5 Things Your Car Salesperson Isn't Telling You
Published in MoneySense, Feb 18, 2016, Written by Prajakta Dhopade
- The dealer invoice price is a sham. The figure a salesperson quotes you is used to set an inflated starting point for negotiations, according to vehicle buying expert Viraf Baliwalla. "A manufacturer generates two levels of invoice for the dealership," he says. "One is meant to be shared with the public to make it look like dealers don't make that much money. The other one is confidential. The consumer is never going to see it."
- You're never actually negotiating with me. After giving a salesman your first offer, don't be surprised if he excuses himself "to go talk to the manager." That's because the sales manager is the one who's really running the show—and now the dealership knows the minimum amount you're willing to pay. "The system's been very carefully designed so that the salesperson is just a buffer to give their side greater leverage," says Baliwalla.
- Always buy at the end of the month. Salespeople typically have monthly quotas, meaning you'll have a better chance of snagging a good deal during the last week of the month if your salesman is worried about meeting his target, says Sujan Inpanathan, an automotive consultant with Car Help Canada.
- But beware of monthly payments. Don't get distracted by low monthly payment numbers, warns Baliwalla. "Dealers are taught right from the get-go to get customers onto monthly payments as soon as possible," he says. That's so it becomes difficult for people to equate the monthly costs with what they're paying in total. Stick to the full price to focus on getting the best deal you can.
- Steer clear of replacement cost insurance. Dealers can mark up these products by 50% or more and typically charge the full insurance amount up front, says George Iny of the Automobile Protection Association. Always check with your own auto insurer for more reasonable and flexible payment options.