Monday, January 05, 2015
The Gap Between Educated and Uneducated Car Buyers
My “thing” is cars and advising you on how to buy, lease, service, and repair your car without being taken advantage of by your local car dealer. I do that with this column/blog, my radio show, “Earl Stewart on Cars” (Every Tuesday and Sunday from 4-6pm on 900 AM The Talk; stream it on www.900TheTalk.com. I also speak before groups such as Kiwanis, Rotary, public libraries, women and men’s clubs, schools, computer clubs, etc. If you are a member of a group in the South Florida, area, just give me a call. I wrote a book on how to buy and service your car entitled “Confessions of a Recovering Car Dealer.” You can buy it on Amazon and 100% of the proceeds go to charity.
Because I’m totally accessible to the public (my personal cell phone number is 561 358-1474), I hear all of the stories of how car buyers are taken advantage of by car dealers. I have to say that there are good car dealers out there, more than there were 20 years ago, but there are more car dealers that do business the wrong way than the right way. Listening to these stories by victims of car dealers is one of the main things that motivate me to do what I do. Three of the most frequent complaints I hear are “I paid way too much money for the car, way too high interest on the financing, or got way to little an allowance for my trade-in.”
There is one thing that sets buying a car apart from almost every other product you buy. That is that everybody pays a different price for the same car, gets a different trade-in allowance for the same car, and pays a different interest rate to finance the same amount of money. That means that if you were to buy a Ford F150 pickup truck today and your next door neighbor bought an identical truck tomorrow from the same dealer, the chances are that your neighbor would pay substantially more or less than you. The price difference could easily be thousands of dollars.
What determines who gets the lower price and who gets the higher one? It has nothing to do with your race, sex, age, religion, or income; although there are studies that allege this is true, when you drill down in these studies you will learn that the underlying common denominator is “education”.
When you buy or lease a car, you are playing a game for money with the salesman and his manager. Both of them are paid a percentage of the profit they can make on the car they sell you. The higher the price they can convince you to pay, the higher their commissions are. The salesman and manager are professionals and you’re an amateur. They do this many times every day but you buy only one car every 4 or 5 years. They hold most of the good the cards in this game. They know the true cost of their car, the cash incentives to you from the manufacturer, but more importantly the secret cash incentives to the dealer. They are highly skilled negotiators and masters of psychology in winning your trust. Likability is one of the most important attributes of a good car salesman. When he looks you in the eye and says, “This is as good a price as I would give my own mother”, you want to believe him.
The educated car buyer that has done his homework by reading Consumer Reports, www.TrueCar.com, www.KBB.com, www.Edmunds.com, and other very good sources of Internet information on buying cars can win this high stakes game. Those who do not educate themselves, take their time in the car buying process, and get competitive bids from different dealers will end up paying a lot more money. In almost any car dealership the profit on a vehicle can vary from as little as a few hundred dollars to several thousand dollars. You want to be the savvy buyer that will save thousands of dollars. I’ll leave you with one thought which will save you money in your next car purchase…Time is on your side. The longer you take in the car-buying process, the lower the price of the car will be. Never buy a car on impulse on the first day or even the first week of car shopping. The car salesman will give you a lot of reasons not to do this, but they are untrue.
Posted by Earl Stewart at 10:33 AM