If you are ready to lease a new car at a dealership and HATE the entire process, I have great news for you…
Yes, car salespeople are not exactly honest
Let us talk about the dirty tricks and lies we are told by the new car industry…
Why do car salespeople lie to us… bully us – even stalk us on their car lot?
The answer is simple:
Car salespeople have been trained to psychologically wear us down.
Here is the proof. The sign hangs at virtually every car dealership (yet hidden from us):
It is not unusual to spend over 5 straight hours at a car dealership…
This is not accidental…
In fact, nothing about the car-buying process is left to chance.
Because for most of us, getting into a new car is the second most expensive bill in our life (behind a home).
And since there is so much money at stake, car dealers use every trick in the book to get us to pay them the most amount of money.
Profit is their ultimate prize.
And we are steak on the table – ready to be devoured.
Behind-the-scenes’ secrets of the car dealership “sausage factory”
Car dealers use these 3 basic schemes to trick us into buying their cars to gain the most profit from us:
Trick #1: misleading invoice price
We are led to beLIEve that the Internet helps us get the best deal on a new car.
But car dealers are sophisticated marketers. They use weaponized marketing schemes to trick us into thinking we are savvy shoppers.
They want us to think we drove home in a new car and got a BARGAIN.
(If only this was really true).
The trusted truth is car manufacturers are in cahoots with car research sites like Edmonds and TrueCar. And these sites “reveal” each car’s invoice price…
We think this is the lowest price, but they are not…
Because we can usually save at least 12 to 15% more than the lowest “invoice” price without their help.
In fact, if we go back to 1993 (when “invoice” pricing first showed up to the public)…
A BMW 7-Series Sedan showed an invoice price of 18.2% lower than the sticker price. Today, that same invoice price is just 8% less.
A Honda Accord had a 1993 invoice price of 16% lower than the sticker price. Today that same invoice price is just 8.5% less.
In 1993, The Infiniti Sedan had a 20% invoice price lower than sticker. Today, it is just 7.4% less.
The same 20% invoice price for a 1994 Lexus Sedan is just 8% today.
I could go on and on.
The bottom line is car manufacturers are slowly closing the gap between the “invoice price” and the full sticker price. This is a deliberate move to trick us into paying more money for less car.
Yet most people still think the “invoice price” is what a dealer pays for their inventory. They do not. Car dealers pay a heck of a lot less for their inventory.
Trick #2: Hypnotic spells
From the time we visit a dealership until the moment we drive our new car off the lot, we are under the dealer’s magical spell.
Every single second of the car-buying process is a carefully choreographed charade to funnel us to the F&I office.
(F&I stands for Finance and Insurance.)
This is where we sign the contract and buy stuff we really do not need (like pinstripes, fabric protection – even VIN window etching).
The average car dealership gets a 30% “conversion”. That means for every 100 people who visit the dealership and say, “I am just looking”, 30 will buy or lease a car… usually the same day.
And the VAST majority of these new car buyers is going to pay thousands of extra dollars unnecessarily…
They are literally giving the car dealership thousands of extra dollars and getting nothing back in return.
Not only will we buy stuff we will never use (like extended warrantees)… but we will significantly overpay for stuff (like GAP insurance) that can be had for pennies on the dollar elsewhere.
Trick #3: “Emotion porn”
Emotion is the devil’s best friend…
When we make financial decisions based on emotion, we ALWAYS pay more money for stuff.
There is no exception.
The entire car buying process relies on us making poor emotional decisions.
Most people dream about driving a certain car. This is VERY emotional…
We IMAGINE what other people think seeing us drive a shiny new car. Again, very emotional.
But when we make logical decisions instead of emotional choices, we get FAR more car for less money.
Flip the game and win!
To win the car shopping game, we need to turn the tables on new-car dealers…
Instead of being led like a puppy into a showroom for more than 5 hours, it is best to email car dealers without leaving our home.
Because stepping into a dealership is a surefire recipe to make poor buying choices.
Instead of getting into a new car when “we are in the mood”, waiting a week or so can save us thousands of dollars…
Because timing is everything. I find getting into a new car on a Wednesday gives us the best deal…
Most people try negotiating the best price for a new car with each dealership. We play their insulting back and forth pricing game. This is EXACTLY what they want us to do. And even if we think we got a “great deal”, we probably paid thousands of dollars more than we had to…
Instead, it is best to “flip” the game in our favor…
Ready. Set. Go…
I created a leasing blog that talks all about this stuff. This includes:
– how to lower monthly payments to obscenely low levels (1% of the MSRP)…
– how to get the biggest lease incentives, discounts and rebates…
– how to always get a $0 cash down, sign and drive lease…
– how to get the dealership deliver our new car to our home or office – even a Starbucks.
I call it the KTL USA At-Home Leasing System: