When buying a new or used car from a dealership, there are many pitfalls you must avoid. It must be remembered, you and the dealership have different objectives. You are trying to buy your vehicle as cheap as possible and it is trying to maximize its profits.
Here are some of the common sales tactics that unscrupulous dealers may use:
1. The Hard Sell
Buying a car is a big decision, so never make a purchase simply because you feel pressure from an overaggressive salesman.
2. Selling on Payment Instead of Price
When a salesman pops the question, “What kind of payment are you looking for? before you’ve even talked about the price of the car, that’s a major red flag. If you’re focused on payment, they will stretch the term as far as possible- up to 6 years- to get you a payment you’re happy with, even though you’ve overpaid on the car. They also make money when you finance- as much as $3,000 in some cases.
3. The Trade-In Trick
Some dealers will make you think you’re getting a good deal on your trade-in value while ripping you off on the car you’re buying. Keep both of these values in mind when you’re talking with a dealer about a trade-in.
4. Bad Information
Another common tactic with dealers is to answer a question with misleading information. Know your stuff. You can do more homework on the internet and find out more information than a salesman knows about a car. This is especially true for high performance cars.
5. Hidden Fees
The fees aren’t really “hidden,” but most dealers aren’t going to publicize all the extra costs- like processing fees. It’s all profit. They disguise that profit into fees and don’t tell you about it until you’re sitting down to pay for the car. If you lease a vehicle, there can be additional fees hidden in the capitalized cost portion of the lease. The uninformed consumer doesn't notice the increased monthly payments.
6. The Waiting Game
You may have to sit through sales negotiations with a salesman, a team leader, a sales manager, a general sales manager, and possibly a general manager. Don’t agree to something because you just want to get out of there. Also, don’t let them keep your car keys hostage.
7. Lies, Lies, and More Lies
Take your time and be patient when shopping for a car. Don't rush into anything, especially based on what a salesman tells you. Just treat salesmen fairly and take everything they say with a grain of salt.
8. Shell Games
Negotiate each portion of your car purchase separately. Shop your trade-in to multiple dealers, shop for an auto loan among multiple lenders, compare new car prices with multiple dealers. Don't let them bundle everything into one big deal.
9. Bait and Switch
The whole point of a bait-and-switch ad is to get you to the showroom. Call the dealership just prior to visiting to confirm they still have the vehicle in stock. If so, ask them to email or fax you a signed statement indicating that the vehicle is still in stock and available for sale.
10. Focusing on Monthly Payments
Always negotiate based on the actual price of the vehicle and always separate each part of the transaction into a separate negotiation. This includes your trade-in and any other products or services you purchase.
11. Low-Balling Trade-In
Shop your trade-in to multiple dealers to get a fair price.
12. High-Ball Trade-in Offer Over the Phone
Shop your trade-in to multiple dealers and have them inspect your trade-in car in person. Any high-ball offer you receive from a dealer sight unseen is no good.
13. Changing Figures in the Lease Agreement
Many dealers will change the numbers around in the contract and literally steal money from you. Things such as raising the capitalized cost or increasing the money factor. You need to have a good understanding of how leasing works and the terminology used to prevent this scam. There are many resources on the internet to help educate you.
14. “Mistakes” in the Contract
Make sure you review all the numbers and items in the paperwork to ensure they match the numbers you agreed to. “Mistakes” in the contract will almost always favor the dealer.
15. Raising the Price on the Vehicle
When leasing, the purchase price of the car is called the capitalized cost. This should be negotiated just as aggressively as if you were buying the vehicle.
16. The 4-Square Method
The "4 Square Method" is the most common sales tactic you will find in dealerships. It's a technique designed to confuse car buyers by mixing the price of the car, down payment, trade-in value and monthly payment into a single transaction. This tactic only works on car shoppers who negotiate at a dealership. Simply use the telephone/email negotiation method and handle each part of your transaction separately.
17. Confusing Window Stickers
The dealer sticker will include options that were installed after the car arrived from the manufacturer. They're usually worthless and some aren't even options at all, but simply made-up charges.
18. Title Washing
Use CarFax and Autocheck to see the history of a used vehicle. Title washing does not get rid of computer records of title transfers.
19. Lying About Money Factor
Money factor is another thing that seems to confuse leasing customers. Money factor is basically the interest rate shown as a fraction. To convert it into an interest rate you're familiar with, you just need to multiply by 2,400- but a lot of people don't realize this so it's an easy way for dealers to take advantage of the situation.
20. Double First Payment
Leases usually require you to make the first monthly payment up front. Sometimes the down payment includes this, other times it doesn't. Check the agreement carefully and make sure they are not double charging you for the first payment.
21. Spot Delivery Scam (Yo-Yo Financing)
The Spot Delivery Scam, also known as yo-yo financing, is a common scam used mostly against car buyers with bad credit. It occurs when a dealer leads the car buyer into thinking their financing was approved. They let them take the car home, only to call them back a few days or even weeks later to inform them that the financing fell through, and that they need to finance through a different lender at a higher interest rate. Always have a car loan arranged before visiting the dealership so you know exactly what kind of rates you qualify for. If they ask you to sign a "borrowed car agreement," that's a sure sign the financing has not been approved yet.
23. Packed Payments
This is when dealers hide things like service contracts, extended warranties, gap insurance, undercoating, paint and fabric protection into the monthly car payment. Never negotiate based on monthly payments. You need to know exactly how much you're paying for the car and any additional services or products you agree to.
Curb-stoners are car dealers who pose as private individuals in order to defraud consumers or skirt the FTC rules pertaining to selling used cars. They will post ads in various classified sites such as Craigslist and pretend to be the owner just trying to sell their vehicle. They are usually selling vehicles with hidden problems that can affect safety and value. First, always make sure to get a vehicle history report. You also need to ask to see the seller's driver's license along with the car's title. If the names don't match, don't buy the vehicle.
25. Odometer Fraud
Unscrupulous people are reprogramming digital odometers using relatively inexpensive software and devices made for legally recalibrating faulty odometers. Compare the mileage on the odometer with the mileage indicated on the vehicle's maintenance records and get a free CarFax odometer check.
26. Good Guy, Bad Guy
One salesmen is "honest" and can be trusted, but his sales manager is hard to deal with. This strategy is meant to wear you down slowly, forcing you to agree to a bad deal. Never negotiate price at a dealership. It's best to do it over the telephone or online.