We often hear that car salespeople can be shrewd as they are looking to try and sell you a lemon or trick you into buying something way out of your price range. Although this definition is a little harsh, it is a good idea to keep a level head when walking into a car dealership. After all, they are the only people standing between you and getting your car for the best price. Below are four traps salespeople often use on buyers which can result in you making a huge mistake and paying more than you originally planned.
Trick #1 Negotiating on Monthly Payments:
We’ve all heard the wonders of low-monthly payments. How taking such a route will help us to drive away in a brand new luxury automotive for mere hundreds a month. When a dealer begins discussing this payment method, your red flags should go up.
Although a clever dealer can make you focus on the low payments, they are neglecting to tell you about other financial variables. While monthly payments may sound low, dealers may actually be inflating other factors such as interest and the length of a loan. There are even dealers who use what is commonly known as a four-square chart which is extremely difficult to understand. A former car salesman describes this “game” as putting the buyer on the defense and carefully wearing them down with complex math while the salesperson appears to be lowering payment prices.
In order to avoid this trick, there are three counteractive moves you can make. First, avoid talking about monthly payments. When the dealer begins discussing this, inform them that you will talk financing later, but you first want to know their best price. Second, pay cash for your car or secure your own financing. However, do not inform the salesperson of your plans. They will be less likely to give you a good price if they know they are not going to receive a profit from the financing. Third, if you do have to discuss financing, it is better to wait until you have negotiated the sale price. Once you have an idea of the total price you can then focus on the annual percentage rate versus payments.
Trick #2 Telling You Your Credit is Bad:
If you are unsure of your credit score, a car salesperson is at an advantage. They can easily tell you that due to your credit score you are not eligible for a high rate. For example, a bank may tell you that you qualify for a 5% loan; however, a dealer could easily tell you that 7% is the lowest available to you.
To avoid this, know your credit score before you ever step one foot into a dealership. Pull your credit score for free so you are knowledgeable about whether a dealer is being fully honest. Additionally, as stated before, do research into your own financing as it is better to do this independently versus going through a dealership.
Trick #3 Baiting and Switching:
It is easy for a salesperson to appear to be on your side and lower your guard with humor or statements which ensure you they will help you get a discount or a great trade-in rate. But most of these promises are inevitably pushed to the side. Edmund.com’s “Confessions of a Car Salesman” series revealed that rates and numbers given in the initial negotiation are often “forgotten” by the dealership later on.
The information above really makes salespeople sound bad. Although not all salespeople are out to cheat you, there job is to sell you a car, not be your friend. Be cautious not to fall for their games and make sure to get the numbers they gave you in writing that way you have something fall back on if they try to change things. Also, you are not bound to anything at this point and if they neglect to uphold the deal you agreed upon, walk away.
Dealer Trick #4: Pushing Add-Ons and Fees:
When negotiating for a car, make sure to watch out for additional add-ons dealers will try to throw into the mix. Although their salesmanship is great and an extended warranty of only $40 a month sounds great, it will end up costing you $2,400 more on a 60-month loan. Although add-ons sound great in the moment, they can essentially be just another way for a dealer to jack-up the price of your car.
In order to avoid buying add-ons which are not worth the price you will ultimately pay, make sure you know the add-ons which are necessary and those which are just gimmicks. Additionally, check your financing and sell sheets for fees you should not be charged. Examples of such charges include a hidden loan acquisition fee and other fees, such as “customer service” or document preparation fees.
Your Best Strategy:
To avoid falling for the tricks dealers often use, it is a good idea to do two things to make sure you will come out on top. First, research car prices and second, do comparison shopping. A recent survey showed that knowing the dealer’s invoice prices and visiting at least two dealerships could potentially save buyers an average of $800. Searching websites such as TrueCar, Kelley Blue Book, and Edmunds.com will help you find invoice prices and discover what your trade-in is worth.
Another strategy which is rather ingenious can be found on GetRichSlowly.com. They recommend emailing all the dealers in your area saying, “Hi, my name is so and so. I plan to buy such and such car today at 5pm. I’m going to buy it from the dealer who gives me the best price. What is your best price?” Such an email will help you cut to the chase very quickly and avoid tricks which jack up the price of a car.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.