Tricks of the Trade: Car Dealers

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New car coming in the new year? Car dealers are legendary at sales, but that doesn't mean you can't beat them at their own game. Follow these tips, and you'll be a negotiating pro.

The first time I bought a car on my own, I got ripped off. I traded in my car for less than it was worth, bought a clunker for more than I should have, and got talked into a $900 warranty to cover rust as I was finalizing the paperwork. The salesman saw me coming and pulled out every trick in the book, from saying my credit wasn’t good enough to tacking on “mandatory charges” during the final sale.

If you’re in the market for a new car, Money Talks News founder Stacy Johnson warns about five car dealer tricks of the trade. Check out his video, then read on for more.

Now, let’s go over what Stacy said and add some more traps to avoid:

1. Be wary when dealers talk payments

Some dealers will talk payments; you need to talk price. For example, the last dealer I met asked me how much I could afford to pay a month. When I didn’t answer, he offered a “great deal” at $385 a month. He never mentioned the total price of the car, or the length of the loan.

By focusing on payments and not total price, it is easy to trick the consumer into thinking they’re getting a good deal. Steer the conversation to the total price, and let the payments take care of themselves.

2. Dealers act like they’re doing you a favor with your loan

As Stacy said in the video, a dealer can make as much money on the loan as on the sale of the car, something they’re not likely to disclose. Instead, they’ll make it seem as if they’re doing you a favor by either getting a great interest rate or even getting you a loan at all. Don’t fall for it. Financing is big business for dealers, and you’re not winning a prize when they get you a loan.

Step one in buying anything requiring a loan is securing financing. Never head to the lot without first shopping and getting pre-approved for a loan. Check out the auto loan rates search tool on the Money Talks News rates page. Or visit a local credit union; they’re usually a good spot for low-interest car loans.

But don’t just shop for rates. Apply and get approved. This serves two functions: You won’t get ripped off with dealer financing, and you’ll be ready to pull the trigger when you find the perfect ride.

3. Bait-and-switch advertising

Bait-and-switch gets you in the door by advertising a super deal on a car, but switching you to another, less-super deal when you show up.

Car dealerships are notorious for should-have-read-the-fine-print promotions. Take the example given in the video; you see a great price on a certain model of car so you go to the dealership. Once there, you find out the advertisement was only for one specific car, which is now sold. And if you want a different car, maybe in a different color or with different features, you’ll have to pay more.

Read the fine print before you go to the dealership. If you’re not sure, call ahead.

4. High pressure tactics

As soon as a salesman approaches, their goal is to close the sale today, and they’ll try any number of sales tactics to make it happen. Maybe they’ll tell you about a sale, or try to convince you that you’d look great in that sports car. Or my personal favorite, insist the car won’t be there tomorrow.

Solution? Don’t bite. If you feel uncomfortable or unsure of any decision, ask to speak to someone else or just walk away. Keep looking until you find someone you can work with.

5. Extras that add up

Car dealers work on commission, and the more you pay the more they make. One way to increase the sale price is adding extra services, like wheel and tire protection, an extended warranty or rust protection. To help sell you on optional extras, they’ll break them down to the total price per month. For example, remember when I bought rust protection? The dealer told me it was a “great service for only $25 a month.” I ended up paying $900 over three years for something I didn’t understand or even know how to use.

Don’t let the dealer pressure you into a pricey service you don’t need. Know what you want before you sit down in the dealer’s office. And if it’s an extra you need, shop for it elsewhere. There are very few things offered by car dealers you can’t find from other sources, often for less.

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