Each semester in our collegiate course in Personal Finance at the Bauer College of Business at University of Houston (wow, that’s a mouthful), one of my favorite lessons is “Negotiate Anything”. This semester, the students had some amazing stories. One of those stories was submitted by one of those students. Michael Jefferson gave me permission to post the story here at iMakeYourMoneyCount.com.
by Michael Jefferson
Driving Miss Nikki: I call her Nikki because she was made by Nissan
“Patience, Master Bruce. Patience…”
For me, patience is the first rule to follow regarding purchasing decisions. Humans are emotional animals and emotion is often one to inspire recklessness. Because cooler heads prevail I believe that the best way to avoid buyer’s remorse and get the most from your money is to stop and think before making an impulsive purchase. We are easily excited by the prospect of owning something brand new or the next iteration of technology. Advertisers use this deep seeded emotional response to their advantage and reinforce it with promises of continuing happiness once their product is in your life. I too have thoughts like “If I had that new phone…If I had THAT car…” every single day, and it sure is not because I have a useless phone or a run-down car. I would like a faster phone and a smoother car, but they still have plenty of use left and the cost to upgrade these is huge. However great the improvements may seem they are often very minor compared to the cost of advancement. By waiting for a few days you give yourself time to think logically again and make a rational decision.
Back in 2008 I became a senior in high school and I drove around in an eight year old Volkswagen Jetta. The car worked well enough for me, most of the time, driving to school and carrying my friends about. When I first got the car I was thrilled but after the initial excitement wore off, just like everything else, my gripes began to pile up. The car had a nice intact black leather interior, but when paired with black paint and the Texas summer sun it turned into a skin melting glass furnace. The air conditioning blew as cold as the Swiss alpine wind, but it also blew bits of foam insulation around the cabin and into unshielded eyes. The little engine that could was plenty of power for any parent to trust to their precious teenager, but trying to cross two lanes of traffic in an obstructed intersection left me crossing my fingers the side airbags work. Not the biggest complaints in the world, but important information regarding cars that I had to learn firsthand.
Luckily enough I have a younger brother who happened to be turning 16 in early 2009. So my amazing parents, very generously offered to buy me a new car which would last me through college as a graduation gift. I finally got to pick out my own car and I had a budget of $25,000 including tax, title, and registration. Now my first instinct was to go buy a brand new Volkswagen because they fit the budget, I was used to the brand, and I could get a faster model. However, I did not rush to go buy a car right away; I waited a few weeks to think it over and let the excitement wane. I test drove a few models and while the engine was faster and the exterior was brighter, the inside still felt the same as my Jetta. As I thought more and more about the new Volkswagen I felt the excitement over the changes diminish but I felt the concern over the similarities grow. I thought “If I’m planning on keeping this car for years to come, I may face the same problems down the line” and I so I talked myself out of buying it.
A turd by any other name would smell just as foul
After letting my emotions subside and allowing past experiences guide me, I started researching and comparing alternative car brands. I started looking at Audi whom make higher quality equivalents of Volkswagen models. Now with my budget I could not afford a brand new Audi but I did manage to find a few used models which just came out of lease and would fit my price range. Right away I could tell that these cars felt much more well-built and the engines even in the base models had as much pep as I was looking for. However, all of the Audis I could afford had black leather interiors and so I walked away from that dealership empty handed. I did learn that I could stretch my dollar further when buying a car by looking for luxury cars that had taken a loss in depreciation but not in quality.
I spent days pouring over car listings online but I had no inspiration to guide my search. That is until I remembered that a saucy little number I had met in Florida came to visit me driving an Infiniti G35 coupe and I had really liked the looks of that car. So I steered my research in that direction and there turned out to be a slew of models that fit my requirements. Initially I was only interested in the sedan models because I was so used to carrying multiple passengers. My tastes changed as continued to study the car and I swayed my preference to the coupe because I liked the look better and I was moving to college soon. The more I thought about owning a G35 coupe the more I fell in love with it: a rear wheel drive sports car, with sun reflecting beige leather, and even 2 rear seats just in case.
You can buy it for a song if you wait until the band leaves
In 2008 CE the global economy experienced a financial shock now dubbed “the great recession” and the automotive industry was hurting badly during this time. For a buyer like me this became a great opportunity to negotiate a deal on a car because dealers were desperate to move inventory. On top of all that it was now December and many companies, such as car dealerships, pay Christmas bonuses to their employees. And I believe that what is about to follow is really going to amaze.
I came home from school and my father told me that he may have found the perfect car that I was looking for. So we hoped in his truck and drove to a Chevrolet dealership far away on the northeastern side of Houston. The dealer had bought this car at auction in Colorado and just arrived that day; the pictures had not even been uploaded to the internet. I took a look around it, no scratches or dents, and took a test drive with my father in the passenger seat. I had a grin from ear to ear during the entire drive, the car seemed to fit me perfectly, but my dad told me to cool down before we went in to negotiate.
As we pulled back in to the massive car lot at the dealership I regained composure and we walked inside to meet with the sales rep and the general manager. When they asked me about how much I enjoyed the car I kept calm and said very little. Now the manager said that they were listing the car at the market value that had been holding for the last few years, something like $23,000 or $24,000. My father waved that price off, looked out the window at the 300 car lot and said “You’ve got a lot of inventory here. You’ve got a lot of staff too. There’s 2 or 3 other people walking around out there but they don’t look like they’re buying.” He let that sink in for a bit until he continued “I’m here to buy and I can pay in cash. If you guys can get me that car for $25,000 including the tax, title, and license then I’ll write you a check now.” It took the manager less than 3 seconds to make up his mind and agree.
Just like that I was now the proud driver of a 2006 Infiniti G35 coupe with automatic transmission, white paint, beige interior, with 4 years of warranty left and 17,831 miles on the clock. And it was all thanks to patiently searching, comparison shopping, great timing, leveraging with cash, being too valuable for the seller to let us walk away, not blatantly showing my emotions, and most of all my father’s master examples of proper negotiate tactics. Actually, the car cost less than $25,000 all-in because a few weeks later my dad received a check back from the dealership for a couple hundred dollars!
Please leave your comments below to let Michael Jefferson know you appreciated his story!
PS: Michael, please send me the original image. I tried to use the one you sent but I need the original. Thank you!