You Have No Leverage Here
I was twenty-two years old when I received my first lesson on being a taker. I was sitting with my wife at a car dealership, looking to purchase our first car together. My first son, aged two, was with us, playing with the ultra-contaminated toys in the ultra-contaminated waiting area. My wife and I were very young, had no money, zero credit to speak of, and above all else we were extremely naïve.
After thirty more minutes of the ‘waiting game’, the finance guy came out, introduced himself to me and took me back to his office. The finance guy’s office, as was the entire dealership, was a somewhat seedy establishment where the credit disaffected would go to procure a car. Where us credit disaffected were relegated to, resorted to, as there was no other place for my financial kind to go. In the office, there was a desk, two chairs opposite the finance guy, a rusty filing cabinet, and a dot-matrix printer on top of that. The desk had a mountain of forms on it and an ashtray.
From what I recall the price of the car was already negotiated, or should I say I agreed to the price. Back then there was no usable Internet. I had no idea what MSRP was, let alone the capability to check the resell value of a car. The finance guy began discussing options and warranties that could be purchased. I shrugged when he mentioned GAP insurance, whatever that was. Then the finance guy got to the rate. He looked me straight in the eyes and said, “Twenty four percent.” I wasn’t aware of the word ‘usury’ at the time either, although such a rate is still legal for buying a car up to the publishing of this blog. Something in me knew the rate was high, really high, but I was timid with negotiations at the time, and a child in the art of being a taker. I looked down at the finance forms fanned out on the desk in front of me and said, “That seems high. Can you do better?”
The finance guy leaned into his desk, his eyes still locked on mine, and spoke.
“You have no leverage here.”
That moment seared itself into my mind. I was embarrassed, humiliated, and it made known how beholden I was to my financial class status. At times I harken back to that thought as needed, to the scar of it.
And though this would not be my last burn, or even the worst in my life thus far, that experience taught me two things:
- Chevrolet Cavalier’s were pieces of junk.
- Become a taker or be taken.
As the dot-matrix printer cleaved out the reel of forms contracting my indentured servitude, I vowed to never be in that position again, either while purchasing a car or any other situation. I had begun down the road of being a taker right then and there.
Fast forward twenty-four years. I was still married, my first son was a grown man. I was once again sitting in a finance guy’s office at a car dealership. This office was a bit nicer than that of my first car-buying experience. Though better demeaned, this finance guy oddly went through the same rituals. First the offerings, sealant, floor mats, GAP insurance, and then the rate (I took the GAP insurance. Always take it. Don’t let anybody tell you differently). By this time, I had learned to negotiate a car price. I did well enough to be comfortable.
The finance guy spoke. “Your credit score came back. 821. Your income more than qualifies you. Are you sure you don’t want to put any money down?”
“I’m, positive,” I replied.
I never do, and I don’t recommend doing it.
“Well, this should be a no-brainer then. 2.9 percent is the rate we’re offering.”
“Is that the best that you can do?”
“I’m afraid so. We can’t do better than 2.9 percent on this loan.”
“I already have financing in place,” I replied.
I didn’t of course. I knew that I could get financing, but stick with me here.
The finance guy stared at me. “I can’t go lower,” he said despondently.
You see, that’s how they get paid, from the commission of you taking a loan through the dealership.
“Then I guess we’re done,” I replied and stood.
“Wait, wait, now.” The finance guy raised his hands in the air, broke off his stare, and exhaled for about five seconds. “I can go 2.5.”
I stood there for a moment, and then sat back down. I took a deep breath. “1 percent.”
The finance guy looked at me. “Excuse me?”
“I don’t care how you get it done, or through what mechanism, but knowing this dealership isn’t doing 0 percent right now, I’ll go 1 percent.”
The finance guy spoke. “Try and work with me here. 2.5 percent is reasonable.”
That’s when I leaned into his desk, my eyes locked on his, and spoke.
“You have no leverage here.”
I got that Mustang GT at a rate of .9 percent.
For years since my first car-buying experience, I had honed my method and metrics for being an effective taker. My metrics that day, as they have been at any car dealership since, are as follows:
- Be willing to walk away.
- Walk in not loving the car (or at least never let them know that you do).
- Maintain a good credit score.
- Have personal financing as an option, even though you might not have it in place. There is no shame in lying to drive down the rate as well. Remember, the dealership is always lying to you.
- Know the going loan rates.
- The dealership can always resort to a loan directly through the manufacturer, which has rates better than market rates.
Negotiations are fluid. You set the rules as much as the person you’re negotiating with, whether that be a car loan, home loan, or a salary. The most uncomfortable thing can be sitting across from someone who is determined to get you for the lowest price. People typically don’t want to be disagreeable, confrontational, or come off as greedy.
But the person on the other side of the desk has no issue with these things. It’s the art of removing the illusion of need, that you need something from them, while making them realize they truly need something from you, or that you are willing to walk away.
In this weekly blog series, ‘Be a Taker: An Unapologetic Account of Getting the Salary and Equity That I Want’, I will tell you my methods and experiences, someone without a college degree who commands salaries well into the six figures, and has done so for others. This blog series is not about getting rich necessarily, but about changing the thinking of what true compromise is, and above all else that being a taker, it’s a good thing.
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