How To Buy A New Car

I've spent 10+ years as a new car salesman for various dealers in Southern California, the "car

capital of the world." You might find this information interesting and useful. I hope so.

Every shift generally starts with a sales meeting:

"ok guys, we need 5 sales today! Kill 'em!"

"Yeah...we will!"

"Remember...the average car buyer usually buys a car every 3 or 4 years. We are the

pros. We do it EVERY day!"

"Yeah, boss!"

"You guys want to make money, right?"

"Right!"

"Then write everybody and get them into the box (sitting at the table). And I don't want any

weak sucks! If I have to turn it in the box, you get nothing!"

"Yeah, boss!"

"And remember...I don't want any write-ups with no money down. Do you hear? If I see that,

I'm going to throw the deal right back until you get something. Understood?"

"Yeah, boss!"

"Open the doors! We're ready for business! Let's move some iron!" So the day starts.

The salesmen are usually standing at a pre-determined location known as "the point."

As you drive in, they'll yell something like: "White, coming in!" The person in the white car is

then his customer. That's the system known as "calling ups."

The salesman meets and greets you. It is his job to land you on a car. If there is a problem

of some kind, he will then turn you to another salesman and get half the deal. He is then

"married" to that salesman, meaning that commissions are split as long as you're working

together. This is called the "T-O" or turnover.

It is the salesman's job to be your friend. After he lands you on a car that you like, he then

will suggest a test drive.

Many managers want ALL customers to test and drive. They'll say something like:

"I'm not going to accept any deal if the customer hasn't driven the car. Would you buy a

thirty thousand dollar car without driving it? No! So don't do it! No test drive, no deal!"

"OK, boss."

So you get the test drive. Hopefully you will love the car. After the test drive the salesman

then does a walk-around. He takes you around the car pointing out the features and benefits.

He then says something like: "If I can make this car affordable and fit it into your budget,

is there any reason you wouldn't want to buy it today?"

Many folks say: "I would be interested if you can fit it into my budget!"

"Come on inside and I'll see what we can do!"

You are now in "the box." The salesman has done his part. There's a good chance that

you're going home with a car.

A credit application is then filled out. During this process, the salesman gets to know you

better. You laugh and joke. He is on your side.

Credit scores are very important. A FICO score of over 700 labels you as "a brick" and you're

in the 700 club. That's very good. You can then be bought by most banks. There's a good

chance that you'll be going home in a new car. (If they put someone in a new car and can't

get them financed, the car must be brought back to the dealer.)

Many dealers have "write-up" money for the salesmen on weekends. Something like ten

dollars. This is a spiff and gives extra money for gas or whatever.

Now we come to the fun part:

THE FOUR SQUARE

Just about all dealers use this method to sell cars. There are pre-printed forms.

For this example, take a blank piece of paper and draw 2 lines on it. One down the middle

vertically and one line across the middle of the form horizontally. You then have four squares

on the sheet.

On the upper left hand square, label that "Trade-In". This is where you're going to find out

how much you will get for your used car. If you have no trade-in, so much the better.

Because they are going to steal your car. After all, they take your car in on trade, refurbish

it and sell it in order to make a profit. This is big bucks for the dealer. He doesn't make that

much on new cars, but he can make lots on the used ones. The salesmen can easily make

a "nickel" (five hundred dollars) or so on a used car. That's where the money is.

OK, back to your used car: The salesman might spend an hour or so on this square alone.

He'll say something like: "I'm going to get you as much as I can for your car. Let's go out

and look at it."

He takes an appraisal slip with him. After all this is done, the used car manager will give a

"hit" figure on your trade-in.

Also, keep in mind that when looking at your trade, the salesman often won't say much. He'll

use his finger to just "touch" the dents, scratches, etc. You'll notice that.

Anything bad will be written down. Then he (or someone else) will drive it for a short distance.

"Kind of klanks when you put it in gear, doesn't it?"

"yeah."

"There's a little smoke coming from the exhaust. Don't you agree?"

"Yeah."

Your car is depreciating as you speak. He then lifts the hood with the engine running.

"Looks like a little oil leak here. Must be using oil, right?"

"Yeah."

When it's all over, you'll be asked what you want for your trade-in.

"Oh, I'm thinking about five thousand dollars!" the prospect says.

The salesman responds with something like: "I'll try to get as much as I can for you!"

He's a nice guy.

You then follow him into the office. He makes a call to the used car manager, saying: "What's

the best we can give him for his trade-in?"

"Well, Mr. Prospect, our used car manager says that we've been buying cars JUST LIKE

YOURS for four hundred dollars."

"What? That's absurd! I want five thousand!"

"Mr. Prospect, please keep in mind that we are buying cars on a wholesale level. We

have to refurbish them for resale. We stand behind our used cars, so that's all we can pay.

If you want more, you can always sell it yourself on the retail level. Put an ad in the paper!"

"Yeah, but then I have to have people come to my house!"

"Yes, that's right!"

"I don't want that! So what do you think, momma?

Silence.

"OK, we'll take $400!"

End of step 1. Your car has just been sold. Some dealers allow their salesmen to buy their

trades at the same price as paid. So the salesman sometimes ends up with another car.

Now we go to step 2 on the four square the upper right hand corner.

This is where your "new car" prices show. The salesman fills in the MSRP (manufacturers

Suggested Retail Price) from the sticker.

Sometimes the prospect objects, saying:

"I'm not going to pay the full price!"

"No problem, sir. That's just where we start out. We go down from there."

"Oh, OK."

Now we go to step 3, the lower left corner:

"This is the down payment, Mr. Prospect. Banks like to have about one third down." He then

writes in $10,000. "We accept cash, checks or credit cards. Which one would you like to

do?"

"What? That's just too much! I don't have $10,000!"

"You can use a credit card!"

"No! Won't do it!"

"Well, Mr. Prospect, as you know, the banks run the country. If your credit is real good, maybe

we could do less. How's your credit?"

"Real good."

"Great!" The salesman then draws a line through the $10,000 and writes in $8,000. "You

can handle that, can't you?"

"NO!"

"No? Banks like to have an equity interest in the vehicle." He then draws a line through the

$8,000. "I'll put you down for $6,000!"

"No!"

"Remember, you can use several credit cards. You can split it up!"

"No!"

"Then how about $5,000?"

"No!"

"$4,000?"

"No!"

"$3,000?"

"No!"

"$2,000?"

"No!"

"$1000?"

"No!"

"Mr. Prospect, what would you like to put down?"

"Nothing!"

"Nothing? That's impossible!!! You mean you want to buy a car with nothing down?"

"Yeah. That's right!"

"Well, my boss won't accept any deal like that. Let me ask you this: To keep my boss happy,

you can give me a check for $100, couldn't you (while he nods his head)?"

"$100? Yeah, I could do that!"

"OK, get your checkbook out and write a check right now for $100. Make it payable to

Ajax Chevrolet."

"OK, momma...make it out! What's the monthly payment?"

"We're going to get to that now."

We now move to the last square on the bottom right.

"Now Mr. Prospect, as you know, the worse your credit, the higher the payment. The banks

give their best rates to the best credit customers. We can either pay this off quick at a higher

payment or pay it off a little slower at a reduced payment. Let me ask you this: You can

handle $1200 a month, can't you?"

"What? Are you crazy? No!"

"How about $1000 a month?"

"No!"

"800?"

"No!"

"How much were you thinking?"

"Oh, about $200 a month!"

"$200 a month? "

"Yes."

"Now wait a minute, Mr. Prospect....let's get real here! You can't get any $30,000 car for $200

a month with practically no money down! That's only $2,400 a year, and that's with no

interest! Isn't going to happen! You can see that, can't you?"

"Yeah, I suppose so!"

"So If I could get it for you around $550 a month or so, you can handle that, can't you?"

"Whaddaya think, momma?"

Silence.

" Yeah, OK. We can afford that."

"Then just initial here!"

Mr. Prospect has just bought a car! The salesman then circles the $550 per month and turns

it into the desk (sales manager).

The sales manager turns it over to the assistant sales manager (the salesman's boss). He

is known as "the closer". He then closes you and the salesman goes out to get another

customer.

The closer will then bring back the four square with an offer from the sales manager.

The first time is known as "the first pencil". This is always a deal very favorable to the

house. If you say no to this, it goes back for another review and a "second pencil."

If you really, really want to save money, always reject the first and second pencil.

Take the third pencil. You'll save lots of money and still get the car!

SOLD!!!

A final few notes:

1. The best time to buy a car is when it's raining on the last day of the month. They will

have no customers and they need more sales before the first of the month.

2. If they give you a lot of static on the price and how you're raping them (and show you the

invoice, which is real, by the way), and say something like: "See...with the deal you want, we

aren't making ANY money! We have to make SOME money! Don't you want us to make a few

dollars?"

3. You then say something like: "No! And what about the HOLDBACK? You're making

money, all right!"

4. And then they will say: "You know about HOLDBACK? How did you find out about

HOLDBACK?"

5. "My friend Robert Holt told me!"

One final comment: Please note that ALL dealers will and do sell cars at a loss sometimes,

just to make a sale! They pay big bucks for FLOORING- unsold inventory sitting on the lot.

A representative from the bank comes by frequently and checks. Anything not on the lot

means "it must be sold" and they want their money. NOW!

And after absorbing an "at-a-loss" sale, they more than make it up on some other guy(s).

Some sales are FIVE POUNDERS Or more. A pounder is a thousand dollars profit, so a

five pounder would be $5,000 profit. It happens frequently. So one little "in back" of invoice

isn't going to make much difference.

END OF STORY!! Good Shopping!