By David Maillie
Why is it that when you are trying to negotiate a deal at your local car dealer they continually ask for a cash deposit? Every time the car salesperson asks you what you would buy the car for right now they immediately ask for cash or a check for $100 or so so they can supposedly show their boss that you are a serious buyer. What is really going on here?
Well, most car dealers spend a considerable amount of money and time on training their sales staff to close more deals and to gross more money (sell cars and associated products at higher prices). Now, a large part of this training is geared towards taking control. In these training seminars, books, videos, etc… the customer is likened to a puppy dog and they instill in the sales staff that they need to take control right from the start and never let go. This means that right from the moment you appear on their lot they want to steer you right into a sale – whether you are ready or not (this is why car dealers want to finalize the deal and deliver your new car as quickly as possible so there is no time for buyers remorse to set in).
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At all times during the sale, from the search for the correct vehicle to the presentation to the test drive, the sales staff wants to be in control. That way they have a far greater chance of getting the deal. If they allow you to wander on your own or take control in some other way, their chances are greatly diminished and you have a higher chance of getting tired and bored and then meandering to the next car dealership where a better salesperson will take control and sell you a vehicle.
Your probably asking yourself what does this have to do with cash deposits. Well, asking for a cash deposit is taking control away from you. By making you write out a check for $100 even if the price of the offer is way too low, they have gotten you to commit. This is huge to the sales manager as that means they are 95% of the way there and almost assured of an easy deal. They have your check now and you are not going to leave until you get it back. They also know where they stand and how close they are to a deal. They also know once they reach the dollar amount of a doable deal how much profit they have and then they will still play with you a little bit to further increase that profit.
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Many times this is the point where an experienced car salesperson will try and convert you from sales price, trade value and trade difference to monthly payments. All the while they have your commitment and check or cash. A cash deposit is akin to out dated sales tactics like throwing your car keys up on the roof or losing them on purpose – you are trapped, they pretty much have a deal, they can see the dollar signs, and they just want to squeeze a little more out of you to make more profit on the front end and maybe also add some padding or cushioning for the greatly over priced products in the finance managers office which you will soon be presented with.
The best thing you can do when visiting a local car dealer and even when negotiating is never give up control (be sure to read this article on car dealer scams so you don't get taken). Always leave an escape route. If you aren’t exactly where you want to be numbers wise than you should be able to get up and walk out. You shouldn’t have to wait for your check which they say has already been processed or such (all lies) literally holding you hostage so they can rehash and rehash and make that sale as you finally give up. Car dealers are getting better due to the recent increases in lawsuits by state attorney generals and FTC and are being held more accountable, but you still need to know that the cash deposit is a control gimmick and its only purpose is to get you that much closer to a completed sale. It’s all a numbers game. The salesperson and staff that control their customers better sell more cars and for higher prices. It’s that simple, so don’t let them take control and you will always end up with a better deal.
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