Visiting car dealerships can be a lot of fun. You get to drive different cars, imagine how they fit your life and style—and then perhaps buy one. But dealerships are also where business takes place and it pays to be prepared.
Most people only visit a car dealership every few years, and it is perfectly understandable if you don’t quite know how they work. So, before you walk through those dealership doors, it pays to learn a bit about what to expect so you can explain your needs and shop with confidence.
While every dealership is a bit different, there are things that most have in common. Here are five things to know about car dealerships to help you purchase your new or used vehicle.
They will ask about your budget
Most dealers will open the conversation with questions about what you are looking for, either a type of vehicle or a specific make and model. But the conversation will eventually turn to how much you want to spend. Dealers don’t want to waste time showing you cars that you cannot afford. They also don’t want to show you cars that cost more than what you are prepared to pay. So many will simply ask about your budget.
This is a question you can answer directly, or you may choose to give an indication without providing numbers. But however you choose to respond, you should know your budget. Before visiting the dealership, it’s a good idea to determine what you can comfortably afford, both in terms of total costs and monthly payments. A tool like the Credit Acceptance monthly Payment Calculator can help estimate a monthly payment based on your budget.
They may check your credit score
If you enter the buying process and you want financing through the dealership, they will check your credit. Usually that means they will contact one or more of the three nationwide credit reporting companies (Equifax, Experian and TransUnion) and obtain your credit scores. These will help them determine how to provide you with financing. To prepare yourself for that conversation , you should also know your credit scores before you visit the dealership.
You can obtain one free copy of your credit report from each of the three credit reporting companies (sometimes called credit bureaus) every 12 months by visiting AnnualCreditReport.com or calling 877-322-8228. You can also use free services like Credit Karma. The national credit reporting companies can also provide you with your score, but they may charge you a fee.
They will know your current car’s trade-in value
Many dealerships take trade-ins every day and they are experts at valuing cars. They may not know every single thing about your car, but they will have a pretty good idea. Many also have access to tools that can show your car’s history.
You can prepare yourself for a trade-in conversation by gathering your own information. If they know what your car is worth, you should, too. There are several tools you can use to learn the basic value of your current car (sometimes called the “blue book” value). For example, Kelley Blue Book can give you basic information at no cost.
They have their own needs (such as sales goals)
Not everything in the car-buying process is about the buyer. Dealerships operate in an environment that changes constantly, and that can impact the price you pay.
For example, most dealerships have weekly, monthly, quarterly and annual sales goals, and so do each of the sales representatives who work for them. Those goals sometimes determine what kind of deal they can offer. A dealership that is struggling to make its goal may be more eager to deal. A dealership that is on track may be less so.
There are a variety of other factors that also impact how a dealership behaves, such as manufacturer incentives, interest rates, the local car market and the state of their inventory. While you are unlikely to know what is happening behind the scenes, you should understand that conditions at dealerships change periodically and that not every dealership is facing the same set of circumstances. Doing your research on models and pricing and then shopping around can help you secure the best deal.
They are experts in financing
Just as dealerships are experts at valuing cars, they are also experts at financing. They finance vehicles every day. You can prepare yourself for this conversation by reading up on the financing process, obtaining your credit scores and having a realistic budget in mind when you walk in the door.
Here’s another strong strategy: get pre-qualified for financing before you visit a dealer. By tackling your financing first, you will know all the details—including the amount, the length, the interest rates and more—before you even begin negotiating over a specific vehicle. This makes a visit to a dealership less complicated, allowing you to focus on choosing the right car and negotiating a good deal. Pre-qualification does not obligate you to borrow or spend. It simply tells you what kind of financing you can obtain in order to buy your car. To put this strategy in action, use Credit Acceptance to get pre-qualified for auto financing before you visit a dealer.
