I was introduced to this at the second store I had worked for. It is just about what it sounds like. It is a deal worksheet divided into 4 areas with all your personal info written on top to look "official" lol. Typically the areas are divided into sales price of the car you are buying, value of your trade, how much money you are putting down, and what you can expect your monthly payment to be based on all of those figures. I am going to be honest and say that the sole purpose of this tactic is to make your head spin with all these numbers and literally break your heart. It is fully intended to shock the hell out of you and get any numbers out of your head you were hoping to do before you walked in the door. In a nutshell, make you feel as if your expectations to this point have been unreal. It is also designed to mentally prepare a person with an inflated payment before they walk into the finance office to make any upselling easier when they get there.
Now that you have seen these figures and you have a big lump in your throat like you are 6 and didn't really get what you wanted for Christmas. This is where the salesman goes over the figures with you and says things like "what were you hoping for?" There is still plenty of money on the table at this point. After all he just gave you his first proposal. Now that he has broken your heart he is going to play good cop/bad cop . He is going to poke and prod at you and try to figure out which one of those numbers really makes you tick. What I mean is. Generally there is an aspect of the deal that is most important to the customer such as trade in value or no money down. If you really want to put a salesman between a rock and a hard place at this point. Tell him you don't like any of the numbers lol. They are only going to manipulate the one that makes you happy anyway. In their defense though you cannot have it both ways. Trades are worth what they are worth and they can only sell a car for so little.
What you need to do is look at your personal situation. Maybe you don't even have a trade. Maybe you are paying cash. We're down to 2 squares already now which really kills the tactic dead in its tracks. Truthfully, as long as our FICA score isn't a 450 and you truly know you have the ability to buy. You can tell them straight up how you want to see the numbers. If they have a problem with this then they are obviously so successful they don't need your sale and you probably don't want to buy a car from these folks anyway.
Personally I recommend a good old white sheet of paper or their "other" worksheet for people like you lol. I am going to give you one piece of information at this time now which will allow you to tell them to leave the payment end of it out until you get into the finance office. With today's rates and sufficient credit you can expect to pay about $100 a month for every $5000 you finance on a 5 year note. Give or take $20/month .Example: financing around $20,000 you could expect to pay in the neighborhood of $400 a month on a 5 year loan. With that said, you can be sure you are looking at vehicles you can afford now so they don't use payment as leverage on you. With that said. Don't forget your fees as well. If you are wanting to be around $400 a month make sure you are looking at a car you think can be "bought" for around $18,000-$18,500 if fees come to $1500-$2000. Fees vary from state to state so get a general idea of these before you head in. We are at the sales desk at this point and we just want to hash out the price of the "car" itself. We are not interested in inflated payment figures full of gap insurance, extended warranties, and service plans. As for the money down, you can decide this as well when you get to the finance office. That's your business until you sign.
So now that we have thrown "payment" out of their little scheme. We are just down to the price of the car and the value of the trade or maybe just the price of the car. Isn't it amazing how much the whole thing has been simplified just by taking the payment out? This is not what they want trust me lol. At this point though it will take some of your own research to determine fair values on either the car you are trading or the car you are buying. As a general rule. A new car you can typically expect around a 10% markup on a sticker price. This excludes factory incentives. If you are buying used get the average retail values between KBB and NADA based on condition and this should be fairly close to what you can expect to pay. If you can get it lower than that you're doing good. If you can't get to the averages between these two books though and strike a deal there is a possibility they own this car for more than they should. Up to you at this point if you want to look elsewhere or buy theirs. If it is something unique you can expect it to bring above book value though. In regards to trades do the same thing. Get collective average of both books and be sure you booking it as a trade. Trade and retail numbers are different for obvious reasons. Also, make sure you be honest with yourself about your vehicles condition. I seen all to often that the customer was a bit biased toward their trade. I myself would have to probably catch myself on this one. That line in the book values that reads EXCELLENT at the top. Well, that's more or less show room condition and about less than 5% of the vehicles out there will really qualify for this title. However, make sure they are playing by this rule as well. If they are showing you the best book numbers with their printout they made trying to justify their price make sure the car lives up to it. If he is claiming it's in excellent condition except for that little bumper scuff. Guess what buddy, it ain't in excellent condition.
Now that we have broken it down to 2 (and maybe 1 in your case) simple figures we just want a difference number before fees. In other words. What are you going to sell me that car for with my trade? There is no smoke and mirrors at this point. If there car is $22000 and you think you can buy it for $20000 and you have a trade you are wanting $10000 then a difference of $10000 is what you are shooting for. It's fairly simple.
One more thing I wanted to touch on quickly before I go is vehicle payoff. I plan to do a segment on this later but I want to touch on it so you know how it applies to a deal like this. Call the financial institution before you go work a deal anywhere. If they are a 4-square store or even not they will pry at this one to try to appease the "payment" issue. The best thing you can do on this is play dumb and factor the payoff number in your head into it when you are working the deal. For example. I will use the figures from the last paragraph. Lets say you worked a deal down to difference of $10000 and your trade-in payoff is $8300. Fees will be based on the $10000 (that could vary state to state) and your payoff will then be added to the total. So you are back up into the $20k neighborhood at this point.
I would say the best advise to taking away a stores 4-square ammo away is to be vague about your finances (money down and payoff info) and don't express concern of payment. I have given you what types of payment you can expect for certain dollar amounts spent on 5 year terms and I can assure you that as long as the finance office does not have them loaded with "extras" and your credit is substantial it will be close enough to what I have said given the rate is competitive. If you should want to further payment estimates for different length terms or to play with different rates Bankrate.com has a wonderful payment calculator on their website. I hope you found this helpful and I hope it save some of you folks some money. Stay tuned, and I will post more of these.
Tuesday, July 19, 2011
The Infamous 4-square Sales Tactic
0 comments:
Post a Comment