Here’s the script for the “Negotiating A Car Deal” video above:

You’ve told the sales rep that you want to buy the truck.  The sales manager has appraised any trade you may have, now you’re back inside, and we’re going to continue with negotiating a car deal from the start.

This is the part where people can feel the most anxious as it’s the first part of this entire process that has been out of your control.  Don’t worry.  We’re going to break down all of what to expect and how to get the best price when negotiating a car deal.

Your sales associate has gone into the tower to communicate with the sales manager to get your opening offer.  Any offer from the desk to the buyer in the car business is called a “Pencil.”

Why?

It’s because numbers can be erased, changed, and moved around.  Your opening offer from the tower is called the “First Pencil.”  It will be your sales rep’s job to present the first pencil, and if you say yes at this point, you become what we call a “Lay Down” because you offered no resistance.

That’s not you, though. We’re going to offer resistance!

negotiating a car deal

The sales associate or potentially someone from management will emerge from the tower with a pop in their step, a smile on their face, and a piece of paper in their hand.  On that paper will be your first pencil.

I’ve seen these go down in several ways from the most basic, called a “Four Square” written in marker – up to a printout showing how all the numbers breakdown and add up, just because some people think that if a computer prints out numbers that everything must be legit.

Just keep in mind that whether this first pencil comes from a printer or a crayon, all numbers can move, and all that we’re working towards here is an preliminary agreement, we don’t actually buy a car without signing a lot of other paperwork first.

These pencils or offers will all have the same four basic components.

  • The vehicle price
  • The offer for your trade-in
  • Your down payment
  • The monthly payment.

We’re going to walk through this mock 4 square here so you have an idea of how I will present it to you as a sales rep, as well as what’s really going on behind the scenes after.  The most important part for you, in the beginning, is to make sure that they’re presenting numbers on the right car.

You do that with the VIN, remember when I had you remember the last six of the VIN before the test drive?  Make sure that the numbers you’re discussing have the same last six of the VIN when negotiating a car deal because sales managers make mistakes too in communication with the sales rep.  It isn’t usually on purpose. If it happens, just make sure the numbers match.

negotiating a car deal - the first pencil

Keep in mind that you may see a literal 4 square just like this, or it may be a more enhanced itemized breakdown.  It doesn’t matter how you see it because they all have the same things.

Now I’m going to pretend that I’m your sales rep here, I’m placing this down on the table and here’s how the presentation will go.  Notice how I make your trade sound like it’s worth more and how your new expenses seem small.  Ready?

“Alright Bill and Judy, I’ve gone to bat for you with the boss, and here’s how you can drive out with that new F-150 today.  On your six-year-old Pilot, we’re going to give you nine thousand eight hundred seventy-five dollars for it!  Your new F-150 is forty thousand five, and with an initial investment of seven K, we can get your payments down to just seven-fourteen for 60 months or six forty-one for 72.  Isn’t that great? Circle the payment that works best for you and sign right here so we can get you going.”

See how that went?  Sounds good, all polished, right?  Do you want to say yes?  Well, don’t!  I was ripping you off!

Here’s why:

Negotiating a car deal

When the sales rep presents this to you, don’t take any of it personally.

  • The vehicle price may be high even though they know you’re on internet price.
  • They may offer you half of the Edmunds valuation for your car.
  • They may indicate that you must put $5,000 down, and they may show you a payment with an 18% interest rate!

You know…potentially ridiculous numbers!

Some dealers will even pad the payments to give what we call “leg” to the finance manager so that they can upsell backend products while keeping your payment in the range of what you already agreed on, making it sound like you’re getting a VIP customer bonus deal or something!

Again, Don’t take it personally.  Remember that the sales manager’s job is to maximize profit for the dealership because they get paid based on a percentage of the profit.

We would always say in the business that, “If you never ask for the money, then you’ll never get it.”  They have to try because, depending on your relationship with the sales rep, there maybe a 5% chance that you’ll say yes to the first pencil.

Don’t freak and storm out of the dealership; what they’re doing is called “taking your temperature.”  How hot or cold are you?  Where are you at?  Remember, if you’ve done your job up to this point, the only thing they really know is that if the numbers work out, you’re willing to drive off the lot with that car today.

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