When to walk away from a dealership

I entered the auto dealer’s showroom thinking the no-haggle approach was the new way of doing business. The hard-sell designed to separate me from more of my money, I thought, was a thing of the past.

That naïve notion was quickly dispelled. 

There’s no better feeling, of course, than getting a good deal on any big purchase, especially a new car or SUV. And I had lined up a great deal to buy a new Volkswagen Tiguan Limited. Or so I thought.

A day earlier, I’d followed the car-buying experts’ advice of doing all the negotiations ahead of time online, far from the frenzy of the showroom, where they have a home-field advantage.

After pushing for an even better price on the steeply discounted SUV, I got a number I liked. In an email, the dealer quoted me a price nearly 30 percent below the sticker for the four-wheel drive set of wheels I’d been coveting for months. It was an offer sweetened by sizable incentives. I couldn’t pass it up.

“Done deal,” I thought to myself.

That’s where my cautionary tale begins. 

When I got to the dealership the next morning, they set me up with a salesman. He accompanied me on a short test drive. But when we sat down to finalize the transaction, he didn’t start by confirming the deal terms agreed to online the night before. Instead, he launched into a fresh round of negotiations. A push to get me to pay more was underway. “Umm, that’s not the price I was quoted,” I protested. 

That hiccup in the buying process was the first sign that I would have to fight hard to get a deal done on my terms. 

Snaring a good deal on a new car, I learned firsthand, is still fraught with danger. Even in the internet age – where pricing information is more transparent and deal terms are fleshed out via email or text message, rather than face to face – conquering experienced sales pros in person, on their turf and driving away with the vehicle at a previously agreed-upon price is never 100 percent guaranteed. 

Here are five red flags that should prompt you to either stand your ground – or walk out of the dealership door without a new set of car keys.

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The online deal you secured is ignored

My fight-or-flight response kicked in when I was faced with the prospect that the online deal I thought was sealed was maybe not all buttoned-up after all.

I felt like I was in an episode of “The Twilight Zone” when the salesman began to restart price talks from scratch on the showroom floor, even though I had a quote in writing. He started with the sticker price and backed out the savings from manufacturer incentives the dealer was passing along.

There was just one problem: The new price was higher than the initial online quote. But instead of making a beeline for the door (which might have immediately given me fresh leverage in the negotiations), I opted to fight it out, steeling myself for what turned out to be a time-consuming, mind-numbing and emotionally draining encounter. 

Fine print works against you 

If, like me and millions of other Americans, your idea of in-depth reading is a 280-character tweet on Twitter or a catchy headline on Facebook, prepare yourself for potential frustration when shopping for a car. Why? There’s a good chance the all-in price that was agreed to online may not exist when it’s time to sign the purchase document.

How’s that? Beware the fine print. Often, buried in tiny type in the dealer’s promotional materials are a list of incentives – or “potential” discounts – that are used to calculate the car’s lower sales price. Common discounts include those for first responders, members of the military or recent college grads.

The fine print proved problematic – but not a dealbreaker – in my case. I last stepped foot in a college lecture hall  in the 1980s when the Police’s “Every Breath You Take” was a big hit. And I earn a living as a journalist. I’ve never been a fireman, cop, EMT or Navy Seal. In short, my resume meant I wasn’t discount material. But I protested, arguing that the price I was quoted online was an out-the-door price. I won that battle. 

The bottom line: If the purchase price doesn’t make financial sense once all these price-cutting programs are ruled out, consider foregoing the deal.   

One mistake I did make was not lining up my own financing before I got to the dealer. That proved costly when I learned that the 0 percent financing deal offered by VW on its website was a no-go because I opted instead for the big rebate off the sticker price.

As a result, instead of having a loan with a low interest rate already in hand, I ended up getting financing through a bank arranged by the dealer. I got a decent 4.49 percent rate on a 72-month loan. Not bad. Kind of average these days. But I likely could have locked in a slightly lower rate on my own had I planned ahead. 

Beware the pen-and-paper deal terms

Even though I am a reporter who covers Wall Street and know a lot about managing money, my anxiety level spiked when the finance guy sat me down to go over the numbers using a sheet of paper and a pen. The jumble of numbers included columns of different monthly payments based on loans lasting either 48 months, 60 months or 72 months. This blur of numbers created some confusion for me, clouding my judgment for a bit. (My advice: Make sure you stay focused just on the purchase price, and if you arrive with a loan already lined up, you won’t have to concern yourself with monthly payment projections.) The salesman also used the pen and paper to show me how “good” my deal was and how the dealer was “losing money” on the price I agreed to the night before online. Finally, he asked, “Can you meet me halfway?” My response: “No.”

They outnumber you 

If it looks like you could get into a street fight and are outnumbered, running away is probably your best chance to avoid harm. That principle also applies to shopping for a car. I should know. I was on my own, representing myself. But the dealer had a team of seasoned pros willing to wait me out, wear me down and squeeze more money out of me.

In my four-hour odyssey, the first handshake was with the internet sales specialist. I met the salesman next.  And after the salesman burst my bubble with new, less favorable deal parameters, he brings over the finance guy. The so-called sales closer-in-chief is well-trained in getting auto buyers to pay more for a vehicle than they had intended. He ran the numbers for me anew while looking me in the eyes in search of weakness. Finally, the finance guy who handles the loan part of the deal comes by and muddies things up even more. Unless you’ve already gotten a rate and loan approval, be ready to be told the best rate they can get you just happens to be higher than what you can find on your smartphone as being the average nationwide rate. Dealers often line you up with a higher rate and get a commission on the sale from the bank providing the funds for the loan.

The waiting game

The sales process takes forever, in my case about four hours. It wore me down. The sales team went back and forth on seemingly every facet of the deal, ranging from what interest rate they could offer me to why I might want to consider buying a tire protection plan or why paying a little more for the car is still a good deal. I got hungry, thirsty and longed for a nap. I became mentally fatigued. Even my phone battery died. I thought about bolting, but I thought to myself, “I can’t go home without a new car after spending my whole day here.” 

So how did my day finally turn out? I ended up buying the vehicle I came to buy. But I have a confession: I gave in just a wee bit on the negotiation and agreed to up my price by $300 above my initial quote. I’m not really sure why. I am still beating myself up over giving in just a little, even though it was still a great deal.

 

 

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