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Humility about one’s own knowledge and abilities is the key to finding success in life. With that profound fortune-cookie philosophy in mind, let’s deal with five myths that, should you naively accept them, will prevent you from scoring a great deal when buying a new car.
And the myths we’ve chosen are just five among hundreds. A friendly Southern California Porsche/Mercedes-Benz sales veteran—who prefers anonymity—helped us separate fact from fiction. A second salesperson, this one from the East Coast, also weighed in [see “On the Marks,” below]. Quoth the SoCal gent: “It’s like someone wrote a how-to-get-the-best-deal book 10 or 15 years ago and no one has bothered to update it. The business has changed.”
The Hobo Myth: Dressing like a bum or arriving at the dealership in a crappy car may give you a negotiating advantage. If the dealer assumes you don’t have a lot of money, he may be willing to offer a larger discount.
“Here in Southern California, it’s the guy wandering around the lot in shorts and a T-shirt at two in the afternoon on a Tuesday who has money. The guy who comes in a suit at noon and has to be back in his office by one? He’s working for somebody. Besides, I’m going to run a credit check.”
The Myth of the Lessee: It’s easier to negotiate down from the sticker price if the salesman doesn’t know you’ll be leasing. The idea is that leases are treated differently and the salesman is less likely to reduce the price (capitalized cost) of the car.
“What we sell our cars for is the bottom line. Whether you write a check, finance it, or lease it, the bottom line is the bottom line.”
The “My Boss” Myth: They’re really just chatting about what they had for lunch.
“It depends. We have certain guidelines about how much we can discount a car. If an offer is within those guidelines, we don’t need to talk with a manager. But if it’s outside those guidelines, then we have to talk with a manager.”
The Myth of the Moneylenders: It’s always cheaper to finance outside the dealer. Dealer financing comes with kickbacks to the dealer; my bank won’t give them any kickback, thereby saving me money.
“We have 15 or 20 sources for financing, including banks and the manufacturers. It’s funny when someone comes in here saying they have the money at 3 or 4 percent, and I can get them 2.5 or 2.9 percent or even 1 percent through the manufacturer.”
The Myth of Parachuting: Not mentioning your trade-in until you’ve already negotiated the final price of your new car is such a common practice that it’s known as “parachuting the trade.”
“Nine times out of 10, ‘parachuting’ just slows things down. One customer brought in a Lexus as a trade, and we don’t have expertise in Lexus, so it took us a couple of phone calls to determine its worth. That took half an hour. It’s in the dealership’s best interest to give the best price it can. The sooner we can inspect the car, the quicker the process.”
WHAT WE SAID: “After six months of selling cars... my conscience had been reduced to: sale = right, customer leaves = wrong.”
[Related: Absurd Porsche Options That Cost More Than $11K]