For the last several years, I’ve worked as a car salesman as my day job. During this time, I’ve learned how clueless the average person is about car shopping and just how bad most Americans are with their finances.
I’m not trying to make judgements or stereotype, but these are just simply observations I’ve noticed throughout my career of selling cars and dealing with hundreds of different customers.
First of all, most people don’t seem to understand the basic concept of financing a vehicle. No matter how many times I’ve tried to explain it to customers or how many times I’ve tried to modify my wording to make it simpler to understand, a lot of people still just don’t get it. As a lot of you might already know (or not), with financing a vehicle, you are spreading out the total amount financed (the amount you are borrowing from the bank) over the course of your term length (the total number of months you have to make payments). So obviously a loan of $20,000 for 72 months is going to have a lower monthly payment than a loan of $30,000 over 72 months. That seems like common sense to me. Basic math.
A lot of car shoppers I encounter are unable to grasp this concept. They always come into the store wanting a $350 payment for zero down. For some reason this has become the magic number most customers have in their mind. I’m not exactly sure where that comes from, but whatever the case may be, $350 or lower is what everyone wants. Now, in order to get that $350 payment, obviously (or maybe not so obviously) you would have to be only financing an amount that, when spread out over the course of your term length, would equate to $350 month.
Let me simplify even more. For a $350 a month payment, you’d have to be financing a vehicle that costs less than $20,000. That’s just based on very simple math. For some people with horrible credit who end up with those astronomically high interest rates, you may even need to look for a vehicle under $15,000 to get to a $350 payment.
I won’t go too deeply into interest rates in this article but, in other words, don’t get pissed off at me when you see that 28% APR on the screen. I had nothing to do with that whatsoever. You earned that interest rate. That was all you and your bad money management. Sure, maybe you didn’t know how to build your credit. Maybe you were never taught. I can agree that our school systems suck at teaching people real-life fundamentals of finances, but either way, it’s not my fault. So, getting pissed off at me and throwing an adult tantrum at the dealership is only making you look like the fool. Not me. But I digress…
Back to the topic at hand… Let’s pretend that $15,000 is the magic sticker price to get a $350 a month car payment for 72 months that will apply to the vast majority of customers. Like I touched on before, there are other variables that affect this number such as interest rate, down payment, etc., but for this example, let’s just go with $15,000. So now that we all agree that $15,000 is roughly the target vehicle sticker price (not including taxes and fees) to achieve the endlessly sought-after $350 monthly payment, let me ask you this… How many fucking new cars do you know of in 2018 that cost $15,000?! How many? I’ll wait….
So, since we’ve established that a new vehicle for that price doesn’t exist in 2018 and you are asking me for a $350 payment with zero down, what the fuck are you doing asking to test drive that $50,000 luxury car? Why are you wasting my time and making me educate you like a child on how you can’t fit the square peg into the round hole? $50,000 does not, on any planet in our current dimension, equal $350 a month unless you are putting somewhere in the vicinity of $30,000 down. Do you have that much to put down? No. And since you want to put zero down, or if I twist your arm you can maybe cough up $500, there’s no way in Hell you are coming anywhere close to a $350 payment on a vehicle in that price range. Auto lenders don’t offer 25-year car loans last I checked.
A lot of you who have experience buying or selling cars may say that $350 is just the customer lowballing. They know they probably won’t get that payment, but they use that number to try and avoid getting screwed by the salesman. Of course. I totally get that. And trust me, I can’t even remember how many times I’ve closed a customer on a $400-$500 (or higher) monthly car payment after they came in insisting they could only afford $350. It happens all the time. Customers lie. That’s just part of the game. And anyone who is a good car salesman can easily overcome these type of customer objections in several ways. I’ve done it many times myself and I’ll admit I’ve taken advantage of customer’s lack of financial savvy.
There’s been several times when a customer has driven off with me knowing full well they can’t afford that car payment. I know it’s going to cause them severe financial hardship down the road and they will possibly regret it later. But at the end of the day, it’s my job to sell the car. It’s business, not personal. And if the customer is willing to make themselves go broke because they just gotta have that shiny new thing, then who am I to stop them?
A car salesman is not your friend or your family. We’ll smile to your face and then celebrate how badly you got screwed while adding up the commission check you just earned us as soon as you leave. Many of the best in the business are straight up sociopaths. Again, not judging, just stating what I know to be true.
At the end of the day, the car salesman sees you simply as an opportunity for a bigger paycheck – nothing more. And just like lions in the jungle, we can much more easily prey on the weak. If you come into a dealer with no understanding of finances or what you can afford, be prepared to get devoured. And getting financially bound to a 6-year car loan is a huge commitment. Don’t kid yourself. It may not seem like it at the time, but a lot can happen in 6 years. And guess what, a few months from now when your car has a few miles and few nicks and blemishes on it, it’s not the shiny new thing anymore but your payment is still more than you can afford. Bottom line, arm yourself with some basic financial understanding before entering shark-infested waters. And remember, a new car is not an investment. It’s a liability. How much is it really worth in the long run?