• Car Dealer Tricks

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    Although most car dealers are reputable, hardworking business folks who are trying to help you find a car with financing options that work for you, there are a small minority of them that use a number of practices that work against your best interest. Here are some of the car dealer tricks and tactics to look out for:

    Dealer Trick 1: Bait-and-switch

    The bait-and-switch tactic has been around for a long time. Salespeople everywhere use it, and it's important to recognize when it's being used on you. First, you're going to see an advertisement for a special deal on a certain car. If you look at the fine print, it may say the dealership only has one of these cars in stock. But you're going to be lured into the dealership on the premise of this great deal, only to find out that the one car they had in stock has been sold. Then the car salesman is going to get you into a different car, maybe even one you weren't considering. In these instances, it may be better just to walk away before being "sold" on something you don't want, or weren't looking for.

    Dealer Trick 2: An offer that's "only good for today"

    Remember, it's a salesperson's job to get you to buy the car as soon as possible, which means he or she is going to use whatever pressure tactics possible to get you to sign today. That includes saying a price or offer is only good today, or that the sale that was advertised ends today. Don't be fooled when dealership employees make these claims. Most of these are just ways to pressure you into making a purchase sooner rather than later. However, USAA says that there are times when you really can get a better deal -- usually, that's at the end of a month, quarter or year, because dealers and their sales forces are trying the make sales quotas. In that case, holding off until the next day really could cost you.

    Dealer Trick 3: Negotiating monthly payments

    This is an easy one to fall for, especially if you get dealer financing instead of walking in pre-approved. Your eye should be firmly on the cost of the car, not the monthly payment, which is easy to manipulate. If you make the mistake of telling the salesperson that you can afford $200 a month, and you allow the entire negotiation to be dictated by the payment, you will probably get a car with a $200 a month payment. And you may find that you paid $2,000 too much for it and that you signed up for a ten-year loan with a bad interest rate. Line up your financing first. Know what the car is worth. Walk in, tell them what you want and don't get side-tracked.

    Dealer Trick 4: Sticker price

    One of the top suggestions for negotiating the best price is to do your research and know the cars before heading to the dealership. This is because you can't negotiate the best price if you don't know anything about the pricing in the first place. Whatever you do, don't focus on MSRP, the manufacturers suggested retail price, also known as the sticker price you see on the car. The important figures are the dealer's cost and the rebate it gets from the manufacturer. It helps to know what other people are paying for that car as well. Otherwise, you could fall for a deep "discount" on an imaginary sticker price that no one actually pays.

    Dealer Trick 5: Finance charges and fees

    When it comes time to finance your new car, don't skim over the details of the paperwork. You want to see a breakdown of all the finance charges and fees associated with your car loan. Whatever the dealership is charging you in finance charges or fees is completely negotiable, so don't be afraid to ask for them to waive the fees, or negotiate a lower fee. It's also a good idea to get pre-approved for financing elsewhere, so you have another auto loan offer for comparison. Some people choose to skip the dealer financing altogether, because of the next trick they use...

    Dealer Trick 6: Selling add-ons and extras

    It's a fact that dealerships can profit more by arranging financing and selling extras like extended warranties and service contracts than by selling a car. So when you sit down to close the deal, and the financing officer starts offering you all sorts of extras, ask how long you have to decide. In some cases, you may be able to add something within the first few days of the purchase, so you can take time to consider the offer, without feeling pressured.

    If you do feel pressured, just say no or walk away -- Consumer Reports researchers concluded that extended warranties are usually bad deals for buyers and great deals for dealerships. The magazine also warns that, "Dealers often try to sell the convenience of rolling coverage into a new-car loan, but that means you may be paying up front for coverage that you already have with the factory warranty. You can purchase an extended warranty after buying the car, although you may find the cost increases as the vehicle ages."

    Dealer Trick 7: Misleading statements and false promises

    Some salespeople will make all sorts of promises in order to get you into a car. For example, a dealer offers to pay off your existing car loan when you trade it in. Sure, they'll pay off your car, but what they may not fully disclose is that they add the loan balance to the loan on the new car you buy from them.

    How about those offers for zero percent financing? The teeny tiny print says it's only available to buyers with exceptional credit. Even though most people don't qualify for the special deal, however, enough of them buy cars anyway that dealerships continue to run this game.

    Then, there is the leasing price of a new car. A dealer may disclose a certain monthly payment amount in an advertisement to entice you into the dealership. Like zero percent financing, you'll discover that it's for exceptionally well-qualified consumers, and unfortunately, you don't meet the requirements. Of course, they will try and get you into a lease anyway.

    Read the fine print, and if the deal you wanted isn't on offer, call their bluff and leave. Finally, a promise isn't a promise unless it's in writing. Read everything and sign nothing unless what you want and expect is in there.

    Dealer Trick 8: Yo-yo financing

    This dealer trick mostly happens to people with bad credit. You walk into the dealership, take a look at a car, sign all the papers, and drive it home, thinking the deal is done. Then the dealer calls to tell you the financing has fallen through; you weren't actually approved for the loan. At this point, you'll have to bring the car back, but the dealer is likely to offer you the car at a higher interest rate, which means a larger monthly payment. Or they may ask you for an additional down payment, or coerce you into getting a co-signer in order to keep the car.

    Experts at Edmunds say that this happens mostly when people buy cars on the weekend and the banks are closed. They recommend avoiding this by either buying during the week or not taking delivery of the car until everything has been cleared. The best way to avoid this situation, says Edmunds, is simple; just get pre-approved for your auto loan before you buy your new car. If you aren't able to do that, or find yourself in an unfortunate situation, call their bluff and return the car. Then arrange your own financing.

    Dealer tricks in car selling are as old as the industry itself. Being a more educated buyer should prevent you from being reeled in.