Strategies to help you get the most out of your auto loan
So you’re thinking of getting an auto loan. It’s going to involve a lot of things – negotiating with banks and finance managers for the loan, haggling with salespeople over the price and trying to get a good deal for your trade-in. There’s one important thing you need to keep in mind. Salespeople are trained to separate you from your money. It’s nothing personal. You want to save money. But their job is to make it. Knowing the strategies they use will help you beat them at their own game. Here’s what you need to look out for.
1. They use time as a tool
Salespeople love doing this. They want to make the process as long as possible in order to tire you. So you need to set the pace. Ask the salesperson to text or email you an offer if he or she claims a lot of negotiating with the manager will need to be done. Don’t hang around. Set aside one day for a test drive and another day for negotiation. Just remember that you don’t have to take the deal they’re offering you. You’re perfectly free to walk away at any point. It’s honestly one of the best negotiating strategies you have.
2. They’ve been taught how to profile customers – including you
We cannot stress this enough – car salespeople are specifically trained in persuading you to buy a car. So just knowing what you want isn’t enough. You also need to know your weak spots. The first question you’re going to be asked is how much you’re willing to spend each month. Be non-committal. If they know what monthly payments you’re willing to make, they’ll make offers based on that information and it will hurt you in the long run – for example, you’ll get the monthly payment amount you want but it might be accompanied by a longer loan term which will lose you money in the long run. Break the process into discrete steps – choosing the car you want, equipping it with what you want and then negotiating a price.
3. They’ll tell you that the best time to get a deal is today
Say you’ve agreed on a price. The salesperson will tell you that if you don’t buy it today, the terms are going to be less favourable in the future. There’s a sale going on right now, they’ll say earnestly. Oh, and someone else is coming to look at the car tomorrow. This sales tactic, according to Dan Seidman, the author of “The Ultimate Guide To Sales Training”, is known as “the impending event”. It puts pressure on the buyer to make an immediate decision by implying circumstances or product availability will change later on. Don’t fall for it.
4. The porcupine close
This is a classic strategy the seller uses to put the onus on the buyer (in this case, you). Questions to watch out for include: “If I could get you this monthly payment, would you buy the car today?” or “I’ll get it in the color you want, but you’ll need to close this out by tomorrow.” Bide your time. Don’t make a decision in the moment. Insist that you need to talk to other dealerships. You are not required to decide anything immediately.
5. The Ben Franklin close
The salesman will make a list of reasons for you to buy the car on one side of a piece of paper – and reasons not to buy on the other side. They will leave the ‘cons’ list blank and ask you for your opinion. Which is obviously going to stump you. Go ahead and feel free to create an awkward moment by saying, “Oh, so that’s the Ben Franklin close.” The look on the salesperson’s face will be gratifying, we promise you. It’s a tactic that manipulates you into only seeing the pros. There are cons but you need time and information to consider them. It’s in the salesperson’s interest not to give you those.
6. Adding costs
A salesperson will always try to get you to buy more than you need. For example, “oh, you better get the tire protection. It will help you save so much in the long run.” Other added costs include anti-theft devices, rustproofing, extended warranties and interior stain protection. That’s why it’s important to do your research before you go to the dealership. Maybe you do want a couple of add-ons. But know what they are in advance and don’t get persuaded into buying more than you originally intended.