3 things you should never tell a car salesman

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By Michael McDonald/GOBankingRates

Buying a new car ranks among the biggest purchases most people will ever make. The average cost to buy a new automobile is now nearly $34,000, according to Kelley Blue Book. With so much money on the line, it is natural that people get nervous about the deal they are getting.

Many shoppers hate the process of buying a new car. In most cases, shopping requires you to go to a dealership and haggle with a car dealer. Say the wrong thing, and you can give the dealership the upper hand. Then, your new car might come with an unhealthy dose of "buyer's remorse."

To get the best deal, there are several things a buyer should never say on the car lot.

Click ahead for a look at three phrases you should avoid at all costs.


This article, 3 things you should never tell a car salesman, was originally published on GOBankingRates.com.

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​1. “I love this car.”

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Car dealers hope you will fall in love with a vehicle. They know that if you really want a car, you will agree to pay more for it. So, never let on about how much you like the car.

Instead, pretend you are in a poker game. You do not want the car salesmen to know when you are happy.

Whether the salesman is showing you a Ferrari or a Chevy, your response should always be to point out the car's problems and flaws. Even if you are dying to buy the vehicle, tell the salesman that you might be willing to take it if you get a great price on it. But if you cannot get a good price, you are happy to keep looking.

If you can make the salesman believe you place a lower value on the car, he will lower the price to a level he perceives is in line with that reduced value. Of course, no dealership will sell you a car if it means losing money on the deal. So don't hold out for an absurdly low price. That will only communicate that you are not a serious buyer.

Instead, the ultimate goal is to get the dealership to take a price so low that it is willing to simply break even on the car in exchange for the opportunity to move the metal off the lot. Do some online research beforehand so you know what the car commonly sells for. Then, start negotiating at a price at least 10 percent below that number.

Again, the key to succeeding at this is to show very little enthusiasm for the vehicle.

​2. “I work at Acme Inc. as a [insert highly paid job title here].”

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All car dealers engage in a perfectly legal technique called "price discrimination." In economics, price discrimination refers to selling the same product to different buyers at different prices based on their willingness to pay for the good. Dealers do this as a way to maximize profits. The goal is to charge each customer the most that he is willing and able to pay.

To effectively employ price discrimination, the salesman needs information about you. First, he needs to know how much value you place on a car. That information comes out during the sales process. Second, he needs to know your ability to pay. There is no point in trying to sell a $100,000 BMW to a person who works a minimum-wage job.

To figure out your ability to pay, the salesman typically will ask what you do for a living and where you work. This may seem like small talk, but it is actually a carefully calculated move to gather information. Thus, you should always downplay the importance of your own job.

If you are a neurosurgeon, just say you work in a hospital. Are you a president of a university? Tell the salesman you work in teaching. The point is to go against the natural instinct to be proud of your success. Instead, make the salesman think you have just enough income to afford the car, but only barely.

​3. “I want my monthly payment to be no more than this amount.”

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It may seem counterintuitive, but even though the monthly car payment is the most important factor for many buyers, never tell the dealer that is what you care about.

Do not say you want the monthly payment to be no higher than a certain number. A car salesman tries to maximize profit, and will simply artificially lower your payment by extending the life of the loan, or by requiring more money upfront as a down payment.

Instead, try and separate discussion about the loan from any negotiation over the price of the car. Focus on negotiating the price of the car down to the lowest possible level. Once you have gotten that part of the deal finalized, you can worry about negotiating the loan interest rate, terms and length.

The key is to simplify the transaction so it is just about price. Decide on the upgrades you want, and then work on getting the price as low as possible. The salesman may try to distract you by offering incentives on the loan or telling you that he can adjust the loan terms to get you the monthly payment you want. Ignore that. Always start by dealing with the price first, and then haggle over the loan.

Indeed, some buyers choose to eliminate the loan portion of the car-buying process altogether by getting an auto loan at the bank before shopping for the car. Doing this helps simplify the buying process and ensures that the dealer has no choice but to focus on the cost of the car. Similarly, it is wise to negotiate any trade-in separately from the purchase of the vehicle itself.

Follow these tips for buying a car and you will have a successful car-shopping experience. Just remember, the goal is to buy a car you like at a price you are willing to pay. If a negotiation is going badly or you give up too much information and compromise your bargaining position, it's always OK to walk away and try again in the future.

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