Dealer Trick #1: Negotiating Monthly Payments
Beware when the salesperson starts talking about monthly payments. Clever salespeople want you to focus only on low monthly payments because it gives them room to inflate other variables, such as the loan interest and length. This increases the dealer’s profit — while you spend thousands more on the car when it’s all said and done.
Some dealers pull out what’s called a four-square chart, which is confusing as hell. A former car salesman unveiled on The Consumerist how that shell game is played: You’re put on the defensive and worn down with tricky math, while the salesperson appears to knock down prices.
Counter Strategy: Don’t even discuss monthly payments. Tell the salesperson you can talk financing later, but first want to know their best price. Pay for the car in cash or get your own financing if you can, but don’t reveal how you’re going to pay until after you’ve negotiated down the total car price. But note that dealers may be less likely to negotiate if they know they can’t profit from you financing from them.
Dealer Trick #2: Telling You Your Credit Sucks
If you don’t know your credit score, all dealerships can try to rip you off by saying you don’t qualify for a better rate. Perhaps a bank would offer a 5% loan; the dealer might say 7% is the lowest for your credit score.
Counter Strategy: Pull your credit report for free and know your credit score before setting foot in a dealership. Again, shop around for financing and get it on your own if you can. Whatever your credit score, at least you’ll know if the dealer’s trying to pull a fast one on you, and be the last straw for you taking your business elsewhere.
Dealer Trick #3: The Ol’ Bait & Switch Game
Salespeople can disarm you with humor and appear to be on your side in your battle against a faceless manager in the back room. You might even get a great trade-in offer or discount on the total price. Low-ball offers or inflated trade-in values for your car are crushed by the manager later, of course. And edmund.com’s Confessions of a Car Salesman series reveals how numbers previously agreed upon, perhaps over the phone, can somehow be “lost” or “forgotten” by the dealership.
Counter Strategy: Not all car salespeople are smooth-talking swindlers, but remember, they’re doing their jobs. They are not your friends. Don’t fall for the good guy/bad guy game, and walk if they don’t honor what you agreed upon. Better yet if you’re shopping around for cars — get the numbers you and they discussed in writing.
Dealer Trick #4: Pushing Add-Ons & Other Fees
Be on the lookout for extras added to your purchase or financing. Dealers can increase your car payment price by “packing” extras like an extended warranty, rust-proofing, by perhaps saying it’s “only $20 more” a month. That $20 extra could cost you $1,200 over a 60-month loan.
Counter Strategy: Know which add-ons are truly unnecessary and check the financing and sell sheets carefully. Things you shouldn’t be charged for include a hidden loan acquisition fee and other fees, such as “customer service” or doc preparation fees.
You only need to do two things to come out on top: research car prices and comparison-shop multiple dealerships. One recent car survey found that knowing the dealer’s invoice prices and visiting two dealerships saved car buyers an average of $800. TrueCar, Kelley Blue Book and Edmunds.com can all help you find invoice prices and what your trade-in is worth.
Another idea comes from GetRichSlowly.com and states: email all of the dealers near you and say, “Hi, my name is so and so. I plan to buy such and such a car today at 5pm. I’m going to buy it from the dealer who gives me the best price. What is your best price?” Straight to the chase like you mean business and know what you’re talking about.
As far as Dealers tacking on add-on fees when you get around to closing the deal — I personally hate it when dealerships do this to me. I groan in despair, even as I verbally let them know I’m not interested.