Tricks of the Trade: Car Dealers

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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.

From our Solutions Center: Find the best rate on a car loan

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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Comments & discussion

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  • Amy Hyett

    You are so right I sold vehicles for 5 years including being a finance manager I did not make 6 figures a year but I made enough to support my family being a single mom. You don’t like rip off dealers buy a vehicle privately and see how honest every joe blow out there is at least if something isn’t right after the fact with a dealership you can go back to them try doing that with a private deal wont happen. So before you paint everyone with the same brush try selling vehicles its not easy and to top it off everyone thinks you are a slimy salesperson because of articles like this. Please author go and work for a dealership for 3 months and then spew your crap. All you are doing is taking food out of some child’s mouth, you make substancially more than me I’m sure so why is that ok and I’m a conartist

  • Rgf42

    You need to know what you are buying is worth. Go to Edmunds or similar site for a price. Offer what the car is worth and get the trade in you found. Always have a 2nd price or another deal. Get your own financing, don’t be rushed. Don’t get extended warranty, under coating , pin stripes, etc., you will probably get rid of the car and none this will matter. There are a lot of good buys. Lease returns, courtesy cars, year old new cars are some.

  • Kent

    The truth has been a victim in Capitalism. Just about everywhere you look.

  • ModernMode

    I recently went to a Chevy dealer in my city. They had put second stickers on all their vehicles with tacked on prices. I asked the salesman and he referenced a special wax job that was $300. That’s the kind of thing that giveg dealers a bad name. I told him I would not be doing business with his company because of the second stickers. Some dealers are rip-off artists and unfortunately they muddy the waters for everyone else.

    • cliffvettej

      Those are called “Addendum” stickers and the dealers use them to add profit to the car but when they are used and cite worthless items as the justification for an “Addendum” sticker then they are wrong. I always hated the “Addendum” stickers because they only brought what I call “gremlins” into the deal and get people upset for no reason. They do not need to be there unless they have added a real value added item to the car (for instance a hood rock protector to protect the hood from getting chipped up in bad snow areas). If an added value item is installed at a fair price they are okay. But paint protection package? BS!

  • cliffvettej

    Thank you for your honest post. I spent over 20 years in the retail automobile industry and I find the tone and tenor of this article appalling. While there may still be car dealers that do some of the things that this person writes about they are far and few between. The trade in portion of “Dealer Tricks” always gets me. He says to check out a book and get the trade in price. The dealer that I worked at used the MMR (Manheim Marketing Report) to get “real time” numbers. We wanted to know what SIMILAR cars with similar miles were bringing at the auction THIS WEEK. Not 4 to 6 weeks ago as most of these books tell you. The market changes and what a book printed a month ago tells you may not be good information today. Also various makes and models bring different money in trade in different parts of the Country. A 2 wheel drive truck was “sale proof” in our part of the Country but it did well back East where they did not have to deal with snowy streets all winter. The issue is the trade is worth what a dealer is wiling to pay for it. Or they can sell it on their own. There are other things to mention in a trade deal but I am not going to write a 2500 word post on the ins and outs of trade ins. I do like your attitude and honesty and thank you for letting people know that YES we do make a profit and NO we are not there for them to come in and offer us what we pay for a car and act like we are ripping them off when we refuse to sell our cars for exactly what we own them for. I cannot tell you how many times people think that a dealer should give up every dime of their profit and sell them a car for that price.