Car Dealer Secrets You Should Know

The Bait and Switch

Some dealers will do anything to sell the cars they have on the lot, even tricking consumers to buy a model they don’t want.  Forbes reports that one popular car dealer scam is to advertise the perfect car in order to attract customers to come onto the lot only to offer up a worse version of that car instead. If this happens to you, the best thing to do is just leave and try another dealership.

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Selling Totaled Cars

One of the biggest fears that any consumer has when shopping for a car is that they’ll end up with a lemon, but if you’re looking at used cars, you might actually end up with something even worse.

SmartMoney reports that each year, about 5 million cars are “totaled, rebuilt and often sold as if free of damage.” In order to ensure that you don’t end up with one of these resurrected vehicles, SmartMoney recommends having the car inspected by an independent mechanic you can trust.

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Watch Out for Rebates

Rebates are often a great option for consumers looking to make a few dollars back on a purchase, but when it comes to shopping for a car, rebates could actually end up hurting you.

According to Car and Driver, some dealers will try to use the rebate against you in the negotiation process, arguing that they are giving you a good deal already with the rebate. However, the rebate is always provided through the manufacturer, which means the dealer is being disingenuous.

At the same time, Car and Driver also emphasizes that you should require the dealer to apply the rebate at the time of purchase. Otherwise, if the dealer mails you a check for the money back after the deal, you will incur taxes and interest.

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Financing Scams

In recent years, many consumers have reportedly been duped by financing issues. According to ScamBusters, consumers will request a loan at the time of purchase and be told by the dealer that it will take some time to go through. Yet, the dealer will then allow the shopper to drive the car home even before the loan is officially approved. Within a few days or weeks, the dealer will let the shopper know that the loan was not approved, and will proceed to either force you into a loan with a higher interest rate or push you into an even more expensive car and redo the loan.

However, this is an issue with a simple fix: don’t drive off the lot with a car if all the paperwork and financing has not been finalized. In fact, despite what the dealer may say, Bankrate.com reports that it should only take about 15 minutes for the salesperson to figure out if you’re approved for the loan.

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Waiving Your Right to Sue

As with all major purchases, you should be sure to review the entire contract before you sign. As MotherJones pointed out back in 2007, car dealers, like many businesses, often include an arbitration clause buried in the contract that waives your right to sue the dealership if you have a dispute down the road. If you find this clause, you should try to negotiate it with your dealer, or walk away from the deal.

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The Four Square Trick

Often when you begin to negotiate a sale with the car dealer, they will present you with a handy chart of four squares: the trade-in value, the price of the new car, the total down payment and your monthly payment. From the consumer’s perspective, this is supposed to be a tool to make sure that you get the best deal all around for your purchase, but as one former used car salesman told The Consumerist, the entire chart is like a rigged game.

Essentially, the dealer will begin the negotiation process by making two of the four payments absurdly high in order to take your attention off the other boxes. So for example, the down payment and monthly payments might be several thousand dollars about what you expect them to be, forcing you to go on the defensive to rectify that, and in the process you lose control of negotiating the overall asking price for the vehicle. For more about how this works, check out The Consumerist’s breakdown.

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Dealers Usually Want You to Lease, Not Buy

Whether or not leasing is right for you, the dealer may try to push this option on you. According to SmartMoney, that’s because dealers are often able to make more money from people who lease a car than people who buy it. Part of this has to do with consumer habits: When you make smaller payments over a longer period of time, it’s easier to justify signing up for a more expensive vehicle. Besides this, certain deceptive dealers may try to trick you into paying more upfront with the promise of a lower monthly payment, despite the fact that one should have no real effect on the other.

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