CAR BUYING IS DIFFERENT FROM OTHER BUY/SELL SITUATIONS

Most people, when they set out to buy a car, don't really know what they want to buy. They are vague as to the kind of car they want. And they don't know if they can afford a car or not. Therefore, it is easy for a dealer to confuse and manipulate such buyers.

• Most people don't know what their trade-in is worth - and most dealers are depending on that factor to get the most money from your old car, money which they put toward buying more new and used cars to sell.
  
  
• Most buyers don't know which model and what extras they want, so, evaluating and deciding can take a very long time.
  
  
• All salespersons have more patience than buyers, so they can easily wait the customer out.
  
  
• Getting financing is not always easy, even with good credit. Calculating the amount of down payment, cash back, etc. takes time even under the best of circumstances.
  
  
• Doing all the paperwork and explaining all the legalities takes a long time.

The average buyer has to go through all six of these steps before he ends up with a new set of wheels. And he has to make sure these steps go really well so he gets what he wants, with the minimum of grief. This is where you need to be a good negotiator.

WHAT THE DEALER MAKES ON EACH CAR

You may be asking, how much money does a dealer make on a car? Here's a good rule of thumb: the more expensive a car, the more profit is built into it. As a result, you have more leeway for getting a good deal.

So how do you find out what you should allow the dealer for his profit? Below is a realistic guide that you should follow:

WHAT OTHERS MAKE ON THE DEALER'S LOT

Your first encounter with buying a car is the salesperson. Remember, the salesperson is working on a commission. This means that he gets a percentage of the dealer's profits. The higher the price you pay, the more expensive the car you buy. And the more options the salesperson sells, the more money he makes. Also, the salesperson has a weekly quota to meet. His job is at stake. This is why the pressure is so high on a car lot.

Also, the finance and insurance (F&I) people get paid a percentage of the amount of money the salesperson makes on the "back end," or financing part, of the sale. That is why it is not surprising the salesperson tries very hard to sell you an upgraded stereo system, long-term warranties, or anti-theft packages.

There are a lot of people being paid off whenever a car is sold - it isn't just the dealer.
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