There is a reason that most people think of car salespeople as con artists and thieves. They will do anything to rip you off. While they may not put a gun to your head or grab your wallet, they will try every trick possible to get you to spend extra money on a car. Here are a few of their favorite ways to get you to break your budget while you are shopping for a new (or new to you) ride.
- Sticker Price Inflation. The sticker price is the easiest place to rob you on a new car. The price usually includes items you do not need and services that have not been performed yet. Things like VIN etching, fabric treatment, and after-market undercarriage sealant can be eliminated from the price. They are all overpriced and unnecessary.
- Trade-in Lowballing. Every salesperson in the business will lowball your trade-in. Many hope that you have not researched your vehicle’s value on Kelley Blue Book (KBB). Dealers use the NADA (National Automobile Dealers Association) guide when determining the real value of a car and how much they can resell it for. The NADA value is generally higher than the KBB price. Let the salesperson know you are aware of the NADA value of your vehicle.
- Dealer Rate-Padding. If you use dealer-arranged financing, you are being very foolish. In most states, a dealership can add up to two percentage points to a loan offer just for arranging it. So, if the bank offers you 5%interest, the dealer can legally tell you the rate is 7% and pocket the extra cash. Arrange your own financing prior to shopping to avoid this scam
- Customer Service Fees. Dealerships often try to charge a ”customer service fee.” This fee has been known to be as high as $1,000. The fee is for doing the paperwork for your loan, processing the loan, and mailing in the sales tax. Refuse to pay it. Get up and walk out of the dealership if you must.
- Dealer Add-ons. Gap insurance and extended warranties are ways that dealerships increase their profits by preying on your fears. They will try to impress upon you how much your car can depreciate compared to your loan value, and how your insurance company will only pay the value in the event of a wreck. Next, they will say an extended warranty offers peace of mind. Well, both are cheaper anywhere you look — once you leave the dealership. You probably will never make a claim on an extended warranty if you shop wisely. The people who sell cars push every button and keep talking so that you will not notice the fine print on the sticker or in the loan papers. You need to go prepared to be ripped off so that you can protect yourself. Always arrange your own financing prior to shopping, and never tell a sales person how much you can afford.
Taylor Brown is an auto finance and purchasing expert. More of his work is available at www.specialfinancecarloan.com