How To Be Prepared For The Car Dealer
First things first....not all car dealers are out to rip you off. Many put forth an honest effort and will treat you professionally. Many more, however, are dishonest and overly aggressive and will look for an opportunity to take advantage of you.
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Here are the top Scams, Tricks & Games you'll need to be familiar with... before you step foot on their Lot.
- You see an ad in the paper or on TV showing a car or truck you like at a phenomenal price but when you arrive at the Dealer, you're told, "Sorry, we just sold the last one". Just remember this - if it sounds to good to good to be true....it probably is.
- Salespeople are notorious for giving you discounts on one thing and hammering you for full retail on another. Know the costs of everything you're considering so you don't get ripped-off.
- Salespeople are usually very good with numbers. They like to play "the difference game" with customers where they try to confuse you with all the rebates, incentives, accessories and your trade-in. Go slow and watch the numbers.
- So, you don't like to negotiate? Car Dealers do. Their idea of fun is to simply wear you out. They like the "marathon" where you eventually give-up and sign the paperwork. If you're not getting anywhere in your negotiations....leave.
- Beware the serious salesperson. If he or she is all business, we tend to relax and trust that individual a bit more. Be careful with these folks - they are usually the best the Dealership has.
- Beware the honest salesperson. If they act like your best friend....watch your wallet.
- When you call a dealership and ask for a price, you either get the run-around or, you get a price. If you get a price, keep in mind that it could be a "Lowball" price which essentially is a ridiculously low price to get you in the their door. If want to find an honest Dealer that offers great prices, see "How to find an honest Car Dealer in less then 90 seconds".
- One of the biggest rip-offs you will see is the addition of "Dealer Setup & Preparation Fee's" to the price of a vehicle, that will increase the price of a vehicle $200 - $700. Are they serious.....the only "Dealer Setup & Preparation Fee" is the $7.50 Car Wash the Kid in back did before your sales person gives you the keys. Refuse to pay for any "Dealer Setup & Preparation Fee's".
- Many young people or those with "dinged credit" are told "We're letting you take the car home today.....and we'll get the loan approved tomorrow". This is called a "spot delivery" in the car business and happens thousands of times a day.
The phone rings at your home 5 days later, and the Finance Manager says "I'm sorry, but we couldn't get you financed for the full amount of the purchase (or, they made a mistake on our paperwork). Two things are going to happen.
One, you'll be told you need another $2,700 (or more) down to make this work. Or two, they'll tell you you need to bring the car back.
Here's a word of advice....never, ever take a car or truck home if the financing has not been completed. If you're asked to sign any documents that indicate the sale is not final....walk out.
Better yet, make sure you review our Car Loan Guide for solid options regarding your auto loan choices before you ever think about visiting a Dealership. - Similar to the above scam, many dealers will say, "I'm sorry, but with your credit score we're going to be unable to offer your our best rates." If you have "dinged credit", that might be true. However, many Dealerships will try this ploy on anyone just to see is you'll fall for it. The result - a higher interest rate which puts more money in their pocket.
The only way to beat this game is to have other options ready and available - again see our Car Loan Guide. - If you tell a sales person that you can afford $350 a month, you're going to hear "we can work with that". Yes, they probably can....by extending the term on the loan from 60 months to 72 months. Never tell a salesperson what your payment goal is.
If you've done your research you already know that a $20,000 car will have a payment of more than $400 a month for a 60 month term.
Car Dealers are creative but not they are not miracle workers. You'll find out about this little game when you get ready to sign all the paperwork. Then again, you might not catch it and be stuck with a 72 month loan. - The MSRP Sticker (Manufacturers Suggested Retail Price) in the window means nothing to you. What it cost the Dealer is what you need to know. To get that information, and what folks just like you have paid for the vehicle you like, visit Edmunds.com
and spend a little time. After all, aren't you interested in knowing what you're going to have to pay for that new car, truck van or suv? If so, look for TMVsm at Edmunds.com - that'll show you what other people are paying for the vehicle of your choice.
- Don't expect Dealers to volunteer what Rebates and Incentives are available. Make sure you know upfront what's available. See all available Incentives & Rebates at Edmunds.com
before you visit a Dealership.
- At some dealerships, you're going to get a hard-sell regarding Gap Insurance. This Insurance covers the difference between what your car is worth and the amount you still owe on it should it be totaled or stolen. Unless you're putting 20%-30% down, you'd better have an idea of what GAP is and what your real options are before you get the hard-sell. See our Gap Insurance Guide to learn more.
Lease Scam's, Tricks and Games
- If you're told a rebate or incentive doesn't apply to leases.....you're being lied to. Find another Dealer.
- A Lease does not have an Interest Rate. It has a "Money Factor" instead. If a Dealer continually uses and Interest Rate in calculating a lease....find another dealer.
- On a Lease, there is not a Purchase Price. It is called the Capitalized Cost which includes all fee's and other costs. If a "purchase price" is used in negotiations, the dealer us trying to hide price increases.
- If a dealer tells you that the "Cap Cost" will not impact your payment, they're lying. It's the only number that matters.
- If you're trading in a car and plan on leasing the new one, make sure the value for that trade-in is clearly noted on the lease contract. Many times the number will be less that what you agreed to.
- If you're going to put money down on a lease (it's called a cap reduction) make sure that amount is noted correctly on the lease contract.
- Looking at an ad for a lease special? Read the fine print carefully. It's normal practice for Dealers to put very attractive ads in the paper for a Base Model, or on a Model they don't even have.
- Make sure the lease contracts have, in-writing, the following: capitalized cost (purchase price), cap reduction (money down or trade-in value), money factor (interest rate), residual, monthly payment, excess mileage charge, termination penalty, acquisition and disposition fees (if any), and total due at signing. If any of this information is missing, don't sign the contracts.
- Many Dealer claim they can get you out of your existing lease before the term expires. And they can....but you'll pay out the nose for doing so. To get out of a lease (any lease) you need to pay the difference between what you've already paid on the lease and the amount it's already depreciated plus any remaining payments left on the lease term.
- Many Dealers put Lease ads in the paper that boast low monthly payments....while hiding a huge down payment figure in that tiny, tiny print just below the ad. Don't fall for these ads. The only lease ads you should pay attention to are Manufacturer Subsidized Lease ads.
- Some dealers try to entice you into a contract by comparing the payments you would make under a lease agreement to the payments you would make to purchase the car. Remember, there should be a big difference -- at the end of a purchase term you own the car. At the end of a lease you own nothing.
- Many Dealers want to know up-front whether you're buying or leasing. Don't tell them. Negotiate the price first, then let them know what your plans are.
You can avoid all of issues by simply doing a bit of research and educating yourself. Many Dealers are honest but there are many more that are not. Do your homework and be prepared.
I do have an obligation to point out that not all Car Makers, Dealers, Salespeople, Insurance Companies and Banks are greedy or crooked. This site is dedicated to honest Companies and their Professional Employees who've grown weary of the ignorant and classless giving the automotive related industry a black eye......a black eye that I feel is very close to being permanent.
By using these new and used car guides, I hope to be able to help you find the Best Businesses, and the Professionals that represent them, with very little effort on your part and help you....
Save More Money and More Time Than You Ever Have Before.
It is also my hope that these Companies and the Professionals that represent them will have more business than they can handle - a reward they justly deserve.
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Tom O'Leary - "A Concerned Dad....and Automotive Analyst"
New Car Purchase - Exceptional New Car Purchase Advice and Automobile Purchase Strategies for your next new car or used automobile purchase.
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