Buying a car can be a daunting, confusing and a pretty unpleasant experience. Many people feel intimidated just walking into the car showroom and nothing short of terror when a car salesman spots you. You just know that it all goes downhill from here.
First there will be all of that cheesy small talk and jokes, the test drive, the ridiculously low offer on your part exchange and then the eye watering interest rates on your finance package. This is all before the dealer add-ons and extras start getting chucked at you.
Before you know it you are signing on the dotted line, paying more than you wanted to and not getting anywhere near the true value for your part exchange. If you are lucky you might actually be buying the car you originally came in for.
Wouldn’t it be nice if for once you had the upper hand? Wouldn’t it be nice if you knew all of those little games the salesman plays so you could beat him at his own game?
Well, you are in luck because I actually used to be a car salesman in the UK. I actually worked as a car salesman for over ten years before I got tired of the industry and escaped.
I have worked on used car lots as well as selling Honda, Toyota, Peugeot, Nissan, GM, Hyundai and Ford.
As a former car salesman I have decided to blow the lid and let you in on all of the secrets that car salesman do not want you to know. Friends often ask me questions about buying a car and ask for advice on how to get a good deal. I have taken the most common questions that I am asked and answered them honestly for you so hopefully the answers will help you get a really good deal when you buy your next car, new or used.
How Much Commission do You Make on a Car Sale?
The commission that a car salesman can vary depending on the place they are working. Most car salesman will make around 50 bucks as a minimum flat rate while others will make around 10% of the total profit that is in the sale. As an average a salesman will make between 50 and 100 bucks per sale and then possible extra for selling finance or dealer extras.
Do You Really Have to “Talk to the Manger?”
Most customers when buying a car do not believe that the salesman has to speak to the manager but this is actually a fact. Every single place I have worked as a car salesman has required the sales manager to make all of the decisions regarding part exchange price and selling price of the car you want to buy.
The salesman actually has no control over the numbers and it is the sales manager who makes those decisions. Technically the salesman is nothing more than a go between for you and the manager.
How Much Profit is there in a Car?
When it comes to selling new cars there is very little profit in selling the car. If a brand new car sells without any discount the average profit on a car costing 10k will be a couple of hundred bucks at best. A luxury car costing 100k will have a profit of around 7k. Customers never believe this but it is true. If you wanted to get technical about profits on new cars then you need to be aware that car dealerships will receive a large bonus from the manufacture if they sell a targeted number of cars. This bonus can be anywhere from 40,000 bucks and upward.
Used cars are a different story altogether and are much more profitable. Your average used family car will have a profit margin of 600 – 2000 bucks.
What is the Best Way to get a Good Deal?
I get this question asked a lot. The truth is there is nothing set in stone when it comes to getting a good deal while buying a car. The best advice I can give you hear is do your homework before going down to the dealership so you have an idea of competition and go there ready to buy. If you are willing to make a decision and buy then this is a huge bargaining tool and carrot for you to dangle.
I have lost count the number of times over the years that a customer has said they wanted more money for their part exchange to which I have replied “If I got the sales manager to give you that figure for your part exchange, would you buy my car today?” They then rely with “I’d think about.”
If you are only going to think about it and not buy the car then I will give you a million bucks for your part exchange.
When is the Best Time to Buy a New Car?
Again, there is no hard or set rule as to when the best time to buy a car is. In the UK it was often considered (by customers at least) that the month of a new registration was the best month but that is all bull. If I had to give a best time I would say at the end of a month. At the end of a month dealerships and salesman have a good chance needing sales to hit targets so they may push the boat out for you especially if it means that bonus from the manufacturer.
What is the Worst Thing to do When Buying a Car?
I could fill a book with the things that annoyed me about customers while I worked in the motor trade. First do not come into a dealership wanting to test drive every car in the show room and not want to buy the car for another 6 months. The salesman does not get paid for test drives and 6 months is a long time.
Forget about the idea that cash is good for getting a good deal. Nowadays it is better for the salesman and the dealership if you use finance as they get commission for selling the finance. Cash means nothing in today’s world.
Have You Ever Seriously Stuffed a Customer?
I started in the motor trade when I was pretty young and, yes, I have done this once or twice. It does not happen as often as you might think but twice I had a customer come in and say they wanted to buy a particular car and they had 200 bucks a month to spend. I went off and done the calculations with the manager and the monthly payment came out at 118. I just pumped up the interest rate on the finance to get the figure up towards the 200 bucks a month. The interest rate was horrific for this customer.
I am not proud of it and still regret it to this day and that is 14 years later.
Are Those Add-ons Pure Profit for the Dealer?
They are not pure profit but they do provide a lot of profit for the dealership. In honesty you probably want to take a look at some of the insurances that you will be offered and see if any of them are of a benefit to you but I would advise staying well clear of these lotions and potions that go on the paintwork to protect it and the scotch guarding of the interiors. These products have a huge profit margin in and are a total waste of time. The warranties you get with products like dimondbrite and superguard or not worth the paper they are printed on.
Also the products themselves are seldom applied in the correct way so any benefit they did offer is lost. I have actually lost count the number of times I have saw these products purchased by a customer and then the dealership has not applied them.
If you have a quite word with the salesman and get on with him or her he might be able to get you a few half empty bottle left overs of these products from the valet bay for you to apply yourself.
Do You Treat Customers Differently Based on Appearance?
We should not but we do. The thing is when you work with the public you do hear and see every story under the sun and it becomes a drag.
It is not usually down to the clothes a customer is wearing but rather the way the come into the dealership. If they come wondering in without their part exchange or without any real direction you just know they will waste your time.
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