What to be wary of when you re negotiating your next new-car purchase.
We know. Not all car dealerships are unscrupulous and not all are going to take you to the cleaners. Among all the Honest Bobs and Barbs out there walking the lots, many really are trustworthy. But there is a simple reason so many people dread buying a new car: The potential for rip-off is astronomical, and common practices over the years have often justified consumers fears. If you catch a whiff of any of the scams below, be on the alert.
Juggling the Foursquare
This isn t really a trick, but awareness here is important for a buyer. When you sit down to negotiate, the salesperson will pull out a foursquare worksheet on which to figure out the terms of the deal. In the four quadrants of the sheet, the salesman (or -woman, but enough of being PC!) will record purchase price, down payment, monthly payments, and trade-in value. He will fill in the sheet as you talk, working the deal like a shell game. If he thinks you are preoccupied with getting a fair deal on your trade-in, he might give you a good price for that and then nudge your new-car purchase price north. Take it slow, focus on one item at a time, and be sure you are comfortable with each individual aspect of your purchase.
Profiting from Rebates
Rebates bring a lot of customers into a showroom, but the discounts can hide several tricks dealerships employ to suck a few bucks from a buyer. First, don t let a salesman tell you that you are getting a good deal because of a rebate; rebates come from the manufacturer and usually apply regardless of the price you negotiate with the individual dealership. Negotiate as if there were no rebates. Second, make sure the rebates are deducted from the purchase price. If you allow the dealership to mail you a check after the sale, you end up paying taxes and interest on the rebate. And never let an incentive like a low APR or a rebate rush you into a purchase you aren t ready to make. If there s an incentive on a car today, odds are there will be incentives on it again. Salesmen often tell you there are strings attached to incentives, such as that you have to buy a certain trim, engine, or option package to qualify. This is not always true. Do your homework.
Talking monthly payments at the car dealership can be as dangerous as saying bomb at the airport. A salesman asks how much you are willing to pay each month, and you throw out a number say, $450. He asks how much more you could afford just getting a feel for you. You tack on another 50 bucks. In your mind, you were theorizing, but to the salesman, you just committed to a $500 minimum monthly payment. Instead, when a salesman asks how much you can pay each month, tell him you will not discuss monthly payments and only want to talk purchase price; you ll decide on monthly payments after you ve settled on a fair price.
Fees and Extras
Delivery charges, titling fees, and other closing costs are inevitable extras associated with buying a new car. But aside from a few essential add-ons, most fees or extra-cost items are inflated or altogether unnecessary. Negotiate fees down, or outright refuse to pay them. And deny any extras offered by the finance and insurance manager. Basically, if it s anything he offers you after you ve negotiated your sales price, you don t need it and you shouldn t pay for it. Particularly egregious are paint and fabric protection essentially wax and Scotchgard that dealerships often charge hundreds of dollars for.
You should always shop for your own financing before you head to the dealership. Maybe you ll get a better rate; maybe you ll just get a better idea of what rate you qualify for so you can police the finance manager. It is not uncommon for the dealership to secure financing for you at one APR but offer you a rate one percentage point higher and then pocket the difference.