[WalterBright]

Don't sign predatory non-competes. If one is executive material, negotiation is a necessary skill :-)

I was helping a friend buy a car the other day. The salesman kept coming back with a "final" offer and "we can't go lower than that", etc., etc. But I advised my friend to hold the line, and he did till the offer got into his price range.

[namecheapTA]

Take it from a car salesman, this is often a tactic to slow down the negotiation and make you feel like your offer was a good deal for you. I have said those words many times when I could have gone lower than their offer, but if you just go back and accept it, a lot of "hard negotiators" get cold feet. Anyone that brings a friend to buy a car with them automatically broadcasts "I'm playing games and brought an extra player" so we turn on the games too.

[WalterBright]

Oh, I enjoy the game. I went along to make sure he wasn't rooked. He did notice that three times the numbers on the term sheet didn't add up, in the dealer's favor, and three times the salesman said he'd just made a mistake.

I knew about the term sheet ruse, it had been tried on me twice and on another friend of mine.

I also knew that I'd be up against a negotiator who does it all day every day, and so I expected game on.

[namecheapTA]

I sold cars for a decade, at very busy dealerships, and I have no idea what a term sheet ruse means. The only 'ruse' in car sales is the game played to stop people that want to pressure a dealership into selling something below it's typical sale price.

If a car is in demand, it sells near MSRP. If it's a high volume commodity that's hard to sell in the required numbers, you can discount it heavily. If everyone wanted to buy a car at "the best possible deal you've done in the last 90 days" dealerships would basically be out of business by definition. So someone has to hold the line or the entire system doesn't even work.

Im a very frugal person and don't even buy new cars, but why some people think they deserve to pay less than their neighbor did blows my mind still to this day.

[WalterBright]

> some people think they deserve to pay less than their neighbor did blows my mind still to this day

Deserve has nothing to do with it. It's about both parties negotiating for the best price.

That said, there may be very good reasons not to push too hard. You might want to do business with the other party in the future. You might want a good review on Google. You might not want to take advantage of an elderly person or an inexperienced wide-eyed kid.

But any party going on about what they "deserve" is not going to earn sympathy.

BTW, did you ever watch "King of Cars", a reality TV show at a car dealership? I found it both entertaining and instructive.

[namecheapTA]

I haven't seen the show unfortunately.

My basic summary of the entire absurdity of the common tactic of "what's the best price you can do?" is as follows..

The best price is a vague concept depending on where we want to draw the line.

Best price I can do and keep my boss happy with my performance?

Best price I can do if I want to be below average at this company?

Best price I can do if I want to ask for a personal favor from my boss to allow me to heavily discount this car beyond established metrics we have and sell it this one time?

Best price I can do if I want to be yelled at tomorrow morning?

Best price I can do if I want both my boss and I to be yelled at tomorrow?

Best price I can do if I want my boss to negatively impact his career by the owner seeing him make deals like this too often?

Best price I can do if I want to get myself or my boss fired the next day? I could probably somehow secretly sell a car $10k under what I should... Once.

Where do we stop? Some nice people pay MSRP. Some people ask for a gesture of a discount. Some people ask for what discount is fair to market and we'd be ok with, and take it. Some people want below market, and we try to stop it if the car is in demand or we have enough volume. Some people want prices so low they'd fall into the "negatively impact the salesperson or teams career". Sometimes we even take those, but it's always a calculation between taking a below market average offer or waiting for one of the earlier described people to walk in.

[WalterBright]

I happened to know beforehand that the car had been on the lot a while, and the dealer probably wanted to be rid of it.

Unsold cars on the lot are burning cash, as they're there on borrowed money.

BTW, he had to get the manager's signoff on the final price, so I'm sure he wasn't getting fired for it. A savvy manager isn't going to let a salesman underprice a car to sell to his buddy.

You mention a lot of considerations, all perfectly valid. That's what makes the game interesting and fun :-) I'm sure the salesmen also size of the customer based on his clothes, the car he arrived in, his demeanor, etc. I remember shopping for a new car long ago, arriving at the dealer with my usual worn out jeans. None of the salesmen would talk to me. So I bought the car from the dealer's rival. These days, Seattle is full of millionaires wearing jeans, and the salesmen know that, and don't make that mistake.

[WalterBright]

The term sheet ruse has taken the following forms in my experience:

1. the final paperwork has an interest rate a full percentage point higher than the agreed upon number

2. the "new" car turned out to have 5,000 miles on it in the final paperwork

3. an extra $1000 charge magically appeared on the final paperwork

4. the total on the final paperwork was quite a bit higher than the sum of the figures above it

[namecheapTA]

1. Weird fraud I've never seen done, if the actual original interest rate was "agreed upon", and not just a "potentially if you qualify at our source bank".

2. I assume the car was looked at and maybe test driven. I find it hard to believe this was a 'ruse' left for the final moments. I can imagine people getting confused or not hearing or understanding I suppose.. someone wants a discount, salesperson says we have a demo over here we can do a large discount on.. and somehow the miles or reason for discount were not discussed. I wouldn't call this a ruse, and once again not something I've done or seen since it's just a waste of time. Obviously the person will discover the miles at some point, so why have the drama.

3. Illegal to pad a term sheet and then stuff a $1000 'charge'. You'd atleast have to have the customer sign the contract for what they were getting for their $1000. Dealers attempt to add things often, but they can't be secretly padded into the initial payment discussions. It's superficially easy for a customer to snap a photo of a preemptive term sheet and burn a dealership at the DMV dealers office or back out a whole deal months or even years after purchase if this was documented. Again, not something I saw in 10 years.

4. I saw countless people get confused by the "total" on the contract, usually when selling a used car to a less mathematically and logical buyer for some reason. You can sell a Porsche to an accountant and all goes great everytime, but sell a used Corvette to someone that personally requested a 72 month loan and watch drama unfold as he wonders why the total of payments on his $50k car is $70k. Luckily I was good and could always explain reality of sales tax, registration, and interest to these people. But not everyone is so lucky.

Maybe the dealerships I worked at were above average in integrity, because they were high performers and high performers don't have time to fraud induced drama, but honestly if you land on a dumb salesperson that can't explain your confusion to you, you can end up thinking your confusion was their attempt at a scam.

[WalterBright]

1. It was a handshake "come back tomorrow for the paperwork" deal with the manager. The underling who handed me the papers said they would never have agreed to the lower interest rate. I told her to go check with the manager. She did, and came back complaining that she'd have to redo the papers (!).

2. A "new" car doesn't have 5,000 miles on it. They told me it was new. There was no ambiguity there. They pushed the papers at me hoping I wouldn't notice it.

3. Illegal or not, that's what they did on the next day final paperwork. Of course, they said it was just a clerical error and they'd fix it. The original deal was not documented.

4. When you have a column of numbers and a total, the total should match the sum. There's no excuse for this.

These issues were from multiple dealerships, so I figure it is common practice. One was from a friend of mine, who I warned to check the numbers on the final next day paperwork. He laughed at me, saying nobody would do that. The next day he called and thanked me, as he discovered a $1,000 error in the dealer's favor. He said he'd have never checked it if I hadn't warned him.

[WalterBright]

BTW, my dad once was negotiating for a mortgage with the local bank branch manager. He said the manager gave him a long cock-and-bull story about how mortgages worked. Finally, the manager asked him what brought my dad to town. My dad replied that he'd been hired as head of the finance department at the local college.

My dad said the manager's expression was priceless.

No, I am not confused about things like compound interest, what the sum of all the payments would be, etc. I often tell kids who complain "who needs math" that failing to learn about compound interest is going to cost them plenty.

[ethbr0]

The terms sheet ruse as I've heard it and seen it, aka the triangle game, is pushing a sheet with down payment, monthly payment, and total price in front of a customer.

The salesperson then attempts to discern which of the 3 the customer is actually paying attention to and optimizes that one at the expense of the others.

Because the input vars (e.g. interest rate, term length, MSRP) and dealership profit are concealed behind the displayed numbers, the deal can be "adjusted" to please the customer but keep the same sale profit.

[CalRobert]

Jesus this alone is enough to make me want to buy a Tesla.

[namecheapTA]

You can buy any car in America using the Tesla model. Just call them, tell them you'll pay asking price (just like Tesla requires) and tell them you want it delivered to your house with the paperwork. I have done this countless times, even for people negotiating a discount.

[CalRobert]

This might be why every single car I have ever bought has been from Craigslist (or a local equivalent), private-party, cash or cashier's check. Except for the one I bought from ebay which wasn't too different. But I've never had a new car.

[ethbr0]

Also, you can generally call any dealership and ask to speak to the internet sales / fleet department.

They're usually (at least at Ford) compensated on volume-moved-above-minimum, not profit-per-vehicle.

[namecheapTA]

They are definitely compensated via a gross profit commission split just like others at the dealership. They do have volume bonuses to make up for the fact that most of their deals will be low or no profit, but if you inquire on the internet about buying a rare model, it's not like they're going to discount it drastically and get a low commission... It's a rare model after all.

[ethbr0]

YMMV, but I got it directly from a roommate who worked in internet sales at a Ford dealership. Volume >> profit.

[ethbr0]

I meant less so on the business owner side, although it is a lesser concern there too, and more so on employee side.

Hard to hire experienced employees if no one in your industry (i.e. nail care) can change employers.

And then there's the latest 'you owe the (arbitrary) cost of your training if you leave before X' restrictions.

Also, car buying is the worst. The only working formula I've found is to deal with internet sales, confirm the number, show up, and say you're walking if they add anything but taxes to it.