Have you ever gone to buy a car and told yourself and your spouse you’re not going to pay a penny more than $400 a month? And then, four hours later, you’re driving home in your brand new Zorch Commander…with a $572 monthly payment?
If so, you’ve been bumped.
For the past few weeks, I’ve been talking about negotiating—that part of car buying everybody loves, right? But I’ve been talking about it in very broad terms. Today I’d like to tell you about a very specific tactic you’ll probably encounter the next time you buy a car. It’s called “The Bump.”
No, this is not a revival of a ’90s dance move. In car sales, “bumping” someone is the art of making them pay more than they want. It usually refers to the monthly payment, but it can also mean in terms of the total price, if they’re paying cash.
Now, when I put it this way—making people pay more than they want—it sounds terrible, doesn’t it? I can just hear you thinking, “Why, those dirty rotten car salespeople! Tricking us into paying more!” Well, hold on a minute. Let me explain why this is done, and why it is absolutely necessary in every car deal.
The Bump works this way. Let’s say you and your spouse have just test-driven a new car, you both love it, and now you’re sitting in the salesperson’s office starting the negotiating process. Your salesman, Mr. Slick Stevens (“Call me Slick”), starts by asking you a series of innocent questions such as your name, address, etc. And then, without shifting gears, he quietly asks you: “What kind of budget did you have in mind?” “In terms of payment?” you ask. “Yes,” Slick replies. “Oh, I don’t know.” You look at your spouse. “I think we both agreed we’d like to pay no more than $400 a month.”
“I see.” Slick writes this down. And then he asks you another question in the same nonchalant tone, his pen poised above the paper, prepared to write down your answer: “…Up to?”
Without really thinking you reply: “Up to maybe $420, 425.”
Slick nods and writes that down. “And if for some reason—let’s say maybe you don’t qualify for the 0 percent or we can’t get all the rebate—if you really had to stretch, you could do…what? Up to $440, maybe $450?”
This question makes you uncomfortable, but it sounds reasonable the way the he says it, so you say: “Well, we might be able to pay up to $450 a month. But that’s the absolute highest we can go.”
Slick smiles. Guess what? You’ve just bumped yourself $50 a month. You started out trying to stay around $400, give or take a few bucks. But you’ve just agreed to pay $50 more than that. Without realizing it, you’ve also put a lot more money in the dealership’s pocket. If you finance your car at 72 months, which is becoming more common, that’s $3,600 more profit the dealer just made. All because the salesperson asked you a few simple questions.
Why did he do this? Well, of course, the obvious reason is to make money for himself and the dealership. That’s every salesperson’s job. But there’s another reason behind it. Let’s say you want to be around $400 a month, but you’ve fallen in love with a vehicle that cost $23,000. Your salesperson pushed you to buy the cheaper model, the one with cloth seats, but it didn’t have all the features you wanted such as leather upholstery. And those plastic wheel covers look so cheesy! So you picked the more expensive model. Without knowing it, you’ve bumped yourself. Because generally speaking, a $23,000 car is going to be closer to $460 a month than $400 a month.
[A good rule of thumb to use when trying to estimate how much your payments will be is: approximately $20 for every $1,000 you finance. That’s assuming average credit, no money down, no trade-in, and financing for five years.]
On top of that, on the test-drive Slick (again, asking seemingly innocuous questions) has discovered you owe about $3,000 more on your car than it’s worth. That extra $3,000 gets tacked onto the price of the new car, which means you’re really looking at a $26,000 car. Add taxes and fees, and we’re talking $28,000 out the door—or close to $600 a month!
A good salesperson in the scenario above knows that if he’s going to have any chance of selling you a car, he’s going to have to cut his price—which he doesn’t want to do—and you’re going to need good credit, money down, and be willing to finance for a longer term. And after all that, he’ll still need to bump you. That, or switch you to a cheaper car.
How do people get in this situation? Well, the main reason is the average person has no idea how much car their money can buy. So they innocently pick out cars that are too expensive. The second reason is their salesperson has failed to do his or her job. As a professional, I should know how much car your money can buy, and it’s in my best interests to land you on—or steer you to—the car that fits your budget. If I don’t, if I allow you to select a car that’s too much, I have no choice but to lose money, bump you, or watch you leave without a car.
I would say 99 percent of customers I encounter start out with an unrealistic idea of what price car fits their monthly budget, an unrealistic idea of what their trade is worth, and an unrealistic idea of how much I can discount my car. And 99 percent of salespeople do not ask the proper qualifying questions to find out what the customer can afford. All of this combined means the customer pays more.
How to avoid being bumped? First, learn how much car fits your budget. Second, always start low, knowing you’ll almost always have to pay a little more than you planned. Third, if your salesperson asks a seemingly innocent question, don’t take the bait. Stay firm, and insist on your original target figure.