Payment vs. Price. How prospects prefer to negotiate.

Vincent R
This seems to be something that is very common that comes up among prospects. They are more concerned about the price versus what their monthly payment will be. I am a member on another forum and people were calling this "the monthly payment trap" or "the four square game". They may have their guard up and just not want to tell me their payment budget or price range. This can be tricky as some may want to see vehicles way outside of their budget expecting to get a huge discount. Virtually always a customer is very concerned about the price at my dealership. And if it turns out they have about $6,000 to spend, they are still interested in a $10,000 vehicle! And if we pitch to them the idea of financing options it doesn't ever really work out too well. They may ask, "What is the lowest you can go on this car if I pay cash?" To which I may respond, "Well it's not my car to give away, but I will be happy to see what I can work out for you. Though before I do let me ask you this, if I can get you the right price on this one, will you take this car home today?" To which they may not answer, but still be insistent on obtaining a number. So how do you guys deal with these people.
Keith Wilkerson
I have found that a pretty good word track is "Are you looking for the MOST car you can buy for $6,000 or looking for the BEST DEAL on this particular car that is well over that price point. Either way, I can help you." Regardless of the response, it drills down to how firm that budget really is and if it's just a smoke screen.
Lauren Moses
Vincent, great topic. We have a lot of this around here as well. One of the first deals that I closed all on my own (a week in and we were down 2 salesmen), was a younger lady (younger than me), and she was extremely picky. She had been preapproved for $11000 out the door. But the bank gave her the stipulations of it being no older than a 2009, with no more than 75,000 miles. You can imagine that it was not easy to find a vehicle to suit her needs. Not to mention that she wanted it to be very clean, had to have a 3rd row, very high safety ratings, and if possible a dvd player. I thought she was asking for the moon and more. At first it started off great, but as soon as she got an approval from the bank she started to let it get to her head. She started demanding prices on different vehicles, that we fix things like tiny scratches, adding DVD players, and much more. I finally got her settled on one mini van that we had that we got the bank to okay since it didn't meet their criteria for the $11000 preapproval. She wanted to negotiate the price and nit pick the entire van. I had to finally shut it down and simply asked her "what will you give me for the van? What do YOU feel the vehicle is worth for the safety of you and your daughter?" She threw out a ridiculous price of $3000 below what we paid for it. Even though she was approved for the whole amount of the vehicle. Thankfully I was able to salvage it and came to an agreement on a price in the middle. But with the stipulation that it was taking the vehicle as is. I know that it's a lot but in the long run it's all dependent on the customers. If you have a customer that has to keep a note of say $500, you may be able to get them that note and a nicer vehicle if you go out 72 months or more versus 60 months or fewer. But that to me only works with the customers that don't really pay attention to their finances. A financially savvy person isn't going to finance a vehicle for 72 months at a 10% interest rate. They know that come less than half way through paying it off the vehicle wont be worth what their payoff is. I just ask straight out if they have a budget, are they looking for certain payments or vehicle cost. Some say both and some give me one or the other. I work it from there as best I can. If I need help I call in our owner or GM.
Dustin Lyons
I loved having people who were trying to buy a vehicle for $6000 cash, because I would with them to a lead on a new car! Especially when they start to nitpick the used stuff. I had a customer once who was demanding prices on everything and then making comments like "oh thats way to high for that" etc... I finally just had to say "look, you want to play games or do you want to know what I would do in your shoes". He said "what would you do?" And of course my reply was "I would lease a new one for a couple of years and then sell it and put cash back in my pocket". This intrigued him enough that the (probably non existent) meeting that he had to go to in 5 min was suddenly not that important and he stayed for my lease pitch and then drove away in his new truck a couple hours later. Ultimately when people asked how low we could go if they paid cash, or if they asked for an additional discount because they were paying cash I would generally inform them that it makes no difference to us if they pay with a duffle bag full of crumpled up dollar bills or if the bank sends us a check, so cash really isn't an incentive to discount the vehicle. One thing that works well when you get into a situation like this is regain control by being the one who asks the questions. Your question of if I could would you does that, but it also tells them that you will probably discount the vehicle and will cost you gross. You can regain control and maintain gross by asking them more value building questions, like asking them what they like about that particular car, how they may use it etc... And offer a switch piece. Show them a $6000 car and see how quickly they come back to the one they like. I always preferred negotiating payment (for many probably obvious reasons), and most people can be switched to payments, like I would explain that the price is certainly important, but the payment is what is coming out of your pocket each month so lets make sure that is comfortable for you. Most people also don't keep their vehicles that long either, so it can be easy to switch someone to payments (especially a lease).
Lauren Moses
Dustin, that is SO true. People look at the sticker prices and get sticker shock. They don't realize that with the right circumstances you can get into a new vehicle for the same note that you would be spending on a used vehicle. We don't do a lot of leases around here (MAYBE 1 every 4 years). We just have too much of a drive to go do anything to make it worth it. I do HATE when customers say..."what is your cash price?" Especially if they end up not having cash and having to get financing. I tend to let people know that I am not the one to give the discounts. All I can do is show them the vehicle and write up the paperwork. All of the negotiations go through our Owner after a handshake. It helps to get them in the showroom where they can become a little more attach to the dealership and it's always done after we have done a trade in appraisal if they have a trade in.
Dustin Lyons
1 lease every 4 years?!!? I was doing probably about 15 a month lol. I did have a pretty solid lease pitch though. Sometimes it was tough because we had a lot of very conservative, cash type buyers who for mainly religious reasons didn't want to "be in debt". One thing I would recommend Lauren is not talking about discounts etc... It just opens the door for losing gross. The price question can be a scary one for a lot of sales people who aren't sure of the best way to answer, and who want to make sure they keep the buyers interest without lot popping prices etc... After a few months, most sales people probably have a pretty good idea of the type of prices that their manager will accept, but we are often told not to discuss price out on the lot and that the manager determines the price. I found that the best way to answer the price questions is that the "cash price" is the exact same as a finance price. It makes no difference (actually we definitely prefer the customer finance because it is much easier for accessories and finance to make addition gross), so just let them know "for us it doesn't matter how you pay, we treat everyone fairly, the price of this vehicle is $XXXXX and that includes the features that you said you wanted, plus it comes with this and that, and I think that it will work great for you and we can make it work for your budget, here sit here lets take it for a drive and see what you think." The key is maintaining control by controlling the conversation, and focusing on value rather than price. If you switch the customer off of how much it is and on to the value that it will create for them because it fits what they are looking for then you will be able to maintain control and not give away the gross by suggesting that they will get a discount later on when they talk to someone else. Be confident in what you are selling, know what your customers value, make sure you give them or show them more value than you are asking them to give up, and get them to like an trust you and you'll have a car deal, more gross, and a happy customer.

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