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Behind the Scenes at a Car Dealership What Happens When You're Shopping for a Car
Home / Buying / Behind the Scenes at a Car Dealership
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by Matt Jones
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April 29th, 2016
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BUYING
Did you ever wonder why it can take so long to buy a car? Have you questioned whether the salesperson really has to check with his manager to get a deal approved? Do you want to know why a car salesman can't just give you his best price upfront? We know there are things about car shopping that seem mysterious. And we're here to give you some insight into what's going on.
Some things that happen at car dealerships can seem mysterious to shoppers. But the reasons make sense once you know how the business works.
Sometimes the car you want to test-drive is on a storage lot, parked among a lot of other cars. It ha washed and prepped before you can try it out. This is why you'll want to make a test-drive appointm
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Between the two of us, we have nearly 20 years of experience in buying and selling cars. Matt worked in car dealerships for 12 years as a salesman, sales manager and Internet sales manager. Ron buys and sells cars for Edmunds' long-term fleet of test cars and has written dozens of articles about all aspects of car shopping. Both of us help friends and family with their car buying. We hope we can make your car-buying experience smoother — and maybe even fun. With that said, here are our answers to six common car-shopping questions: Q: Why is it taking so long to wrap up this car purchase? A: Usually one of two things is going on — or maybe both: You're shopping on a weekend or you may not have all the documents and information you need to do a car purchase. Foot traffic at car dealerships is lowest on Tuesdays and peaks on the weekends, when most people have their days off. While there may be plenty of salespeople on the floor, the bottleneck typically occurs at the finance and insurance office (also known as F&I — we'll talk more about that later). In the finance office, a manager will likely offer an extended warranty or other products and, of course, this is where you'll sign the sales documents. Fewer people work there and each customer might be talking to one of the finance managers for 30 minutes or so. While all this is going on, your new car is being washed, gassed and prepped for final delivery. If that process doesn't sync up exactly, you might have to wait a while longer for the car to be ready. The other thing that takes time is, obviously, the deal itself. The average car sale takes about four hours. Yes, it's a long time, and that's because there are a lot of pieces to it. The dealership needs to run your credit, get your loan approved, appraise the car you're trading in, figure out the pay-off amount to your current car and agree on a price for the new car you want to buy. Now, if during all this, you forgot a key piece of the paperwork, things can grind to a halt. So be sure you have the following ready: Payment: This can be a bank or credit union check for a pre-approved loan, or it can be a cashier's check, a personal check or even a credit card payment for a down payment when the financing is done at the dealership. To find out what forms of payment the dealership will accept, call ahead of time and ask to speak with a finance manager. Driver license: You have to drive the car off the lot, so the dealer needs to know that you are a legally registered driver. The driver license also serves as identification for your check or other form of payment. Title for your trade-in vehicle: If you are trading in a vehicle, you will need proof that you own it. The title, sometimes called the "pink slip," shows that you are the owner. Current vehicle registration for trade-in: If you are trading in a vehicle, you will need a copy of your current registration. Locate this important document, verify that the registration is current and also check that the sticker is on the license plate. Proof of insurance: To drive a new car off the lot you need to prove you have insurance on that car. You can call ahead and set up the new insurance policy if you know which car you are buying Account number for trade-in loan: If you are trading in a car for which there is an unpaid loan, you will need to bring the loan's account number, which is on one of your payment stubs. Better yet, call the lender yourself, explain that you are trading in the car and ask how to facilitate the transaction. If you are car shopping on the weekend, ask if a representative is available to handle the transfer. If you want to speed up the process, try these tips: Shop during the week. If you have to shop on the weekend, get your trade-in appraised on a different day (or sell it yourself). Finally, here are some other shopping tips that can cut your time in half. Q: Why does it take so long to get a test-drive? A: Because the car you've chosen is not easy to get to. If you saw a car online and dropped in to see it in person, the car might not be on the main dealer lot. There is a finite amount of space at a car dealership. Cars are often parked like sardines to fit the entire inventory and many will be on satellite or "overflow" lots, which could be miles away. If you've chosen one of these cars, the salesperson has to locate the key, get to the car and move the ones that are blocking it. And when he gets there, the battery may be dead or the car may be so dirty that he gives it a quick wash to ensure it makes a good first impression. Do you want to test-drive that nice car you saw in the showroom? Even more complicated: The dealership is going to have to open up the doors and move other cars that are in the way. Here's what to do to avoid all that: Call ahead and make an appointment for a test-drive. If you don't want to talk numbers yet, let the salesperson know that you're still in the research phase and aren't ready to buy. When you arrive for the test-drive, the car will be out front waiting for you. You've cut the wait time to zero. If you're considering a showroom model, ask if there is a comparably equipped car that might be more accessible. Q: Why can't they give me the best price upfront? A: It goes against one of the big rules of negotiating. If the salesperson did give you his best price, one of two things would happen: You would take that price to another dealer and ask them to beat it, or you wouldn't trust the first price and you'd ask for something even lower. Now, there's nothing inherently wrong with comparing quotes or with healthy skepticism, but you can see why the dealer is hesitant to show all his cards at once. That said, there are a number of dealer groups that are bucking the trend and offering a very competitive price upfront, so it is important to recognize when you are at this type of dealership. Lexus has also begun to test the waters of a no-haggle, no-negotiating sales process, so the tide may be changing. And finally, thousands of dealerships participate in Edmunds Price Promise, which offers you a guaranteed no-haggle price that's meant to save you time and money. We use the nonconfrontational approach to get a great car price. Call the Internet sales manager at three dealerships. Rather than asking each for his "best price," use the term "asking price." You'll get three quotes, and you'll easily see which is giving you the best price. Q: What happens when the sales guy goes to talk to the manager, and why is he gone so long? A: Most salespeople just aren't authorized to make deal decisions, such as determining a trade-in value or discounting the price of a car on their own. They usually have to take a trip over to the sales manager (a process that's known as "visiting the tower"). The sales manager may be working out terms for other deals at the same time as yours. And if you're shopping during peak hours, those deal discussions are stacking up like air traffic at Los Angeles International Airport. Even if you are the only customer in the dealership, there is still no guarantee you'll be able to get a deal offer in a flash. If you're taking out a loan, the sales manager might have to run your credit to get your credit score. He'll call the finance department to get your interest rate, and then look up specials and incentives on your car to make sure you're getting the right program offer for the right car. Sometimes it just takes a while to get all the information together. Q: Don't dealers make a ton of money on every new car? A: Maybe in days past, but certainly not now. Some new cars, like the Honda Fit and Ford Fiesta, may have less than $500 profit for the dealership when they are sold at full sticker price. And most shoppers don't pay full sticker. These days, car dealerships make the majority of their income in the service department, on used-car sales and in the finance and insurance office. Q: What exactly is the F&I office, and why do I have to go there? A: Think of the employees of a nice restaurant: You have waiters, bartenders and chefs and all do their own special job. And for the most part, they do that job only. Many dealerships use this same technique. They delegate different parts of the car deal to different parts of the staff. Most dealerships are firm believers in this kind of specialization. One group of people (sales) demonstrates the car. Another group (sales managers) works out the sales price, trade-in values and calculate payments. A third group ties up the loose ends of a deal and does the final paperwork. That's the F&I department. These people have the task of making sure all the appropriate legal and deal documents are signed and sent to the right place, like the DMV or the bank. F&I employees are also the people dealerships usually use to get loans approved. On top of that, this is the group who double-checks the information that the salesperson collected. You don't want your name misspelled on your car's title. F&I people also sell extra products for your car, like extended warranties and paint protection. Some dealerships have the salesperson do all the paperwork from start to finish. But the vast majority of dealerships across the U.S. have F&I departments. If you're buying a car from a dealership, the F&I will likely be the last step of the deal before you're handed the keys to your new car.
Share: by Matt Jones Matt spent 12 years working in car dealerships before joining Edmunds as a senior consumer advice editor. He now offers car shoppers tips for saving time and money. Twitter | Facebook
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