Learn About Things Your Car Dealer Isn’t Telling You

Without exception, nothing is more exciting than sitting behind the wheel of your new car for the first time and taking it out for a spin.  The downside of that experience is the process you go through to get to this point.  Shopping for a new vehicle is not popular with the majority of us.  The maze we often must negotiate, especially when going to a dealership, can take a great deal of the joy of ownership out of the equation.  This is due to the incredibly complicated process dealerships often take us through in order to ‘seal the deal’.

Because the most stressful part of the shopping process for that perfect vehicle for you is having to deal with the salesperson, the following is a list of car dealership secrets to know before setting foot on the lot.

The Old Bait and Switch

Even in this day and age of consumer protectionism, some dealers will still employ tricks of the trade to make the sale.  One glaring example is the advertised special to draw customers to the dealership.  Once there, the customer is either told that the vehicle has already been sold or they are shown another model that is selling for a higher price.  The best advice when confronted with this scenario is to simply leave.

Selling Vehicles Previously Damaged

Other than the stress that most experience when dealing with a car salesperson, the next most stressful concern is the fear that they may get stuck with a lemon.  Even though that is possible when purchasing a new vehicle, the odds increase dramatically when it comes to the purchase of a used car or truck. Anyway, if you’re just starting your business and want to get a car, be warned and watch out!

It is reported that each year about 5 million cars are “totaled, rebuilt and often sold as if free of damage.”  If you want to make sure that you don’t end up with one of these, it is recommended that you request a Carfax on the vehicle and have the car inspected by an independent mechanic you can trust before signing on the dotted line.

Be On Guard When It Comes To Rebates

As it is with a wide range of consumer goods, rebates can be a good thing whenever consumers are looking to save some money on their purchases.  This can also be the case when buying a new vehicle.  However, some dealerships have been known to use those rebates in their favor by refusing to go any lower on the price of the vehicle, taking the position that they are already giving you a great deal because of the rebate.

The truth is, those rebates are offered by the manufacturer, not the dealership.  Not only that but, should you decide to purchase the vehicle promoted with a rebate, make sure you have that rebate applied to the purchase.  If the dealer offers to mail you a check for the rebate, you will have to pay taxes on that amount and your balance owing will be higher, resulting in more interest paid on the car loan. Remember what your teachers told you time and time again? Think…and then, think again!

Financing Scammers

One of the biggest scams foisted on the consumer is in the area of financing.  The number one way in which dealerships practice this is as follows:

When negotiating a car loan, the potential buyer is informed by the dealership that the loan will take some time to process.  In the meantime, they will allow the customer to drive the vehicle home with the promise that, as soon as all the paperwork comes in, they can simply return to finalize the loan.  However, after a few days or a couple of weeks, the sales associate will call the customer and inform them that their loan was turned down.  Upon returning to the dealership, the customer is then either told that they only qualify for a higher interest rate loan or they are offered an even more expensive vehicle in order to then redo the loan.

If this ever happens to you, make sure you don’t leave the lot with the vehicle unless all the paperwork and financing information is complete!  In this day and age, the typical time it takes to know whether or not you are approved for a loan shouldn’t take more than 30 minutes. So if you can count, don’t count on these practices.

Never Waive Your Right to Sue

When considering making such a major purchase as a new vehicle, one thing you need to do is take the time to read the contract before signing it.  There are dealerships that include an arbitration clause in the contract that, if you sign it, effectively waives your right to sue the dealership should you have a dispute later on.  If this is discovered in the language of your contract, point that out and negotiate with your sales associate to remove that part of the agreement.  If they refuse, get up and walk away from the deal.

The Four Square Scheme

When you start the negotiation process with the car dealer, they often present you with what is referred to as the foursquare approach.  Essentially, this involves four key points: the trade-in value of your present vehicle, the price of the vehicle you are interested in, the total down payment required and what your monthly payment would be.  Even though this is presented in the light of them spelling out to the customer what they will be looking at in simple terms, it is actually rigged in favor of the dealership.

In fact, what the salesperson does is start the negotiation process by setting two of the four payments ridiculously high in order to distract you from the other three boxes.  The goal is to take you off your game and place the negotiating process squarely in their favor.

The example of this is to present the down payment and monthly payments to be several thousand dollars away from what you would expect them to be, causing you to become defensive and attempt to resolve that discrepancy.  This in effect causes you to lose control of the negotiating process.  It is a simple but effective trick to take away from the customer the ability to effectively negotiate the overall asking price for the vehicle.

Dealers Prefer Leasing Over Buying

Regardless of whether leasing is the right thing for you or not, dealerships will often attempt to persuade you to go this route.  The bottom line is they stand to make more money when a customer opts to lease instead of purchase a vehicle.  A couple of reasons behind this philosophy are pretty clear.

For one, when you lease, your monthly payments are often lower than if you were to purchase the vehicle through a conventional loan.  This is due in part to there being a residual balance remaining at the end of the lease.  In fact, when you lease, you are only making payments on a portion of the agreed upon price of the vehicle, not the total price.

The other factor is to get you back into the dealership when the lease is up and either get you to refinance the remaining balance on your current vehicle or move into a higher priced vehicle, resulting in them making even more money.  There is also the chance that, in order to get a lower monthly payment by leasing, you will agree to a higher price for the car or truck.

Well, there you have it!  Arm yourself with these guidelines before setting foot on the lot of your local dealership and you are guaranteed to have the upper hand in any vehicle negotiating process. Read also this article about Gary North, the “leader” of the Preparedness Movement.