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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.

> 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.

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.

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.

ethbr0 1338 days ago

Unless there's value in it to me, I generally dress down for anything where I'm paying money.

My thinking? If I'm polite and verbally confirm that I'm good for the amount and the salesperson treats me poorly? Not someone I'd want to do business with anyway.

Actions >> appearance

I'm from California where ignoring someone for the way they dress doesn't really happen often. And honestly, any car salesman that's been in it for more than a month has seen a blue collar worker come buy a $80k diesel pickup or escalade for their wife.

What we do screen for a bit is basically time wasters. It is possible to be accidentally picked up in this net, and then say "they sure missed out, I bought a car at the next place". That's unfortunate for the salesperson sure, but you're ignoring the countless hours saved by quickly dismissing the true time wasters.

I sold cars and was very good at it (better than top 1%) and would sometimes get in a mood when I would ignore intuition for a few weeks and just do an amazing job with everyone. Doing an amazing job works well, and you can get people to buy a car who swear they stopped with ZERO intention of actually buying a car that month even, very often. But you almost never even get CLOSE to selling a car to someone you have a bad vibe about, even if you go all in.

If you're good at car sales, you have more people to follow up with and do a good job with than you have time. I sold 34 cars a month average over years. National average is 11. Eventually you have to trust your judgement to save yourself 10+ hours a week, even if once a month it costs you a sale.

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

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.

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.

1. I wouldn't call a miscommunication between a handshake deal with multiple people and departments involved and the next day the exact same as a "term sheet ruse" which implies there are games being played on the actual term sheet in front of you. I would say in many industries there are terms on the final documents that don't always exactly match what earlier communications, and yes it's important to make sure they match up.

2. A new car is new as long as it hasn't had a registered owner. You can even have a new car with an already started warranty sometimes. I still wonder how you made it to the paperwork stage without seeing the car and noticing it wasn't exactly 'new new', but if you landed on a very shady salesperson it could be covered up (simply leaving the dashboard display on a trip meter instead of odometer could do this I suppose)... But once again.. I STILL think it's more of an accidental miscommunication than deception since everyone knows it will eventually be discovered. Dealerships sell many "demos" year round, and I've also never seen this drama in person even though demo sales are common industry wide.

3. Clerical errors do happen when a salesperson gives management a summary, a salesmanager loads a deal into the system, and a "finance manager" (I hate them) finished loading things so that the DMV and banks are happy. It does happen. It isn't a tactic because once again, people rarely miss a $1000 line item, or the payment going up suddenly.. so why have the drama, potential deal blow up, yada yada.. the salesperson doesn't get paid on non vehicle adds ons or fees, and management gets such a small cut of gross profit I just don't believe it's done on purpose since it has a high threshold of drama.

4. I have never seen this, and I can't even imagine how we'd get the computer system to do this. Also, the banks would reject a contract later that doesn't add up and send the deal back. And finally, who is intentially commiting this kind of fraud on a document that will forever exist in your hands and the banks hands. Would there be an easier way to get caught for some crazy fraud than having numbers not add up on a final contract?

I understand that clerical errors and miscommunication happen. I make those mistakes myself.

But when they always err in favor of the dealer, I get suspicious.

> I still wonder how you made it to the paperwork stage without seeing the car and noticing it wasn't exactly 'new new'

I foolishly had not checked the odometer. I assumed that if the salesman said it was new, that it was new. Anyhow, on noticing the mileage on the final documents, I pointed it out, said I wanted a new car, and walked out. They watched me go, and when I was backing out of the parking lot, came running out and said they'd make buying it worth my while. And they did.

A car is designed for 200,000 miles. 5,000 is a significant chunk of that, and also the new car warranty is based on absolute mileage, not miles since buying it.

4. The various printed sheets that were not the final documents were printed separately and had no signature block. "I can't even imagine how we'd get the computer system to do this" You can probably do it with Excel. The idea is to focus the customer on the bottom line, and then he likely won't notice the column numbers were different on the final sheet because the total would be the same.

frumper 1338 days ago

I've had a statistically unusual amount of clerical errors after a deal is struck at car dealerships going from salesperson to the finance guy. I've politely corrected them each time and only once did I walk away because I "must be mistaken"

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 1338 days ago

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.