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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

 

The last car I purchased (2001 Honda Accord, bought new) was the best car purchase experience I have had.  I emailed every Honda dealership within about 100 miles and described exactly what I wanted to purchase the following weekend.  I sent out 10 requests and heard from 4 dealerships.  The purchase took about four phone calls, but I had a firm price that I thought was fair(I understand the dealerships need to make a profit,  but they do not need to make a lot of it from me).  I chose to drive about 65 miles, into another county to save $2,300 on the overall cost and a full point in sales tax.  By the way, this price was lower than the Costco price offer,  by $2,200 plus sales tax would have been about $240 higher in King county.   I will never purchase a vehicle without negotiating the price before I get to the dealership.

The reason I went this route for purchasing my car was based on the experience of buying the previous car.  This was before the keys were coded with a chip, so a replacement key was only a couple of dollars.  Anyhow, I was at the negotiating stage to purchase the car and they were looking at my car as a trade in.  I never give an entire key ring when having my car serviced, so I handed them a single key for my 1990 Accord.  This was a stroke of luck as they were taking far too long and I was getting tired of the BS.  I knew the goal was to try to get me to pay more for the car than I wanted to, and they thought they could out-wait me.  When they said they had misplaced my car key, I told them that it was not a problem, as I had a spare.  So, I stood up, grabbed my purse and headed to my car.  I have never seen car salesmen move so fast in my life.  But, I was done and they lost the sale and any future maintenance I would need.  I did get a series of phone calls, but I stood firm and told them that they could not treat potential customers that way and expect us to give them thousands upon thousands of dollars.  

First of all Turn in fees are a part of every jeep lease, and they are required by Jeep not the dealer. The dealer dosnt make a cent from it.

Second, if you believe there is $11,000 mark up in a $32,000 vehicle then you are high. The truth is the new car market is so competitive that mark up is minimal in most cases. Ask for an Invoice its an easy way to get a good deal and you dont have to drive 150 miles or go through costco to get $400 over in most cases.

Third,most dealers want you to buy a car and leave happy, its hard to sell cars right now and customers are gold. The power is all yours but be resonable and you will win.

When my husband and I look for a new car we do our research.  We know what we want and what we will pay.  When we find a car we tell the sales person we do not want to haggle about the price and want the best offer they will make on it.  If it is around the price we have in mind it's a deal.  If not we say no.  That's when the fun starts.  We try to leave, they try to offer a better deal.  No dice.  If they couldn't make a firm offer the first time there is no second chance.  The dealer we have now has sold us 3 new cars and 2 cars to our kids.  They know our rules and always treat us right.  Do your homework and you will not feel like you have been taken to the cleaners.  We know the dealership will be making money on us but that is why they are in business.  They just don't need to take advantage.

Another tip......don't use a trade-in.  We have always sold our car ourselves and used the cash for a bigger downpayment.  Works out a lot better in the long run.

No one ever considers how much overhead is involved in a car purchase. We stock around 8 million dollars of inventory so you can pick out a red $25,000 coupe. You pay the payment on the 25k and we pay the paymenyt on the rest of the 8 million! Also, did you think that big air conditioned showroom was free or the 15 acres of land the cars are setting on or soap and water to clean it was free. Do you think all the people at the carlot work for free. Was that full tank of gas free to the car dealer? Did they have to send someone to the tag office to register it for you, and maybe that was free also. I think if you actually saw what was left after all the overhead, you would realize it is more of a convience for you than it is a proffit for us. The fact is if you do not get a good deal on a new car right now with all the informaion at your finger tips, then you must be plain stupid!

I worked at a new car dealership as a salesman for a short time and I found that it to be the most sociopathic job that I could imagine! The salesmen all talked about how they screwed the buyers on the frontend and on the backend of the sale then there was the extras that the salesmen were suppose to help the finance manger sell.

Then I would hear the salesmen trash the customers behind their backs because the customer was upside down in their loan and this would eat into their profit on the car because in order to make the deal they would have to absorb the difference if possible. Some customers would owe $10,000.00 more on their old car than it was worth because a previous salesman had screwed them on the front and back end of the sale.

One of the biggest tricks the dealer I worked for used was the black book to estimate your trade. The black book is a price that the dealer can expect to get for a car at wholesale. The difference between the black book price and what the dealer would sell the car for sometimes was 10-12 thousand dollars.

But the true raw deal was made by the men in the tower. They were the true experts in manipulating the customer. They would drag out the sale sometimes for hours just to wear down the buyer.

I was an auto salesperson for years (one of few females) at 2 different dealers (Toyota & Honda).  I can say that the auto business is the worst for sales people.  The sales managers basically force the salespeople to play their games.  If I didn't like what I was being told to say, many times I was told I can pack up my desk.  I've been in sales in many industries and this is the only one where the salespeople are created like crap.  My customer could go into the finance office with me having earned $500, and then come out with me earning $100 and the finance dept. earning that extra $400.  They'll even rip off their own employees.  In my experience speaking with sales people at other dealers I've learned ALL new car dealers are the same.  Then you have the customers:  they want to pay under invoice price for their new car, leaving the sales person to earn $100, and then they expect you to give them hundreds of dollars over what their car is worth, which then takes away from your lousy $100 commission!  The whole industry needs to change the way cars are sold.  The managers are given incentives to rip off the sales people and the customers.  And even when the customer gets a great deal, the sales person gets ripped off.  Maybe they should sell cars like any other item - the price on the sticker is the price everyone pays.  Due to the dirty tactics I have been out of the car sales business for years, and I make more money and am treated with respect.

Attn Honest

Not all dealers are the same and yes some are as dirty and backwards as they were in the 60's and 70's when people really did get screwed. Today it is a completely changed market, buyers are in a better position to get a good deal. Do your research and take your time. But remember to be resonable, even car dealers need to make a profit ( families to feed, bills to pay ) just like everyone out there. I don't sell cars anymore but I still work for a dealer. There is a misconseption out there that dealers and their salespeople are burying their customers with every sale and chance they get. So not true, anyone can sell a customer one car and make a large profit. It takes a true auto profesional to sell that same customer several vehicles over a lifetime. Keep in mind that the average salesperson sells 12-15 cars per month at a commision of $200 per car average and with no base pay. Someone made a comment about retail sales should all be at one price so that we all would get the same deal. I agree with that but if every dealer sold at one retail price, some consumers would still feel that they are getting screwed somehow.

And to Honest you said you worked in the car business for a short time what do you do now?

Dont ever buy the extended warranty. It is all cash for the dealer.

Bought it once for 1600.00 but whenever we would try to use it, they would come up with items that were not covered for this reason or that.

This is sad to read!!!! Not all dealers are crooks!!!! I would have to assume nobody here has ever bought a car or truck from a DCH Auto Group store. No fee's at all are aloud. No port fee's, No shipping fee's, No prep fee's and these days most cars are sold at invoice. There is not much to be made selling new cars. Also we would never lose sombody keys to keep them in the dealer.

Jim,

Was the warranty on a new or used car? Did you buy from a Franchise Dealer or corner usde car lot? And to shed some light most states cap what we can sell a warranty or service agreement for. For example If the company charges me $500 for the product I am not allowed to charge you a penny more than $1000. That is to keep you protected from any dishonest dealers. And while we are on the warranty subject a message to all Dealers will stick buy the products they sell. DDON'T EVER BUY A WARRANTY OR SERVICE AGREEMENT FROM TV, INTERNET, OR PHONE ADVERTISEMENT. Those companies are not part of any dealer group, but keep giving us a bad name because of gaps in coverage. Buy smart and find a dealer that you trust.

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