If you are looking to purchase a new car you are really going to want to look over these tips! Below are DI’s top 10 ways that dealerships can screw you over. Some dealerships are great, but there are always horror stories of how customers have spent more than they intended or received a car with imperfections all over it. No one wants this to happen to them, so take a look at these 10 ways and keep them in mind for the next time you step foot into a car dealership!
- Monthly Payments Instead of Total Price – This is one of the oldest tricks in the book with car dealers. They will often ask what you are willing to pay per month and this can lead to confusion. Why? Well, the salesperson will use the longest auto loan term available to calculate your rates. For example, a $25,000 car with a five year loan has the same monthly payment as a $16,000 car with a three year loan. The difference however is that you could end up paying $2,500 more in interest for the more expensive car! Always ask for the total price and negotiate on that. You can always worry about the monthly payments on your own after purchasing.
- Purchasing Add-Ons – Add-ons can consist of anything from undercoats, navigation, stereo systems, tinting, wheels, leather, etc. etc. etc. The problem with these is that the are overpriced by the dealer. For example, a dealership may tell you that if you want navigation it will be and extra $2,000. Not only is that grossly overpriced, this upgrade normally comes with other upgrades in a “package” as well. Consider buying a navigation unit from your local electronics store from anywhere between $50 and a couple hundred bucks or using your cell phone. Often times these upgrades offer zero to minimal increase in resale value.
- Financing With The Dealership – Dealerships say they look around for the best financing rate, but they can often be several points higher than your local credit union. I highly recommend doing your homework before looking at the dealerships rates. Could they give you the best rate? Sure they could, but in my experience this is not the case. They almost always have higher rates and wouldn’t you want to be able to save money and say, “No thanks I will go with my credit union”. Simply evaluating all of your options will help ensure that you are receiving the best rate possible.
- Extended Warranties – Be weary of some warranties and read the fine print! There are generally two classifications when it comes to warranties, Named Inclusion and Named Exclusion. Named Inclusion ONLY pays for what they name in the coverage. If it is not named, then it is not covered. This allows them to omit anything they do not want to pay for by simply not naming it as covered. Named Exclusion is the opposite, it will cover ALL parts, unless it specifically excludes it. For example, it might say ALL PARTS AND COMPONENTS, EXCEPT TIRES, BRAKE PADS, WIPER BLADES, etc. An extended warranty may sound appealing, but just be sure to read the fine print to make sure it covers what you would like it to.
- Trade In Value – Dealers use the National Automobile Dealers Association (NADA) database, which gives them a much more realistic idea of what they can get for your trade than Kelley Blue Book (KBB). Look up the value of your car before meeting with the salesman and make sure they are giving you what your car is worth. Another option is selling it privately. This normally does take longer to do, but when you find the right buyer they will generally pay more than what you would have received at the dealership.
- Down Payments – Never ever talk about your down payment when they ask. Wait until you find out how much the car will cost out the door, then start talking about your down payment. The down payment can be a valuable bargaining chip and if you use it too early the salesperson can often raise the price of the car to offset some of your down payment.
- The 4 Square Sheet – The four square sheet is a way for the salesman to play around with the numbers and make you think that you are getting a great deal. Read this great article that is written by a car salesmen explaining exactly how to use the 4 square sheet to manipulate customers into a sale. It is really an eye opener and it will make you demand that this sheet is not used when you deal with them.
- Hidden Fees – Read the fine print before signing the paperwork! Dealerships may work with you on the price but then add other fees onto the contract. Make sure you read over everything and take your time. Some of these fees are required, but the ones that are not they hope you do not notice. Check all the prices and tell them you do not want any of these unnecessary fees if you do notice them pop up.
- Inspect The Car – Make sure to inspect the car thoroughly before signing the papers. We recommend doing this during the daytime with good lighting. Dealerships do not take the best care of their cars on the lot and dings/other damage is bound to happen. Our Warehouse Manager Charlie just ran into this exact issue. He drove the car off the lot and later noticed a bunch of chips that had been filled in with touch up paint, and this was a new car! He immediately went down to the dealership and because his family has been purchasing cars from them for years, they did take care of him. You do not want to put yourself in this situation so before you leave the lot, inspect the car!
- Detailing The Car – After you sign the paperwork the dealership will start to get the car ready for you to pick up. This often includes a car wash, interior cleaning, tire dressing, etc. Sometimes they will apply a glaze or wax to the paint which lasts a very short period of time so it looks great at pickup and it makes it difficult to see surface imperfections. The free detail may sound great, but they often do more damage than good. For the wash, they may take it to the local car wash and for a better idea of what happens to the paint from these car washes, check out this article by Zach McGovern. If they do not take it to a car wash they often have an employee wash it quick using improper techniques and dirty wash media, which again ads unsightly imperfections in the paint. The tire dressing they apply are often heavy silicone based and look great short term, but with regular usage they can brown the tires and they are prone to slinging up on the paint when driving. Make sure to tell them that you DO NOT want them to detail the car. They will look at you like you are crazy, but this will save you a lot of time and money from correcting the paint after it has been damaged by the car wash. After you purchase the car use something like the DI Accessories “Do Not Wash” Rear View Mirror Hang Tag anytime you are back at the dealership for a service, new tires, or anything else that leaves the chance of detailing before they return the car to you.
Not all of the car dealerships out there are bad, but these are just some of the ways dealerships can try to keep more in their pockets. We hope this top 10 list opened your eyes and that you keep it in mind when you are looking to purchase a new car in the future. If you have any questions about this list, or if you would simply like some recommendations to correct and/or protect your new car please do not hesitate to contact us, or leave a comment below!
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