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Common car dealer tricks

Posted Jul 06 2009, 07:43 AM by Karen Datko
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This post comes from J.D. Roth at partner blog Get Rich Slowly.

When I bought my used Mini Cooper in April, things didn't go exactly as I'd planned. Part of this was because I hadn't done enough research. But a lot of it was because the dealership had some tricks up its sleeve and I did not.

At Car and Driver, Jared Gall has compiled a list of car dealer tricks to watch for when buying a vehicle. He says the following are common practices:

  • Juggling the foursquare. The "foursquare" is the worksheet on which the salesperson jots down the terms of the deal. It's an easy way for her to manipulate one factor (purchase price, down payment, monthly payments, trade-in value) or another.
  • Profiting from rebates. Gall warns that salespeople often use the presence of a rebate to manipulate buyer psychology. Don't let that happen to you.
  • Inflating payments. The more you're willing to pay each month, the more room the salesperson has to work with. The article recommends ignoring the question of monthly payments until you've negotiated the price of the vehicle.
  • Fees and extras. "If it's anything he offers after you've negotiated your sales price, you don't need it and shouldn't pay for it."
  • Interest-rate bumping. Gall recommends shopping for your own financing before you shop for a vehicle. He also warns that "it is not uncommon for the dealership to secure financing for you at one APR but offer you a rate one percentage point higher -- and then pocket the difference." Be careful.
  • Altering the bill of sale. Some dealers will leave the contract open-ended. Don't allow this. Don't sign anything with blanks or undefined terms. Be sure the paperwork is complete before you leave the lot.

Gall says there are several other tricks that dealers use, though these are especially underhanded. "If a dealership pulls any of these stunts on you, it doesn't deserve your business," he writes.

  • Ransoming your check.
  • Eavesdropping.
  • Lying about your credit score.
  • Misplacing trade-in keys.

For more information on these tricks and how to cope with them, check out the full article at Car and Driver.

Remember: These folks play this game for a living. Even if you go into a deal armed with good information and knowledge of dealer tricks, you can still be manipulated. You're an amateur negotiator, and you're playing with professionals.

The dealer trick that got me isn't on Gall's list. When I went to look at my Mini Cooper, I was greeted by a young man who'd been on the job for only two weeks. After I test drove the car, we sat down to negotiate. I talked him down from $17,000 to $15,000 and was very pleased with myself. But then he fetched the "closer," whose sole task was to talk me up from that $15,000 number. I had essentially told the dealer how much I was willing to pay, and the closer was there to get me to pay more. And I did. I paid $15,600.

The young salesman did a follow-up call a week after I bought the car. He was doing a survey to ask me about my experience. I told him it was fine except that I didn't like dealing with the closer. I felt like I had been manipulated by him.

"Yeah," he said. "You shouldn't listen to him. He talks a lot, but he's full of (it). He wants to sell that car. You had more power in that situation than you think."

Lesson learned.

Related reading at Get Rich Slowly:

The inner workings of a car dealership (and how to use them to your advantage)

Shaking the new-car itch: A tale of priorities

My mini and the power of saving

Comments

 

I remember that "closer" back in 2006 when I bought my car. He tried to nickel and dime me with a bunch of extras AFTER we'd settled. I stuck to my guns, fortunately. I wound up getting testy even though he was all smiles and expert at gladhanding. I really was getting frustrated with the shine this guy was trying to put over on me, so I just stopped him and said, "You know, I like this car but I don't have to buy it here. I'm going to go to the Nissan dealer on Highway 59 (this was also a Nissan dealer) instead." Problem solved. I got what I wanted. It was annoying, though. A year later, when my wife's car died we signed up with Costco's car dealership network through my membership. While we had to drive 75 miles to this dealer, we got the car for $400 over dealer cost. We got the car we wanted, a 1.9% interest rate, and no runaround from the dealer. I'd recommend going through a car program like Costco, or some other. We saved $1500 on the car itself. Yes, I will drive 150 miles round trip to save $1500.

I leased a new Jeep Liberty through Chrysler Financial in 2006.  I signed the contract but then the closer said he made a mistake on the name of my insurance company and needed to print the form again.  I had read the first contract but made the misstake of not reading the second contract as fully.  He had added on a turn-in fee of $450.00 which I was unaware of.  I had specifically told the salesman I did not want to owe anything at the end of the lease.  When I turned in the Jeep in Januart 2009, I was below my allowed mileage and there was nothing wrong with the vehicle, they told me I was finished and I left.  Almost 2 months later I received a bill from Chrysler trying to make me pay the $450.00.  I told tshem my contract said I didn't owe anything, because that is the contract they gave me.  They took the balance I still had on my extended warranty and then turned it over to a collection agency.  UI am still fighting them about this.  Has anyone else had a similar problem?

My biggest qualm is the extended warranty.  I bought my last car from Enterprise Rent-A-Car, low mileage, in good condition.  I got a really good interest rate and no stupid fees.  Good right?  Although, the car came with a 1 year warranty, I was given the opportunity to purchase a 3-year warranty.  When I was told that the warranty ran concurrent with the existing warranty, I argued of course that this made no sense, that I was essentially paying for 2 years.  In the end they agreed to extend the warranty through the 4th year.  Normally I wouldn't get an extended warranty, but because I spent thousands of dollars in repairs on my last car, including putting another $300+ into it less than a month before it was totaled, I didn't want to take any chances.  Turned out didn't need the extended warranty after all, never had any problems with it.  Have had it for over 6 years.

Yes

I have I bought a focus and had the same issue with the dealership.

I have to defend my fellow dealership employee's. Why do people bash us for trying to make an honest living. I have been in the Car Business for almost ten years and what we do every day is not easy and we don't take advantage we just do our job. I always ask everyone to step back and ask why is negotiating for a car a fair practice. If I told my Doctor that I wanted to  pay cost he would not care for me. If I told a Waiter that I wanted to pay $20 for my steak and not the list price of $29 just because I think $20 is fair, they would throw me out. I could list hundreds of example's but I think you get the picture. So Tell Me Why Do People Give Us Such A Hard Time And Expect Everything For Nothing.

My trash man performs a service that benefits society. He's hardworking and his contribution to society is appreciated and necessary. I can't say that about a car salesman.

Hey Hard Working Car Guy: I have sold used cars, so don't give me this crap about "honest living". 99% of all car dealers will and probably have used shady tactics to complete a sale. In most retail purchases every body will pay the same price for the same item. But, tell me why two different people will pay two different prices when buying the very same car. And I know for a fact that a woman will pay more than a man. I do not like or trust new car dealers due to bad past experiences that is why I buy used. If car dealers would clean up their act their sales would probably improve. My personal opinion here you understand.

If it was an "honest" living, we wouldn't bash it. Car sales, much like home sales, has been a predatory lending fiasco for decades. Fees for rediculous "services" such as delivery (I'm sorry, I don't intend to drive to the port to pick up my car, much like I don't drive to a farm to get my milk) and other such should-be-included items are simply to add on price to a vehicle that is already priced WELL above the dealer cost. Dealers themselves have set up the environment of negotiating for price, so don't blame the consumer for bashing a game they are forced to play against their will. Now, you could say "if they don't like the game, don't buy a new car," and you would be correct. But, keep in mind, if everyone decided to not buy new cars, you would be out of a job, so you may keep your tongue in your cheek, but keep it in your mouth and don't treat the consumer like a burden.

Bill in Houston...

You are to be commended with your purchase.  $400.00 over dealer cost?  Assume the Dealer has a property with showroom, lots for new and used autos, service department fully outfitted with equipment to service your vehicle, A staff of upwards of 30 people. The dealer sells 1000 new and used vehicles a year and makes $400.00 a vehicle. Grand total of gross profit $400,000.00.

Having worked for an auto manufacturer for over 32 years in production control here are the figures.  Take a sticker price of $30,000.00 plus $800.00 for shipping equals $30,800.00.  Actual cost of manufacture is approximately $10,000.00.  How in the world could a dealer making $400.00 a car pay all the business overhead and pay 30 employees and himself a salary and benefits?  Lets just suffice to say the dealer makes a great deal more than $400.00 a car.

Case in point, my latest purchased auto listed for $32,900.00 plus shipping.  I paid $21,131.12 .  The Doc fees were $395.00 that I paid because the dealer charges everyone the fee.  The dealer deducted the $395.00 off the vehicle cost to make it look like I paid the fee.  I priced the auto with 8 dealers in the area before making the purchase.  I secured a 48 month payment schedule with a 2.9 % interest rate.

i've bought 4 auto's at auctions. i payed the price i thought was fair for the car after doing carfax and other due diligence.if bidding went to high i backed out....no salesman, no(b.s). no contracts and you can get extended warranty, but it is cash and carry only

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