deal, the manager is happy with the sales consultant because of the customer satisfaction you received.

6)Keep in mind that dealerships often have access to the company owner, meaning he usually has an office in the same building you were in. Unlike Wal*Mart, if you are truly irritated by the way you were treated, or even really impressed, let the OWNER know. They always step in on your behalf because it's their name on the building, not the salesman's or other managers.

If you are working a deal at a reputable dealership, you should be able to walk out with a win-win deal. Remember there are dealerships that claim to have a "haggle free" pricing system. These are NOT as good as they sound. Those dealerships make sure that on every vehicle sold, there is always a large mark-up, and you lose your ability to talk them down. These places claim they give the best deals on the sticker price, so you never pay more or less. The problem is they would never list a price that would make them lose money, yet other dealerships will go below invoice at times just to earn your business.

Research is key to getting the best deal. Don't rely on any salesman or saleswoman for that matter, tell you the good, the bad, and the ugly about every aspect of the deal he/she is working. He/she won't spill the beans. However do be prepared, and never buy anything you settled for. It's your game, play it to win it.