Beware the “Second Sale”

second saleOnce you agree to buy the car, the second part of the process begins. This is where the dealership has an opportunity to make a profit on the sale (which your skilled research and negotiating made difficult to achieve during the “first sale”).

In most jurisdictions, the dealer cannot charge more than the MSRP for the vehicle. If you negotiated a deal well below MSRP, the dealer can only recover the lost profit by selling additional products and services which is done in the Business Office or Financial Service Office.

You will get the opportunity to “protect” your new purchase with additional warranties, rust proofing, and various insurances. Some of these are worth getting (particularly additional factory warranty) but it is often over-priced. But the presentation is usually so effectively done that it can be hard to resist.

The reason that it is so difficult for most car buyers to resist the F&I sales pitch is because once you agree to buy the car out on the sales floor, you have mentally taken ownership of the vehicle. It’s now your car and your instinct is to protect it (which is why rust protection is often one of the first add-ons to be pitched). It is also true that the “second sale” is easier than the first. When we agree to buy something, it does not quench the buying thirst like a glass of water satisfies you. When you make a purchase, your brain is excited and ready to buy something else. Dealerships know this and construct the sales process to accommodate this fact of human psychology. That’s why I have found that the happiest customers leaving the dealership are not those who have negotiated the best deal, they are the ones who spent the most in the F&I office. By the same token, I have also observed that those who have hammered out a great deal during a prolonged negotiation are the least happy customers because they have a feeling they could have secured an even better deal.  

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