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How to Buy a Car, Using Game Theory

How to Buy a Car, Using Game Theory

Many of you will think this is overkill, stupidly complicated or not worth the hassle and if you feel like that ignore the list, test drive a couple of cars and buy one all within a day. For those of you that would appreciate an extra £500-£5000 in your pocket follow this guide:

Plan plenty of time (2 weekends is about right)

Before you start shopping for your car, decide on your maximum spend. Never mention this amount to anyone that asks, if they really do force you to tell them then ensure you knock 10-20% off that amount e.g. £5000 suddenly becomes £4500 or £4000.

Think about how you’re going to fund the car, generally the best way to buy a car is with cash in your bank account (or for added protection via a credit card, with funds ready to pay the credit off) however if you’re looking at getting a loan or car on finance then you really need to compare your options and really consider if now is the right time to buy a car, especially when you realise that any finance deal from any dealerships will generally be expensive.

Don’t sell your old car to the dealer unless you’ve already agreed a decent price for the new car. Learn about how to get the best price for your old car

Do your research and find 3 cars you like

Test drive the 3 cars

NEVER BUY A CAR STRAIGHT AFTER TEST DRIVING. NEVER EVER! You’re a fool if you do and you’re like putty in dealerships hands as you will be excited and more likely willing to be ripped off.

Go back home and write a list of the extra you like and the extras that you ‘must have’ with the car.

Do your research and make

Do your research and make sure you know what car you want and the exact features you must have on it

Call 8-10 Dealerships with a pre-planned speech (within a 50-75 mile radius, depending on how much you’re willing to save/spend) – this sounds like a lot but it will take you less than an hour and could save you thousands of pounds so it’s 100% worth it.

Tell each dealership the same statement:  “Hi, my name is so and so.  I plan to buy such and such a car today at 5pm.  I’m going to buy it from the dealer who gives me the best price.  What is your best price?”  The dealer may say—the person on the phone may say: “Well sir or madam you can’t buy a car on the telephone.  Come in.  We’ll give you the best price.”  The response to that is:  “I know I can buy a car this way because I know many cars have been purchased this way, so if you don’t quote a price to me I understand that you’re telling me you know you don’t have the best price.  I appreciate you’re saving my time.”

contact-dealerships
Now they will either say thank you good bye or they will quote a price or they will say yes, but when I tell you a price you’ll call the next dealer and that person will quote a price that is £50 lower than mine and then you’ll go buy their car to which the response is:  “That’s right, so if you can go £50 lower this is your opportunity because I will buy from whoever gives me the lowest price and I need the full total price, taxes, everything.  I don’t want you to charge me £450 dealer prep to wash the car.  I want a full end price (on the road price with no hidden costs).  I will not discuss the price when I come in.  I will come in with a cheque made out to whoever gave me the lowest price.  If you go back on that promise I will walk out.  I will have the second best price cheque in my pocket.  I will go buy it from them.  What is your best price?”

When they’ve finally given you the price ensure you confirm they actually have the car you want to buy by asking for the VIN number of the car or ensure you get them to list out all the extras that are on the car

 

When you arrive at the dealership ready to pick up and pay, be ready to leave. Most likely something will be wrong with the car you’ve been discussing, they’ve either ‘just’ sold it, found a problem with it, found it has got some added extras that weren’t on the paperwork or some other excuse to either sell you the same car for more money or to sell you a very similar car for more or less money.

Say to them “Sorry I thought we had a deal, you said you had the car and not you’re saying that isn’t true, it’s a shame I won’t be buying a car from you today and you leave.

Under no circumstance do you look at other cars they’re trying to sell you. If they’re willing to bait and switch you like that, imagine what they will do if the car breaks down in a weeks time or worse!

Don't sit in the car until you've properly looked at the car

Don’t sit in the car until you’ve properly looked at the car, picked up on issues and ensured it’s the exact car you were looking at buying

If the car is there ensure you DO NOT SIT IN IT YET – As soon as you’re sitting in the car you will start emotionally getting attached to the car, you will picture yourself driving it and will become putty in the hands of the dealer.

Instead, take a very good look around the car, often cars will be crammed in close so get them to pull the car out. Check the body panels all match colourwise, check the tyre tread, check any bolts you can see under the car are not damaged/have the paint removed from them, check for dents on the bodywork, check for any modifications, check the lights on the dashboard, check the built-in electronics (sat nav, stereo etc), check the air-con works, lift up the car mats of the car and look for damage and check the service manual/paperwork of the car.

‘Most importantly, don’t let your heart rule your head and trust your instincts. If the car looks too good to be true, it probably is.’ – Shane Teskey, of HPI

WALK AWAY IF THEY TRY AND CHANGE THE DEAL / PRICE / It isn’t as described etc

 

Now go back to your list of other prices, continue the process of going to buy those cars or wait for the previous dealership to come to their senses and give you the previous deal.

car-pull-out

Make sure you pull the car out and properly check the car over, get a friend who knows about cars if you’re unsure

Ensure they don’t try and take you for a ride by adding extras on or by selling you other products/services etc on to the price you agreed on the phone. Take a friend for support if you find yourself easily tempted to say yes or embarrassed to say no.

Check what you’re signing and actually read it, it might bite you in the bum if you’ve just signed that the car is ‘as is’ and, therefore no warranty etc is given.

car-tyre

Be careful of added extras, they will try and sell you your own Mother if they could legally find a way!

Insist of seeing the V5C vehicle registration document, this shows who the registered keeper is + should show who previously has been the keeper. If these are different to who you’re buying the car from question why!
With this V5C use the number on it to check the MOT on the Government website

WARNING: We purchased a car from a main dealer and it turned out it was registered to Hertz (the car rental company), the company told us it was a managers car and not part of the fleet… We went away and ended up ringing Hertz, they pulled up the file and confirmed it was a rental car. AKA Never trust anyone in car sales, most of them will say anything to get you to sign on the dotted line! 

Most dealers will supply a HPI confirmation form however if you’re buying privately then ensure you’ve done an HPI check to confirm the car doesn’t have outstanding finance on it, written off or stolen in the past.

 

Be ready to feel a bit like a douchebag, you may be known as the crazy guy/lady who bought a car today but stick to your guns, ensure they’re not ripping you off and ensure they’re not adding any optional extras like car cleaning products, extended warranties etc, they may sound amazing but remember it’s their job to sell these overpriced extras to increase their profit margins but 99% of the time you can get better products at lower prices after you walk away. You wouldn’t go to a cinema and stock up on sweets to take home would you?

Once the price is locked, pay and finally sign the final document. You’ve just purchased a car and should have saved a decent price.

I have now bought 10 or 11 cars this way.  I just got an email from a Marine officer who teaches an intelligence course.  One of his students, another Marine read The Predictioneer’s Game, went out, bought a book, had written down what his dream price was for the car.  He beat the dream price by $2,000.  I just bought a car for about $6,000 less than one would have expected.  I have a student who just bought a car for several thousand dollars below invoice.  An Irish Times reporter bought a used car this way.  He said this can’t work, it’s ridiculous.  He telephoned.  He wrote an article.  He said in ten minutes I bought a car for two and a half thousand Euros less than the highest price I was quoted, which was what I expected to pay.  It actually works.  So there is a good example of a simple problem just a little bit of logic.  All the information flows from the dealers to you.  You never ask the question what will it take to get me in this car today other than to say you’re having the lowest price.

This was adapted from Rob Gruhl video & Bruce Bueno de Mesquita video

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62 Comments on "How to Buy a Car, Using Game Theory"

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Lee
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Lee
1 year 7 months ago

Would you do this in a apple shop ?

Adam
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Adam
1 year 7 months ago
Dealer Principle
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Dealer Principle
1 year 7 months ago

This is cringe worthy advice. Don’t paint all car dealerships with the same brush. Get a life. Spend your money, and get the hell out of my showroom.

Always remember kids…buyers are liars. Including this douche bag.

Gareth
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Gareth
1 year 7 months ago
This awful advice. Instead of copying and pasting a 70’s American guide why not speak to people in the motor trade to get genuine tips? What happens when you buy the car from the cheapest dealer 100 miles away and find after a few days driving that you should have got a manual/auto, petrol/diesel, next spec up/down or different model entirely? Not so easy to get help now. If you treat your local dealer with respect they will work to qualify your needs to help to pick the best model for you not just give you a price. I sold… Read more »
Lee
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Lee
1 year 7 months ago
My best price is screen price, I make the most money at that!! We sell good cars at great prices, act like this and see where that gets you. Would you go through all this to buy a TV or would you buy from who gives you good information, great service and actually listens to you? Cheapest is not always the best. If you like it and you think it’s a fair price why would you ring everyone in the world for a chip off the price. No wonder business is so hard, what happens when no one makes money?… Read more »
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