As published in The Chicago Daily Law Bulletin
Jeff is a car guy. He was describing how he saved his friend $6000.
“My friend's all amped up,” Jeff told me. “He wants to buy this car. This exact Toyota 4Runner. He's excited. But the numbers weren’t right. I looked at him and I said, ‘Listen, you drag me here, you've wasted my time. I will be insulted if you buy this car.’ He's like, ‘Yeah, but I really want it. I'm going on a road trip next week. I want to take the car.’ I said, ‘Listen. Take $500, rent a car, and I promise this will go better.’ I talked him off the ledge. He was disappointed, a little Eeyore with his tail between his legs. A week later, he found another at a different dealer.”
“My friend's all amped up,” Jeff told me. “He wants to buy this car. This exact Toyota 4Runner. He's excited. But the numbers weren’t right. I looked at him and I said, ‘Listen, you drag me here, you've wasted my time. I will be insulted if you buy this car.’ He's like, ‘Yeah, but I really want it. I'm going on a road trip next week. I want to take the car.’ I said, ‘Listen. Take $500, rent a car, and I promise this will go better.’ I talked him off the ledge. He was disappointed, a little Eeyore with his tail between his legs. A week later, he found another at a different dealer.”
Lesson number one, it’s all about not caring. By finding a way to get past the urgency, John got a much better deal. Eagerness is expensive.
Lesson number two, “So, you really want to know if you’re done? Get up and leave.” An earlier deal got stuck on a tax question. The salesman came out of the office with a three-inch binder where he’s going to prove the tax is right. “Good luck finding anything in a three-inch binder. I say it’s wrong, with conviction. He says it’s right, with conviction. I say, ‘C’mon let’s go.’ We walked out the front door of the dealership. These guys are chasing us. ‘Come back. Let’s get it done.’”
Lesson number three, “Get them to negotiate against themselves. The first person who talks in a negotiation loses. So, the car's 30 grand. ‘What would it take for you to buy this car?’ ‘I don't know. What can you do for me?’ ‘Well, I went and I talked to the manager. He can do 29.’ ‘Yeah, I don't think 29's going to work. Why don't you see if you can get him to sharpen his pencil?’ ‘Well, he's going to want to know what you're willing to buy it for.’ ‘Well, I'm not buying it for 29. I'm not sure what I'm going to buy it for. But let's see what he can do. I'm serious. I'll buy it today. I brought my checkbook. Here it is.’"
Lesson number four, knowledge is money. A car buyer should consider:
* Geography. “ If you're buying an Audi on the North Shore it's different than buying an Audi in Loves Park out by Rockford because of where affluent people live that buy high end cars. The other way is also true. It's different in Rockford because you're the only game in town.”
* Timing: “Calendar year plays into it, because just like they have monthly sales quotas, every business in the world has annual sales metrics that they're trying to hit. A lot of times, the management with authorization to make the deal gets paid or bonus’d based upon unit volume or profitability of the dealership.
The other thing is, model years. “If you are looking to buy a Honda CR-V, all the cars at all the dealers are 2018s. At a certain point in time, '19s will come out. It might be the exact same car. But it certainly devalues the '18 because when you go to trade it in five years from now, the '19's going to be worth more than the '18. So, keeping track of, when's the 2019 coming out? Am I willing to wait for it? Is anything different on the 2019?”
* Dealer’s Invoice. "The dealer will present it as, ‘This is what we paid for the car. This is the invoice. You can't expect me to lose money by selling it to you for less.’ Forget that doom and gloom situation. The tactic often works and it gets people to say, ‘Well, okay. If the dealer pays $28,000 for this car and they're selling it for $30,000, I can't expect them to not make any money on it. So, I'll buy it for 29. That seems like it's fair for everybody.’" The reality is there's plenty of backend money for the dealers. Some people call it holdback. Some people call it factory incentives. Just because the invoice price is 28 grand doesn't mean you can't buy the car for 26.”
Lesson number five, showing you’re ready to make the deal. There's a big difference negotiating on a hypothetical transaction and negotiating on an actual imminent transaction. You might say, ‘Okay. Well, I'm not buying it today. I need to come back with my wife. She's got to drive it,’ or, ‘Where are we at on money?’ Maybe you press them a little bit. But you're not going to get the best deal until you walk in and say, ‘I will buy it today.’
“Because if I'm a dealer, the last thing I want to do is give you a number that you can shop because I don't want to be the second to last person to give you a number. I want to be the last person to give you a number. I want you to walk into my dealership with a number from somebody else's car dealership and say, ‘I'd rather buy from you. You're closer to my house,’ or, ‘You have a purple one,’ or whatever the case may be. ‘But you got to meet this price.’ Because now I know that at least, if I say yes, which again, I'll only do if I'm going to make money, then by saying yes, I have a sale.”
Don’t hesitate to negotiate other terms like warranty and look carefully at taxes and destination charges.
Don’t hesitate to bring help, even a friend who is not invested in your purchase.
Be nice, be respectful, but know what you want and be firm.
Probably same advice for a case.
Lesson number two, “So, you really want to know if you’re done? Get up and leave.” An earlier deal got stuck on a tax question. The salesman came out of the office with a three-inch binder where he’s going to prove the tax is right. “Good luck finding anything in a three-inch binder. I say it’s wrong, with conviction. He says it’s right, with conviction. I say, ‘C’mon let’s go.’ We walked out the front door of the dealership. These guys are chasing us. ‘Come back. Let’s get it done.’”
Lesson number three, “Get them to negotiate against themselves. The first person who talks in a negotiation loses. So, the car's 30 grand. ‘What would it take for you to buy this car?’ ‘I don't know. What can you do for me?’ ‘Well, I went and I talked to the manager. He can do 29.’ ‘Yeah, I don't think 29's going to work. Why don't you see if you can get him to sharpen his pencil?’ ‘Well, he's going to want to know what you're willing to buy it for.’ ‘Well, I'm not buying it for 29. I'm not sure what I'm going to buy it for. But let's see what he can do. I'm serious. I'll buy it today. I brought my checkbook. Here it is.’"
Lesson number four, knowledge is money. A car buyer should consider:
* Geography. “ If you're buying an Audi on the North Shore it's different than buying an Audi in Loves Park out by Rockford because of where affluent people live that buy high end cars. The other way is also true. It's different in Rockford because you're the only game in town.”
* Timing: “Calendar year plays into it, because just like they have monthly sales quotas, every business in the world has annual sales metrics that they're trying to hit. A lot of times, the management with authorization to make the deal gets paid or bonus’d based upon unit volume or profitability of the dealership.
The other thing is, model years. “If you are looking to buy a Honda CR-V, all the cars at all the dealers are 2018s. At a certain point in time, '19s will come out. It might be the exact same car. But it certainly devalues the '18 because when you go to trade it in five years from now, the '19's going to be worth more than the '18. So, keeping track of, when's the 2019 coming out? Am I willing to wait for it? Is anything different on the 2019?”
* Dealer’s Invoice. "The dealer will present it as, ‘This is what we paid for the car. This is the invoice. You can't expect me to lose money by selling it to you for less.’ Forget that doom and gloom situation. The tactic often works and it gets people to say, ‘Well, okay. If the dealer pays $28,000 for this car and they're selling it for $30,000, I can't expect them to not make any money on it. So, I'll buy it for 29. That seems like it's fair for everybody.’" The reality is there's plenty of backend money for the dealers. Some people call it holdback. Some people call it factory incentives. Just because the invoice price is 28 grand doesn't mean you can't buy the car for 26.”
Lesson number five, showing you’re ready to make the deal. There's a big difference negotiating on a hypothetical transaction and negotiating on an actual imminent transaction. You might say, ‘Okay. Well, I'm not buying it today. I need to come back with my wife. She's got to drive it,’ or, ‘Where are we at on money?’ Maybe you press them a little bit. But you're not going to get the best deal until you walk in and say, ‘I will buy it today.’
“Because if I'm a dealer, the last thing I want to do is give you a number that you can shop because I don't want to be the second to last person to give you a number. I want to be the last person to give you a number. I want you to walk into my dealership with a number from somebody else's car dealership and say, ‘I'd rather buy from you. You're closer to my house,’ or, ‘You have a purple one,’ or whatever the case may be. ‘But you got to meet this price.’ Because now I know that at least, if I say yes, which again, I'll only do if I'm going to make money, then by saying yes, I have a sale.”
Don’t hesitate to negotiate other terms like warranty and look carefully at taxes and destination charges.
Don’t hesitate to bring help, even a friend who is not invested in your purchase.
Be nice, be respectful, but know what you want and be firm.
Probably same advice for a case.