Debt Free

Most people dread it, and with good reason; you’re at a big disadvantage. It can feel like you’re a new fish in the yard. I’m talking about making a trip to a new car dealer to pick up your latest 300hp, depreciating asset. Although some may enjoy the witty banter and glib one liners provided by the typical automobile sales consultant, most find the whole procedure about as distasteful as explaining to your boss why you were having a party with his wife in his office. Ah, but there are ways to arm yourself, so you can shut them down when they try to perpetrate one of their many scams on you. Not to say all car dealers are dishonest, on the contrary, there are many reputable dealerships out there. But on the (not too small) chance you saunter into one of the others, here are some of the tricks you can find yourself up against.

Remember this question; “If I could, would you?” It’s the question almost all car salespeople try to boil the negotiation down to. Insert whatever pushes your buttons into the previous question. Basically “If I could get you into that car for nothing down and only $289 a month, would you drive it out of here today?” A great sales person will be able to find out all sorts of information about you during the initial conversation and test drive. They’ll use that info to frame the question in such a way that will get you to agree. In the time leading up to the inevitable question, they try to get you to answer “yes” to a variety of other questions so that when they pop the big one, you’ll be in the habit of saying yes, and really, what’s one more time? 

A lot of the tricks you’ll find at the dealer are concerned with credit and financing. This is where the dealer makes a good portion of their profit. You didn’t think they could support 100 employees, their inventory carrying cost and that spanking, new building, when they sell their cars for a few percent over cost did you? In many cases, it’s all about the financing. The car is just a vehicle to sell you a financial product. The favorite financial product of many dealers is the retail installment sales contract or (RISC). This is then sold to a financial institution. This is known as “selling the paper” and is common practice in many types of financing.  The higher the interest rate the dealer can make you pay, the more profit they make when they sell the contract.

You should always secure financing before visiting the dealer, unless you have great credit and are going to take advantage of low, or no, interest financing from the auto manufacturers. Be advised, these deals are “upon approval of credit” and many can not get them. Don’t get sucked in. Know your credit score before you visit the dealership & don’t let them tell you the number you got from Experian or Equifax is wrong, because some will try. If you do finance at the dealer, take a financial or loan amortization calculator so you can figure the interest rate you’ll really be paying. You’ll be surprised.

Here is a list of some other tricks you’ll be facing:

• Your financing didn’t go through – Can you come down and resign your loan paperwork? Many car deals are OAC, even if they initially let you drive off the lot with the car. After you’ve really gotten to love it, they’ll let you know you’re not approved and you need to change the terms of the financing you thought you got the car for.
• We don’t take checks from those online lenders or credit unions. Although there has been an upsurge in cashier’s check fraud, the checks from the major online lenders don’t bounce. It’s just a line the sales person is feeding you to get you to finance the car at the dealership.
• Selling salvage titled cars “as is” – Reputable dealers won’t try to pull this, but watch out! Where do think all the flood damaged cars from Katrina ended up? Use CarFax on any car you purchase to ensure its vehicle history. Most used cars are sold “as is” and that clause makes it extremely hard to win if you try to defeat a dealer in court. They can afford the best lawyers, trust me.
• “I’ve got to talk to my sales manager” – This is the standard negotiating technique. Normally, the salesperson actually does have to get the sales manager’s approval. Be prepared, however, to see a higher offer when the salesperson returns. They may even try to get you into at the same payment at a longer term or, if you weren’t paying attention, a higher interest rate. Too many people buy because the dealer can get them the payment they want, not the total price they want to pay.
  

Three things you can do to keep from getting stung are – Have the car inspected by a mechanic, Get a CARFAX vehicle history report, and Secure financing before you ever get to the dealership. If you do go through the dealership for financing, make sure you know your credit score and have a financial or loan amortization calculator with you.

You car is one of your largest purchases. It can be a day you wish you were cleaning the bees nest out of your attic instead of sitting in that chair. Even worse, you could leave, completely happy with your dynamite new ride, totally oblivious to the fact they scammed you sixteen ways from Sunday. It’s your choice.