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Car Dealership Tricks to Avoid

Written by Laura Martinez - 25 Comments

Buying a new car is one of the most stressful financial situations that you’re likely to encounter. There are many reasons for this. After, this is one of the biggest purchases (aside from a house) that you’ll make, and you want to get a good deal. One big obstacle for many is dealing with salespeople who try any number of tricks to get you to spend much more than planned.

Understand the process

While there are honest car dealers out there, dealing with a bad dealership can leave a very bad taste in your mouth. If you know the tricks of the trade, though, you can go in prepared to get a fair deal for your next car.

Today I wanted to cover some of the most common tricks you’ll encounter when buying a car and/or when you do a trade-in.

Trade-in tricks

Trading in your old car help to offset a portion of the purchase price on your new car, but it’s rarely the best deal. In most cases, you’d be better off selling your old vehicle yourself and then putting the proceeds toward the new car. It’s more legwork, but if you’re patient, you can get a much better deal.

Inflated trade-in values

If you do decide to trade in your car, the salesperson might come back with a fantastic offer – perhaps much more than any other dealer would offer. Seeing as this deal is much better than what you can get elsewhere, you may go ahead and start making a deal for your next car.

The problem with this situation?

All too often, the sales guy will eventually claim that the trade-in price was rejected by his manager. He’d like to keep the deal with the new car since you’re almost done, but will offer a smaller amount for the trade-in. At that point you may be so emotionally invested with the process that you’re likely to accept his offer.

Don’t fall for this trick. Stand up, start moving toward the door, and ask the salesperson to lower the new car’s price correspondingly. If they won’t budge, you may just want to walk away.

Holding your keys

Another possible gotcha occurs after you hand the dealer the key for your trade-in. There have been stories where dealers kept potential customers in the showroom by “misplacing” their keys. In fact, our friends had it happen to them. Upset with that old trick, they wound up leaving without purchasing anything.

Scams when buying a car

The biggest advantage you can have when buying a car is knowledge. Don’t go into a dealership without knowing what kind of car you’re looking and how much it should cost. If you’re prepared, you’ll be able to spot outrageous offers and comfortably walk away.

Foursquare – bad math

If a salesperson asks how much you’re willing to pay per month for your car, watch out! Some dealerships coach their salespeople pull out a foursquare chart to maximize their profit by only focusing on your monthly payments.

Payments can be reduced by extending the length of your loan, or by including a balloon payment. Know what you’re looking for and tell them what – and how – you want to buy. Use sites like Kelley Blue Book and Cars.com to see what your dream car is worth and how much people are paying for in your area.

Instead of getting into the tricky math at the dealership, focus on the bottom line – the total price you’re willing to pay for the car. If you need financing, you should consider lining it up on your own rather than including that in your negotiations.

Lowball first offer

Similar to the overly-generous trade-in offer discussed above, it’s not uncommon for a salesperson to give you a too-good-to-be-true price on the car you want to buy. As you rush to close the deal, however, the manager inevitably comes in and says that the price is too low. They can’t sell it to you at that price because they would “lose money.” Don’t fall for it.

If a salesperson has been at the dealership for any reasonable amount of time, they’ll know what sort of deal will pass muster and what will get rejected. Simply tell them that you understand, but that you’ll need to find a deal that is better suited to your situation. Then get up and head for the door. If they capitulate, great. If not, keep walking.

Push you to pay more

Finally, be on the lookout for attempts to add extras to your purchase. Maybe they’ll claim that the bank requires you buy a warranty before they’ll approve the loan. Another tactic is to use your credit score as an excuse to get you into a ridiculously high rate car loan. They may be right that your score won’t get you the lowest interest rate, but it doesn’t mean you have to take the worst.

The best way to prepare is to know your credit score. You should also check with your local bank or credit union to see what sort of interest rate you can qualify for. Knowing these things in advance can help you evaluate any deal you come across.

Your car dealer experiences

Not all dealerships are shady, but you still need to be very cautious.
What sorts of car buying experiences have you had? Good? Bad? Any tips or tricks for getting a great deal?

Note from Nickel: My preference is to avoid the showroom entirely, and to negotiate the deal via e-mail and/or fax. That way you can play dealerships against each other and find the bottom of the market without racing all over town. It also keeps you out of the sales office, so you avoid any shenanigans.

Published on October 12th, 2010 - 25 Comments
Filed under: Automotive

About the author: helps families achieve financial freedom by sharing tips for reducing debt and building freelance income over at Couple Money.

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25 Responses to “Car Dealership Tricks to Avoid”

  1. 1
    Floridian Says:

    I had a pretty good car buying experience! I did the research – knew what the same cars were selling for in my area, knew my credit score and what kind of rate I could get at a credit union (where the best rates are!), and I knew what my “old car” was worth. I also knew about the four square method before going in (but I already believed anyone who purchases a car based on monthly payment was an idiot before I heard about the four square scam!)

    As soon as I was approached by a salesperson, I told him what I was looking for and asked him NOT to even try to upsell me or I would walk. I informed him that I was already in conversations with 3 other dealers. So he knew up front that I would purchase from whomever made the best deal. I told him I was NOT trading in my car and I asked him to give me the bottom line CASH price on the car I wanted (to include any “dealer fees,” which vary by dealer and they never tell you about it until (unless) you ask “what’s that additional $400 there?”). Even though I probably came across as a major pain in the a$$, he respected my wishes and was very good to deal with. When we finally settled on a cash price (a week later after negotiations with all 4 dealerships), THEN I asked about financing. It turned out they could do the same rate as the credit union. They ran the numbers but came back with a payment higher than what I had calculated with my wonderful financial calculator. I asked the finance manager to try again. He came back 10 minutes later apologizing for his “inadvertent error” of entering the $36 tag transfer fee as $360 (my a$$ – they tried to throw in an extra $920 to the financed amount hoping I wouldn’t notice! Afterwards, I learned that many dealerships will try this same scam!)

    So yes, be very careful at dealerships! Even when you do all your homework, they’ll still try to stick it to ya somewhere!!

    My “old car?” I sold that privately and got about 4 times what the dealership would have offered for a trade in :) I applied the funds to the new car loan. The new car was paid off within 2 years :) (and still had a KBB private party value higher than what I purchased it for!)

    Oh PS – there is no such thing as zero percent financing at a dealership. When someone tells me they got zero percent, you know what that tells me? That just tells me they got royally screwed on the price of the car! Don’t fall for the zero percent financing scam. Negotiate the PRICE first, THEN the financing!

  2. 2
    Tony Says:

    Whatever you do, don’t let yourself feel pressured. If you’ve done your research online or dealership-to-dealership, you’ll know what you want and how much to pay. If there is even the slightest doubt or pressure, thank the salesman and tell him you’ll come back later after shopping around. He might on the spot make you a better offer. If he does, thank him again and tell him you’ll come back later after shopping around. The offer will be good for a couple of days, if the offer is real.

  3. 3
    BG Says:

    Dealership == Stealership.

    They make most of their money on the back-end anyway (maintenance / repairs). Buy domestic, hence increasing your chances that someone other than the dealership can actually fix your pile.

  4. 4
    jim Says:

    I had a car salesman ask me for information including my social security number when I was negotiating on price. I hadn’t agreed to buy the car yet and we were till discussing the price. He insisted he needed the social security number. It was BS and he just wanted to run a credit check on me to figure out how much he could try to charge. I’ve also heard that some dealers have claimed they need SSN due to the Patriot Act which is a lie too. They don’t need your SSN at all unless you’re actually trying to get financing from the dealer.

  5. 5
    Dollars Not Debt Says:

    Rule Number 1. Never, ever, ever buy a NEW car.
    Let someone else pay for the new car smell

    Buy a 3 year old used car and keep it until it croaks.

    Dollars Not Debt

  6. 6
    Floridian Says:

    Dollars Not Debt – I used to think that way too. Then I went looking for a 2 or 3 year old used Honda with around 30K miles on it back in 2008. At the time, dealers were so desperate b/c no one else was buying cars. Hondas and Toyotas in particular were selling brand new models cheaper than the used ones. Toyota had such a overflow of inventory that they were piling them up in a lot in Jacksonville, Fl as soon as they unloaded them off the boat (my aunt lives in Jax and drove me by the field full of RAV4s!). I was stuck on Honda – The brand new Honda with 9 (test) miles on it cost me only $1,000 more than the used one with 27,000 miles on it. So I went with the new car. It’s paid off now and only has 13,500 miles on it. The new car was definitely a better deal given the circumstances! (and, I don’t have to worry about how the last person drove it. When a car is driven a certain way, 25K miles may as well be 50K or even 75K miles!)

    Never say Never ;)

    PS – how’s that water pitcher workin’ out for ya? Are you getting irritated at how slow it is or how much room it takes up in the fridge yet? ;)

  7. 7
    Floridian Says:

    And for the record, I went around looking for the best deal on a “used Honda Accord with no more than 36K miles on it.” I told the guys at the lots I was absolutely NOT interested in a new car – and I wasn’t! The best deal I got was an Accord LX with 27K miles on it. I was just about ready to buy it! THEN, my B-I-L who had worked in the car industry for 20+ years told me of the situation dealers were facing with new cars. So I went back looking for the best deals on NEW hondas. I actually could have gotten a brand new Honda Accord LX for LESS than the one with 27K miles on it! But I opted for a CR-V straight off the boat instead. My husband liked the CR-V better. And I have to admit, I’m glad he talked me into it :) I love the CR-V!

  8. 8
    Charles Cohn Says:

    I always buy my cars for cash. On one such purchase, after the deal was settled I told the salesman that I was buying for cash. He was visibly disappointed; I guess he was thinking about the scam opportunities that he was missing.

    It’s a shame that the car dealers were able to weasel out an exemption from the new consumer-proection law, because they are the biggest scumbags in the business world.

  9. 9
    Charles Cohn Says:

    I forgot to say that I wish cars were sold by large mass nerchandisers like Amazon or Wal-Mart. I’m sure we would get much better deals from them.

  10. 10
    Steve Says:

    The four square is designed specifically to give the salesperson multiple variables to work you with. If you focus on the price, they put some profit into the trade in and/or interest rate. The most profitable customer may be the one who focuses on monthly payment, but the foursquare is there to get anyone who isn’t paying attention to every single aspect of the deal.

    One nice thing about selling your trade-in in a private sale: it removes one of the variables from the equation. That’s what was nice about buying a car with cash; that brings it down to one variable,

    When we bought that car (last year), I tried to negotiate by email and phone as “they” recommend. Only two dealerships per make, out of all the ones within 10 miles I had contacted, would give me a simple price quote on the vehicle specified. The rest wanted me to “come in and see what we can do for you.”

  11. 11
    thom Says:

    When we bought our car, we had settled on a price. Then the salesperson went back to an office to figure out the monthly payment. He came back and said great your monthly payment will be $x dollars. My mom fortunately is a real estate agent and knows how to use a financial calculator and do interest calculations. She put the numbers in her calculator and guess what? The guy’s monthly payment number was higher than what it should have been. She pointed this out to him and he said “uh let me double-check my numbers”. He went back to his office and admitted he had “miscalculated.” I don’t know why we even continued to buy the car from him!

  12. 12
    Kris Says:

    Wow, why is it so hard and stressful to buy a car? Is there any other product that is so hard to buy? I’m sticking with my ‘99 Accord for as long as I can!

  13. 13
    Money Obedience Says:

    I don’t like the after-sale experience, when the sales person tries to sell you basically useless add-ons like undercover protection for $600.

  14. 14
    Holly Says:

    I used to be married to a car salesman. He used to say it was the only job you could do drunk. (And yes, nearly all of the salesmen were drunk and/or high daily at work.)

    This is why I no longer buy cars from dealers. I’d rather the 3 year old car purchased for cash from a private party. (I have my mechanic check out my purchases first.)

  15. 15
    Dave@50plusfinance Says:

    Whats worse car salesman or bankers. My car salesman told me that the car was so technologically advanced that it didn’t have spark plugs, when it did. This was the asst. manager.

    My brother sold used cars because his conscience bothered him from all the lying he had to do to sell cars. I have never had a good experience with a car salesman.

  16. 16
    BG Says:

    I’ve bought a few cars from Carmax. They have a better model for people who despise ‘negotiations’. The sticker price on their cars are non-negotiable, and for the two I’ve purchased from them — pretty good deals.

    I’ve also had two friends do trade-ins to Carmax, and they both were given much more than they expected.

    For the person asking about the WallMart/Amazon for cars — I suggest you try Carmax.

  17. 17
    barry Says:

    Not all salespeople in the automotive industy are scumbags! Do your homework as a consumer and don’t offer prices $2000 under the invoice. A car dealer will always make a profit but most any dealer will sell you a car for invoice because they still get the hold back. The comment about the 0% interest was silly the manufactures give you an option of 0% or a rebate, always compare it both ways, if you trade frequently the 0% is not the best way to finance your car. 20 year automotive dealer employee Sales and Finance Manager …you begin trashing me if you wish

  18. 18
    randolph Says:

    I agree with Barry, not all salespeople are scumbags some are professional some are not, the same with any other profession. Its simple DO YOUR HOMEWORK. If a service is giving than someone deserves to be compensated your research will determine that salesman profit or COMPENSATION. STOP THE BLAME GAME AND DO THE RESEARCH, and these so called Tricks will be avoided.

  19. 19
    Karim Brown's Honda Says:

    Given the amount of information available on the internet and the invoices listed on KBB and Edmunds there is nothing scary about buying a vehicle anymore. As far as Carmax is concerned they have an exact 19% profit on any vehicle you buy that’s just a fact. the 0% is offered in combination with or whithout a rebate from many brands is both a reflection on the state of the economy and the banking industry rates and manufactrors used to keep production and sales up not to mention jobs. Sales consultant are guides for the most part that assist in landing you in the right vehicle and do paperwork for the most part.

  20. 20
    Mike Says:

    I read the article twice to make sure what I was reading…Laura your about five years behind the times. I have sold cars form 20 years and the nasty tactics your suggesting only happen at the dealerships that have had that type of reputation for years. Ask anyone, they probaly can tell you who they are in thier area. In fact in my area those dealers have already went out of business. Anyhow, 90% of todays buyers have already done some type of research before they have entered the dealership. The big three have very minimal mark ups. In fact the mark up on a 2011 Jeep Compass is about $900. The average commission today on a new car is $125. Five years ago it was $300. All I can say is that it sure makes it a lot easier to help a client with their purchase when I know what they are trying to accomplish. What payment they want,how much they want to put down and what type of vehicle they would like. With $900 worth of markup to deal with, I can easily direct someone in the right direction. The client who wants to come in and treat me like I’m out to get him/her is the one I send down the street. The next guy can spend five hours showing the guy/gal the wrong car. For $125 I need the people who are looking for someone who will help them get what they need at a fair price and will send friends and family to buy from me. You internet savy people know you can get a copy of the invoice off the internet dont you? Print it off and take it into any dealership. Make any type of fair offer over invoice and I bet ya the dealer will accept it. Good luck people…see you on the showroom floor!

  21. 21
    Edt Says:

    We did our homework, and negotiated a tough deal for the car we wanted (but were not emotionally attached to). We told the salesman up front that we don’t play games. We reached an agreement on a car held by another dealership. We sat in front of him while he talked to the other dealership about a trade. Then he gave us a sheet to take to our bank with all the numbers on it (oops! he forgot to print “Purchase Agreement” on it), we got the check and came back. Oh, he forgot a $15 charge (really, you’re going to haggle over $15 on a $25k car–seriously?).Guess what, now the other dealer “doesn’t want to part” with the car, but they can give us another one but it will cost a little more, maybe just $100 or $200. Deal breaker! The loan was written for the VIN# on the car the other dealer had. We couldn’t/wouldn’t turn over a check for a different car. This is supposedly a reputable dealership (is there such a thing?). The only thing on earth lower than a car salesman is a lawyer. I freaking HATE buying a car.

  22. 22
    Elliot Says:

    Edt, I am sorry to see that you feel this way. Not all lawyers are the same. I have never cheated anyone, although I have had plenty of clients not pay for my work. If I were a thief, I would probably not be nearly as broke as I am. I am sure the same can be said of many car dealers. If you can’t trust one, find another.

  23. 23
    Greg Says:

    Don’t know if this still happens, but when I was in the market for my first car 20 yrs ago, the salesman informed me that he needed to see my drivers license because the state (CA) required a license in order to purchase a car. He even had a great story about how ‘just last week’ he’d sold a car to someone only to find out they didn’t have a license. I handed my license to the salesman, who said he had to show it to his manager and it disappeared for the next two hours. Everytime he left the office to take an offer to his manager, I’d ask him to bring my license back which he never did. The only reason I got it back about 2 hrs later is because he thought I was going to buy. I took my license and left. I later encountered this same trick complete with the same explanation and same story at other dealers however, I never let the license out of my hand.

  24. 24
    dealmaker Says:

    OMG…..You people kill me how its always the dealer or the salesperson…How about you look in the mirror and realize its really you the buyer who is the liar and cheat.

  25. 25
    edt Says:

    How am I liar and cheat when I laid everything out up front and kept my end of the deal? I pulled no “oops” on him. In the end he got us the same car we originally agreed on from another dealer. All I wanted was for him to keep his word the same as I did. No more, no less. If he couldn’t offer the deal we wanted, he should have said so, and we could have gone from there.

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