Car Buying 101 - A View From The Inside

With 19 years in the auto sales business I have decided to share some insight to the managers side of the car deal. So many websites try to coach a car buyer with out knowing the whole story. I would like to help you understand some of the things that work and some of the things that don’t as well as enlighten automobile purchasers on some of the mistakes that can cost you money!

A VIEW FROM THE OUTSIDE I have recently left the retail side of the automotive business.  After almost 20 years in the industry I am now working for a great company that provides insight to auto dealerships and teaches them how to look at the market around them vs gut feelings on how to buy sell and merchandise vehicles.

What does this mean for my blog followers?  Maybe a little more information… but not much of a change.  You see, no matter what my job description is, I am still a sales manager.

I understand how people perceive sales people… hell… I even shy away from them when I’m not in my area of expertise.  That is actually what this conversation is about today.

I found myself laughing in my own head the other day at a grocery/everything store.  When I walked in the door the young man said welcome to “..”  can I point you in the right direction.  I of course said no instantly.  Reality was… I just needed to find a cake pan.  Now he could have saved me time if I wouldn’t have done the normal thing that we all do…. went into just looking mode and assumed anyone who is trying to sell us something is not there to help us but to help themselves.  You see… gut reaction is to say “just looking”. Of course your just looking when you go out to a car dealership… you don’t buy a car with out looking at it first.  But, we are all afraid to ask for help.. or guidance.  It shows weakness and allows the salesperson to have control!!!  Well guess what.  We have a new thing called the internet.  Prepare yourself before you arrive.  Do your homework.  And don’t be afraid to ask questions or ask for help.  Good salespeople are there to help and guide you in a purchase.  If they do a bad job and you don’t buy a car it was a waste of their time also.. and most of them are commission based.. so it really hurts them to suck at their job.  So give them your wants and needs when you explain what you are just looking for.  But don’t show up blind.  Look online, read reviews  do some research about the car and the dealership!

You may find yourself with no help and unanswered questions… like I did.. standing in the cake mix aisle… when I should have been on the other side of the store.. in the kitchen items… 20 minutes of my life I will never get back…

It surprises me how often customers come in to the car dealership and argue about the price of the car or the car payment and never look at the entire budget decision.

As an auto dealership, we are here to sell cars.  Most of our customers are very budget minded.  They tend to focus on the payment or even the amount financed.  So we try our best to negotiate a win win purchase.  But when a customer stops  the process based on a budget and the payment is within a few dollars, I am surprised at how little they have done to prepare the budget for the purchase.

There are 4 items I try to get my salespeople to look at in every purchase decision.

1) The monthly payment of the car.  This is the obvious (duh) portion of the budget.  The customer has a predetermined payment in their head before they even set foot on the car lot.  My favorite is when that payment is $200 a month and they start looking at $25,000 cars.  Quick math… $25,000 divided by $200 a month is 125 monthly payments!  That’s right!  If you had a zero percent interest rate and no sales tax, you would be paying on a car for over 10 years!  So please…. do some research (and math) before you go shopping.  There are plenty of great payment calculators out there on the internet that can show you the price range for your budgeted payment.  But also, notice that newer cars offer longer loan terms.  $200 a month may buy you a high mile $7000 older car on a shorter term (36 months) than $200 a month on a lower mile newer car that can go 72 months financing around  $13,000.

2)  What about your insurance?  When is the last time you shopped around for insurance?  That’s right!  Insurance is mostly commission based as much as car sales!  There are many agents that come to the dealerships offering gift cards for each customer sent to  them.  Why?  Because they are commission based and more referrals equals bigger pay checks!  So shop around!  But be smart!  Make sure the prices you are getting are for comparable coverage.  And I cant stress the importance of customer service.  The best service I have ever gotten was from a commission based agent… why?  Because his paycheck depends on his service!  It is his best sales tool.  But, if you can save $10 a month on insurance… that equals out to about $500 more for the car you want to purchase… now that sunroof model looks more affordable!

3)  Fuel savings.  If you are a sales professional you may already use this tool.  If gas is $3.00 a gallon and you have an SUV that gets 12 miles per gallon and you are considering a smaller SUV you may want to look at the savings.  If the newer more fuel efficient model is getting 24 miles per gallon you are spending half as much on gas.  If you are driving the average 12,000 miles per year thats $1500 a year in fuel savings.  That frees up an additional $125 a month in payment.  Now… most of the time there is not that much of a swing… but even if its half?  Now were talking!

4) This one is a real surprise to me.  It has become more researched by consumers in the past few years and that’s a great thing!  INTEREST rate!  Depending on the size of your loan, this could save you $5 $10 maybe even $20 a month.  Get pre-qualified for your own good!  Visit your credit union.  Get an approval and print it off.  Take it with you.  Tell the salesperson while you are negotiating that you are pre-approved and ask them to give you a better offer to earn your financing.  They want your financing!  We are signed up with numerous credit unions to work on their behalf.  They pay us for the contract!  We make you a member at the dealership and give you the same rate as they would give you at the credit union branch.  So give us a chance to match or beat the rate you have. It can only benefit you.  But you need to have a starting point.  And please understand… get pre-approved!   Don’t walk in to your bank and ask what the best rate is and come tell us.  We know most of the rates.  And they are usually short term loans. Bring in the letter and use it as a bargaining chip.

If you use this advice you may be able to  upgrade  to a nicer car… or just save yourself some money that you could apply toward your other debt!  But don’t go in so  stubborn about your budget that you miss out on a really good deal.  Get your ducks in a row and make the right decision!  Just a shout out to my friends over at GreenCash4Cars who have been paying the most cash for cars in Anaheim, California & surrounding Orange County areas for nearly 30 years.

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