Philip is an automotive expert who writes a syndicated column for NerdWallet. He has appeared on national TV and radio and once wore a hidden camera for ABC News to show how to haggle for a used car. His passion is helping people save money in their automotive budgets.
Assigning Editor Lisa GreenLisa Green leads the life insurance team and oversees insurance-focused data journalism at NerdWallet. A professional journalist since high school, she was an insurance writer at NerdWallet before becoming an assigning editor. Previously, Lisa spent more than 20 years as an editor at The Tennessean in Nashville, where she led business and consumer coverage for several years. At The Tennessean, she was part of a 2011 Pulitzer Prize finalist team for coverage of devastating floods in Middle Tennessee. Her work has also won awards from the Society for Advancing Business Editing and Writing, Investigative Reporters and Editors, and the Society of Professional Journalists. Lisa is an alumna of the Wharton Seminars for Business Journalists at the University of Pennsylvania. She has also studied data journalism with the National Institute for Computer-Assisted Reporting, business editing with the American Press Institute and writing, editing and news research with the Poynter Institute. In addition to her work at NerdWallet, Lisa is a real estate investor and has taught a seminar on how to earn college scholarships. She is based in Nashville.
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Some years ago, I became an undercover car salesman at two different dealerships in Southern California, as part of an investigative series for an automotive website. What I learned surprised and scared me, as I described in the resulting article, “Confessions of a Car Salesman.”
Selling cars turned out to be the perfect training for my current job as a consumer advocate and autos editor for NerdWallet. While I posed as a “green pea” — the nickname for a beginner car salesperson — the sales managers freely revealed their secrets to me so that I would move the metal and, in turn, make money for them.
Here are just a few of the things I learned and how you can safely navigate the car-buying process .
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Min. credit score Check Rate SEE MORE LENDERSBelieve it or not, I felt sympathy for many of the salespeople I worked with. They face long hours, hostility from customers and constant pressure from managers who watch from “the tower,” a raised platform overlooking the car lot. Later, as I used my insider knowledge to buy more than 100 cars for an automotive website, I met many honest, intelligent, helpful car salespeople. But the work of these “good apples” was often spoiled by a rotten batch of uninformed sales stereotypes — not to mention some manipulative and even underhanded dealership managers.
I like to tell people that they should test-drive car salespeople before they test-drive the car. Here are a few things to ask yourself: Are they informed about the cars they are selling? Do they listen well and respond to your questions? Will you feel comfortable negotiating with them?
It takes only a minute to look up the current market value of a car — and yet many shoppers wander onto the car lot without any idea of what they should pay. This one little data point would provide an amazing amount of protection. But as an undercover car salesman, I had to stand by and watch trusting, ordinary buyers overpay for their new cars.
So take a moment and check a pricing guide such as Edmunds or Kelley Blue Book for the current market value of the car you want. Bring this information with you, or download a pricing app to check prices on the fly.
“What kind of monthly payment are you folks looking for?” This helpful-sounding question is the favorite trick of car salespeople everywhere. And if you answer, it can be a financial disaster for you. While it sounds like the salesperson is concerned about your budget, it’s the opening gambit for a tactic called “packing payments.” If the dealer can get you to negotiate a monthly payment rather than the purchase price of the car, it's easy to add in — or “pack” — extras and make you overpay.
Getting a preapproved car loan and telling the salesperson you are a “cash buyer” is an easy way to deflect this trick.
You could walk into a dealership and have the same high-pressure experience your father had when he bought cars decades ago. Or you could have a mellow, enjoyable shopping experience where you get a fair deal. There’s such a wide range of sales styles and dealerships.
I worked at a “turnover house,” meaning that if one salesperson wasn’t making progress with a customer, the customer was turned over to a different salesperson. If that didn’t work, they brought in a “closer” — an overbearing, manipulative bully who was determined to make a deal at any cost.
If you see these warning signs, if you get a bad vibe, if you don’t like your salesperson, beat a hasty retreat — instead of going to war, go to another dealership. For example, the second dealership I worked at was very relaxed and didn’t use closers. But high-pressure or relaxed, whichever type of car lot you find yourself on, never take anything at face value.
While the salesperson negotiates the price of the car and pretends to be your best friend, the real damage is done after the customer is handed off to the finance and insurance manager. Also called the “F&I guy,” this salesperson assumes the air of a financial advisor, sort of like a friendly banker. But he or she is really there to build even more profit into the deal by inflating the interest rate on your loan and selling you extra products such as extended warranties and anti-theft devices.
Before you go to the dealership, spend a few minutes being your own finance manager by using an auto loan calculator to set up your own deal. Bring these figures with you to the dealership and get the dealer to match or beat them.
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Philip Reed is an automotive expert who writes a syndicated column for NerdWallet that has been carried by USA Today, Yahoo Finance and others. He is the author of 10 books. See full bio.
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