Making The Offer
Once you have written down every fault that you can find on the vehicle, and you are back at the dealership, it’s time for you to really work out a deal. Your friend has been furiously scribbling down notes for you as you drove the car and inspected it. Tell the salesperson you would like a few minutes alone with your friend to discuss these with him or her.
Organize this list of faults into a legible format, and don’t hesitate to add any other fault you happen to think of at this time. Consider what time of the year it is for your evaluation of the air conditioning system. If it’s February and you are in North Dakota you won’t be able to test the air conditioning system. It will blow cold air, but it will just be outside air. All air conditioning systems have a sensor that prevents it from working below a certain temperature. Remember the air conditioning system is a very expensive system to get repaired, and if you aren’t able to test it, add this to your list.
You are going to prepare this as a written offer. There are three different prices for this car.
Wholesale (or sometimes below) is the price dealers always pay when they buy cars. It’s also what they usually give you for your trade.
Retail is the price the dealer is asking for it, and will usually be somewhere around $2,000 to $5,000 above the wholesale price.
Loan value is what the bank thinks the car is worth loaning money on. This value falls somewhere between the wholesale and retail prices.
Loan value is going to be the absolute maximum that you should pay for this car, but that doesn’t have to be your offer.
Write down all the faults you want taken care of and add the below statement and hand it to the salesman.
"I will buy this _______ ___________ ____________car today for
(year) (make) (model)
this price $___________________ which includes tax, tag, title and no additional fees, on the condition that the above problems are taken care of to my satisfaction."
_________________________ _____________
Signed Date
Sign your name and date it. The price you put in the above statement should be $500 to $1,500 less than the loan value. If the retail (asking) price is below $10,000 then offer $500 less than the loan value. If the retail price is $10,000 to $20,000 then offer $1,000 less than the loan value. If the retail price is above $20,000 then offer $1500 less than the loan value.
The salesman will probably tell you he needs to run a credit check or fill out some other forms or something else before he can take this offer to his boss. Not if, but when he tells you that, just kindly inform him that you’ll take care of any forms once you have a deal.
If he still tries to do anything besides get approval of your offer, thank him for his time and bid him good bye. Chances are he’ll try some other tactic at this point like saying something like "Come on, work with me here. What’s it going to take to put you in this car today?" If he does that, don’t say a word… just point back at your written offer.
Next he might say, "Wait just a minute please? I want you to speak with salesman Johnson. He might be able to structure this some way I haven’t thought of."
The "T.O." in car business jargon is what the salesman is doing when they "turn you over" to another salesman or their boss. Usually this is when they are not having success (on the verge of panic) and want a really savvy salesman involved. Salesman Johnson has more experience in wearing down a customer like you (they will split any commission).
If he says that, just tell him that there’s no use in involving another salesperson. Just say "This is my offer. Take it to your boss or I’m leaving." When you threaten to leave, you need to be ready to back this up with action. Mean it when you say it.
Don’t fall for this tactic of "turning you over" to another salesman or sales manager. All you are asking this salesman to do is walk into his boss’s office with a piece of paper. It’s not that tough.
A savvy salesman at this point will start to ask you questions to make you look like the bad guy, or get you laughing. They might say things like "Mr. Jones aren’t you serious about being fair with us on this fabulous automobile today?" or "Now Mr. Jones I am sure you knew this process would not be that easy, hehehe".
There are literally hundreds of diversionary questions designed to get you "off your game" on onto theirs.
Just remain stoic (unemotional) and give him a dead serious look. He’ll eventually cave in and do what you ask. NEVER HESITATE to act like you are going to leave. Nothing motivates a salesman to do your bidding more than if he thinks a possible commission is walking out the door. Remember that you have at least one or two other cars that you can go and work out a deal on.
If you weren’t able to test the air conditioning system, the salesperson will want to know how this can be "taken care of to your satisfaction". Tell them you want a written one-year guarantee on the air conditioning system covering all parts and labor. Air conditioning repairs can be very costly and this is a risk you certainly should not take.
Again, once the salesperson has you talking about something else (the air conditioning issue in this example) he will then probably start trying to pick apart your list of faults and get you distracted. Don’t let this happen. He needs to walk into his boss’s office with your written offer.
Once the salesman takes the offer to his boss he will eventually come back with a counter offer, and if it isn’t to your satisfaction (ANYWHERE above loan value is NOT to your satisfaction). Thank him again for his time and tell him good bye.
Walk out the door.
Chances are that the salesman will chase you down and say "Let’s discuss this further." Tell him that’s your offer, take it or leave it. You stand a very good chance of getting him to take it. If he doesn’t, then you can always come back later and negotiate a little higher price as long as you don’t exceed the loan value. You may also concede one or two items on your list of items you want repaired. Get his business card (you may want to call him later in the day), and head over to the next dealership on your list of possibilities.
If you do have to go to another dealer because the first one wouldn’t accept your offer, you should just repeat this whole process, and then consider which of these two vehicles will best suit your needs and wants. Never lose sight of your needs and don’t get emotionally attached to a car throughout this whole process.
If you still think at this point you would be better off with the first car, then step outside the second dealer’s office and call the first dealer. Tell him you are about to make another offer on another car at XYZ Dealership. Ask the first salesperson if he would like to reconsider and accept your offer now. You may even negotiate a bit with him and offer to up pay a higher price as long as you don’t exceed loan value or concede an item or two on your list of faults.
If the second car suits you just fine and this dealership accepts your offer, then good for you!