We "shopped" for cars about 4 weekends and a full week during our holiday.
The car buying experience in the USA is totally different than in Europe.( I generalize for better understanding)
Car buying in Europe
You have read some reviews so you go to the dealership of that car, take it for a test drive. You don't take any salesperson with you. After a while (minutes/hours) you come back. You pick your options, add them all up, and you deduct the 8%-10% (unwritten discount)from the dealer's price and sign the contract. 3 months later you pick up the car that was custom made for you.
Car buying in the US
In the US you pick a certain car from the lot, that you like. You take it for a 15 minute test drive with an annoying salesperson next to you who wants to distract you from paying attention to the car/engine/transmission. When you arrive at the dealership, negotiations start. This process can take hours because the salespeople want to wear you out. Once in a while you hear a bell ... someone has bought a car. You can feel the selling pressure in your little toe.
At first this was very weird for us but we adopted very fast...
I went on the internet to look for salestechniques they used so we were aware of them (and were able to counter them). I found this incredible article from an undercover journalist who became a car sales person. It took me 2 hours to read the whole thing but oh my, that saved us thousands.
some shocking excerpts:
The process begins by asking the customer how much they want for a monthly payment. Usually, they say, about $300. "Then, you just say, '$300... up to?' And they'll say, 'Well, $350.' Now they've just bumped themselves $50 a month. That's huge." You then fill in $350 under the monthly payment box.
I later found out this little phrase "Up to?" was a joke around the dealership. When salesmen or women passed each other in the hallways, they would say, "Up to?" and break out laughing.
The final box on the 4-square was for the trade-in. This was where the most profit could be made. Buyers are so eager to get out of their old car and into a new one, they overlook the true value of the trade-in. The dealership is well aware of this weakness and exploits it.
I later found out that the first pencil is arrived at by the dealership in a very unscientific way. For every $10,000 that is financed, the down payment they try to get is $3,000 and the monthly payment they try for is $250. In this way, a $20,000 family sedan would require about $6,000 down and a $500 a month payment. (These payments are based on very high interest rates calculated on five-year loans. These numbers are so inflated that a manager I later worked with laughingly called them, "stupid high numbers.")
"But here's the beauty of this system," Michael said, "these numbers aren't coming from you — you're still the good guy. They're coming from someone on the other end of the phone. The enemy."
This reminded Michael of something and he laughed. "Here's another thing. Never give the customer even numbers. Then it looks like you just made them up. So don't say their monthly payment is going to be $400. Say it will be $427. Or, if you want to have some fun, say it will be $427.33."
In another post I will explain our strategy when visiting car dealers.
Monday, January 26, 2009
Car buying process
Geplaatst door RamsesVI op 6:07 PM
Labels: Car buying process
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