Car Loans (Part 1)

There are many factors that can effect a car loan. Some of these factors may seem obvious, but there are several others that the average consumer may not be aware of. Some of these include your personal risk factors, the length of the loan (referred to as the term), amount financed, vehicle risk factors, and loan to value. Each one of these factors can have a significant impact on your monthly payment. I will be posting seperate blog posts for different pieces of this to keep each post from getting dragged out too much. For this post I will start by explaining credit.

Obviously your own personal credit is the number one factor in determining whether you will get financed, how much you will get approved for, what rate you will recieve, etc. Even this can get complicated though. It is a no-brainer that the better credit you have, the better your rate will likely be. The interest rate that you are charged is dependent on how much risk the bank would be taking in loaning to you. It is like playing the stock market. The more volatile the stock, the higher the return can be or, conversely, the more you can lose. 

The same goes with the bank loaning you a vehicle. The bank is taking a chance on whether or not you will repay the debt and how consitent you will be in doing so. A bank is trying to determine whether or not you will pay your loan back monthly at a specified amount. This is not just about whether or not you will pay, but also how much effort they might have to exert to get you to pay, for example phone calls and letters. The bank will look at several factors. Initially, they will look at your credit report and determine whether you have paid other loans monthly at a specified amount. 

Often, people will get a small loan to start building their credit or get a credit card. While these loans will definitely help, it will not be as much as buying a car or buying a house. Your ability to pay matters, too. When looking at a loan, the banks and credit agencies will calculate your ability to pay compared to other people. Essentially the bank is asking, “How many people can afford to pay this $75 a month loan?” Obviously a higher percentage can afford this payment than a $400 a month payment. 

Banks will also be determining how much free cash flow you have a month. Although you may have an 850 score, you might only make $10 more than what your credit report shows you owe a month. This an exaggeration, because you will not have a perfect credit score if your debt to income (how much you owe compared to how much you earn) is too high. A credit report will estimate your debt to income without knowing your income, and it will effect your score, but it will not tell the whole story. 

The timing of your accrual of debt also matters. If you have not borrowed money very often, but you buy a house and a car back-to-back your credit will likely take a large, albeit temporary, hit. The credit companies will want to make sure that you have not lost your mind and decided to go on a massive spending spree (If you do decide to do that, just remember that I love you). That is one reason not to buy a vehicle right before, or in the process of, buying a house. The bank will want to see that you can afford a car itself before they will risk money on whether or not you can afford a car and a house at the same time.

Another fact concerns whether you are a nomad or not. Do you move from town to town? Are you a job hopper? Is this your first real job? If you cannot stay in one place or you are unable to hold down a steady job a bank might worry about your ability to pay for the periods that you are unemployed. If you are just getting your first big kid job they will likely be wary about letting you pay them $600 a month when you just started making $600 a month. You “millenials” scare the ever living crap out of banks (and me, too, sometimes).

There are many, many, many other factors that effect your score and your chances of getting a loan, but I am nearing unconsciousn…… ess from boredom just typing this. Off to more exciting stuff…

Real Caring vs. Perceived Caring

I know where you think I am going with this. You think I am going to tell you how to tell how other dealers or other salespeople may act like they care when maybe they do not, but this post is a confession. I truly care. I want people to find the vehicle that best fits their wants and needs at a price that best fits their budget. I want people to be happy with their purchase. I am destroyed when I find out that a vehicle that a customer has purchased from me has caused them probems. But this is not a post about how great I am as a salesperson. It is about how I have failed to properly display how much I care at times.

Earlier today I was making calls to follow up with past customers. I was rolling right along thinking how awesome I was for actually making these follow up calls, because, as I am sure many of you have experienced, a lot of salespeople in the car business do not provide good follow up with sold customers. As I was making these calls though, I could tell something was off.

Some customers sounded very appreciative. Yet others actually seemed disappointed. I have had this feeling before, and I have always been unable to put my finger on the problem. That is when I heard a booming voice from on high. Ok, actually it was just Richie Tipton, our new car manager. If you know Richie, you will know why I use the term booming.

Richie asked me what the problem was with my call. I was beginning to think Richie was a mind reader, but he simply said, “You need to sloooooooow down.” That is when Richie pointed out the problem that had escaped me. I sounded scripted. I am scripted. Here is what I say:

Me: “Hi, this is Bill Vaughn from Kirksville Motor Company. You purchased a X from us X months/years ago and we just wanted to follow up and see how things were going.”

Customer: “We are doing just fine.”

Me: “Great! If you ever need anything from us, please do not hesitate to give us a call!”

Offhand reading that it probably does not sound so bad. Now imagine hearing someone say that who you might imagine has said it over and over again for the last year and a half. Guilty as charged.

What Richie pointed out to me was that it did not matter how sincere I feel in caring about the customer. If they do not feel that then it is not real. That resonated with me, because I am a believer in the idea that perception is reality. I am so used to saying my unintended script and hearing that everything is fine that I just blow right through it.

The problem is not that I do not care. It is that on these calls I sometimes do not seem like I really care. Frankly, it sucks realizing I have let those customers down rather than having made them feel even better about their purchase and where they bought their vehicle. Outside of addressing any potential issues, that is the entire point of the call.

Bravo to Richie. Richie did not tell me that I needed to work on this to sell more cars. He told me this because he wanted me to do a better job of showing customers that I care, and that means he cares. After all these years in this cutthroat business, that often gets drug through the mud, it still matters to Richie that customers feel cared for. And it means a lot to me that Richie took time out of his day to make me better.

What Is My Trade Worth

It is one of the first questions that customers ask, but it is the wrong question. What customers should be asking is, “What is my trade really worth.” Sounds like the same question, but one word can make a huge difference. It can be the difference between a customer getting a truly good deal and a customer being made to believe they are getting a better deal than they are. There are a few keywords and some jargon to listen out for such as “showing” and “ACV (aka: Actual Cash Value).”

 What is meant by “showing” is that the dealer wants to give a certain amount for a trade-in, but they want to show the customer they are giving more. As for actual cash value, it is the price a dealer might actually pay you in cash for your vehicle even if you do not buy anything from them. The difference is that at a best price store actual cash value is something said directly to you. At a negotiable price store, it is just jargon that would only be heard whispered in smoky back rooms.

Here is the math for 2 completely different deals:

Deal 1:

Sticker Price: $20,000
Actual Cash Value of Trade-In: $10,000
Difference: $10,000

Deal 2:

Sticker price: $22,000
Showing Value of Trade-In: $12,000
Difference: $10,000

If you look at only the botton line, these look like virtually the same deal. In each deal the customer is going to pay $10,000 after trading in their vehicle. The second might even look like a better deal, because it seems like the customer is actually getting a more expensive vehicle and getting more for their trade. If the vehicle in Deal 1 and Deal 2 are the same vehicle though, what gives?

There is a difference between sticker price and an actual sales price. In Deal 1, the sticker price is $20,000 and the actual sales price is also $20,000. In Deal 2, the sticker price is $22,000, but the dealer is willing to negotiate the sale price to $20,000. Instead of simply selling a customer the vehicle for $20,000, telling the customer they are getting an actual cash value of $10,000 for their trade, and leaving the difference at $10,000, someone at the dealership realizes that the customer believes their vehicle to be worth more than $10,000.

To mitigate this situation, the dealer continues to state the sale price at $22,000 and shows they are going to give the customer $12,000 for their trade. When a dealer states that all of their vehicles, both new and used, are at their very best price available they cannot show trade value. They can only give actual cash value, because there is a tighter profit margin. A negotiable dealer has a profit margin that fluctuates more due to how much they mark-up they may have in a vehicle above the best price they woud be willing to sell a vehicle at.

As I said in my last blog post, every dealer knows what their best price is. Some just hope you will pay a little more. The same goes for trade-in value. Every dealer knows what your trade is worth. Some just hope you will take a little less. Just one little word can mean a lot. How about you? Have you ever heard a dealer tell you they are “showing” you a value? Leave a comment if you have ever picked up on it.

Why Even a Best Price Can Sometimes Change

One of the comments often heard by both customers and competitors (and remember that I was one of them) is that the “best price” is not really the best because prices can still be lowered. Yes, you will hear that the best price is really the best price today which means that it might not be the best price next week or next month. There are a few reasons for this, none of which debunks the best price strategy. Long story short: things change.

The things that can change can be big or small. A small change can simply be the number of trade-ins on a specific make or model. For instance, Toyota customers are very loyal and trade for the newest version of a make and model with the frequency of a college student and an iPhone. If we get several Rav4’s traded in for new models we will want the oldest stock on the lot moved out to make room for the newer ones.

Another example of a minor change is how long a vehicle stays on the lot. As I mentioned in my last post, there is a random phenomena that occurs that can cause a vehicle to sit on a lot longer than expected. The longer that vehicle sits on the lot, the quicker that dealer will want that vehicle to move. New inventory keeps people excited and intersted. If you come to the lot several Sundays in a row (yeah, we know you’re avoiding us) and keep seeing the same inventory, you would not come back the next Sunday.

An example of a major change is higher rebates. Once the newest model year is released the manufacturer will increase rebates on the previous model year which can make them cheaper and not significantly more expensive than the pre-owned models. If a customer is looking at a pre-owned GMC Terrain and it is $21,500, but they can get a new one for $24,000 (only about $45 a month more) there is a good chance they will go with the newer model, so the only way to keep the pre-owned inventory fluctuating is to lower the price.

There is also this funny little thing called Capitalism. It is all about what the market will bear. If the entire market, and not just a specific dealer, gets flooded with inventory dealers will start lowering their prices to keep their inventory moving to compete with other dealers. The same build up of inventory can occur if you do not keep up with your competitors.

Our dealership is always striving to give you the best price it can offer considering all market conditions. What this means is that even if our price is X amount of dollars lower than our competitors today it may not be that way next week if we are not careful, so we have to keep up with the market to keep offering you a significant discount over everyone else. Conversely, our competitors know their “best price” too. They are just hoping that you pay a little more.

Ultimately then, it is our duty to keep track of the market and continue to keep our promise to our customers; even if it means the best price for you is not the best price for us.

My First Week at a Best Price Store

After 15 months of working at a dealership with negotiable prices and commissioned salespeople I recently moved to a store that offers their best price right up front and who has non-commissioned salespeople. It is hard to understand how massive of a change this is to someone outside of the business, but believe me it is an enormous change. I will delve into the differences between the two in a later post, but I decided to make this post more about me experiencing the change, breaking down my old perceptions, and working for an entirely different company with different perspectives.

I will be honest from the start. I was bred to believe that the “best price” story was a false narrative and gimmicky. Although in theory I felt the dealership’s way of doing business fit my approach best I was worried that I might be making a mistake and falling for a marketing ploy. That is not because my previous employer (who was great to me and whom I have great respect for) had negative things to say and brainwashed me to think this way. Frankly, it is just what you have to convince yourself when the store you are working at is selling 40-ish cars and the guys up the street are selling 100+. At the same time, anyone who has asked me how I felt about the “best price” concept will tell you though that I have always done my best to stay neutral. I have always simply shrugged it off with a casual, “Well, everyone has a different way of doing business” or “They both have their benefits.” Now that I have seen the other side though…. I still say they both have their benefits. You thought I was going to go on an epic bashing spree there didn’t you?

The truth is, they do both have their benefits. Here it is: You can possibly get a better deal at a negotiable dealer. (Boss, if you’re reading this, bear with me). You might be able to get a better if you are a hardcore negotiator, if you catch the negotiable dealer at the end of a bad month, or if you happen to like the vehicle that dealer hasn’t been able to get rid of for 6 months. I should note on that last one that I’m still not bashing here. I’ve seen very good vehicles sit on the lot for an unreasonable amount of time. If I could figure out why that happens I’d be rich, but it does. All dealers struggle with this phenomenon. Even a best price store will lower the price of a vehicle if it sits on the lot too long (why a lowered price does not throw a rod into the best price concept will come at a later date). 

What this all comes down to is a preference. If you like to negotiate, you know that negotiable dealers are easier to deal with at the end of the month, and you like the vehicle that has been on the lot for 6 months you should go for it! I have come to realize though that a best price dealer does not necessarily think they are going to get every single car deal. The concept is based on the idea that on a consistent basis you can count on being able to get a fair deal on a vehicle without having to negotiate and find the right car on a Tuesday at the end of the month where a dealer is having a bad month and needs to get rid of a car and the wind is blowing out of the east and there is a 60% chance of rain and they broke a mirror the night before while walking under a ladder and…. you get the point.

As I have said, having worked at a negotiable dealer I thought this was all hippie stuff. I even thought for certain that it would not take long before the salespeople and managers were telling me behind closed doors, “Yeah, this best price stuff is hogwash and the owners are screwing us.” I am not even exaggerating. I was shocked to find that the staff really felt good about what they did. They truly bought into the process; even the people who were there before the store changed their approach. Anyone who has ever been through such a huge organizational change can attest to how difficult this is to accomplish. I even took the top salesperson out to lunch fully expecting them to tell me that the story was a crock, that they felt like they were getting taken, or that they did not even adhere to the company’s practices, and that they were a rogue vigilante who still did things their own way. Nope.

I have found quickly that not only do the employees and managers feel this way, but that our owner, Dan Anderson and his wife Stephanie, truly believe in what we are doing. And after my first week at a best price store, I can rest easy now having the confidence that I believe it too.

Best Time To Buy

One of the questions I am asked the most in the car business is when they best time to buy might be. This question is usually in regards to the best time of the month or the best time of the year, but it’s more complicated than that. You will often hear the best time of both the month and the year is the end of each. There are some factors at play and it can be dependent on whether we are talking new or used and whether you need to buy or you just want to buy.

For a given month, there is some truth to the idea that the end of the month is the best time. There are often bonuses for certain number of cars sold for the salesperson, the sales manager, or even the dealership from the manufacturer in a given month. If any of these targets are either achieved or unachievable with only a few days left, then the end the month is irrelevant. Typically, it will be the salesperson that needs a sale most before the end of the month and they have the least control over the price if they have any at all. On the other hand, a dealer may want to get a good start to a month if the previous month was a bad one. The same can be true with the middle of the month. If everyone is behind target for end of month goals in the middle of the month they may be willing to deal too.

There are factors related to new vehicles that impact this as well. Rebates regularly end at the beginning of each month. So even if the sales targets for the folks at the dealership are irrelevant, you might lose out on $500-$1,000 if you do not get a deal done before the end of a month. For instance, for the last few months Ford has been giving us a few thousand dollars at $1,000 increments to apply to certain vehicles. They decided monthly whether to continue them and kept them for about 3 months, but they ended yesterday. Your $19,000 car might have just become a $20,000 car. This might be only relevant if you are really ready to, or need to, buy a car right now.

Another factor (also related to rebates) is when certain model years are released. For instance, F-150’s typically come out at the end of the year while the new Escape model has been out about 2 months already. So a 2017 Escape actually comes out in Spring of 2016 while the F-150 comes out closer to year end. Rebates will begin to really increase leading up to the new model year for each specific vehicle, and especially once they start finding their way to the lots. The manufacturers want those old models off of the lot, so they will increase the discounts to help dealers move them. I’ll tell you why you should beware of waiting too long for those rebates in my next blog post.

Lastly, the end of year question. Yes, there are some extra rebates and yes there are some year end goals, but they are not nearly as strong as what is believed. I believe there used to be more truth to this and it might even be more true at larger dealers who have a lot of volume, but I do not think it is so.

In the end, I’ll call the “end of month deals” mostly true and the “year end deals” mostly false, but as you can see there is a lot more to it!

If you have any questions feel free to comment, call me or text me at 660-342-3715, or just come see me at 1801 N Elson!

The Trade-In Process (Part 2)

There are two schools of thought to approaching a dealer about your trade. Some say to clue the dealer in that you plan on trading a vehicle early on in the process. The other side says to keep that fact from the dealer as long as possible. There are advantages to both, but I believe that the advantages for holding out outweigh the benefits of cluing the dealer in early.

I would love to have a paragraph here explaining to you why some folks think that you should be up front about the fact that you plan on trading in a vehicle. Unfortunately for both of us, none of the people that say you should seem to give a good reason for it. Maybe the thinking is that it gives you a better relationship with the sales team or specifically your salesperson or maybe they do not believe you will get any extra value for it, but that is not the point.

The main reason for keeping this information out is to extract the exact price the dealer is willing to sell you the vehicle you want that way you can get an accurate idea of what they are giving you for your trade later. This is true with both new vehicles and pre-owned ones, though for most dealers it will be most or only beneficial with pre-owened ones. As far as new vehicles go, as I have mentioned before most dealers sell their new vehicles for about as low as they can sell them right from the start. Some of them still keep a little bit though.

For instance, some dealers will hold onto certain rebates or they will not give you all of the difference between the MSRP price and the invoice price. As I have mentioned in a previoius blog posts, most dealers now sell new vehicles at Invoice Price minus the Rebate. If you go to a dealers web site and they say “Get your E-price” for instance, the dealer is probably holding onto one of those amounts. They just want your contact info before giving it to you.

If they hold onto that initially, they can add that value to your trade-in to show they are giving more to you than they actually are (we call this “blue sky”). Here is the key: Always ask to see the invoice and always ask to see the rebates. You can also find the rebates that are available online. I would make sure to compare what you found to what the dealer shows you. You may have missed some. Be aware that rebates do change regularly (usually monthly). Here is an example of how numbers can be manipulated:
Your trade-in is worth $10,000

The MSRP of the vehicle is $38,920 (and some change)

The invoice price is: $36,873

Rebates are: $3,800

Sale Price: $33,073 (36,873 – $3,800)

So if the sale price is $33,073 and your trade is worth $10,000 you should be able to trade for $23,073. The dealer might show their online price using MSRP minus rebate which is $35,120 initially ($38,920 – $3,800), but once you come in they go ahead and give you the invoice minus rebate cost, but tell you that your trade is worth $12,047. The price to trade is still $23,073 ($35,120 – $12,047), but the value for your trade is still only really $10,000. They just took the difference between MSRP and Invoice which was $2,047 ($38,920-$36,873). That’s not confusing at all is it….

Now you can see why you might want to negotiate the price of the vehicle by itself without the trade initially. Get the actual sale price of the vehicle first and then you will know exactly what they are giving you for your trade. To see if your dealer or salesperson is being honest with you then you could also include the trade early on, get the price after your trade-in, and THEN ask for the invoice and rebates to see if the numbers match up. It just comes down to your preference.

Ultimately, the purpose of either approach is so that you can compare dealers offers accurately. If you go to one dealer that puts the invoice minus rebates price right up front like we do (click here for the example I used above: http://golovegreen.com/Mobile#/Mobile/Vehicle), but another only gives you MSRP minus rebates you might think that dealer is giving you more for your trade then the first dealer when in reality the offers end up the same. In some instances you can get “more” for your trade, but end up paying more!

It can all be pretty confusing so feel free to ask me any questions in the comments and always feel free to ask to see my invoice and all of the rebates available if you come into my dealership!

The Trade-In Process (Part 1)

For this post, I decided it was important for me to do some research on the subject considering that this is one in which I can see dealers handling the process differently. I was not necessarily surprised to see a lot of misinformation, but I was surprised to see some of the tactics that some dealers use (or have used) in the trade process. Since there is a lot of information to be discussed about this process I have decided to break this topic into separate posts so that I am neither too brief on the subject nor too long winded on it. For today, I am simply going to give you a snapshot of how the trade process should. Then, I will tell you a few things to absolutely not put up with that I found during my research.

The first thing that happens when you bring in your trade is that we will get all of the information off of the vehicle so that we can appraise it accurately. First, we will get the make, model, trim level (please, please, please refer to my blog post “What’s In A Name” about this subject), mileage, and VIN (vehicle identification number) of the vehicle. I will also typically do a quick walk-around of the vehicle myself to both make sure the appraiser sees any visual damage on the vehicle and also to make sure that he notes all of the additional options your vehicle has that adds to the value (large dealerships will usually have someone whose main job is to do the appraisals whereas our Sales Manager does all of ours).

Next, we will use the VIN number to run a vehicle report history. This history tells us multiple things about your vehicle including number of owners, number of accidents, and an odometer check making sure there has been no rollback on mileage. There is other information available such as if there were any hail damage reports, water damage reports, or, more importantly whether there is a salvage title on the vehicle.

As you might expect, an odometer rollback is never a good thing. This means that it is now and forever impossible to tell exactly how many miles a vehicle has on it. This can make a vehicle very hard to sell and therefore will likely decrease the vehicles value. Number of accidents is not as important as the severity of an accident, but if the number is high it can impact value. The importance of the number of owners depends on the age of the vehicle. If the vehicle has 4 owners and is fifteen years old, that is pretty normal, but if a vehicle is only five years old and has 4 owners that can be a sign of trouble. Not to mention that one of the first questions people ask is how many owners a vehicle has. For vehicles that are five years and newer people typically only want to hear that the vehicle has one owner; maybe two.

While the salesperson is running these reports and making sure you are comfortable, the appraiser will be out driving your vehicle. Before they go out they will do a quick walk-around of the vehicle looking for any damage to the vehicle and looking at tire wear. After that, they will make the same trip on every drive taking your vehicle through rough roads to listen for something like bad shocks. Then they will take it on the highway to listen for sounds that a rougher and louder road might cover up like tire noise.

While they are out they will also check to make sure everything works such as the air conditioning, radio, automatic windows, etc. This may seem like ways for the dealer to de-value your vehicle, but it is more so that they will know what they will have to fix. Try thinking about it like this: If you were going to a reputable dealership to buy a pre-owned car would you not expect the air, radio, and windows to work? The dealership will have to fix these little problems which will obviously cost them money.

After all of this, the appraiser will take this information and use several resources to determine the value of your vehicle so that they can make you a trade offer. I will discuss this trade evaluation process in the next blog post so that you know exactly how they will come up with your value and I will give you some tips on how to be ready for this step in the car buying process.

I will end this post with two things I read about in my research of the trade process you should absolutely not put up with. Walk out if these things happen to you at a dealership:

1. DO NOT let the salesperson or the appraiser do a walk-around of the vehicle and invite you to be with them for the purpose of pointing out every ding, dent, or minor blemish to your vehicle. They are merely trying to reduce the value of the vehicle in your eyes. This is just flat-out disrespectful. With the internet age and impact of social media, I think this tactic has likely gone by the wayside since they don’t want people openly sharing this distasteful treatment.

2. DO NOT let a dealership lose or hide your keys. I cannot believe I even had to type that, but apparently some dealerships will purposely lose your keys (I heard of one that openly threw the keys on the roof!) so that you will be at the dealership longer and they can keep negotiating with you  and wear you down. Again, I imagine that this has disappeared in the social media age, but the fact that I read it on several current articles absoutely floored me.

Please leave me a comment if either of these things have happened to you.

What’s In A Name

I owned a 2007 Dodge Charger for 7 years. In the years leading up to the point that I got in the car business if had you asked me the “trim level” of my Charger I might have said, “Uh…. 4 doors?” Had I known how important this is I would have probably memorized it better than my own social security number. It is both important in the buying process and the trading process. Let us explore why.

Since getting in the car business I have found that most people think every vehicle is the same plus or minus a few features that can be added, but the Escape for instance actually comes in 3 different trim levels with multiple features available on each one. They are S, SE, and Titanium. They are each so different (especially from SE to Titanium) that they are almost different cars. These can be differences in appearance (ex. an S only has black door handles whereas SE and Titanium have colored) mechanically (ex. the S only comes with a 2.5 liter engine when you can get a 1.6 Ecoboost and 2.0 Ecoboost on the SE and Titanium), and technology (ex. the hands-free liftgate is only available on the Titanium).  Each trim level above the S model has different features that come standard on it and each successive trim level has all of the features of the lower model, plus it’s own standard features. On top of that, each trim level has specific packages and individual features that are only available on that trim level. Understanding this is important when buying a new vehicle for a few reasons.

The obvious reason is that there is a different starting price between each model (S: $23,600, SE: 25,745, and Titanium: $29,745). Another is that if you go to one dealership and they give you a price of $25,745 and you go to another and they offer you $23,600 you might think you’re getting a better deal, but you’re really just getting a lower trim level with less features. This can even be true within the same trim level if a certain package is available on one dealerships car and not the other. For example, the SE has a Convenience Package that adds $1,395 to the price. You might find an SE at another dealership that doesn’t have this package and think you’ve saved yourself $1,395. This is all very confusing. And it’s on purpose.

Recently, the Chevrolet commercials for the Malibu (trim levels: L, LS, 1LT, 2LT, and Premier) have caught my eye. They tell the story of all of the wonderful technology that is available and the real people not actors “oooo” and “awww” at all of the features available to them. Then they tell us that the Malibu is available “starting at $22,500.” One of the features Chevy often mentions is their new teen driver technology (which Ford has had since 2009; called MyKey), but that feature is only on the 1LT model and up and the starting price is $25,895. I use Chevy as an example because they have been very specific in trying to differentiate based on features, but all car makers do it. The auto-makers #1 goal is always to get you on the lot. They want you to see specific features and come into the dealership looking for them at the $22,500 price. Once you’re there the salespeople have to break the bad news to you that you have to spend $25,895 to get that feature. The hope is that you will either move up your price range or go ahead and buy the $22,500 one any way.

Where it is even more important is on the value of your trade-in. You want to make sure that if you’re trading in a 2013 Escape Titanium that you get the trade value of a Titanium and not the SE. If you don’t understand these differences then a dealer might able to give you less for your trade than it is worth. You will also need to know that your sunroof that is on your Titanium model is also more valuable than a Titanium model that does not have it (Note: specific individual features don’t always change trade value).

Buying a pre-owned vehicle makes tracking these differences even more difficult. For starters, you will want to make sure that you know the true value of a pre-owned vehicle you find on the lot. You don’t want to go home and research that vehicle and think you are getting a steal because you looked at pre-owned Titanium online but the one you saw on the lot is only an S. What complicates matters is that there is no true window stickers to compare the difference from one used vehicle to another.

As I said, this is all very confusing. You might want to read this more than once, because I cannot stress enough how important this is. If you have any questions feel free to call me at 660-342-3715.

“Just Looking”

It’s the oldest trick in the book. When you’re out on the lot and you see a salesperson walk up, the default response is “I’m just looking.” This seems to be the conditioned response for everyone, even if they aren’t actually “just looking.” I know I have used it before myself in other situations. There are a few problems with this response. None of them help you, the consumer.

For starters, salespeople have adjusted to this response. A good salesperson knows how to move past this response now. At a minimum they will say, “Well thanks for stopping and looking at our dealership. Are you looking for a car, truck, or SUV.” Salespeople know that 99% of the time if they walk away after you say it, they won’t get a chance to talk to you again. The salesperson’s chances increase heavily just by moving past this. It’s hard to blame someone who makes their living off of commission for pressing on. The other problem is that people are so used to this working that they actually get a little upset when a salesperson doesn’t bid them adieu. This doesn’t do anyone any good.

So what do you do now to deflect the salesperson who comes out on the lot. Well, I’m not sure you’re going to like my response, but bear with me: Talk to them. Rarely is a person just looking. You have come to the lot for a reason. Just tell the salesperson what you wanted to know. If you are just looking for price information, just ask. If you want to know if the car you’re looking at has remote start, just ask. Or maybe you just wanted to look around the vehicle and see if you like it in person. Just tell them that. If you at least give a salesperson something to go off of they will feel like they have done their job. If you make them feel like they have won something by moving past this you are likely to end up with a less pushy salesperson. A lot of the time a salesperson just wants to be able to come back and give the boss some quality information since “Oh, they are just looking” is the fastest way to the doghouse.

Lastly, unless a dealership has the option of doing the entire sales process online, you are going to have to work with a salesperson at some point. So have a conversation with that salesperson for the purpose of finding out if you are comfortable working with them and that, most importantly, you think can trust them. The key here is to come to the lot with a plan and with information that you have already gathered online. Ask them what the price is and see if they give you the sticker price (which we’ve already talked about is never the actual price anymore). If they do, you might not be able to trust them. Ask them if the vehicle you’re looking at has remote start (knowing full well this one doesn’t). If they tell you that it does, or if they don’t know, you’ll know whether that salesperson knows their stuff.

The fact of the matter is that the salesperson is a necessary evil. Skipping “just looking” will relax the salesperson and take pressure away from them feeling like they have to sell to you. Use the salesperson to get all of the information you came looking for and find out if they are the person that you would like to work with or that you even want to buy from that dealership. How that salesperson treats you will most likely be how that dealership expects them to treat you.