Interview with a Used Car Salesman

Frank Sarwark of Consolidated Auto in Arizona was a good sport to answer all my questions, even the slightly snarky ones. You can visit him at his own blog, Trust Me, I'm A Used Car Salesman. It's informative and friendly, just like Frank.

1. I'm sure I'm not telling you anything you don't know when I say that most people have an extremely negative impression of car salespeople -- especially ones who sell used vehicles. I, personally, have had nothing but unpleasant encounters with them. Do you feel that the typical person who sells cars is extremely pushy and untrustworthy? If so, why is that?

Car buying is something that a person doesn't do very often so it is unfamiliar and therefore challenging. The salesperson is working on a commission. If he doesn't sell cars, he earns nothing. A typical new car store has a turnover rate in salespeople of about 30-40% per month. The new salesperson is hired and has a quota to make each month. He sells cars to his family, friends and acquaintances. After those sales it gets harder. If the store can allow 10 salespeople to earn a good living, the store will hire 15 of them or more. That way they have to work harder for every sale.

The salesperson is in an uncomfortable position between a manager that is threatening him if he doesn't sell cars and the customer who looks and may or may not want to buy a car today. Most dealerships work on an "up" system. As customers come in, there is a rotation so every salesperson will get the same number of "ups" or chances to sell a car. If that customer is only looking, that salesperson has to wait until another 15 or 20 customers come in before he has another chance. This is what will make the average salesperson pushy.

The untrustworthiness comes in more with the finance department employees. This is the person who actually does most of the paperwork and gets your deal approved. He is the one who will say, "I know that your credit isn't the best, but if you make payments on time for a year we can refinance the car at a lower rate." More profit can be made in the finance department than on the sale of the car itself. This is where the warranties, insurance products, and accessories come in. If the finance guy can sell these, he makes money too.

2. I notice that your site says that you personally guarantee a pleasant experience or you'll pay the customer for their time. How exactly does this work? And what do people get paid if they hold you to this promise?

I have never actually had anyone take me up on that guarantee. We operate in a way that is a little bit different than a new car dealership. We finance 90% of the cars we sell. That means that when the customer takes delivery of that car, we are entering into a relationship with that person for the next two or three years until that car is paid for. If the customer is unhappy with his purchase and the experience he had, he is less likely to complete the payments and finish paying for the car. If someone were to ask me about the guarantee at that point and say he was unhappy, I would give him $20.

3. Would you say most people who sell cars actually know anything about cars? I don't generally get that sense.

Most people end up selling cars because they are looking for a job. The new car store has a training program that teaches them about the line of cars that they are selling, but the average car salesperson doesn't have a lot more knowledge about cars that the average person on the street. The longer he is in the profession, the more he learns, but most people don't stay in the job too long.

4. What advice would you give someone who is car shopping to get the most out of their experience and not get taken advantage of?

The more information you have, the better equipped you are. If you have a trade-in there are a number of Internet sites that will give you your car's approximate value so you know if the salesperson is trying to low ball you on the value of your trade. Edmunds and KBB are a couple of them. Edmunds will also give you prices on new cars.

Go to your bank or credit union before going shopping for a car. When you ask the salesperson for a Camry with a trade-in that is worth $4,000 and you are already approved at your bank for a loan for the difference it makes things a lot easier.

Warranties and insurance from the dealer can be had from other sources like AAA or your credit union for less and possibly with better coverage.

5. You talk a little about how gas prices are impacting your business. Do you see a trend towards customers wanting more fuel efficient cars?

Right now, the car market is in turmoil. Everybody is thinking fuel economy and getting rid of the full size cars, SUVs, and trucks. Depending on the vehicle right now it might only be worth half of the book value and the really fuel efficient cars are selling at a premium. I heard of someone that wanted to get rid of a big SUV. He sold the car for half what he owed and took a personal loan for the balance in order to pay it off. If you are going to lose $5,000 or more when you sell this car, think of how much fuel $5,000 can buy.

6. What standards do you have for extending credit to car buyers? Are they more stringent than, say, the subprime loan people?

We look at time on the job, address, and area, and then we look at income and ability to pay. The last thing we look at is the credit report. I know that most of the banks, finance companies and credit unions have tightened up their requirements in the last month or two. People who could have easily gotten a car six months ago are now running into problems getting the car at the price and terms they want.

I would say we are more stringent than the subprime people. Since we are entering into a relationship with this buyer for the next few years, we want to make sure the buyer feels comfortable and will be able to complete the transaction.

7. How did you end up in this business?

My father started this business in 1942. I went to work for him when I got out of high school and have been here since then. That was about 40 years ago. I still enjoy the work and the customers. I see people today who we have been dealing with for 20 or more years. We rely a lot on repeat and referral business. The best advertising is word of mouth from a satisfied
customer.

8. How many jobs have you held in your life?

I am probably one in a million. I grew up in a family business and ended up taking it over. I do have some other interests, but this is my career and something that I enjoy doing.